Dessie Ellis (Dublin North West, Sinn Fein)
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I thank the Chair for selecting this topic and the Minister of State for attending. He will be aware there is a serious crisis developing across the State in regard to shared ownership. People on the housing list and-or on low income availed of this facility in recent years. Applicants had to provide proof of two refusals from private lenders to avail of this loan.

This week alone, three houses in my area, Finglas, are up for repossession. A number of weeks ago, I was at the scene of an eviction in Finglas that received none of the attention a recent eviction in an affluent area received. This one concerned a sole property owner, not a person with multiples of properties. By next September there will be 70 shared ownership repossessions within Dublin City Council, dating from the last couple of years up to September. Fifty per cent of these were abandoned by individuals and families. Others were taken due to arrears and non-payment after attempts to resolve the problems failed.

There are approximately 1,400 shared ownerships within Dublin City Council and approximately 6,000 to 7,000 throughout the country. Of these, 30% are 90 or more days in arrears. At present there 29 further cases of people who are unable to pay Dublin City Council, all of whom have been classed as in urgent need of housing. This crisis is heading towards major catastrophe for the families and individuals concerned.

The Keane report is all about private mortgages and private debt and does not address local authority lending and the debt accrued in that regard. The money received by local authorities came through the Housing Agency. What is the status of this report? We need the issue of shared ownership loans to be included in any solution. Although interest-only relief can be obtained on the mortgage section of these loans, the rent to local authorities rises by 4% each year. Negative equity is now a major disincentive for families fighting for these homes. The local authorities need help to take these homes in charge, with the residents' consent, and to keep families in their homes, charging them the normal local authority rent. It is a simple solution but it would be costly. I understand that, but we are in such a crisis in this regard it may be necessary for this to be done.

I realise people in these shared ownerships did not have to pay stamp duty; nor do they have to pay the household charge. Although this is a welcome relief it is not enough to alleviate the problems we face. Many of these loans were obtained by families such as lone parents on community employment schemes, or in other situations. We can argue to and fro as to whether this was the right thing to do at the time but the reality is we are now faced with the crisis affecting these families. I hope the Minister of State will look at this problem and respond to some of these issues.

Fergus O'Dowd (Louth, Fine Gael)
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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.

Dessie Ellis (Dublin North West, Sinn Fein)
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I hope the measures the Minister is preparing for the local authorities will address the issues raised. It would be a tragedy if we end up with people on local authority housing lists and in receipt of rent subsidy because we cannot leave them in their homes. It is financially viable to leave them in their homes. Dublin City Council has debts of €40 million in respect of affordable housing. Other sections of Dublin City Council have other debts. I refer to the Keane report, which does not mention this source of housing. The Minister of State said he would provide some guidelines but we need to see how exactly it will be dealt with. We are supposed to see how to deal with private debt in the Keane report. How will we deal with local authority debt? If Dublin City Council's exposure is this high, what is the exposure of other local authorities? I do not have the figures but I hope to get them in the near future. Many people at the bottom end of the scale are affected by this. Some of them surrendered properties when they came off the housing list and took up shared ownership. They lost their homes and there is a great danger of homelessness. Moving people from shared ownership to rental subsidy and homelessness would be disastrous.

Fergus O'Dowd (Louth, Fine Gael)
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Deputy Ellis raised some important points, some of which I do not have an answer to. I am sure the Department will be able to provide statistics and a response on the Keane report. Local authorities face serious challenges and mortgage holders across the country and shared ownership borrowers are facing additional challenges. We must take account of this. Revised guidance to local authorities on the treatment of mortgage arrears will shortly issue. Closely mirroring the Central Bank's code of conduct on mortgage arrears, it replaces the existing guidance to local authorities. It will include a common mortgage arrears resolution process for use by all local authorities and will provide for the consistent and sympathetic treatment of all distressed local authority borrowers. That is the wish of everyone and particularly Deputy Ellis.

It is also recognises that wider issues beyond mortgage difficulties are faced by shared ownership mortgage holders. These include issues relating to a clawback if the property is sold, mortgage holders facing difficulties buying out the local authority's share of the property after clearing their shared ownership mortgages, and the lack of a facility whereby mortgage holders can rent their property. These issues will all be addressed in the context of the full review of Part V of the Planning and Development Act 2000. This review may lead to legislative amendments, as appropriate, or to new guidance for local authorities and shared ownership mortgage holders, as appropriate. The review is a major commitment on the part of the Department and it will be keenly examining developments in the area.