Only 40 households have benefitted from Government mortgage deal

Just 40 households have benefitted from a Government mortgage-to-rent initiative launched two years ago, aimed at assisting up to 3,500 mortgage-holders who face losing their homes.

The scheme allows mortgage-holders to surrender their homes to a not-for-profit housing association, who in turn rent it to the original owners.

It was billed at its launch by the Government as a way of providing certainty and security for up to 500 households in mortgage distress over a seven-year period.

While up to 40 households have agreements completed and have become social housing tenants under the scheme, official figures show a further 460 cases have been advanced and are under negotiation.

The vast majority involved deals with so-called subprime lenders – such as Pepper and Start Mortgages – rather than the main banks or financial institutions.

Government concern

A spokesman for Minister for Housing Jan O’Sullivan said she was concerned over the number of transactions so far, given that her department budgeted for 350 this year.

“There are a number in the pipeline which we expect to come through over the coming months. But we’re concerned that this facility isn’t being taken up.”

Among the reasons cited for the poor figures include a lack of interest in the scheme by the main lending institutions, as well as bureaucratic hurdles delaying transactions, according to sources involved in the initiative. In addition, at any time both lenders and borrowers can exit the process, which can take about eight months to complete.

However, a new streamlined approach discussed by lenders and not-for-profit housing associations at a recent meeting organised by the Housing Agency may lead to an increase in transactions.

‘Extremely disappointing’

Housing association Clúid is hopeful more families in distress will stand to benefit.

"The performance up to now has been extremely disappointing," said Simon Brooke, director of policy at Clúid. "We've put a great deal of effort into making the scheme work. But the atmosphere at the meeting between stakeholders recently was very good and we hope it will lead quickly to increased output."

The mortgage-to-rent scheme is regarded as a measure of last resort aimed at low-income households unable to keep up with payments.

To qualify mortgage-holders must live in a property with a current market value of less than €220,000 in the Dublin area (or less than €180,000 in the rest of the country) and have a net household income of up to €35,000. In addition, mortgage-holders must be approved for the scheme by the lender and the home must be approved as suitable by a housing association.There is an option to buy back the home after five years if a tenant’s situation improves significantly.