Dublin City Council owed almost €15.5 million in mortgage arrears

Unpaid debts on residential mortgages taken out with Dublin City Council have hit almost €15.5 million, the highest home loan arrears ever owed to the local authority.

Almost half of all homeowners who have mortgages with the council are in arrears, and half of those are behind in their payments for more than 12 months. The council has over the last six years repossessed 109 properties, but plans to up this rate to repossess 25 homes in 2015.

The council has 2,629 mortgage holders on its books, who owe more than €320 million in borrowings. In 2007 more than 92 per cent of its mortgagees were keeping up to date with their payments. Provisional figures for 2014 show that by the end of the year that rate dropped to less than 63 per cent.

In 2007, total arrears were just over €3 million; by 2010 they had more than doubled to more than €7 million. Last year saw that figure more than double again with arrears now close to hitting the €15.5 million mark.

Some 1,259 homeowners are in arrears on their city council mortgages. The vast bulk of the money – €13.2 million – is owed by 610 mortgage holders who have been in debt to the council for more than a year.

Socially deprived

The level of mortgage debt is “only heading in one direction”, said Una Joyce, a senior executive officer with the council. “The impact of the economic downturn has been particularly pronounced in low income and socially deprived areas, and they would be the majority of people who we would have given loans to in the past, and continue to give loans to today.”

The council's head of housing Dick Brady has previously questioned whether the council should be in the "mortgage business".

However, all local authorities are obliged by Government policy to provide mortgages and all council mortgage holders are people who have already been refused a mortgage by two banks.

The council has determined that 355 of the home loans on its books are “unsustainable mortgages”. These are mortgages the council believes it will not be able to redeem during the lifetime of the loan. A substantial proportion of these, 221, could be suitable for the Mortgage to Rent scheme, which allows homeowners who have fallen behind on their mortgage payments to remain in their homes as tenants.

Potential candidates

To date 10 city council mortgage debtors have transferred to the mortgage to rent scheme and are now social housing tenants of the council. A further 97 households have been identified as potential candidates for the scheme.

The council will only take people on for the the scheme if it believes they are likely to pay their rent, Ms Joyce explained. “These are borrowers who have proven that they can make a payment,” she said. “We actively engage with anyone who is willing to engage with us. Unfortunately, there are a number of borrowers who have failed to engage with us and in cases like these we have no choice but to repossess the properties.”

Since 2009, 109 homes have been repossessed and a further 25 will be repossessed by the council this year. “Out of that 134, 47 have made no payments and they have made no attempt to engage despite several attempts on our behalf to engage with them,” Ms Joyce said.

“We deal with all arrears cases sympathetically and pragmatically, while balancing this with the need to safeguard the financial position of all local authorities.”

All repossessed properties are used for social housing, she said.