P J Sheehan (Cork South West, Fine Gael)
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Question 371: To ask the Minister for the Environment, Heritage and Local Government his views on the case of a person (details supplied) in Dublin 12; and if he will make a statement on the matter. [25663/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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The applicable interest rate paid by local authority borrowers on fixed rates is set by reference to prevailing fixed interest rates at the time of loan draw down. Loans in respect of which interest rates in excess of 10% apply were issued by local authorities prior to 1991 and reflect the long-term costs of the funds to the Housing Finance Agency (the Agency) prevailing at the time these loans were advanced. Rates were fixed for the life of the loan (generally 25 — 30 years).

Borrowers with these long term fixed rate local authority mortgages, which are no longer available, are permitted to redeem such loans without any interest rate penalty and refinance them in the private sector. This represents a significant concession, having regard to the redemption penalties (of up to six months interest or more) applied by commercial lending agencies in the event of early redemption of such mortgages. Early redemption without penalty means that the Agency — which operates on a self-financing basis — has had to bear the losses on such loans.

In 2001, the position regarding high fixed interest rates on local authority loans was reviewed in consultation with the Department of Finance. This review determined that a State subsidy to reduce such interest rates would not be appropriate, particularly given the cost already being borne by the State where the holders of such loans availed of the option to refinance in the private sector without penalty.

Assistance may, however, be provided to households experiencing difficulties in meeting their mortgage repayments under the Mortgage Interest Supplement scheme operated by the Department of Social and Family Affairs.

Chris Andrews (Dublin South East, Fianna Fail)
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Question 372: To ask the Minister for the Environment, Heritage and Local Government if, with regard to rental supplements for tenants of housing associations, housing cooperative, housing trusts and local authority housing, he will request that these bodies reduce rents in line with the reductions in the private sector; and if, in view of the fact that these bodies are publicly funded, he will contact all bodies, outlining the situation whereby rents in the private sector have fallen and requesting that they come into line and do the same. [25676/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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In the case of local authority housing, local authorities set rents for social housing tenants based on their Differential Rents Schemes. While it is a matter for each authority to determine an individual household's rent, the principle of the scheme is that a household is charged a rent based on a proportion of their income.

In the case of family-type accommodation provided by approved voluntary and co-operative housing bodies under my Department's Capital Loan and Subsidy Scheme (CLSS), tenants are drawn from the local authority housing waiting list and rents are largely based on the local authority Differential Rents Schemes. Under the CLSS, the application of the rent formula as set out in the scheme may be modified, at the discretion of the approved housing body, in particular respects where they consider this appropriate. Rent payable under the scheme to an approved housing body, by a tenant, is based on household income in the previous tax year. Where this would result in hardship arising from a fall in income due to loss of employment, disability etc, the rent may be adjusted accordingly.

In the case of accommodation provided under the Capital Assistance Scheme (CAS), which is aimed at persons with special housing needs such as elderly, the homeless or persons with a physical or intellectual disability, rents are charged at a reasonable rate having regard to tenants' income. In cases where an approved housing body contributes a minimum of 5% of the capital cost of a CAS funded project, the approved body may retain nomination rights, outside of the local authority waiting list, for up to 25% of the units. In these circumstances, the normal landlord/tenant arrangements, including in relation to rent, apply.

Given that the circumstances of individual tenants may change many times during the period of their tenancy, it is accepted that the rent payable by a tenant to either a local authority or an approved housing body should be capable of review in light of such changes. My Department will take appropriate opportunities, in the context of ongoing liaison and consultation with local authorities and the representative organisations for the voluntary and co-operative housing sector, to remind the bodies concerned in this regard.