Assembly approves new rates payment choice for owner occupier pensioners

Finance Minister Sammy Wilson has confirmed that a new rates deferment option will be made available for owner occupier pensioners.

The Minister was speaking following a debate in which Members of the Assembly approved the legislation to give effect to the scheme from 1 April 2010.

Welcoming the move, the Minister said: “This represents a new payment choice for owner occupier pensioners in Northern Ireland who may not have the means to pay high rate bills and are ineligible for rate relief or rate rebate. The scheme will be attractive to those pensioners who do not have access to other means of support, and are struggling to meet the mounting household bills they face living on in the family home in their retirement years.

“Deferment is not a new relief or allowance and importantly does not represent free money. It will however allow pensioners to roll up their rate bills at a concessionary rate of interest, generally until their death or the sale of the property”.

Previous consultation was broadly supportive of the introduction of the rates deferment scheme, with a number viewing it as a further payment option for pensioners. The Finance and Personnel Committee also indicated that even if only a small number of pensioners were to benefit, the choice of deferment should be made available.

The Minister continued: “Deferment will not be an easy choice for pensioners. Given the long term commitment involved it is important that pensioners are made fully aware of all the facts beforehand to allow them to make informed choices. There will be a range of issues for them to consider including the level of mounting debt, the impact on property equity and, looking further into the future, the value of the estate that they may wish to pass on. Nevertheless, I believe that this presents another payment option.”

In terms of the impact on local government finances the Minister explained: "Councils will be paid the district rates that are due in the normal way and will not bear the direct costs, in terms of loss of revenue through ratepayer deferment. The only impact felt by councils will be in relation to a relatively small additional amount of their share of the cost of collection and also if any the secured debt ends up having to be written off in the future – both of which are in accordance with current procedures.”

The Minister indicated that, after several years of operation, a thorough evaluation of the scheme would be conducted, to examine how many people it is helping and whether it represents value for money. This would be undertaken with an open mind and the views of both the Finance and Personnel Committee and key stakeholders would be taken on board.

Applicants will, from 1 April, be provided with an illustration of what their deferred debt could be. A factsheet is available at the NIDirect website and a guidance booklet will also be available, in due course, to those that wish to enter into deferment.

Notes to editors:

1. The rates deferment scheme will come into effect on 1 April 2010. It is a payment choice that may be available to pensioners (aged 60 or over), and their partner, who own and occupy their own home. They may be able to defer rates until their death, the property is sold/transferred or any of the terms of the agreement with the Department are breached. Depending on a person’s age this could be for 30 years or more.

2. They will have to own and occupy the property as their sole or main residence and have sufficient equity in it (at least 40% at the outset and it anticipated that over the term of the deferment agreement that at least 30% equity will be maintained).

3. Deferment will be at the discretion of the Department. Generally it will not be permitted:

• for those age under 60, unless they are jointly deferring as the partner of a person aged 60 or over and also own and occupy the same property as their sole or main residence;
• if any of the owners are unable to postpone rates;
• if the equity in the property is less than 40%;
• if there is a variable charge or mortgage on the property; or
• if the property is rented, a second home or empty (limited exceptions for residential, nursing home and hospital care).

4. Those considering entering into deferment will be provided with an illustration of their deferred debt, which will be based on a range of assumptions relating to property value and interest rates. Interest will accrue on the deferred rates.

5. Media enquiries to DFP Communications Office on 028 9052 7374 or 028 9052 7375. Out of office hours please contact the Duty Press Officer via pager number 076 9971 5440 and your call will be returned.