Housing groups criticise mortgage-to-rent reforms

Housing groups and the Opposition have criticised the Government’s proposals for reform of the mortgage-to-rent scheme announced today.

The Government presented a new package to deal with mortgage arrears, including the effective removal of a veto wielded by banks over any proposed insolvency arrangements.

Housing association Clúid spoke out in response to the Government’s planned reform.

“It won’t make much difference to a scheme that never really got going in the first place,” said Clúid’s head of policy, Simon Brooke.

Mr Brooke said the mortgage-to-rent scheme has been running for nearly three years and that Clúid have completed three-quarters of all mortgage-to-rent cases to date.

“ By now, at least 1,500 distressed borrowers could be housing association tenants; safe and secure in the knowledge that they will not lose their home. Sadly, the current total of completed cases is less than 100,” he said.

"The numbers speak for themselves. Of the nearly 100 cases completed, the main banks - AIB, Bank of Ireland, Permanent TSB, and Ulster Bank - have completed only 11 between them. This just isn't good enough."

Mr Brooke said it is an extremely complex scheme because it involves two changes of ownership and government funding.

He said the scheme could work if efforts were made to simplify the process and said it can “transform the lives of those struggling under the crippling weight of unsustainable mortgage repayments.”

‘Lacking ambition’

Fianna Fáil’s finance spokesman Michael McGrath described the new proposals as “timid and lacking ambition.”

“Over the last four years the Government has denied the existence of a problem in relation to how the banks are allowed to dictate the pace and nature of how mortgages are restructured.

“A huge amount of unnecessary distress has been heaped on families as a result of the failure to address this issue,” Mr McGrath said.

He said he welcomed the news that a court may, in some circumstances, overrule the bank and impose a solution.

He said he also welcomed the increase in thresholds relating to the mortgage-to-rent scheme, but said the scheme “has proven too bureaucratic and involves too many agencies”.

"The house effectively has to be sold twice, first the occupier sells it to the bank and then the bank sells it to the Housing Agency, which needs to receive approval from the Department of the Environment. There is potential for it to fall through at any stage. This process needs to be streamlined urgently."

Mr McGrath said the banks must resolve what happens to the residual debt once the property is sold to a housing association, and that banks have to recognise that in some cases the debt is irretrievable and that they will have to write off a proportion of it.

‘Arrogant denial’

Sinn Féin’s finance spokesman Peadar Tóibín said the mortgage crisis has “been made worse by the Government’s four years of arrogant denial”.

He said he gave a cautious welcome to the commitment given to remove the banks’ veto.

"Sinn Féin correctly opposed the banks' veto when the Insolvency Act was being brought in. We said it was a fatal flaw, but were dismissed by Fine Gael and Labour.

“Since then, years of arrogant government denial has compounded this crisis, while the banks mercilessly turned the screw on homeowners.”

He said there had been fundamental flaws in the mortgage-to-rent schemes, including the lack of resources available to social housing bodies and local authorities to allow them play their part, which need to be addressed.

The Association of Personal Insolvency Practitioners (APIP) welcomed the increase of the market value threshold for the mortgage-to-rent scheme in Dublin, which has been extended from €220,000 to €350,000.

Under the proposals announced today, the current threshold of €180,000 in other counties will be reviewed.

“The repayment costs for many families who face repossession would be lower through the scheme than the cost of renting another house, which most borrowers can’t afford.

“Under the scheme, they can remain in the family home at an affordable cost,” said secretary of APIP, Tara Cheevers.