Written answers

Tuesday, 24 May 2016

Department of Environment, Community and Local Government

Local Authority Housing

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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210. To ask the Minister for Environment, Community and Local Government if his Department has assessed the effect on subsequent local authority housing output of the disposal by the State of the proceeds of certain mortgage loans associated with the local loans fund, which was established in 1935, to provide capital funding for local authority housing under the Securitisation (Proceeds of Certain Mortgages) Act, 1995; if he will enter into a comparable arrangement in order to increase local authority supply; the role of the Local Loans Fund Act 1935 in housing provision; and if he will make a statement on the matter. [11194/16]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The Local Loans Fund Act 1935 provides for the maintenance, financing and management of a fund to be a source from which loans from public moneys to local authorities or for local purposes and other similar loans can be made. Section 3 of this Act provides that the fund established shall be under the control of the Minister for Finance. As such, my Department has not carried out an assessment of this Act.

Work has been undertaken within my Department to consider the potential of a securitisation arrangement comparable to that undertaken previously, in accordance with the Securitisation (Proceeds of Certain Mortgages) Act 1995, in respect of certain local authority loans.

In 1995 and 1996 my predecessor as Minister directed, under section 14 of the Housing (Miscellaneous Provisions) Act 1992, that certain housing authorities should assign debt in respect of certain of their housing loans, in accordance with section 3 of the Securitisation (Proceeds of Certain Mortgages) Act 1995.

Under section 14(4) of the Housing (Miscellaneous) Provisions Act 1992, an assignment which is the subject of a direction by Minister is an executive function.

A similar model for the securitisation of local authority mortgage loans as a means of raising additional funds for the provision of social housing was examined by my Department in 2015, with input from the Housing Finance Agency and local authority sector. Under such an arrangement the income stream from existing loans would be sold as an asset and the proceeds used for the development of social housing.

Following a detailed examination of the matter, it was considered that there were significant practical and policy challenges in proceeding with this as a model. The position of mortgage holders in respect of these loans was identified as a policy concern. The matter of whether any funding received could be used for the purpose intended was a further factor examined. It was recommended that securitisation not be pursued as an option at the present time, as there was considered to be an unacceptable imbalance between risk and reward.

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