Skip to main content
Normal View

Tuesday, 26 Nov 2013

Written Answers Nos 155-174

IBRC Mortgage Loan Book

Questions (155, 167)

Catherine Murphy

Question:

155. Deputy Catherine Murphy asked the Minister for Finance the reason the right of first refusal was not offered to the 4,000 Irish Bank Resolution Corporation performing mortgages at or above the valuation level; the consideration that was given to this; the reason it was not decided to proceed in this way; the conditions that have been built into the sale that comparable lending rates and conditions will apply; the way such conditions are guaranteed to be legally enforceable; and if he will make a statement on the matter. [50209/13]

View answer

Clare Daly

Question:

167. Deputy Clare Daly asked the Minister for Finance regarding Irish Bank Resolution Corporation mortgage holders, if he will ensure transparency and information on the potential buyers and the price the mortgages are being sold at, proper communication, and not letters from the liquidator which are impossible to understand for ordinary consumers; for persons to be allowed to match the best offer being made for mortgages by any third parties and for those with unsustainable mortgages to be allowed to sell their home and have any mortgage shortfall written off or settled over a very short period. [50354/13]

View answer

Written answers

I propose to take Questions Nos. 155 and 167 together.

I have been informed that the Special Liquidators have corresponded with all IBRC borrowers providing them with an opportunity to make written representations on the method of disposal of their loans and the criteria for determining who may bid for loan assets. Consideration was given to Borrower representations and the Special Liquidators are in the process of responding to these Borrower representations.

The Special Liquidators are under instruction to ensure that the valuation of all IBRC assets is completed by 30 November 2013 and that the sale of all IBRC assets is agreed or completed by no later than 31 December 2013 or as soon as practicable thereafter.

Borrowers will be kept fully up to date on the sale of their IBRC loans and collateral obligations. The Special Liquidators do not intend on disclosing the valuation of IBRC assets as it is commercially sensitive information which could potentially have a detrimental impact on asset recovery from the impending sales process.

I am advised by the Special Liquidators that the decision to offer the residential mortgage book in portfolios was arrived at having regard to the scale of the process and size of the IBRC loan book. Furthermore the Special Liquidators have confirmed that the decision to sell these loans as part of a portfolio is the most efficient method of disposal and the one which is most likely to maximise ultimate sales realisations for the Special Liquidators having regard to the public interest. The decision concerning how the loans will be packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the Special Liquidators and I will not intervene in this matter.

IBRC Loans

Questions (156)

Catherine Murphy

Question:

156. Deputy Catherine Murphy asked the Minister for Finance if the independent valuation has been completed in respect of the Irish Bank Resolution Corporation loan books; if not, when same will be completed; if so, the way each loan book differs from the prior valuation; the estimated cost of the discount by loan book; and if he will make a statement on the matter. [50210/13]

View answer

Written answers

The Special Liquidators are obliged to ensure that the valuation of all IBRC assets is completed by 30 November 2013 and that the sale of all IBRC assets is agreed or completed by no later than 31 December 2013 or as soon as practicable thereafter. The valuation of IBRC assets will not be published as it is commercially sensitive financial information which could potentially have a detrimental impact on asset recovery from the impending sale process.

Property Taxation Administration

Questions (157, 161, 182, 200)

Jerry Buttimer

Question:

157. Deputy Jerry Buttimer asked the Minister for Finance the reasons that the liability date for local property tax is in November of the preceding year; if there is a procedure for dealing with the anomaly created when a property is sold between the liability date and date when the tax is due and the former owner remains liable for the local property tax; if he will consider rectifying this situation; and if he will make a statement on the matter. [50237/13]

View answer

Joe Carey

Question:

161. Deputy Joe Carey asked the Minister for Finance the legislative plans he has to deal with those who sell and vacate a property before the end of 2013; if this change will exempt them from paying the local property tax for 2014; and if he will make a statement on the matter. [50245/13]

View answer

Ciaran Lynch

Question:

