Only 88 benefited from mortgage-to-rent scheme

The Government is considering widening eligibility rules for its mortgage-to-rent scheme as part of a series of measures aimed at tackling the home repossessions crisis.

The scheme, launched three years ago, was aimed at assisting up to 3,500 mortgage holders who face losing their homes.

But only 88 householders have benefited from the scheme, according to new figures supplied to The Irish Times.

The initiative allows mortgage holders to surrender their homes to a not-for-profit housing association, which then rents it to the original owners.

Internal briefing documents show that almost 1,900 applications to take part in the scheme were rejected due to a range of factors.

They include lenders withdrawing an offer of the scheme, borrowers withdrawing from the process, and an over-concentration of social housing in certain areas.

The scheme targets low-income families whose mortgage situation is unsustainable and where there is little prospect of a significant change in their circumstances.

In order to qualify, householders must have been deemed by their lender as unable to pay their mortgage.

Market value

The property must have a current market value of less than €220,000 in the greater Dublin area and €180,000 in the rest of the country.

Against a backdrop of rising numbers of repossession cases in the courts, Government sources say a number of changes are being considered to the mortgage-to-rent rules, such as increasing the capital value of eligible homes.

Others measures under consideration to help tackle the wider issue include removing the banks’ veto from insolvency arrangements and a new independent assessment of “structured propositions” put forward by borrowers and lenders.

There have been calls from some quarters in Government to reduce bankruptcy from three years to one, but there is understood to be strong resistance to this from the Department of Finance and other quarters.

Arrears cases

Even with changes to the scheme, the mortgage-to-rent initiative is unlikely to be a solution for the vast majority of arrears cases.

Department of the Environment estimates are that up to 250 households may benefit from the mortgage-to-rent scheme under its existing rules.

Just under 170 cases are currently being examined by lenders and a remaining 566 are still being “actively progressed”, according to the department.

In addition, the department said there has been an increase in cases being put through the scheme this year since revised protocols were put in place to speed up the process.

These include having valuation and condition surveys carried out earlier in the process to give greater certainty to all parties involved. In addition, a single independent valuation is used for the purposes of agreeing the purchase price.

"The operation of the scheme is closely monitored on an ongoing basis by the department and the Housing Agency, who are in regular contact with approved housing bodies and financial institutions," a department spokesman said.

The purchase of properties is financed through a number of channels, including State funding – known as the capital advanced leasing facility – and not-for-profit housing associations’ own finances.