Dáil Éireann Debate, Wednesday - 17 September 2014
3. Deputy Seamus Healy asked the Minister for the Environment, Community and Local Government the number of mortgage to rent transactions completed in each calendar year since the inception of the scheme; his plans to increase these numbers; and if he will make a statement on the matter. [34561/14]
View answerI congratulate my now constituency colleague, Deputy Alan Kelly, on his appointment as Minister for the Environment, Community and Local Government, as well as the Minister of State, Deputy Paudie Coffey.
Not until 2016.
I wish both of them well into the future. The mortgage to rent scheme should be an important and invaluable tool in dealing with the issue of mortgage arrears. It is a very good concept which allows approved housing bodies to purchase houses and a mortgage holder to remain in the family home with the option of repurchasing should financial circumstances improve. However, because the scheme is not being promoted and is very cumbersome and long-winded, only a small number of cases are being approved. What does the Minister intend to do to improve the position and ensure there are significant increases in approvals?
I thank the Deputy for his good wishes. `
My Department funds two mortgage to rent, MTR, schemes, a local authority, LA, scheme and an approved housing body, AHB, scheme. Both schemes are designed to assist families with income difficulties whose mortgages are deemed unsustainable and likely to remain so. Both schemes allow the household to remain in the home as a social housing tenant. Under the local authority scheme which applies to properties acquired with local authority mortgages, the local authority acquires ownership of the properties. In the case of the AHB scheme which applies to properties secured with private mortgages, properties are acquired by an approved housing body.
The schemes were launched on foot of recommendations made in the Keane report on mortgage arrears which was published in 2011. The approved housing body scheme was launched nationally in June 2012, while the local authority scheme was launched nationally earlier this year. To date, 2,490 cases have been put forward by private lending institutions for possible inclusion in the AHB scheme. In 48 of these cases negotiations between all the parties involved, namely, the property owners, lenders, AHBs and local authorities, are completed, while 29 of the cases are fully completed with all agreements signed. A further 73 are at funding approval stage, with detailed negotiations to follow. Separately, 18 cases have been completed under the local authority scheme.
The number of solutions put in place under the schemes has been low and is a factor of the complex multi-party negotiations and agreements required. The Government remains committed to helping families in mortgage difficulties to remain in their homes. In an effort to increase the numbers delivered under the AHB scheme, a new protocol between all parties involved in the process came into operation in June 2014.
The protocol includes such measures as the provision of a single independent valuation for the purpose of agreeing a purchase price. The valuation and condition surveys will now be carried out earlier in the process to give more certainty to all parties, including the borrower. I expect these new arrangements to support accelerated delivery of the schemes.
While I thank the Minister of State for the information, the figures he provided show that the number of approvals under the scheme is unacceptably low. Anything that could be done to improve the number would be very welcome. The level of mortgage arrears continues to be very high, and unfortunately the insolvency legislation brought forward by the Government is now known to be seriously flawed. The banks have a veto and mortgage holders cannot avail of it as they have little or no disposable income. The mortgage-to-rent scheme is an ideal one and it certainly should be used as a tool to deal with the many situations in which families have little or no disposable income and therefore cannot avail of the personal insolvency scheme. I urge the widening and promotion of the scheme.
I recognise and share the concern of the Deputy, as every Member does. I reassure the Deputy that the Government is committed to ensuring as far as possible that people remain in their family homes. While I note that the Deputy is calling for an increase in the numbers using the scheme, my hope is that people's circumstances improve so that they do not end up having to make an application. After all, it is one of the last resorts. It is the scheme to which people are referred when every other avenue of negotiation or resolution has been examined. I accept the concern about the process and the number of people qualifying, but as people's circumstances and the economy improve, fewer will apply to the scheme.
The main barriers to people getting full approval and sign-off have included the process. It is recognised that it was quite complex. A number of valuations, property surveys and condition surveys were required. That has been streamlined since June this year, whereby there is one independent valuation, which will speed matters up. We must also take account of the eligibility criteria of the scheme, which are onerous and a last resort for many.
I agree and hope the Minister of State is right that mortgage holders in arrears can recover the situation and find employment. However, there are many thousands of mortgage holders out there in serious arrears with no prospect of being able to deal with them. This is an ideal scheme. Unfortunately, we have seen that the personal insolvency and bankruptcy processes are flawed. In many cases, bankruptcy means loss of the family home. The key to the scheme is that the mortgage holder can stay in the family home. Everything should be done to ensure that people are given that option. To date, the scheme has not been promoted properly. It is not out there and mortgage holders are often unaware of it. I ask the Minister of State to launch an awareness programme for the scheme through local authorities and the media.
I accept the point the Deputy makes regarding awareness, but I am sure I am right in saying that in their negotiations with people in difficulties, lending institutions make them aware of all of the options available to them to remain in the family home. MABS does Trojan work to inform and assist people in debt difficulty. MABS informs people in difficulty of the options available to them. The scheme is one of the last resorts to which people are referred after every other resolution process has been examined.
The Deputy may ask the pertinent question of why numbers are so low but many applications are ineligible for a number of reasons. These include the borrower not meeting the criteria of the scheme, the borrower declining the scheme, the lender withdrawing an offer under the scheme or the local authority not having a sufficient social housing need for priority. A number of eligibility criteria must be met. It is not simple but it is a last resort and it is an effort by the Government to assist people who are in genuine difficulty. The commitment remains for the sake of those people.