182. Deputy Ciarán Lynch asked the Minister for Finance if he will resolve the anomaly whereby, since 1 November, the vendor is liable for local property tax on a property they no longer own or occupy whilst the buyer/occupier is exempt; and if he will make a statement on the matter. [50603/13]

View answer

Charlie McConalogue

Question:

200. Deputy Charlie McConalogue asked the Minister for Finance if he will amend the Finance (Local Property Tax) Act 2012, to ensure that a person who is in ownership of a property on 1 November 2013 but who sells the property before the end of 2013 is exempted from having to pay the LPT for 2014; and if he will make a statement on the matter. [50814/13]

View answer

Written answers

I propose to take Questions Nos. 157, 161, 182 and 200 together.

In accordance with the Finance (Local Property Tax) Act 2012 (as amended), liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date, which was 1 May 2013 for 2013 and for subsequent years, 1 November in the preceding year. The matter of the 1 November liability date has been raised and responded to several occasions in the House previously and, as far back as 27 March this year, in a reply to Question No. 110 on that date, I specifically addressed the fact that where a liable person sells their residential property between 2 November 2013 and 31 December 2013, provided that they owned the property on 1 November 2013, they will be liable to pay LPT on that property for 2014.

I have also informed the House in my replies to Questions Nos. 221 [49518/13] and 223 [49556/13] on 19 November 2013 that having a liability date before the year commences is preferable as there is certainty about who the liable person is for the coming year, that person has a reasonable amount of time to make the necessary provisions and they have access to the widest possible range of options for paying the tax. In particular, the liable person can put the required arrangements in place to ensure that phased payments by way of direct debit or deduction at source from employment, occupational pension or from certain Government payments would commence from January 2014 and would spread payment of the full LPT liability evenly over the course of 2014.

For a tax such as LPT to function properly, the legislation must specify a liability date for the tax to have application for a particular year. Whatever date is prescribed the question of liability when there is a change of ownership has to be managed, and I expect that the LPT liability involved is likely to be factored in during negotiations between the parties on the sale price and the closing date of a particular contract. I am advised that detailed guidance on LPT issues arising in the context of the sale or transfer of a residential property was prepared by the Revenue Commissioners in consultation with the Law Society and is available on the Revenue website at http://www.revenue.ie/en/tax/lpt/sale-transfer-property.html since last August.

As to whether an anomaly has been created when a property is sold between the liability date and the date that the tax is due, an individual selling a property will often be purchasing another property at around the same time. While a vendor who owns a property on 1 November 2013 is liable for the 2014 LPT on that property, if s/he does not purchase another property before 1 November 2013 s/he will not be liable for the 2014 LPT on that "replacement" property - whoever is the owner as of 1 November 2013 will be liable.

Finally, the liability date for 2014 of 1 November 2013 is settled and has been approved by the Oireachtas in passing the LPT legislation and I have no plans to change the provision in question.

Credit Unions Restructuring

Questions (158)

Eoghan Murphy

Question:

158. Deputy Eoghan Murphy asked the Minister for Finance if he will provide a breakdown of the cost of transferring the accounts and systems from Newbridge Credit Union to PTSB; if this figure is in the region of €4 million; and the way this amount was arrived at. [50240/13]

View answer

Written answers

The financial incentives agreement - FIA - between the Central Bank and permanent tsb dated 10 November 2013, contains a provision for the Credit Institutions Resolution Fund to cover up to €4.25 million in restructuring and integration costs incurred by PTSB as part of the transaction. Under the FIA restructuring costs cover all vouched costs, including VAT, reasonably and necessarily incurred by PTSB which directly relate to the development, establishment and maintenance of a recovery and underwriting function in PTSB with respect to the loans transferred under the High Court Transfer Order. Integration costs cover all vouched costs reasonably and necessarily incurred by PTSB as a direct result of the transfer. Under the FIA, restructuring costs are capped at €3 million and integration costs are capped at €1.25 million, and costs claimed must be incurred by PTSB within 2 years of the date of the FIA. The FIA is available on the Central Bank website at www.centralbank.ie.

