Eamon Gilmore (Dún Laoghaire, Labour)
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Question 1458: To ask the Minister for the Environment, Heritage and Local Government his plans to amend section 10 of the Housing (Miscellaneous Provisions) Act 2002 in view of the difficulties which have arisen for shared ownership purchasers of affordable housing with regard to the activation of the claw-back mechanism on re-mortgaging; and if he will make a statement on the matter. [1090/06]

Noel Ahern (Dublin North West, Fianna Fail)
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Houses sold under the various affordable housing schemes at a discount from market value contain a claw-back provision which is necessary to ensure there is no short-term profiteering on the resale of a house. Traditionally, local authorities were the sole supplier of mortgage finance for affordable housing and they registered the clawback as a charge on the mortgage deed, or in the case of shared ownership transactions, inserted it as a clause-condition in the lease. This allowed them, as the lender, readily to enforce the clawback.

However, re-mortgaging a house that was initially acquired by way of shared ownership, requires that the purchaser buys out the lease, that is, acquires the local authority's share of the house. To facilitate transactions of this kind, but also to ensure a clawback can be still operated by the local authority in relation to affordable housing, section 10(3)(a)(i) of the Housing (Miscellaneous Provisions) Act 2002 has clarified that the clawback must be paid — where a purchaser buys out the interest of the housing authority in the house. Since the enactment of this provision, a number of affordable houses acquired by way of shared ownership have been redeemed and these will have involved the payment of the clawback by purchasers to the relevant local authority.

By buying out the clawback and becoming outright owner the purchaser has the potential to trade on the open market or to release equity. To protect the State's interest in these affordable houses, I consider it appropriate that the claw-back mechanism should continue to operate in such cases and I have no proposals at this stage to amend the legislation. However, I will keep the matter under review.