Wednesday, 20 Mar 2013

Written Answers Nos. 199 - 216

Mortgage Arrears Proposals

Questions (199)

Ciaran Lynch

Question:

199. Deputy Ciarán Lynch asked the Minister for Finance the percentage of agreements entered into by each of the covered institutions in which the mortgagee in arrears has been required to sign a confidentiality agreement prior to entering into negotiations; if the Central Bank of Ireland has oversight of such agreements; if this practice will continue when the Personal Insolvency Act 2012 is implemented; and if he will make a statement on the matter. [13623/13]

Written answers

Minister for Finance

I must advise the Deputy that the detail of any mortgage restructuring agreement is a matter for each individual bank and borrower. The Central Bank has advised that such agreements should not impede consumer’s protections under the Code of Conduct on Mortgage Arrears (CCMA) and this would continue to be the case under the Personal Insolvency Act. CCMA examples:

- at the borrower’s request and with the borrower’s written consent, the lender must liaise with a third party nominated by the borrower to act on his/her behalf in relation to his/her arrears situation (Provision 6 of the CCMA); or

- Where an alternative arrangement is offered by a lender, the lender must provide the borrower with a clear explanation, in writing, of the alternative repayment arrangement, including the borrower must be advised to take appropriate independent legal and/or financial advice (Provision 37 (g) of the CCMA); or

- the borrower's right to refer appeals to the Financial Services Ombudsman (Provision 44 (e) of the CCMA).

Tax Credits

Questions (200)

Finian McGrath

Question:

200. Deputy Finian McGrath asked the Minister for Finance if he will explain a tax discrepancy in respect of a person (details supplied) in Dublin 5; and if he will make a statement on the matter. [13647/13]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that the taxpayer in question had his tax affairs reviewed in May 2011 on foot of a claim submitted by him for a refund of Relevant Contracts Tax. The taxpayer was in receipt of a married person’s credit and rate band although he was a widower since 1997. The Revenue Commissioners were not notified of his wife’s death at the time. When his tax affairs were reviewed the married person’s credits were removed for the years 2007 onwards. This led to the underpayment of tax that is currently being collected.

There was no record of the taxpayer being in receipt of a Dept. of Social Protection (DSP) survivor’s pension on the Revenue Commissioners records until 2012. The Revenue Commissioners received up to date details of long term payments from the DSP in late 2011 and the person’s records were updated from the beginning of 2012. The DSP records indicate that the taxpayer was granted a survivor’s pension in 2011 which was backdated to 2008.

The Revenue Commissioners are currently awaiting the submission of a Tax Return from the taxpayer for the year 2011 which will enable them to finalise any outstanding tax liability for that year.

Property Taxation Exemptions

Questions (201)

Gerry Adams

Question:

201. Deputy Gerry Adams asked the Minister for Finance if there will be exemptions on property tax for persons living in unfinished housing estates. [13634/13]

Written answers

Minister for Finance (Deputy Michael Noonan)

Section 10(2) of the Finance (Local Property Tax) Act 2012 (as amended) provides that a residential property shall be exempt from the local property tax where it is situated in an unfinished housing estate. Section 10(1) of the Act defines an “unfinished housing estate” as a development of two or more buildings that is specified in a list prescribed, under section 10(3) of the Act by the Minister for the Environment, Community and Local Government for the purposes of the Act. Section 10(4) of the Act prescribes a range of circumstances to which the Minister for the Environment, Community and Local Government shall have regard for the purposes of that Section.

Banking Sector Staff Training

Questions (202)

Michael McGrath

Question:

202. Deputy Michael McGrath asked the Minister for Finance the number of staff in each of the covered banks who have received specific training for dealing with customers in mortgage arrears; and if he will make a statement on the matter. [13690/13]

Written answers

Minister for Finance

The covered banks have provided me with the following information

Bank of Ireland

Circa 650 individual staff members dealing with customers in mortgage arrears have completed intensive training programmes across the Bank of Ireland Group. Over 2,000 further staff members across the Group have completed mortgage arrears related training.

AIB

AIB can confirm that it has c. 300 staff in its dedicated Arrears Support Unit trained to deal with customers in mortgage arrears. In addition there is c. 540 staff in the branch network who have received specialist training in relation to the Mortgage Arrears Resolution Process (MARP). All staff in the branch network have received arrears management training which covers all aspects of MARP, Code of Conduct on Mortgage Arrears and Consumer Protection Code.

PTSB

The number staff trained to deal with customers in mortgage arrears in ptsb is c450.