Budget Measures

Questions (159)

Eoghan Murphy

Question:

159. Deputy Eoghan Murphy asked the Minister for Finance further to Parliamentary Question No. 178 of 5 November 2013, if he will provide the forecasting data referred to, regarding the modelling of household disposable income in aggregate terms and projections for the way this income is allocated between spending and savings, as well as the impact of these decisions on tax revenue and employment, where disposable income of €4 billion in aggregate terms was realised in the economy. [50241/13]

View answer

Written answers

To begin, I would again stress that, given the current fiscal position of the State, there is no real scope for a large-scale revenue stimulus on the scale proposed by the Deputy. When assessing the potential impact on the economy of such a measure, my Department must weigh the short-term benefits of economic output against the impact on the public finances. In this regard research produced by the ESRI as part of its Medium-Term Review of July 2013 (pg. 117-118) is informative. Using the HERMES macroeconomic model, the ESRI tested the economic impact of a series of fiscal shocks to the economy. It includes simulations of the impact of a €1 billion adjustment in income tax, which is economically similar to the USC. The results of the research suggest an income tax multiplier of -0.6, that is, a €1 billion reduction in income tax results in additional GDP of about €600 million over the forecast horizon. Employment would be impacted positively by about 0.5 per cent.

The relatively low GDP multiplier likely reflects the open nature of Ireland’s economy and the fact that increased demand would ‘leak out’ through imports. The simulations also include the assumption that some part of a reduced tax burden would be saved rather than spent by households. This positive impact on output must be balanced against the impact on the public finances exerted through lower tax revenues. The simulations suggest that the deficit would increase by 0.5 percentage points of GDP and general government debt by just over 2 per cent of GDP, both by the end of the forecast horizon.

Given Ireland’s current fiscal position, we must necessarily ask if such a measure would be prudent and whether it could be sustained over the medium-term. Through the fiscal adjustment measures that the Government has implemented, stability has been restored to the public finances, the economy is growing and data from the second quarter of the year show jobs being created in the last four quarters. Irish sovereign yields are now at about 3½ per cent, a fraction of the highs of over 14 per cent reached in summer 2011. The improvement in yields is due in large part to the Government’s fiscal strategy which has seen consistent deficit reduction. A reduced cost of borrowing for the Government reduces the interest bill which has to be paid by the taxpayer.

Property Taxation Administration

Questions (160)

Michael McCarthy

Question:

160. Deputy Michael McCarthy asked the Minister for Finance the reason a person (details supplied) in County Kerry was unable to register to pay their local property tax online due to actions outstanding for 2013, even though they have fully paid last year's LPT; and the reason when queried, the dedicated LPT help line team were unable to explain. [50243/13]

View answer

Written answers

I am informed by Revenue that the LPT Return for 2013 was not submitted to Revenue by the person in question. The person did however pay €112 (Band 2 Valuation), which was the estimated amount that issued to her, through a Payment Service Provider on 26 March 2013. Because the person did not file the statutory LPT Return for 2013 her record was incomplete on the Property Register and no notification issued to her in respect of 2014. I am advised that direct contact was made with the individual in question by a member of the LPT team on foot of her enquiries to the LPT Helpline. The person has now filed her 2013 Return through the online system and has selected her payment method for 2014.

Question No. 161 answered with Question No. 157.

Mortgage Interest Rates

Questions (162)

Pearse Doherty

Question:

162. Deputy Pearse Doherty asked the Minister for Finance the number of State backed banks that have indicated they will pass on the ECB's recent interest rate reduction. [50262/13]

View answer

Written answers

Following the recent announcement by the ECB of a reduction in interest rates to date none of the State backed banks have indicated that they will pass on this rate cut bar the reductions that automatically follow on Irish tracker mortgage products. The Government is acutely aware of the increasing financial stress that some households are facing in the current environment, but, ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial matter for the management and the Board of the Institution. At the same time, the Board must ensure that the day to day running of these institutions has regard to competition, market conditions and the need to develop stable commercial enterprises to meet the long term credit needs of households and businesses.

