Brian Stanley (Laois-Offaly, Sinn Fein)

I am grateful to the Ceann Comhairle for giving me the opportunity to raise the matter of home loans acquired through local authorities to buy a house under the shared ownership scheme, the annuity scheme and the affordable housing scheme. Typically, these were, to use the awful term from America, sub-prime borrowers. They were people who could not get loans from building societies, banks or other lending institutions and they needed to be refused by two of them before a local authority would grant a loan. They applied in good faith for these loans to buy either an affordable house or a house under the shared ownership scheme or for the full annuity loan to buy 100% of the house. Many people who wanted to acquire their own home were standing on their own two feet at the time and earning reasonably good wages. There were perhaps two wages in the household. They now find themselves with no wages coming into the house and they are also caught in a negative equity trap.

The problem is escalating. Arrears are accumulating on households at a major rate. In County Laois, of 514 loans, 136 are in distress. In other words, they are three or more months in arrears. In the shared ownership section, 33% of loans are in distress, which indicates the seriousness of the problem. Families are under great pressure, which is affecting relationships. It has reached the stage where it is affecting people's mental and physical health. It is also affecting local authority staff and public representatives who are dealing with the matter. It is putting everyone under pressure and nothing short of a crisis.

Houses throughout the country are being repossessed, with the tenants being evicted and the houses often being boarded up. They are then vandalised, following which they will be sold at half or one third of the value of the original loan. If the original loan was for €280,000, a house might be sold for €80,000 or €90,000. This is leaving the local authorities and the individuals involved with a major loan hangover from the negative equity. A family then typically needs rent allowance and is put on the local authority housing waiting list which, in turn, puts pressure on the system and the family.

We are often asked for solutions. I wish to propose some solutions from this side of the House. Just as with private institutions, we need to put measures in place to deal with loans through local authorities. Burden sharing is an option, as is shared equity. A local authority could take over ownership of a house in cases where the occupier is clearly not in a position and will not be in the short or medium term to pay off the loan and rent the house to the occupier. There could be interest-only repayments. Payments could be deferred for a period or the period of the loan could be extended.

Relief could be brought immediately in the case of shared ownership scheme loans by reducing the rent on the fraction of the house being rented - typically 40% to 50%. Rents are increasing by 4% per year, which is causing major problems. Instead of reducing them or keeping them unchanged, they are increasing by 4%. This matter is under the direct control of the Minister of State.

From talking to officials, I am aware that a review group is in place and I would welcome any steps to address the problem which has been ongoing for some time. However, nothing is happening. There is no outcome or solution. What are the Minister of State and his officials doing about the issue? It is a crisis and we must address it. It is piling up on top of the local authorities and the unfortunate people living in the houses in question. The priority must be to keep them in them. Repossessions - some of which have taken place in my immediate neighbourhood - do not serve anybody. It also causes problems for the people living beside repossessed houses which are often boarded up for months on end and vandalised and consequently worth less. The unfortunate people from whom a house has been repossessed have moved to private rented accommodation and the Government which should be trying to save money is paying rent allowance for them, which is ludicrous.

Colleagues have told me about similar problems in other parts of the State; the problem it is not confined to the midlands. We need to get on top of it, as it has escalated in the past three to four years and local authority officials are at a loss to know what to do. Obviously, my first concern is for the constituents on whom this pressure has built up. However, it is also causing problems for local authorities in their balance sheets. When they go to prepare their budgets, this matter will have a major negative effect because they need to find the money to return to the Housing Finance Agency. As it stands, nobody is winning. The householder, the local authority and the taxpayer are all losing.

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