Local authorities owed €247m in mortgages

Local authorities around the country are owed €247m in arrears from tenants who took out loans to buy former council houses.

Figures published by the Department of the Environment show almost one third of local authority housing mortgages are in arrears by more than 90 days.

It has also emerged that the number of both forced and voluntary house repossessions by local councils has continued to grow. Overall there are 20,277 mortgages on the loan books of local authorities — a decrease of 8.1% on last year.

The total outstanding value of all such loans including arrears is €1.2bn which represents a 3% decrease on 2012 figures.

However, the problem of arrears with local authority housing loans is worsening. A total of €247m of the outstanding loans constitutes arrears, up 16% on last year.

There are 6,275 local authority housing loans in arrears for more than 90 days, representing 31% of all loans. The figure was just 24% in 2010. The vast majority of loans are in arrears in excess of 180 days.

The issue is most acute in Kildare, Waterford City, and Offaly, where more than half of all local authority housing loans are in arrears of over 90 days. The national average is 31%.

Other areas with high levels of distressed tenants are Clare, Laois, Longford, Mayo, and Cavan.

Fewer than 20% of council housing loans in Fingal, South Dublin, and Kerry are in arrears. The figure for the two Cork councils is 28%.

However, a spokesperson for the department said the overall figures appeared to be stabilising.

Official figures show there have been 143 evictions of tenants from council homes between 2010 and 2012 with last year accounting for more than half the total. In addition, there have been 186 voluntary surrenders of council homes by tenants over the same period with 64 last year.

Local authorities with a high number of evictions including Dublin City (31 in 2012), Kildare (11), Galway City (10), and South Dublin (7).

Roscommon County Council had the most voluntary repossessions with 19, followed by Laois (8) and Longford (7).

Separate figures also show that half of over 4,400 shared ownership housing loans made by local authorities are also in arrears.

Housing Minister Jan O’Sullivan said local authorities have powers under the Housing (Miscellaneous Provisions) Act 2009 to deal flexibly with distressed borrowers and they had demonstrated sensitivity over the years on the issue.

The department has issued guidelines to local authorities based upon the Central Bank’s code of conduct which protects the position of the councils while also continuing the tradition of handling arrears in a sympathetic manner.

The introduction of a mortgage arrears resolution process offers borrowers in difficulty a range of alternative payment options, said Ms O’Sullivan. She claimed the introduction of such guidelines had standardised the approach of the various local authorities to the issue. However, she said any default on a housing loan exposed a local authority to a drain on its finances.