As the Deputy will be aware the Relationship Framework with the banks provides that the State will not intervene in the day-to-day operations of the bank or their management decisions. These frameworks are published on the Department of Finance website. I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure their value as assets to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. It must be remembered that in order to fund mortgages, the banks must borrow at current deposit and wholesale rates, which are currently much higher than the ECB base rate. The banks must also ensure that the rates they lend at are economically sustainable and provide a return for the bank and ultimately the State in its capacity as a shareholder.

Bank Guarantee Scheme Administration

Questions (163)

Pearse Doherty

Question:

163. Deputy Pearse Doherty asked the Minister for Finance the number of accounts and the types of accounts not covered by the deposit guarantee scheme; and the steps that have been taken to notify these account holders of their exclusion. [50263/13]

View answer

Written answers

The Deposit Guarantee Scheme (DGS) protects depositors up to €100,000 per depositor per credit institution in the event of a bank, building society or credit union authorised by the Central Bank of Ireland being unable to repay deposits. However, certain types of deposits are excluded from coverage, such as deposits from large companies and inter-bank deposits. The Central Bank’s website has complete information on the Deposit Guarantee Scheme, including information on the types of accounts which are and are not covered by the scheme. This is available at http://www.centralbank.ie/paycurr/paysys/dgs/pages/about.aspx.

All deposit-taking credit institutions in Ireland are required by law to participate in the Deposit Guarantee Scheme. Each credit institution covered by the DGS is required to maintain a balance in the Deposit Protection Account (DPA) equivalent to 0.2% of their total deposits in order to fund the DGS. The Central Bank of Ireland is responsible for the operation of the DGS and is currently working with credit institutions to receive data on exact coverage levels under the Deposit Guarantee Scheme.

The Deputy should note that the DGS does not pay compensation on an account by account basis. Instead, all of a depositor’s eligible deposits with a particular credit institution are aggregated and the DGS covers the first €100,000 of this aggregated amount, per depositor, per credit institution. It is therefore possible that the DGS may cover all or part of a particular account depending on the aggregate amount of the individual’s eligible deposits with the credit institution concerned.

There is currently no requirement for institutions to advise depositors of their coverage under the DGS. However, further changes to the DGS Directive which are currently being negotiated at EU trilogue level include improvements to the information available to account holders.

Mortgage Resolution Processes

Questions (164)

James Bannon

Question:

164. Deputy James Bannon asked the Minister for Finance the actions being taken by his Department to curb the excesses of the banks in dealing with distressed homeowners; and if he will make a statement on the matter. [50275/13]

View answer

Written answers

The Government is very aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. As the Deputy is aware, the Central Bank publishes quarterly statistics on the level of mortgage arrears. Separately from Central Bank quarterly reports, my Department is now publishing monthly data on primary home mortgage restructures put in place by the six main lenders covered by the Central Bank’s MART process. This will place more timely information in the public domain in relation to the progress by the main banks to resolve mortgages in difficulty. This should greatly assist the objective of placing more information in the public domain regarding the progress being made by banks on mortgage restructures.

The Central Bank Code of Conduct on Mortgage Arrears provides an integrated and cohesive package of consumer protection measures for borrowers either facing or in mortgage arrears. This provides that mortgage lenders should allow for a flexible approach in the handling of arrears and pre-arrears cases and that they should aim at assisting the borrower who is in genuine difficulty as far as possible having regard to the specific circumstances.

It reflects the current mortgage arrears situation and seeks to deliver on the following principles, to:

- Ensure appropriate resolution of each borrower’s arrears situation;

- Ensure that lenders deal with borrowers in a fair and transparent manner;

- Support and facilitate meaningful engagement between lenders and borrowers; and

- Ensure borrower awareness of the benefits of co-operating with their lender, and the consequences of not co-operating.

