Bernard Durkan (Kildare North, Fine Gael)
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Question 37: To ask the Minister for the Environment, Community and Local Government the extent to which he continues to receive information from the various local authorities in respect of arrears of shared ownership or annuity loans; if, as a result he will initiate legislation to address the on-going situation whereby borrowers are expected to meet repayments in respect of the rental equity which are greater than that applicable to the mortgage equity; and if he will make a statement on the matter. [31188/12]

Jan O'Sullivan (Limerick City, Labour)
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My Department recently commenced collating data in respect of local authority mortgage arrears. Data to end December 2011 indicate that 6,363 of all local authority mortgages (including those drawn down for the purposes of purchasing houses under the various affordable housing schemes, including shared ownership and tenant purchase) are in arrears of more than 90 days. This represents 28% of the total number of loans.

Under the Shared Ownership scheme the rent charged on the local authority's equity in a shared ownership transaction is to cover the funding costs to the Housing Finance Agency which are based on borrowings at the prevailing interest rates. Any difference between the rent and prevailing interest rate is reflected in the capital outstanding on the property, i.e. if the rent charged in any period is greater than the prevailing mortgage interest due on the local authority's share the purchase price of the outstanding equity will be reduced accordingly.

Local authority mortgage holders – including those who purchased under shared ownership – also benefit from extremely keenly priced interest rates which generally run at around 0.5% lower than the best rates available in the market and currently stand at around 1.5% below average variable rates available in the market. This is a very substantial differential. To take account of the current housing market conditions, the Government's housing policy statement, published in June 2011, announced the standing down of all affordable housing schemes, including the shared ownership scheme, in the context of a full review of Part V of the Planning and Development Act 2000. That review is now underway and it is expected to conclude later in the year. Any future changes to legislation governing affordable housing schemes, including shared ownership, will be informed by that review. End of Take