Central Bank of Ireland IT Operations

Questions (203, 205, 207, 208)

Pearse Doherty

Question:

203. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank of Ireland is planning to outsource the running of its IT systems and their operation to HP; and if so, if there is a precedent for central banks outsourcing functions, particularly IT to private companies; the countries involved; and the periods for which they have used outsourcing. [13709/13]

Pearse Doherty

Question:

205. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank of Ireland is about to outsource its IT operations; if so, the protocols that are in place to ensure that commercially sensitive information will be protected in such an event; and his views on whether it is appropriate that any such outsourcing is made to a company that is in fact regulated by the Central Bank of Ireland. [13710/13]

Pearse Doherty

Question:

207. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank of Ireland is about to outsource its IT operations; if so, the amount it currently costs to run the IT operations; the cost of the outsourcing; and the savings that will be made if such outsourcing is to take place. [13711/13]

Pearse Doherty

Question:

208. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank of Ireland is about to outsource its IT operations; and if so, the tender procedure the bank has undertaken to contract a private IT operator and the costs associated with the tendering process. [13712/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 203, 205, 207 and 208 together.

I am informed by the Central Bank that it has entered into a contract with HP to provide the physical data centre environment to host the bank’s IT systems and to manage the technical infrastructure aspects of these systems. HP will also provide hosting facilities at a backup data centre for the purposes of business continuity. Both of these data centres are located in Dublin.

The Central Bank will remain in control and manage all sensitive systems and data. This new data centre will negate the requirement for the bank to build two new Data Centre environments to replace existing facilities which are at ‘end of life’. It will also enable supplier consolidation for a range of services currently being provided by a diverse group of up to 17 external suppliers. There will be no ‘outsourcing’ of Central Bank staff arising from the contract with HP.

As the existing facilities are unsustainable, a direct comparison of costs does not provide a valid like for like comparison. A robust business case, in which a number of alternatives were investigated thoroughly and compared across a number of criteria including cost, was produced and was approved by the Central Bank Commission. The main cost savings relate to the very significant capital costs avoided in relation to the alternative need to build two new data centres. The costs agreed with the provider are commercially sensitive and are not available for release. However the approach taken by the Bank was considerably advantageous on cost when compared to the alternatives examined.

The Bank selected HP as a result of an open tendering process in compliance with the strict guidelines laid down by the EU public procurement process. The cost of the tendering process for this service is estimated at €150,000 including the costs of legal advice and assistance with the complex contract.

The commercial agreement between the parties contains adequately robust provisions regarding the security and confidentiality of Central Bank information. These provisions are designed to safeguard commercially sensitive information and comply with the Banks internal standards and those laid down by the European Central Bank.

The service provider is Hewlett Packard Ireland Limited. This entity is not regulated by the Central Bank of Ireland. The commercial terms agreed between the parties impose strict restrictions on access to data.

I am not in a position to outline the details of any specific outsourcing arrangements that may exist in other Central Banks as they are confidential to those institutions. We are aware that some other Central Banks and Regulators have engaged external specialist private companies to provide elements of the services which will be provided under this contract. It is to be expected that other Central Banks will evaluate external Data Centre options when they come to an ‘end of life’ scenario with their existing facilities.

Mortgage Resolution Processes

Questions (204, 210, 211)

Michael McGrath

Question:

204. Deputy Michael McGrath asked the Minister for Finance the number of the residential mortgages that have been restructured that will be considered to have been dealt with only on an interim basis and will subsequently require a more definitive long-term solution to be put in place; and if he will make a statement on the matter. [13691/13]

Michael McGrath

Question:

210. Deputy Michael McGrath asked the Minister for Finance if he will set out in tabular form the number of residential mortgages restructured in each year from 2008 to 2013; the number of such restructured mortgages that are currently in arrears; and if he will make a statement on the matter. [13694/13]

Michael McGrath

Question:

211. Deputy Michael McGrath asked the Minister for Finance if he will set out in tabular form the number of buy-to-let mortgages restructured in each year from 2008 to 2013; the number of such restructured mortgages that are currently in arrears; and if he will make a statement on the matter. [13695/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 204, 210 and 211 together.

The Central Bank commenced the quarterly publication of mortgage and mortgage arrears data from the period ending September 2009. As part of this series, it commenced the publication of data on mortgage restructures in respect of primary homes in 2010 and subsequently in respect of buy to let mortgages in 2012. The outstanding number of restructured mortgage accounts for these types of mortgages at year ends, as well as the number of such mortgages currently in arrears, are set out as follows:

-	end-2010	end-2011	end-2012
Stock of restructured PDH mortgages	59,229	74,381	79,852
of which in arrears	24,024	37,584	37,821
Stock of restructured BTL mortgages	-	-	21,800
of which in arrears	-	-	8,331

It should be noted, however, that the number of restructured accounts possessing arrears at the end of each year does not indicate the level of mortgages that have slipped into arrears after initial restructuring. Restructured accounts that are in arrears is comprised of loans that had arrears both prior to restructuring (but are now performing according to the new arrangement) and loans that have slipped into arrears post restructuring. Furthermore, the annual increase in the total stock of restructures is not due exclusively to new restructures that took place in that year, as some restructuring arrangements that were in place at the end of the previous year will have expired by the end of the following year. Therefore, those accounts whose restructuring arrangements have expired at some point during a period are not included in the overall stock of restructures at the end of that period.

