Martin Heydon (Kildare South, Fine Gael)
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251. To ask the Minister for Environment, Community and Local Government the status of the recent changes to the shared ownership scheme to address previous issues around affordability and rent increases and how participants will be informed of such changes; and if he will make a statement on the matter. [15660/16]

Simon Coveney (Cork South Central, Fine Gael)
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My Department, together with the Housing Agency, the Housing Finance Agency and local authorities, has considered the affordability issues facing some borrowers who purchased properties under the Shared Ownership (SO) schemes and devised a more affordable long-term path towards full home ownership. A range of measures have already been taken to reduce the monthly repayments of these borrowers.

The Index Linked Shared Ownership Scheme which operated from 1999 until 2002 has been revised with regard to the annual indexation of the rental equity balance and rental payments. The amendments, which came into effect on 1 July 2015, reduce the monthly cost for these borrowers and avoid existing rental equity balances increasing for the remaining term. My Department has issued directions to local authorities outlining the measures and I understand that these changes are being applied to individual loan accounts.

In addition, the Local Authority variable mortgage interest rate was cut by 0.20% and this has helped many Share Ownership borrowers. The rate cut brought the variable mortgage interest rate charged to local authority borrowers down to 2.55% with effect from 1 July 2015, saving borrowers around €17 per month on a typical mortgage of €100,000. A further rate cut of 0.25% will take effect from 1 July 2016, saving borrowers around € 21 per month on a typical mortgage of €100,000. The variable mortgage interest rate charged to local authority borrowers will then stand at 2. 30 %.

An innovative Shared Ownership Restructuring Option has been available to Shared Ownership borrowers from 1 April 2016. This new restructuring option involves rolling-up all outstanding debt under a SO arrangement into a single annuity loan – i.e. the new restructured loan principal will comprise any outstanding annuity loan balance; rental equity balance, plus any arrears – with an all-sums-owing mortgage charge applying to the property. The term of the annuity loan will be determined by the amount of the monthly repayment deemed to be affordable and sustainable for each SO borrower. This restructuring option allows the borrower to have a regularised, restructured repayment solution which is more easily understood. The restructuring option can lead to full homeownership for the borrower and as such allows for up or down sizing to suit household needs. This arrangement may be of particular benefit to those SO borrowers who are nearing the end of their annuity term but who have not made sufficient provision for the repayment of their Rental Equity balance. The feasibility of this new option for each SO borrower will be determined by their local authority, and may not be appropriate in all cases. Local authorities are currently contacting SO borrowers for whom the restructuring option is deemed appropriate. In some instances, continuing with the current SO arrangement may be the best option for both the SO borrower and the local authority, or in other cases where the outstanding debt may not be sustainable for the borrower in the long-term, the Local Authority Mortgage to Rent (LAMTR) option might ultimately be the appropriate solution.

Local authority borrowers are encouraged to engage with their local authority at the earliest opportunity if they are having difficulty making the repayments on their Shared Ownership arrangement. Information in relation to local authority mortgage arrears, the local authority mortgage arrears resolution process (MARP) and the help available to borrowers is avail able on my Department’s website at the following link:

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