Mortgage-to-rent scheme provider Home for Life settles legal dispute

One of the largest providers of a State scheme to help defaulting borrowers to stay in their homes has paid a six-figure settlement to resolve a legal dispute with a property management company.

The main provider in the mortgage-to-rent (MTR) scheme, Co Wicklow company Home for Life (HFL), has been beset with challenges for much of the last year.

O’Dwyer Property Management had taken a legal case against the company in the Commercial Court, over an alleged breach of contract related to repair works on properties in the scheme.

Under the MTR structure, defaulting borrowers can remain in their homes as renters after surrendering ownership of the property to a mortgage lender.

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The local authority collects rent as a landlord when the lender sells the properties to providers signed up to the scheme. Those providers, such as HFL and various approved housing bodies, agree to carry out any repairs needed to bring the homes up to required council standards.

Late last year the Housing Agency, which oversees the scheme, temporarily suspended HFL from entering into any new MTR lease agreements, due to concerns over the standard of its repair works.

Local authorities had complained about issues with HFL repair works, which the company committed to remediate.

The company, which is run by Paul Cunningham, came under pressure when issues around its repairs were aired publicly during the legal case taken by O’Dwyer Property Management.

Siobhán O’Dwyer, founder of the property management company, said in a sworn statement that the case followed a failure by HFL to pay for services and works, or to comply with agreed exclusivity arrangements.

A hearing last October was told that Mr Cunningham had enlisted O’Dwyer’s help to show that HFL would be able to provide the services required of it in the mortgage-to-rent scheme.

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.

The legal case alleged that arrangement was not being complied with and payments were only made on a piecemeal basis.

The case followed HFL moving to have its repair works carried out by an alternative contractor, rather than through O’Dwyer Property Management, Ms O’Dwyer said.

The legal case put a spotlight on issues around the standard of repairs on MTR properties carried out by HFL, causing concern among housing officials.

Court records show the legal case was struck out in June this year, following a financial settlement between the parties. It is understood HFL paid a six-figure sum to settle the case, according to one source with knowledge of the matter.

Neither Mr Cunningham nor Ms O’Dwyer wished to comment on the settlement.

The Housing Agency is currently working on a planned reboot of the MTR scheme, following uncertainty caused by recent issues with HFL.

A Department of Housing spokesman said the Government was committed to “strengthening” the scheme for distressed borrowers.

The department said it ended the previous pilot scheme in late May, as part of plans to “launch a new iteration of the scheme”.

The spokesman said there was “ongoing dialogue” between HFL and local authorities over outstanding repair works, but added a “significant” amount of the required repairs on MTR homes had now been completed.