Every week brings new reports of courts around Ireland granting possession orders on homes – often reluctantly. Research shows that victims of home loss experience a range of debilitating reactions – feelings of painful loss, frequent symptoms of psychological, social or somatic distress and a sense of helplessness. The loss of a home can amount to a serious breach of human rights, and any person at such risk must be able to have the proportionality of that measure impartially reviewed.
In Ireland today, it is accepted that at least 30,000 households face losing their homes due to mortgage arrears. Many are already in vulnerable situations and will ultimately place unprecedented strain on the State-supported housing sector. A study of 21,000 households (2015 Central Bank of Ireland loan-level data and borrowers’ standard financial statements) showed that households facing long-term mortgage arrears were more likely to have lost their job since taking out the mortgage; to have experienced a divorce since taking out the mortgage; to be single borrowers (mostly women) with three or more children; to have lower incomes; or to have higher mortgage debt service ratios (monthly repayment over monthly income).
Bunreacht na hÉireann provides that the dwelling of every citizen is inviolable, and a forced possession of a home can only take place in accordance with law. In cases of mortgage arrears, the Land and Conveyancing Law Reform Acts 2009-2013 enable lenders to apply to the Circuit Court – or High Court in some cases – for an order for possession. The Irish State and people have entrusted to courts the specialised and complex role of examining and balancing the interests of indebted households with those of corporate lenders, but Irish courts have considerable discretion in relation to making, suspending or executing possession orders. The court "may, if it thinks fit, order that possession be granted to the applicant on such terms and conditions, if any, as it thinks fit".
Yet there is a partisan narrative that loss of home is inevitable, to avoid moral hazard, and there are no valid defences. But there is no detailed consideration of the impact of home loss on the debtor’s household, children or dependants – sometimes referred to as “third parties”. Little scrutiny is evident of the behaviour of the corporate entity originating or enforcing the security of the loan.
Legislators or courts cannot ignore the dominant role of financial corporations in the Irish housing system. Modern states are challenged to manage this globalised interaction between financial actors and national housing systems – evident in Ireland since the early 2000s. Yet Irish legal norms appear trapped in 19th-century liberal contract law. Treating mortgage debt simply as a breach of contract law is inappropriate in contemporary Ireland. Irish courts do not accept that consumer codes are enforceable in these cases.
Yet, with some 700,000 mortgages held by a handful of lenders, the consumer law model is clearly relevant. Irish legislation from 2009 recognises the home loan borrower as a consumer, while the European Union offers increasing consumer protection. EU law obliges courts in all member states to examine mortgage contracts, as consumer contracts, of their own motion, for unfair terms. Once this EU consumer law becomes applicable, courts are obliged to apply the relevant EU human rights protection.
Purpose of new Bill
Reflecting Irish public opinion, it is for the Oireachtas to recalibrate Irish mortgage law, notwithstanding judicial developments – in line with separation of powers principles. The Keeping People in Their Homes Bill (amending the Land and Reform Conveyancing Act 2009), being launched on Thursday, creates a statutory base for Irish courts to effectively conduct proportionality assessments in granting, adjourning, varying, postponing, suspending or executing home possession orders.
The Bill sets out a range of factors to be considered, including the effect of home loss on all household members. Courts will consider the suitability of other options, such as mortgage to rent, personal insolvency, availability of suitable and affordable alternative accommodation, provision for older persons or persons with disabilities, and whether the best interests of any children have been prioritised. Information will be required on the costs of any necessary emergency housing, the outstanding loan, and any tax or other subsidies available to the lender.
Essentially, this means that when there is a choice between several appropriate measures to achieve the legitimate objective (realising the security of the outstanding loan), then Irish courts will adopt the least onerous one, and the disadvantages caused will not be disproportionate to the aims pursued.
This Bill provides a viable solution to the commitment in the programme for government “to keep families in their homes and avoid repossessions insofar as is possible. We will protect the family home and introduce additional long term solutions for mortgage arrears cases.”
Dr Padraic Kenna is director of the Centre for Housing Law, Rights and Policy at NUI Galway