PTSB agrees mortgage-to-rent scheme targeting 500 homes

Permanent TSB has agreed to allow some of its distressed mortgage holders stay in their homes under a mortgage to rent scheme offered by an organisation called Home for Life.

This follows a similar scheme with two David Hall organisations, the Irish Mortgage Holders Association (IMHO) and iCare, which will ultimately allow customers defaulting on their mortgage stay in their homes as long-term tenants.

Home for Life, authorised by the Minister for Housing, Planning and Local Government, is initially targeting up to 500 households equating to a fund of approximately €100 million.

The voluntary, confidential scheme is available to distressed mortgage holders eligible for social housing and currently residing in a home where they wish to continue living but are unable and unlikely to pay their mortgage.

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The Home for Life scheme enables a property to be sold to the group then leased back to the State through the local authority which sublets the home to the original homeowner. the leases are for 25 years in duration. Rents are set at 95 per cent of market rents.

"The appointment of Home For Life is a significant step towards a scaling of mortgage to rent to meet the needs of more borrowers in mortgage distress. It offers the flexibility of private funding with the trust and assurance that comes from having a local authority as landlord," said Damien English, Minister of State with special responsibility for Housing and Urban Development.

Paul Cunningham, the organisation's chief executive, said it has been engaging with "key stakeholders" in the Irish banking and social housing sector for over two years.

“Working with our financial advisers we have developed a scalable, private funding model capable of meeting market demand for mortgage to rent with no impact for the State’s balance sheet,” he added.

Initial funding from the scheme has come from the principals involved, including Charles O’Reilly Hyland and Paul Cunningham. When assets are purchased it is expected that additional funds will be raised.

The company was advised by Davy Corporate Finance and it is understood they have been in discussion with parties for funding hereafter.