Catherine Murphy (Kildare North, Social Democrats)
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460. To ask the Minister for Housing, Planning, Community and Local Government the changes being considered in respect of shared ownership loans; the timeframe involved; if there is retrospective issues being considered; and if he will make a statement on the matter. [41027/16]

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 variable mortgage interest rate charged to local authority borrowers was reduced to 2.3% with effect from 1 July 201 6, which has helped many Shared Ownership borrowers.

An innovative Shared Ownership Restructuring Option has been available to Shared Ownership borrowers since 1 April 2016. This new restructuring option involves rolling-up all outstanding debt 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.

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. For example, 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. Detailed guidance, training and direction have been provided by my Department and the Housing Agency to local authorities regarding the implementation of the measure and my Department is continuing to monitor the impact of the new measure for borrowers.

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 also available on my Department's website at the following link: