Property services firm claims mortgage-to-rent company is breaching agreement

A company set up to allow the holders of distressed mortgages to become social housing tenants is refusing to honour a contract stipulating that a property services company would repair and provide other services for the houses, it has been claimed in the Commercial Court.

O’Dwyer Property Management, trading as O’Dwyer Real Estate Management, claims the Home For Life (HFL) company, which operates the government-licensed mortgage-to-rent scheme, is in breach of a service agreement between them because HFL now wants to have the work carried out “in house”.

HFL, headed by Paul Cunningham, buys the homes of distressed mortgage holders, arranges to upgrade the properties to make them compliant with housing and letting regulations, and then rents them to local authorities which then sublet them back to the previous owner so that they can remain in their homes.

HFL is licensed by the Minister for Housing to operate the mortgage-to-rent scheme. O’Dwyer says that in order to get the licence, Mr Cunningham enlisted O’Dwyer’s help to show that HFL would be able to provide the services required to run the mortgage-to-rent scheme.

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O’Dwyer has sued HFL seeking, among other things, declarations that it has breached the agreement and is obliged to provide funds so O’Dwyer can carry out the work it is required to do under the agreement. It also seeks judgment for €144,569 over unpaid fees and damages for breach of contract and misrepresentation.

The case was admitted on consent to the Commercial Court on Monday by Mr Justice Denis McDonald on the application of Kelley Smith SC, for O’Dwyer.

Michael Howard SC, for HFL, said his side did not accept O’Dwyer’s allegations and assertions but did not object to the admission of the case to the commercial list.

O’Dwyer’s founder and director, Siobhán O’Dwyer, said in a sworn statement that the proceedings arose because of HFL’s failure to pay for services and works or to comply with the exclusivity arrangements required by the service agreements.

Ms O’Dwyer said that HFL, in response to the O’Dwyer claims, has alleged “a series of unfound performance issues” with O’Dwyer, including that it was understaffed or unsuitably staffed, which is denied. She said HFL’s “overall objective appears to be to build an investment portfolio with a government-backed rental yield which can be sold on to a pension fund or other investment vehicle”. This was the reason it needed to have a licensed professional property expert, like O’Dwyer, involved when it was being set up, she said.

Under a master services agreement, an “operating costs account” was set up so that HFL would put away agreed funds to meet the costs of bringing newly acquired properties up to scratch for letting, which typically was 20 per cent of the cost, Ms O’Dwyer said.

However, that arrangement was not being complied with and this left O’Dwyer in a very difficult position, she said. Payments to the accounts were made on a piecemeal basis and only after O’Dwyer was put to “an extremely onerous and drawn out ‘verification’ process”, she said.

Ms O’Dwyer said Mr Cunningham, for HFL, advised at a meeting last May that he had sourced an alternative contractor to do works to make the houses fit for letting because “he felt he was not getting value for money” from O’Dwyer or from the contractors it used. As a result, O’Dwyer was only offered work relating to 10 properties, just 25 per cent of the batch of properties it had expected for that month, she said. Efforts at mediation failed.