Mr. Philip Nugent:

I will respond on the shared ownership issues. The solutions probably lie within the remit of the Department and local authorities rather than the remit of the Housing Finance Agency. As the provider of funding, we do not produce solutions for people who are in arrears or at the final stages of the arrears process. However, the Department has been working with the agency and local authorities to devise proper solutions. Arrears are becoming an increasingly difficult issue in some local authority areas. Local authorities with the largest number of shared ownership transactions have obviously been worst affected by the shared ownership scheme.

It is the case that we cannot have properties lying vacant when households are on waiting lists. We are working with local authorities to devise longer-term solutions in order that repossession and eviction occur only in circumstances in which there is no other solution.

The agency is working on a mortgage-to-rent scheme for local authority borrowers, which will be slightly more complicated than the scheme being made available by mainstream lenders.

Local authorities in making available a mortgage-to-rent scheme will have a loss arising to them. There are two issues – first, the value of the property as it is purchased under a mortgage-to-rent scheme and then the hole left in the local authority balance sheet. That has to be filled; otherwise local authorities will not be able to provide services. It is a question of trying to devise solutions that also protect the ability of the local authority to provide services outside of housing. Mortgage-to-rent will be seen for local authority borrowers in the worst of distress which will include shared ownership borrowers.

We do not have a breakdown of arrears cases by the type of house purchase scheme. We have an overall arrears rate, using the 90 days measured model, which is around 28% or 29%, three times higher than the rate of arrears in the private sector. Then again, one would expect it to be higher because local authorities, by definition, are lenders of last resort.