Written Answers Nos. 70-78
70. Deputy Michael McGrath asked the Minister for Finance the role that the Central Bank of Ireland is taking in requesting banks to deal with long-term mortgage arrears; and if he will make a statement on the matter. [3200/15]
View answerAs the Deputy will be aware, in March 2013, the Central Bank published the Mortgage Arrears Resolution Targets (MART) framework, which set out performance targets for mortgage arrears resolution at six Irish mortgage lenders. The six lenders, Allied Irish Banks, Bank of Ireland, Permanent tsb, Ulster Bank, ACC Bank and KBC Bank are required to meet targets at quarterly intervals. The targets cover both proposed and concluded sustainable solutions, with respect to the lenders' Republic of Ireland principal dwelling home/primary residence ('PDH') and buy-to-let ('BTL') mortgagees.
The targets are specifically set in relation to arrears cases which are 90 days or more overdue, which importantly includes borrowers in long-term arrears (in arrears > 720 days). The targets require the banks to propose sustainable solutions to 85% of customers over 90 days in arrears and for concluded solutions to reach 45% by the end of 2014.
A sustainable solution has been clearly defined in the Central Bank's published MART document as one of the following:
a) "An arrangement concluded under a bank's MARP in accordance with the CCMA, where the borrower is co-operating under the MARP and the bank has satisfied itself that the arrangement provides a sustainable solution which is likely to enable the customer to meet the original or, as appropriate, the amended terms of the mortgage over the full remaining life of the mortgage, including repayment of the original or an agreed revised principal sum where offered. This may include an interest only or other temporary solution for a period if it is likely that full repayment of the original or revised principal will be achieved over time, or where there is a payment plan to return the account to sustainability through the clearance of arrears.
b) A personal insolvency arrangement (PIA) effected under the Personal Insolvency Act 2012; or
c) If an arrangement could not be reached or is not appropriate, that the PDH and BTL property securing the loan has been voluntarily sold or, failing that, any situation where a Specified Credit Institution takes possession of the property including by way of voluntary agreement with the borrower or by Court Order or otherwise".
The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears on their primary residence. The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long-term resolution is sought by lenders with each of their borrowers.
The Central Bank continues to engage proactively with the financial institutions in relation to their cohort of customers in long-term arrears and I expect that this work will continue to be a priority for them.
71. Deputy Michael McGrath asked the Minister for Finance the number of persons who paid inheritance tax or capital acquisitions tax in 2014; the average amount paid; and if he will make a statement on the matter. [3201/15]
View answerI am informed by the Revenue Commissioners that the breakdown of numbers who paid Inheritance Tax in 2014, and other Capital Acquisitions Tax (primarily gift tax and discretionary trust tax), is as follows. These figures are provisional.
|
Tax |
Numbers Paying Tax |
Average Tax Paid € |
|
Inheritance Tax |
11,651 |
27,722 |
|
Other Capital Acquisitions Tax |
1,252 |
26,661 |
|
Total |
12,903 |
27,605 |
72. Deputy Michael McGrath asked the Minister for Finance the number of persons who paid the domicile levy in 2014; the revenue raised from the levy; and if he will make a statement on the matter. [3202/15]
View answerI am advised by the Revenue Commissioners that a total of 19 persons made domicile levy payments in 2014 totalling €3,656,073. Some individuals' payments were for more than one year. An additional amount of €127,667 was collected in interest on late payment of the levy.
73. Deputy Michael McGrath asked the Minister for Finance his views on reports that the Government is to grant additional tax relief to landlords in return for rent certainty leases; if he has discussed these proposals with the Department of the Environment, Community and Local Government; and if he will make a statement on the matter. [3203/15]
View answerI am aware that the Department of the Environment and the PRTB have been examining the issue of the private rental market and looking at possible reforms for this sector. In 2014, the Private Residential Tenancies Board (PRTB) commissioned two research reports to explore the policy options required to ensure a sustainable private rented sector into the future. The main report, entitled 'Future of the Private Rented Sector', examines the economic, policy and taxation treatment of the rented sector.
The second report, entitled 'Rent Stability in the Private Rented Sector', looks at policy options to address the difficulties being experienced in segments of the private rented sector. This report includes an examination of rent regulation regimes in other countries and puts forward a series of policy options in relation to rent stability for consideration, such as -
- Increasing awareness among landlords and tenants of the PRTB and their rights and obligations under the Residential Tenancies Act 2004 - a campaign by the PRTB to deliver on this option is under way;
- Introducing tax incentives in relation to Housing Assistance Payment (HAP) and Rent Supplement tenancies;
- Introducing a rent certainty lease.
