Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 384: To ask the Minister for the Environment, Heritage and Local Government if, under legislation in which a house purchased under a shared ownership scheme drops in value from the purchase price and the buyer wishes to buy out the council share, the local authorities share of the house also drops as a percentage of the reduced valuation; and if he will make a statement on the matter. [37082/08]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I refer to the reply to Question No. 478 of 21 October 2008. For Shared Ownership transactions commenced from 1 January 2003, the cost of purchasing an additional share or the redemption value of the outstanding share is based on its initial cost adjusted annually to compensate for differences between the rent paid on the local authority's share and the interest calculated by reference to the prevailing variable interest rates. The rent payments under the Shared Ownership Scheme are intended largely to meet the cost of funding provided by the Housing Finance Agency to local authorities to finance the rented share in the equity of the house.

For transactions commenced before 1 January 2003, the cost of purchasing an additional share, or the redemption value of the outstanding share, is its initial cost updated in line with the most recently published Consumer Price Index to the time of purchase. Accordingly, the scheme is structured on the basis that, on redemption, the price of the outstanding share is not determined on the basis of a percentage of current market value, but is, rather, a function primarily of its initial capital cost.