Written answers
Tuesday, 29 June 2010
Department of Environment, Heritage and Local Government
Local Authority Housing
10:00 am
Terence Flanagan (Dublin North East, Fine Gael)
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Question 493: To ask the Minister for the Environment, Heritage and Local Government the number of repossessions initiated by local authorities in 2008, 2009 and to date in 2010; the number of repossessions completed by local authorities from 2008, 2009 and to date in 2010; his policy and that of local authorities for local government issued mortgages with very high interest rates from the 1980s; the general policy of local authorities for repossessions in the event of difficulty meeting mortgage repayments; and if he will make a statement on the matter. [27844/10]
Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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My Department is currently gathering repossession and arrears information from all local authorities in relation to quarter 1 2010. Once this information has been collected and collated it will be included in the quarterly statistics published by my Department.
A total of 66 repossessions across all local authorities have been carried out in the five year period 2005-2009. This includes 7 voluntary repossessions. The tabular statement below provides a breakdown of repossessions by each local authority.
Provisions regarding lending by local authorities for the purposes of house purchase are set out in section 11 of the Housing (Miscellaneous Provisions) Act 1992. Where a loan stands in default, section 11(10) and more recently section 34 of the Housing (Miscellaneous Provisions) Act 2009 provide that a local authority may make such monetary arrangements with a borrower as the authority considers equitable to take account of the particular circumstances of the borrower. Local authorities can and do exercise the powers available to them under the Act and, in all arrears cases, they to engage proactively and constructively with a distressed borrower with the aim of enabling a household remain in their home. Repossession, where it does occur, is always a last resort.
To support consistency of approach and ensure best practice across all local authority areas, my Department recently circulated guidance, based on the Regulator's Code of Conduct, to ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household, while also protecting the position of the local authority concerned.
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 Protection.
Repossessions during the period 2005 - 2009 | ||
Council Name | Repossessions | Voluntary Repossessions |
Carlow County Council | 1 | |
Cavan County Council | 2 | |
Clare County Council | 2 | |
Cork County Council | 3 | |
Donegal County Council | 0 | |
Fingal County Council | 0 | |
South Dublin County Council | 2 | 1 |
Dún Laoghaire-Rathdown County Council | 0 | |
Galway County Council | 1 | 1 |
Kerry County Council | 0 | |
Kildare County Council | 0 | |
Kilkenny County Council | 4 | |
Laois County Council | 9 | |
Leitrim County Council | 0 | |
Limerick County Council | 0 | 2 |
Longford County Council | 2 | 2 |
Louth County Council | 1 | |
Mayo County Council | 0 | |
Meath County Council | 2 | |
Monaghan County Council | 4 | |
Offaly County Council | 3 | |
Roscommon County Council | 0 | |
Sligo County Council | 0 | |
North Tipperary County Council | 0 | 1 |
South Tipperary County Council | 3 | |
Waterford County Council | 0 | |
Westmeath County Council | 0 | |
Wexford County Council | 2 | |
Wicklow County Council | 0 | |
Dublin City Council | 7 | |
Cork City Council | 3 | |
Galway City Council | 0 | |
Limerick City Council | 0 | |
Waterford City Council | 6 | |
Clonmel Borough Council | 0 | |
Sligo Borough Council | 2 | |
Drogheda Borough Council | 0 | |
Wexford Borough Council | 0 | |
Bray Town Council | 0 | |
Athlone Town Council | 0 | |
TOTAL | 59 | 7 |
Maureen O'Sullivan (Dublin Central, Independent)
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Question 494: To ask the Minister for the Environment, Heritage and Local Government in the event of an applicant being successful in getting approval for a local authority loan for a house purchase, and they are not first time buyers, is there a requirement to pay stamp duty when the house being purchased has been previously occupied; if so, has consideration been given to exempting such applicants; and if he will make a statement on the matter. [27845/10]
Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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One of the conditions applying to the availability of local authority mortgages is that the applicant be a first time buyer. Provisions regarding the application of stamp duty and the definition of a first time buyer for the purposes of stamp duty are set out in the Stamp Duties Acts, which fall within the remit of the Minister for Finance.
Maureen O'Sullivan (Dublin Central, Independent)
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Question 495: To ask the Minister for the Environment, Heritage and Local Government the number of housing authorities, by authority, applying Circular HRT10 91 paragraph 16 which allows for a reduction in mortgage payments when there are changed income circumstances in the current year, rather than relying on the previous year's income; if in terms of the circular are being applied, what are the financial consequences for the local authority; and if he will make a statement on the matter. [27846/10]
Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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Paragraph 16 of the circular in question allows local authorities to apply the Shared Ownership rent subsidy, pro rata, in the current year in the event that a household suffers financial difficulties.
While my Department does not require local authorities to report all instances of the application of paragraph 16, the policy approach contained therein remains in place and has been extended now to allow for a reduction in mortgage payments through the payment of mortgage subsidy. In 2009 I wrote to all local authorities to advise that "Where a purchaser suffers a reduction in income during the year the appropriate subsidy calculated on the reduced income may be applied, pro rata, from a current date and the mortgage payment reduced accordingly".
In addition, where a loan stands in default, section 11(10) and more recently section 34 of the Housing (Miscellaneous Provisions) Act 2009 provide that a local authority may make such monetary arrangements with a borrower as they consider equitable to take account of the particular circumstances of the borrower. Local authorities can and do exercise the powers available to them under the Act and, in all arrears cases, try to engage proactively and constructively with a distressed borrower with the aim of enabling a household remain in their home.
To support consistency of approach and ensure best practice across all local authority areas, my Department recently circulated guidance, based on the Regulator's Code of Conduct, to ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household, while also protecting the position of the local authority concerned.
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