Thursday, 23 February 2012
Dáil Éireann Debate
168. Deputy Denis Naughten asked the Minister for the Environment, Community and Local Government if he will review the criteria covering the issuing of local authority mortgages and shared ownership schemes; and if he will make a statement on the matter. [10442/12]
170. Deputy Denis Naughten asked the Minister for the Environment, Community and Local Government if he will review the criteria covering the issuing of local authority mortgages in view of the fact that they are now as inaccessible as a bank or building society mortgage; and if he will make a statement on the matter. [10444/12]
171. Deputy Michael McCarthy asked the Minister for the Environment, Community and Local Government if there is any State supported scheme which enables a person to purchase a home that they are renting; the criteria to qualify for any such programme; and if he will make a statement on the matter. [10446/12]
In advancing loans for house purchase by lower income borrowers it is of critical importance that local authorities make such funding available on the basis of sound lending criteria. My Department and individual local authorities have a responsibility to ensure that the borrower can sustain the loan over the full term. Of equal importance, in view of recent developments in the domestic property market, is the imperative for a local authority to ensure that prudence and pragmatism are applied to all aspects of the management of its housing loans book. In a time of limited resources, deploying those resources in a focused and effective manner ensures the management of its loans portfolio can be achieved as efficiently as possible.
The current credit policy has been in effect since 2009. It was deemed appropriate at that time to update the elements associated with local authority lending and to have a homogenous regime in place that ensured best practice was followed across the sector. All applicants are now assessed according to the same criteria, and their applications subjected to the same independent scrutiny. It is desirable to make adequate lending provision available to local authority tenants who wish to avail of the tenant purchase schemes, while also adhering to prudent lending practices, and the current guidelines achieve equitable consideration of all applications.
While it is the case that the rate of refusal of applications has increased it is also clear that the loans issued since the introduction of the revised credit policy are more likely to be fully performing. I am happy that the current mortgage loan model is fair and adequately meets the needs of prospective borrowers and facilitates participation in housing acquisition initiatives such as the tenant purchase schemes.
These schemes include the 1995 tenant purchase scheme for existing local authority houses which offers discounts up to 30% plus €3,809 off the market value, depending on length of tenancy; the incremental purchase scheme for certain new local authority houses, and the recently-introduced scheme for the tenant purchase of apartments in designated local authority complexes offer discounts of 40% to 60% off the all-in cost or market value respectively, depending on income. It is the intention to replace the 1995 tenant purchase scheme with a new scheme based on the incremental purchase model when the necessary amending legislation is in place.
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