Shared Ownership Loans Update – 12th March 2014

12th September 2014 - Bernard Durkan TD

To ask the Minister for the Environment, Community and Local Government the extent to which it has been found possible to address the serious anomalies in respect of shared ownership housing loans which he inherited with particular reference to an annual increase in the cost of rental equity which made the cost of a loan for persons in that income category to be seriously disadvantaged when compared with higher income groups; and if he will make a statement on the matter.

To ask the Minister for the Environment, Community and Local Government if in the context of the review of the shared ownership loan system, a means can be found to ensure that holders of shared ownership mortgages are not disadvantaged; and if he will make a statement on the matter.

– Bernard J. Durkan.

For WRITTEN answer on Wednesday, 12th March, 2014.

Ref Nos: 12392/14 and 12393/14

REPLY

Minister of State at the Department of Environment, Community and Local Government (Ms. J. O’Sullivan)

I propose to take QuestionsNos. 132 and 133 together.

The Government’s 2011 Housing Policy Statement announced the standing down of all affordable housing schemes, including the shared ownership scheme, in the context of a full review of Part V of the Planning and Development Acts 2000-2013. Details regarding the review are available on my Department’s website www.environ.ie

In 2013, I asked the Housing Agency to conduct a standalone review of the shared ownership scheme, including identification of the main difficulties and recommendations for mitigating measures. While I have received an initial draft of the review from the Agency,a number of issues have been identified that need further detailed financial analysis in order to fully assess the impact on local authority finances of possible mitigating measures. This data collection exercise has been initiatedand will inform future actions.

Pending full conclusion of this review, my Department issued a circular letter to local authorities setting out some of the options and interim actions that might be explored to alleviate the difficulties of those in shared ownership distress such as allowing use of the Mortgage Arrears Resolution Process and room rental for Shared Ownership mortgage holders. It is accepted that these proposals are not a complete solution to the issues that arise for such mortgage holders but are intended as an interim measure pendingtheoutcome of the review.

I fully recognise that shared ownership home owners, amongst others, have been affected by issues such as unemployment and possible negative equity. In such cases borrowers should actively engage with their lenders, whether a commercial financial institution or a local authority, to seek to avail of one of the options available to provide sustainable solutions to distressed mortgages.

The mortgage arrears resolution process, already in place in respect of commercial mortgages, is now being implemented across all local authorities. In cases of acute mortgage distress, homeowners also have the option of seeking to avail of the legal process now also in place to deal with personal insolvency.

On foot of the recommendations of the Keane Report on mortgage arrears, the Government launched a Mortgage to Rent scheme on a pilot basis in February 2012. This scheme was extended nationally in June 2012, targeting those low income families whose mortgage situation is unsustainable and where there is little or no prospect of a significant change in circumstances in the foreseeable future. To date, 34 households have availed of the scheme.In addition, my Department has issued full funding approval under the scheme for a further 51 housing units. The scheme ensures that the family remains in their home, while ownership is transferred to an approved housing body and the family becomes a tenant of the approved housing body. Eligibility requirements are in line with other forms of social housing support.

The scheme for localauthority borrowers in arrears, which was piloted in two local authority areas, Westmeath County Council and Dublin City Council, was implemented nationally in recent weeks. With the support of the Minister for Public Expenditure and Reform and the Housing Finance Agency, I will be allocating an additional €20m to the Mortgage Arrears Resolution Process (MARP) fund in 2014 to significantly expand the capacity of that resource to assist local authority borrowersin mortgage distress.

Shared Ownership Loans Update – 12th March 2014

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