Fergus O'Dowd (Louth, Fine Gael)

I thank Deputy Ellis for bringing this issue before the House. I will respond on behalf of the Minister for the Environment, Community and Local Government, Deputy Hogan. The shared ownership scheme was introduced in 1991 to a very different housing environment, as Deputy Ellis outlined. It was designed to facilitate access to full home ownership in two or more stages to persons who could not afford full ownership immediately, with ownership shared between the purchaser and the local authority.

The rent charged is used to cover the funding costs to the Housing Finance Agency, which are based on borrowings at the prevailing interest rates. Any difference between the rent and the prevailing interest rate is reflected in the capital outstanding on the property. In other words, if the rent charged is greater than the prevailing rate the outstanding equity will be reduced accordingly. Local authority mortgage holders, including those who purchased under shared ownership, also benefit from extremely keenly priced interest rates, which generally run at around 0.5% lower than the best rates available in the market and currently stand at around 1.5% below average variable rates available in the market. This is a very substantial differential.

Much has been done to support mortgage holders facing difficulties. A range of restructuring and rescheduling options are available under guidance on mortgage arrears, which my Department issued to local authorities in March 2010. To reflect the content of the Central Bank's revised code of conduct and provide a further suite of options for the sympathetic treatment of mortgage arrears by local authorities, my Department is currently preparing updated guidance to local authorities in consultation with the County and City Managers Association. I anticipate the guidance will be made available to local authorities before the summer recess. In addition, mortgage interest supplement, payable under the supplementary welfare scheme, is payable in respect of mortgages under shared ownership transactions, subject to conditions. An annual subsidy towards rent payments under shared ownership is also available through the rental subsidy scheme.

Finally, to take account of the current housing market conditions, the Government's housing policy statement, published in June 2011, 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 Act 2000. Any changes to legislation governing affordable housing schemes, including shared ownership, will be informed by that review, which will shortly commence.

See this speech in context