The Code places particular requirements on lenders, when communicating with customers, to ensure that:

- The level of communication is proportionate and not excessive;

- Communications are not aggressive, intimidating or harassing;

- Borrowers are given sufficient time to complete an action they have committed to before follow-up communication is attempted;

- Steps are taken to agree future communication with borrowers.

A lender must also produce and implement a Board approved policy regarding communications with borrowers to ensure that these requirements are met. If a borrower is not satisfied with a lender’s compliance with the requirements of the Code, or with the lender’s treatment of the borrower’s case, then any complaint by the customer must be dealt with in accordance with the complaints provisioning set out in the Consumer Protection Code. The Central Bank has informed me that it is committed to the on-going monitoring of lenders’ compliance with the Code and will closely monitor its implementation by lenders.

VAT Rebates

Questions (165)

Éamon Ó Cuív

Question:

165. Deputy Éamon Ó Cuív asked the Minister for Finance the latest date for reclaiming VAT paid by a registered contractor; the reason for a time limit for submitting a claim; if there are any exceptions made in this regard; and if he will make a statement on the matter. [50305/13]

View answer

Written answers

I am advised by the Revenue Commissioners that the Value-Added Tax Consolidation Act 2010 provides that any claim for a refund of VAT must be made within four years of the end of taxable period to which it relates. A similar four-year time limit applies to the estimation or assessment of VAT by the Revenue Commissioners in circumstances other than fraud or neglect. VAT legislation does not provide for exceptions to these limits.

Bank Debt Restructuring

Questions (166)

Finian McGrath

Question:

166. Deputy Finian McGrath asked the Minister for Finance if there are any immediate plans to break free from the illegitimate Anglo Irish Bank debt as it is not our debt. [50338/13]

View answer

Written answers

As the Deputy is aware, the Government reached a conclusion to its discussions with the European Central Bank in February that delivered on our commitment to put in place a fairer and more sustainable arrangement on the IBRC Promissory Notes. That transaction also saw the remnants of Anglo Irish Bank and Irish Nationwide removed from the financial and political landscape. The Government has no plans to make further changes in this area.

Question No. 167 answered with Question No. 155.
Question No. 168 answered with Question No. 151.

IBRC Mortgage Loan Book

Questions (169)

Clare Daly

Question:

169. Deputy Clare Daly asked the Minister for Finance if he will ensure in regard to Irish Bank Resolution Corporation mortgages that any purchaser only changes mortgage interest rates in line with changes in the ECB rate to prevent a potential purchaser from hiking up rates to unsustainable levels. [50356/13]

View answer

Written answers

I have been advised by the Special Liquidators that the contractual terms and conditions of mortgage customers have not changed as a result of the appointment of the Special Liquidators nor will they change on the sale to a third party. As the sale process for this portfolio has yet to be completed it is not possible to speculate on what the potential intentions of the ultimate purchasers of the loans may be but any party that acquires the residential mortgage book of IBRC (in Special Liquidation) will be obliged to comply with the contractual terms and conditions of those loans.

IBRC Mortgage Loan Book

Questions (170)

Clare Daly

Question:

170. Deputy Clare Daly asked the Minister for Finance if he will encourage AIB, PTSB and other State owned banks to be flexible in offering remortgage deals to Irish Bank Resolution Corporation mortgage holders. [50357/13]

View answer

Written answers

I understand that AIB and Permanent TSB are already engaging with Irish Bank Resolution Corporation mortgage holders who wish to move their mortgages. This is a welcome development and I would encourage both institutions to continue doing so where appropriate. AIB has informed me that it continues to engage with individual IBRC customers who wish to discuss moving their existing mortgage. Each case is assessed on its merits with primary focus on financial analysis and proving sustainable repayment capacity and is subject to AIB’s existing lending capacity and policy.

