Can bank delay giving mortgage interest relief?

Q&A:I bought my house in 2008 as a first-time buyer. I was pleased therefore about the announcement in the last Budget of the increase in mortgage interest relief for first-time buyers who bought in 2008 to 30 per cent.

Initially I was told that the increase would be delayed due to issues in Revenue systems. However, I have read that has been sorted out now. Yet my mortgage provider, First Active (Ulster Bank), has yet to pass on the increased relief.

When I called them, they said they legally have until the end of the year to apply the increase and couldn’t give me a date between now and December 31st when it would be applied.

I appreciate that, when it does happen, it will be back-dated but I could do with the money sooner rather than later. Are they, as they told me, legally entitled to wait and why the hold up? It seems unfair that they get to hang onto my money like this.

Ms F.O’C., Dublin

You would imagine that, of all the banks, Ulster Bank would be the most assiduous this year in a focus on customer service after the chaos of its computer “glitch”. It is somewhat depressing to hear the lender adopting such a high-handed approach to customers with whom they presumably expect to nurture a long-standing relationship.

It certainly seems short-sighted and, from your point of view, unfair.

The improved mortgage interest relief for first-time buyers was introduced by the Government precisely because so many people in that category were feeling the pinch due to the high prices paid for their homes in the bubble and the generally reduced economic circumstances prevalent now.

While, as you note, any increased relief will be back-dated when Ulster Bank finally gets its act together, that is not the point,

The Minister was hardly introducing higher mortgage relief because he felt the people affected were so comfortably off that they could leave it lying around untapped for the best part of a year; if that were so, it would have been hard to argue for its introduction in the first place.

The issue is that measures passed in the Finance Act should be implemented as soon as possible. I don’t recall any reference at the time by the Minister to banks being able to string their customers along for the full year simply to preserve their battered balance sheets.

There is generally time allowed to implement such changes, largely because they entail programming changes by lenders which cannot be done instantly, and that is perfectly fair. You are also correct, if memory serves, that there was some initial issue with the Revenue’s own computer systems requiring adjustment to allow for the measure.

However, taking the full calendar year to do so – or assuming that right for themselves – is to my mind an abuse, even if that law is so loosely worded that it may allow it.