Denis Naughten (Roscommon-South Leitrim, Independent)
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To ask the Minister for Environment, Community and Local Government if he will review the criteria covering the issuing of local authority mortgages and shared ownership schemes; and if he will make a statement on the matter. [53805/12]

Jan O'Sullivan (Limerick City, Labour)
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Two types of house purchase loan are available from local authorities: standard annuity loans targeted at lower income first time buyers and those under the Home Choice Loan scheme which are available to qualifying middle income first time buyers affected by the “credit crunch”. The terms and conditions governing the operation, including eligibility terms, of annuity mortgages and the Home Choice Loan are set out under the Housing (Local Authority Loans) Regulations 2009-2012 and the Housing (Home Choice Loan) Regulations 2009 respectively. These are available on my Department’s website:

While there is no reference in the Regulations to a lower income limit threshold for mortgage applicants, the associated credit policy provides a procedure for calculating the maximum amount of mortgage repayments permissible as a percentage of the household income. Local authorities are advised to examine each application on its own merits in determining whether an applicant is eligible for a house purchase loan. It is the case that the rate of refusal of applications has increased since the credit policy was introduced. However, it is also clear that the loans issued under that credit policy are more likely to be fully performing. I consider that the current arrangements for mortgage lending are fair and adequately meet the needs of prospective home owners in a prudent manner.

In relation to the Shared Ownership Scheme, the terms provide that 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. 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 early next year. Any future changes to legislation governing affordable housing schemes, including shared ownership, will be informed by that review.