Permanent TSB has informed me that it is actively seeking applications from creditworthy borrowers across all segments of the market including customers who wish to switch their mortgages. Permanent TSB continues to consider applications for re-mortgage facilities from IBRC mortgage holders who meet Permanent TSB’s normal lending criteria. Permanent TSB has informed me that it offers a rate of 3.95% to customers with a loan-to-value ratio of less than 50% which may be of interest to customers of IBRC with a low loan-to-value ratio.

Question No. 171 answered with Question No. 147.

Mortgage Interest Rates

Questions (172)

Finian McGrath

Question:

172. Deputy Finian McGrath asked the Minister for Finance if he will press for the ECB rate reduction to be passed on to struggling homeowners and in particular families on variable rate mortgages. [50398/13]

View answer

Written answers

I, as Minister for Finance, have no statutory role in relation to the mortgage interest rates charged by regulated financial institutions. It is a commercial matter for the banks concerned. The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has, however, no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997.

The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution’s overall funding.

Property Taxation Application

Questions (173)

Éamon Ó Cuív

Question:

173. Deputy Éamon Ó Cuív asked the Minister for Finance if a house has to be habitable to make it liable for local property tax; and if he will make a statement on the matter. [50411/13]

View answer

Written answers

For Local Property Tax (LPT) purposes a residential property is defined as any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling. Where a residential property is habitable, that is, suitable for use as a dwelling, it is liable to LPT. I am advised by the Revenue Commissioners that property owners should take account of the structure of the building; including whether the property has a roof, windows and doors, sanitary facilities, services (water or electricity supply turned off or temporarily disconnected would not necessarily mean that a residential property is uninhabitable) to assist them in deciding whether or not their property is habitable. I am further advised that LPT is a self-assessed tax and where an owner considered that their residential property was not suitable for use as a dwelling, they were obliged to notify Revenue in writing as soon as possible after they had received their LPT Return for 2013. Owners were also required to provide relevant supporting documentation; for example, photographic evidence, a report from a suitably qualified person such as a surveyor or an engineer.

If the Deputy has a specific case in mind, he should be aware that the due date for filing a LPT1 Return for 2013 was 7 May 2013, and the Commissioners recommend that the property owner should write to the LPT Branch, PO Box 1, Limerick without delay. Based on the information provided by the property owner, Revenue will consider the circumstances of the application, make a decision on the matter and advise the owner accordingly.

Credit Review Office Remit

Questions (174)

Michael McGrath

Question:

174. Deputy Michael McGrath asked the Minister for Finance when the remit of the Credit Review Office will be extended to include Permanent TSB; and if he will make a statement on the matter. [50444/13]

View answer

Written answers

As the Deputy is aware, the Credit Review Office (CRO) reviews decisions by the banks participating in NAMA to refuse, reduce or withdraw credit facilities (including applications for restructured credit facilities) from €1,000 up to €3m. Permanent TSB are not a participating institution in NAMA, and indeed would have very limited lending to the SME sector compared to AIB and Bank of Ireland. Following the publication of an assessment of the CRO carried out by Grant Thornton, I engaged in a public consultation process in order to see what more the CRO can do to ensure SMEs are getting the support on bank lending they require. As a first step, I sanctioned an increase in the numbers on the Credit Review Panel in order to facilitate faster processing of decisions, thereby implementing one of the recommendations in the assessment. In addition, in Budget 2014 I increased the threshold by which SMEs can appeal refusals from €500,000 to €3 million. This will facilitate requests from a broader range of SMEs as well as large requests for refinancing.

The recent CRO report shows that the Credit Review Office upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5 million in credit being made available to SMEs and farms, protecting 1,521 jobs and I would strongly encourage SMEs refused credit to seek a review by the Office. My officials and I continue to liaise with the banks on a regular basis and the decision as to whether to amend the remit of the CRO to include non-NAMA participating banks remains under review.

Top
Share