Michael Noonan says there will be buy-to-let repossessions
Some people ‘just tricking around’ with repayment schedules
Minister for Finance Michael Noonan believes there will be an increase in the number of repossessions of buy-to-let properties. Photograph: David Sleator/The Irish Times
“I can envisage repossessions in the buy-to-let sector,” he said following the new Government plan to tackle the mortgage arrears crisis.
He also said some people were “just tricking around” with repayment schedules waiting for some kind of discount or write-down. “So the people who can pay but aren’t paying; there isn’t going to be any kind of across-the-board write-down.”
Mr Noonan was responding as he was challenged by the Opposition about the Central Bank’s warning that the number of repossessions was set to “rise significantly”.
Fianna Fáil leader Micheál Martin said the comments by the Central Bank’s deputy governor, Matthew Elderfield, were made because the Government was essentially putting the banks in the driving seat to deal with distressed mortgages .
Both the Central Bank and the general secretary of the Department of Finance were saying repossessions would rise significantly but the Government was “telling us not to listen to any of that”.
The Cork South Central TD believed some 20,000 people were “clearly in the firing line for repossession”, and there had been 950 repossessions and 38 forced repossessions in the last quarter.
Mr Noonan, insisting there would be independent oversight of the new arrangements by the Central Bank, said there had been a gap in the law since 2009 and “there have been no compulsory repossessions”.
There had not been compulsory repossession because until now the law did not allow that. There was a sequence of interventions from interest- only arrangements to repossessions, Mr Noonan said.
If there was no provision in law for repossession there would be no mortgage market, he said. “Providing for it in law is different from saying this must be a primary option. It will be a residual option in extremis for the family home.”
He said buy-to-let mortgages were in a different category to family homes.
“They are commercial investments, people are collecting rents, and if they are not servicing their mortgages the best thing for the economy is that they are sold.”
Mr Noonan told Sinn Féin finance spokesman Pearse Doherty “we all know from clinic work that some people are just tricking around with repayment schedules, extending maturities or even splitting mortgages”.
He said there was a section of people where write-down would be the only solution. “However, it will have to be done on a case-by-case basis.”
There were also people “who would like if we announced some kind of discount. That is not going to happen.”
Mr Doherty questioned why the Minister did not take the veto from the banks and establish an independent agency to compel the banks to accept solutions they had rejected to date. Mr Noonan insisted the director of the personal insolvency agency was independent and the Central Bank as the “driver” was also independent.