Bernard Durkan (Kildare North, Fine Gael)
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Question 137: To ask the Minister for the Environment, Community and Local Government if local authorities might be encouraged to offer extra periods within which to pay rent or mortgages for householders who may have fallen into arrears arising from the current economic downturn but whose eviction will not benefit either the householder or the local authority; and if he will make a statement on the matter. [30682/11]

Willie Penrose (Longford-Westmeath, Labour)
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Local authorities have long led the way in dealing pro-actively and sympathetically with mortgage arrears. They can and do exercise the powers available to them and endeavour, in all arrears cases, to engage proactively and constructively with a distressed borrower with the aim of enabling a household remain in their home. The available data strongly bears this out and suggests that repossession, where it does occur, is always a last resort.

Local authority borrowers have received considerable protection from the worst effects of the downturn in terms of their borrowing costs. The effective rate for borrowers has come down by 2% since end November 2008 and now stands at just 3.25%. These rates represent exceptional value by comparison to rates charged by commercial lenders; as of now, the local authority rate is more than 1% lower than the average market variable rate. 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.

In addition, and to support consistency of approach and ensure best practice across all local authority areas, my Department issued guidance last year, based on the Regulator's Code of Conduct on Mortgage Arrears. Also, to reflect the content of the Central Bank's revised Code of Conduct – which replaced the previous code from 1 January 2011 and was informed by the deliberations of the Expert Group on Mortgage Arrears and Personal Debt – my Department is currently preparing updated guidance to local authorities in consultation with the City and County Managers Association.

The single most important advice for any borrower facing difficulties in meeting repayments – whether their mortgage is with a local authority or private institution – is to engage early, proactively and constructively with their lender to seek to achieve an agreed solution.