The data currently published by the Central Bank relates to restructures and the type of restructure. At the end of 2012, the Central Bank advised that around 23,430 PDH mortgage accounts had a permanent restructure type of arrangement but data is not yet available on the durability of the restructured arrangement. However, as the Deputy is aware, last week the Central Bank announced new and significant targets for the main banks to offer and put in place durable and sustainable solutions for their customers in mortgage difficulty. Initially the targets are for the offer of solutions but over time targets will also be set for the conclusion of sustainable solutions and for the durability of such solutions. Arrangements will be put in place to audit and monitor progress made against these targets.

Question No. 205 answered with Question No. 203.

Property Taxation Application

Questions (206)

Michael McGrath

Question:

206. Deputy Michael McGrath asked the Minister for Finance if his commitment that a minimum proportion of the revenue from the local property tax will be spent in the local authority area in which it is raised is aspirational or if he intends to give it a definitive legal basis prior to 2014; and if he will make a statement on the matter. [13692/13]

Written answers

Minister for Finance

The allocation of funding to local authorities is properly a matter for my colleague the Minister for the Environment, Community and Local Government. The Minister for the Environment, Community and Local Government has recently confirmed that the Government has accepted, in principle, a policy position that from next year 80% of all Local Property Tax (LPT) receipts should be retained within the local authority areas where the properties are based. The remaining 20% of the LPT collected nationally will go to the Local Government Fund, which will continue to provide funding to local authorities on a needs and resources basis.

Questions Nos. 207 and 208 answered with Question No. 203.

Property Taxation Application

Questions (209)

Michael McGrath

Question:

209. Deputy Michael McGrath asked the Minister for Finance the actions a homeowner should take if they disagree with the Revenue assessment of their property value; the evidence that homeowners will be required to produce to substantiate their valuation; if he has considered on a one off basis making a tax credit available to allow homeowners to undertake a professional valuation of their property; and if he will make a statement on the matter. [13693/13]

Written answers

Minister for Finance

The Finance (Local Property Tax) Act 2012 (as amended) sets out how the Local Property Tax (LPT) is to be administered and how a residential property is to be valued for LPT purposes. As I have previously stated, the Revenue Commissioners will not be involved in valuing individual properties. LPT is a self-assessed tax so in the first instance it is a matter for the property owner to calculate the tax due based on his or her assessment of the chargeable value of the property. As values for properties under €1 million are organised into valuation bands for the purposes of LPT, property owners will not be required to provide a precise value for their property.

The Revenue Commissioners have prepared valuation guidance which, taken together with the owner’s own knowledge of the property, will assist him or her in assessing its value. The guidance, which is now available on the Revenue website, includes an on-line guide that provides indicative property valuation bands depending on the property type, age and location. If a property has certain unique features, is smaller or larger than the average for the area, is in a significantly poor state of repair or has exceptional features, property owners will have to factor this into their assessment of the valuation of their property. Where property owners consider that the on-line valuation guide is not indicating a reasonable valuation for their property, they should make their own assessment of its value. As I have previously advised the House, where the Revenue guidance is used in an honest manner, the valuation made by a property owner will not be challenged by the Commissioners in accordance with its normal Customer Service Charter.

I am further advised that additional sources that a property owner would find useful to help them with their property value assessment include the property prices register, the property section of local newspapers, information from local estate agents and property websites.

It is a matter for the property owner to decide whether they should have their property professionally valued. However, it is expected that, for the vast majority of properties, the guidance provided by Revenue will give the owner sufficient information which, when combined with their own knowledge of their property, will allow them determine the valuation band for their property. Consequently I do not believe that a tax credit to have a residential property professionally valued is necessary.

Finally, I am advised by the Revenue Commissioners that a copy of the information sources used by the property owner to inform their self-assessment of the value of their property should be retained as proof of compliance with their LPT obligations. This might include a paper record of the property section of their local newspaper, information downloaded from the property price register regarding the sales price of a similar house sold in the area, information downloaded from property websites or details taken from Revenue’s valuation guidance.

Questions Nos. 210 and 211 answered with Question No. 204.

