Subscriber OnlyBusiness

Macquarie and four other groups picked for mortgage-to-rent reboot

Australian bank, private sector groups and approved housing bodies selected by Coalition to deal with loans that have no prospect of being repaid

Mortgage to rent option enables defaulting borrowers to remain in homes as renters after agreeing to surrender ownership of the property.

Joe Brennan
Tue Jan 30 2024 - 05:51

Australian bank Macquarie, two other private-sector groups and two approved housing bodies have been selected by the Government to offer mortgage-to-rent (MTR) solutions for lenders and borrowers dealing with loans that have no prospect of being repaid, according to sources.

MTR solutions allow defaulting borrowers to remain in their homes as renters after agreeing to surrender ownership of the property.

The Department of Housing and the Housing Agency has also selected an entity called Irish Homes, where Stephen Curtis, a former head of operations of existing MTR provider Home for Life and one-time director of the iCare-approved housing body, is a senior executive, the sources said.

The third private-sector entity is Fresh Start Homes, led by Ivan Gayler and Nathan Timmins, who have experience across the Irish property and social housing sectors. The registered company name behind Fresh Start is Tusker Rock Investments, where veteran Irish corporate adviser Robert Dix is a listed director.

READ MORE

Meanwhile, the two entities selected for the non-private-sector element of the new mortgage-to-rent plan are iCare and fellow housing body Foscadh Housing.

The department and the Housing Agency last July sought expressions of interest from private and approved housing body sector entities interested in becoming MTR providers, capable of delivering “at scale”, under a planned reboot of a previous pilot scheme.

Home for Life, the largest and only private sector participant in a previous pilot, submitted an expression of interest for the new programme but was not selected. Still, Home for Life, led by Paul Cunnigham, said it plans to engage with the authorities “to ensure it is allowed to continue to originate MTR cases as it believes it would not have been their intention to effectively suspend the MTR programme by excluding HFL [Home for Life]”.

Home for Life is coming close to the end of processing cases that had been in the system before the department officially terminated the pilot scheme last May.

‘To blame the lowest paid for challenges in our economy is cheap’

Listen | 52:56

The concern is that mortgage-to-rent activity will effectively grind to a halt in the near term as the new participants seek to negotiate binding funding agreements and set up platforms, processes and product from a standing start.

Some 2,258 mortgage-to-rent deals have been completed since an initial scheme was launched in 2012 on foot of a recommendation in a government-commissioned report on the mortgage arrears crisis at the time. A tweaking of the scheme in 2017 gave rise to the pilot programme that had been operating until May.

Home for Life, funded by UK investment firm LCM Partners and AIB, had completed 1,145 cases by the end of September, according to Housing Agency figures.

iCare, led by David Hall, an advocate for distressed borrowers, was the second-most active player under the pilot scheme, getting 483 cases over the line by that stage.

Irish mortgage default cases have fallen from a peak of almost 13 per cent of owner-occupier home loans in 2013 to 4.1 per cent as of the end of September, according to the Central Bank of Ireland. However, almost 7,900 borrowers were more than five years in arrears.

A spokesman for Macquarie, which is acting with its Broadstone Housing unit, declined to comment. Sources had previously said property services company Aramark was working with Macquarie on its bid. However, a spokeswoman for Aramark clarified that it was not involved.

Fresh Start Homes aims to complete 150 mortgage-to-rent cases this year, according to a spokeswoman. She declined to comment on its funding. “We have begun discussions with providers of qualifying MTR properties to commence the rollout of our programme shortly,” she said.

Representatives for Irish Homes, which is said to be backed by UK-based Civitas Investment Management, a so-called social impact investment firm, declined to comment. Mr Hall of iCare and Foscadh Housing chief exxecutive Ken O’Heiligh confirmed that their organisations had been selected.

A department spokesman declined to comment on the identities of the individual parties as it continues to finalise appointments.

“This EOI [expressions of interest] process was necessary to support the long-term sustainability of the scheme and will offer lenders more providers with whom they can engage and process cases,” he said.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

LATEST STORIES