Written answers

Tuesday, 7 May 2013

Department of Environment, Community and Local Government

Local Authority Housing Provision

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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271. To ask the Minister for Environment, Community and Local Government the criteria for rent increases by local authorities in the shared ownership scheme; and if he will make a statement on the matter. [21339/13]

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Under the shared ownership scheme a house is acquired by a local authority and leased to a shared owner, who purchases at least 40% of the value of the house and rents the remaining equity from the local authority. The local authority finances the transaction by borrowing from the Housing Finance Agency. The shared owner must purchase full ownership within 25 years. For transactions commenced on or after 1 January 2003, the annual rent is calculated at 4.3% of the value of the local authority equity and the rent is increased by a fixed 4.5% on 1 July each year. The rent is used to repay the cost of the local authority equity to the Housing Finance Agency and, depending on the level of mortgage interest rates obtaining, may also increase or decrease the capital outstanding on the local authority share at the end of each year. These arrangements represent a significant improvement on the previous terms of the scheme for the shared owner.

The rental formula applied under the scheme is not comparable to rents in the private rented sector, which are determined by the operation of the market. Therefore, movements in private sector rent levels would have no relevant bearing on the calculation of the rental element under shared ownership.

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.

The Government’s 2011 housing policy statement 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 almost concluded and I have also asked the Housing and Sustainable Communities Agency to provide me with a standalone analysis of the shared ownership scheme, including identification of the main difficulties and recommendations for mitigating measures.

Any future changes to legislation governing affordable housing schemes, including the shared ownership scheme, will be made in the context of both pieces of work and I expect to make announcements in this regard in the near future.

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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272. To ask the Minister for Environment, Community and Local Government the options available to a person in the shared ownership scheme when making a will in relation to the property; the options available to the benefactors of the will if the local authority holds equity in the house at the time of the death of the person; if the local authority can insist in the sale of the property or can a relative of the deceased person live in the property by meeting the terms of the original agreement; and if he will make a statement on the matter. [21340/13]

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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Under the shared ownership scheme a house is acquired by a local authority and leased to a shared owner, who purchases at least 40% of the value of the house and rents the remaining equity from the local authority. The local authority finances the transaction by borrowing from the Housing Finance Agency. The shared owner must purchase full ownership within 25 years.

The making of a will and subsequent issues pertaining thereto are matters for an individual’s legal advisors and I have no function in this regard.

The Government’s 2011 housing policy statement 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 almost concluded and I have also asked the Housing and Sustainable Communities Agency to provide me with a standalone analysis of the shared ownership scheme, including identification of the main difficulties and recommendations for mitigating measures.

Any future changes to legislation governing affordable housing schemes, including the shared ownership scheme, will be made in the context of both pieces of work and I expect to make announcements in this regard in the near future.

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