Barry Andrews (Dún Laoghaire, Fianna Fail)

Similarly, despite worsening economic conditions generally, repossession remains extremely rare for local authority borrowers, with only three repossessions carried out by local authorities last year.

Local authority borrowers have received considerable protection from the worst effects of the downturn in terms of their borrowing costs. The effective rate for borrowers has come down by 3% since October 2008 and now stands at just 2.25%. These rates represent exceptional value by comparison to rates charged by commercial lenders and at present, the local authority rate is more than 0.9% lower than the average market variable rate.

Section 34 of the Housing (Miscellaneous Provisions) Act 2009 enables a housing authority to enter into an arrangement with a household for the rescheduling of payments of accumulated arrears, including interest, due to it in respect of specified rents, equity charges and loans, where the authority is satisfied that the household would otherwise suffer undue hardship. While work is continuing on the preparation of the regulations, directions and guidance necessary to enable the remaining provisions of the 2009 Act to be commenced over the coming months, this section has not yet been commenced. However, even without the provisions of section 34, local authorities have extensive powers under legislation already in place to deal flexibly with borrowers facing difficulty in meeting mortgage repayments.

Provisions on lending by local authorities for the purposes of house purchases are set out in section 11 of the Housing (Miscellaneous Provisions) Act 1992. Where a loan stands in default, section 11(10) provides that a local authority may make such monetary arrangements with a borrower as it considers equitable to take account of the particular circumstances of the borrower. Local authorities can and do exercise the powers available to them under this section and endeavour to engage proactively and constructively with a distressed borrower with the aim of enabling a household to remain in that home. The available data strongly bear this out and suggest that repossession, where it does occur, is always a last resort.

Nevertheless, the Minister of State with responsibility for housing and local services, Deputy Finneran, is committed to supporting consistency of approach and ensuring best practice across all local authority areas. He is developing guidance based on the regulator's code of conduct to ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household, while also protecting the position of the local authority concerned. He intends to issue this guidance in the coming weeks.

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