Written answers

Wednesday, 8 July 2015

Department of Environment, Community and Local Government

Shared Ownership Scheme

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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233. To ask the Minister for Environment, Community and Local Government if his Department has plans to address the difficulties that will be faced by shared ownership home owners when they reach the end of their term, and who may be left with large unpaid rental portions, even though the capital element has been cleared by the end of the loan period; if guidance will be provided to local authorities dealing with these situations; and if he will make a statement on the matter. [27947/15]

Photo of Paudie CoffeyPaudie Coffey (Waterford, Fine Gael)
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My Department, with the assistance of the Housing Agency, the Housing Finance Agency and the Local Authority Housing Loans Management Group, has been examining the operation of the Shared Ownership Scheme for existing borrowers. The issues arising with Shared Ownership Schemes require careful consideration and expert financial data analysis.

Arising from the findings of the review to date, with effect from the 1 July 2015 the Index Linked Shared Ownership Scheme (operational up to end-2002) has been revised with regard to the annual indexation of the rental equity balance and rental payments. These amendments will reduce the monthly cost for these borrowers and avoid existing rental equity balances increasing for the remaining term. My Department has issued directions tolocal authorities outlining the measures and I understand these changes are being applied to individual loan accounts.

In addition, the recent reduction of 0.20% in the Local Authority variable mortgage interest rate will also benefit many Share Ownership borrowers. This new rate cut will bring the variable mortgage interest rate charged to local authority borrowers down to 2.55% with effect from 1 July, saving borrowers around €17 per month on a typical mortgage of €100,000.

My Department, together with the other agencies, will continue to examine the operation of Shared Ownership loans and issues arising for some borrowers with a view to developing further measures that may assist with the affordability of these arrangements.

Local authority borrowers should contact their local authority if they are having difficulty making the repayments on their local authority mortgage or Shared Ownership arrangement. My Department’s latest guidelines for local authorities in dealing with mortgage arrears within the local authority sector ,Dealing with Mortgage Arrears – A Guide for LocalAuthorities (June 2014) , are available on my Department’s website at:www.environ.ie/en/Publications/DevelopmentandHousing/Housing/FileDownLoad,30943,en.pdf.

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