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Written Answers - Social and Affordable Housing

Tuesday, 7 February 2012

Dáil Éireann Debate
Vol. 754 No. 3

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 307.  Deputy Catherine Murphy Information on Catherine Murphy Zoom on Catherine Murphy  asked the Minister for the Environment, Community and Local Government Information on Philip Hogan Zoom on Philip Hogan  if he is considering altering the rules around the claw back for those who purchased houses in recent years under the terms of some social housing schemes; if so, the timeframe he has in mind; and if he will make a statement on the matter. [6274/12]

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O’Sullivan): Information on Jan O'Sullivan Zoom on Jan O'Sullivan I assume the question refers to clawback provisions which apply as conditions of the sale of houses to first time buyers under the various affordable housing schemes at a significant discount from market value in order to prevent short-term profit taking on the resale of the house to the detriment of the objectives of the schemes.

Where a person is selling and the claw-back amount payable would reduce the proceeds of resale below the initial price actually paid, the legislation provides for the amount of the clawback payable to be reduced to the extent necessary to avoid that outcome. As announced in the Government’s Housing Policy Statement published on 16 June 2011, all affordable housing schemes, including shared ownership, have been stood down in the context of a full review of Part V of the Planning and Development Act 2000. A request for tenders in respect of the review was published last week, and the review will commence as soon as possible.

 308.  Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty  asked the Minister for the Environment, Community and Local Government with respect to Information on Philip Hogan Zoom on Philip Hogan  the pilot mortgage to rent scheme currently under way with an organisation (details supplied), if he will confirm the number of units involved in this scheme; the participating bank in the scheme; the details of the funding arrangements between him and [461]the organisation; the total cost to the Exchequer arising from this pilot; if the funding for this pilot and its future expansion will come from the existing capital allocation for social housing as outlined in budget 2012 or from additional resources to be made available specifically to address the mortgage crisis; if he has an estimate of the expenditure on this scheme if and when it is rolled out beyond the initial pilot; the terms agreed between the bank and original mortgage holder on that portion of the original mortgage not covered by the purchase agreement between the bank and the organisation; and if he will make a statement on the matter. [6282/12]

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O’Sullivan): Information on Jan O'Sullivan Zoom on Jan O'Sullivan As part of the implementation of the recommendations in the Keane Report my Department is developing a mortgage to rent scheme on a pilot basis. This work has been assisted by Clúid Housing Association, a number of local authorities, the Housing and Sustainable Communities Agency, AIB, and more recently, New Beginning and another lender. The Keane reported recommended 2 such schemes or models on which a mortgage to rent option might operate. The same categories of household would be targeted under each scheme. These are households that:

have had their mortgage position deemed unsustainable under a Mortgage Arrears Resolution Process (as provided for under the Central Bank’s Code of Conduct on Mortgage Arrears);

agree to the voluntary repossession of their home;

do not have significant positive equity; and

are eligible for social housing.

In addition, the house must also be appropriate to household need. In other words, the household are not significantly over-accommodated (e.g. a couple residing in a home that is too large for their needs) or under-accommodated/overcrowded. Households availing of the scheme will become social housing tenants, paying a differential rent calculated on the basis of household income. The treatment of any mortgage shortfall or residual debt will be a matter for bilateral resolution between the borrower and lender. The essential difference between the 2 options relates to ownership of the property after the voluntary repossession has taken place.

Under the first model, after voluntary repossession has taken place the property would be purchased by an approved housing body at current market value. The household would become a social housing tenant — they would no longer be homeowners. The purchase of the property would be part loan financed, using loan finance generally obtained from the initial mortgage provider, and the Exchequer using funds available under the 2012 allocation for the Capital Advance Leasing Facility. My Department is also consulting with the Central Bank to ensure that the process through which households might be offered the option to participate in the scheme complies fully with all existing consumer protection and other regulatory requirements.

Under the second model, the lender would become the long term owner of the property after voluntary repossession had taken place. The household would become a social housing tenant of the relevant local authority and the local authority would, in turn, lease the property from the financial institution for the period of the lease. The household would enjoy the same benefits as any household already accommodated under the social housing leasing initiative in terms of security of tenure, differential rents, eligibility, etc.

It is anticipated that the first transactions under the first model will take place very soon. Ultimately, the schemes will be rolled out nationally using the criteria set out above and it is [462]hoped that all lenders will agree to participate. I have not set definitive limits on the numbers of cases that will be addressed in the pilot phase.


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