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Threshold wants to keep householders in their homes Turtlemom via Flickr

'Shared equity' proposal might keep struggling householders in their homes

Housing association Threshold puts forward plan that would see the State buy properties on point of repossession and renting back to former owners.

A HOUSING ASSOCIATION has proposed an interesting measure which it would like the next government to adopt to help those struggling to pay their mortgages.

Threshold says that a “mortgage to shared equity” scheme should be introduced. Under the scheme, the State would buy homes at a “significant discount” from financial institutions when a houseowner is in danger of facing repossession. The State would then rent the dwelling back to the former owner, who could later re-purchase their home “if their financial circumstances improved”.

Aideen Hayden, chairperson of Threshold, said that there are over 40,000 households in mortgage arrears and over 10 per cent of mortgage-holders are having major difficulties with repayments. She said:

Firstly, the cost of maintaining households in owner-occupation is likely to be lower than that of re-housing people or maintaining them for years on the rent supplement scheme.

Secondly, the Government has spent vast sums bailing out the banks, so it’s only fair that individuals who are struggling should receive some help too. After all, failure in the regulation of financial institutions and the availability of flawed finnancial products – such as sub-prime mortgages – contributed to the current crisis.

Hayden said that as the State is spending over €60m on the mortgage interest supplement scheme and over €500m on rent supplements, Threshold’s proposal makes economic as well as social sense.

The ‘mortgage to shared equity’ scheme would allow a householder facing repossession to stay in their home and “pay an affordable mortgage to the State” while retaining a reduced equity stake in the property. That stake could increase as and when  the householder could afford to pay more.

Threshold said it had submitted its proposal to all the political parties and hoped that whomever ended up in government would take it on board.

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