Negative Equity Mortgages Numbers

Questions (212, 213)

Michael McGrath

Question:

212. Deputy Michael McGrath asked the Minister for Finance his estimate of the number of residential mortgages in negative equity; and if he will make a statement on the matter. [13696/13]

Michael McGrath

Question:

213. Deputy Michael McGrath asked the Minister for Finance the best estimate available for residential properties in negative equity of the total market value of such properties and the total outstanding loan values attaching to them; and if he will make a statement on the matter. [13697/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 212 and 213 together.

While the Central Bank publishes aggregate data each quarter on the level of residential mortgages and mortgage arrears, it is not possible to produce estimates of the level of negative equity on a similar regular basis. However, from time to time the Central Bank has, based on detailed granular data that becomes available to it for a sample of banks, produced estimates of the amount of negative equity in the Irish housing market. The most recent estimates for this was contained in the Central Bank’s 2012 macro-financial review, updating earlier central bank work published in their quarterly bulletin (Jan 2012), and it indicated that for the FMP sample of banks (i.e. banks subject to the Financial Measures Programme and excluding foreign subsidiaries), based on the position that pertained in the second half of 2011, around 24 per cent or 144,000 mortgages were in negative equity and that the value amount of the negative equity across mortgages was circa €10 billion.

Tax Code

Questions (214)

Finian McGrath

Question:

214. Deputy Finian McGrath asked the Minister for Finance if the legislative basis on which self-employed and employed cross-Border workers are treated differently for taxation and universal social charge purposed is section 825A of the Taxes Consolidation Act 1997 as inserted by Section 13 of the Finance Act 1998, the section that enables the Revenue Commissioners to apply it to employees only; if he will highlight the section of this legislation that makes a distinction between employed and self-employed persons resident here but working exclusively outside the State as the section itself refers to an individual rather than an employed; and if he will make a statement on the matter. [13728/13]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that Section 825A of the Taxes Consolidation Act 1997 (the “cross border worker relief”) is confined only to the remuneration accruing to an individual resident in the State from a “qualifying employment” as defined in subsection (1) of Section 825A. In other words, the relief provided for in Section 825A is confined only to employees holding certain employments outside the State, and does not extend to the self-employed. As the Deputy will be aware, where a statutory provision applies, as in this case, to one category of individual, it is not necessary to list in the provision all the categories of individuals to which the relevant provision does not apply nor is it necessary to distinguish as between various categories of individual. This is why Section 825A makes no specific distinction as between employed and self-employed persons resident here but working exclusively outside the State.

Defined Pension Benefit Scheme Issues

Questions (215)

Michael McGrath

Question:

215. Deputy Michael McGrath asked the Minister for Finance if his permission has been sought by the trustees of pensions' schemes of any of the covered banks to sell or otherwise deploy sufficient assets and use the proceeds of those asset sales or transfers to address the pension deficit when they exist in a manner consistent with the treatment extended by the trustees of the AIB pension scheme to the deficit in that bank's pension scheme; and if he will make a statement on the matter. [13765/13]

Written answers

Minister for Finance

As the Deputy will be aware, all three of the remaining Covered banks have defined benefit pension deficits to varying degrees. These are liabilities of the banks to which there are attached numerous legal and regulatory responsibilities. Both AIB and Bank of Ireland have started consultations with their staff representatives with a view to finding a workable and efficient solution to these deficits which takes account of the need to preserve capital and restore each bank to profitability as fast as possible. They are engaging with my officials about solutions but, at present, no discussion has progressed to the point where any permissions are required from me. The asset transfer conducted by AIB in 2012 was directly linked to the bank’s desire to implement a large combined early retirement and voluntary redundancy scheme that will generate significant annual cost savings for the bank over time.

Mortgage Resolution Processes

Questions (216)

Terence Flanagan

Question:

216. Deputy Terence Flanagan asked the Minister for Finance the number of permanent solutions that have been applied to principal dwelling house mortgages in difficulty in each bank; and if he will make a statement on the matter. [13824/13]

Written answers

Minister for Finance

The Central Bank has advised that overall there were around 23,430 mortgage accounts that had permanent restructure types at end-December 2012. The Central Bank advises that permanent restructure types are arrears capitalisation, term extension, permanent interest rate reduction, trade down mortgages, split mortgage and mortgage to rent. However, the Central Bank is not in a position to supply bank specific data on this matter. Also, as the Deputy is aware, last week the Central Bank announced additional new measures to tackle the mortgage arrears problem including the publication of performance targets for the main banks to require lenders to systematically work through their mortgage book and to offer durable solutions to mortgage holders in arrears. The Central Bank will also, over the coming period, set targets for the conclusion of durable solutions and for the sustainability of such solutions. Arrangements will be put in place to audit and monitor progress made against these targets. It will be necessary to wait the full reporting of the new measures to assess their impact and the durability of the solutions put in place arising from this process.