The Government is monitoring the rental market closely and the overriding objective in relation to rents is to achieve stability and sustainability in the market for the benefit of tenants, landlords and society as a whole.
While housing policy is a matter for the Department of the Environment, my officials have been in contact with officials in that Department and they are keeping the tax policy aspects of the issue under review. Any such tax proposals would be considered by the Government as part of the annual Budget and Finance Bill process.
74. Deputy Michael McGrath asked the Minister for Finance the number of persons who have been granted a personal increase in the standard fund threshold applying to their pension in each year since 2011; the cumulative increase represented by these cases; the estimated amount of tax foregone as a result; and if he will make a statement on the matter. [3204/15]
View answerI take it that the Deputy is referring to the facility available under the Standard Fund Threshold (SFT) regime whereby individuals can seek a Personal Fund Threshold (PFT) in certain circumstances.
The Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes. Its purpose is to discourage over-funding and over-accrual of pension benefits through tax-relieved and tax-subsidised arrangements. The regime achieves this by imposing a significant tax charge on the value of retirement benefits above set limits when they are drawn down.
When the SFT limit was reduced in Budget and Finance Act 2011 to a level of €2.3 million, with effect from 7 December 2010, and was further reduced in Budget and Finance (No. 2) Act 2013 to €2 million, with effect from 1 January 2014, the clear legal advice to the Government (as at the time of the original introduction of the regime in 2005) was that an individual who had pension rights in excess of the SFT limit at the relevant dates was entitled to protect or "grandfather" those rights. Accordingly, the legislation provided that such individuals could protect their higher pension values, subject to certain ceilings and conditions, by applying to the Revenue Commissioners for a PFT certificate.
The Deputy is seeking to establish the cumulative level of protection afforded and the estimated tax foregone resulting from the grandfathering arrangements outlined above. The concept of "tax foregone" is arguably more applicable in the context of tax reliefs where there is a choice as to whether to pursue the particular policy stance or not. In that regard, it is important to note that these grandfathering arrangements were not considered optional and were provided in the legislation following legal advice to that effect from the Attorney General. In other words, introducing the SFT regime to put an end to the provision of excessive pension pots at the expense of the general body of taxpayers required the simultaneous protection of pension rights that had been built up legitimately by individuals under the tax provisions that applied up to the relevant dates. This was the firm legal advice to the Government when the SFT was introduced and on each subsequent occasion that the SFT limit was reduced. The choice, therefore, was to introduce the SFT regime, with grandfathering, or not at all.
I am informed by the Revenue Commissioners that, according to their records, since 7 December 2010, when the SFT was reduced to €2.3 million, they have issued 924 PFT certificates with a value of some €2,926 million. Since 1 January 2014, when the SFT was further reduced to €2 million, Revenue has to date issued a further 159 PFT certificates with a total value of some €354 million. The combined overall value of PFT certificate issued since 7 December 2010 is, therefore, €3,280 million. The cumulative additional value of pension benefits protected as compared with the SFT limits applying at 7 December 2010 and 1 January 2014, respectively is, therefore, some €837 million.
75. Deputy Michael McGrath asked the Minister for Finance when the Central Bank of Ireland will issue a definitive response to its consultation process on mortgage lending rules; and if he will make a statement on the matter. [3205/15]
View answerThe consultation period regarding the macro-prudential policy for residential mortgage lending as set out in Consultation Paper CP87 concluded in early December. I have now been informed by the Central Bank that it will publish the responses to this consultation paper and the final measures before the end of January 2015.
76. Deputy Pearse Doherty asked the Minister for Finance the number of businesses in arrears on their commercial leases to companies in which the National Asset Management Agency has an interest. [3210/15]
View answer77. Deputy Pearse Doherty asked the Minister for Finance the total value of arrears on commercial leases to companies in which the National Asset Management Agency has an interest. [3211/15]
View answerI propose to take Questions Nos. 76 and 77 together.
As the Deputy is aware NAMA has acquired loans from the five participating institutions and is not the owner/operator of properties. The Agency's role is that of a secured lender. Other than properties that have been enforced, all of which are listed on NAMA's website and which are managed by the appointed receivers/administrators, properties continue to be managed by their existing owners or their professional managers/agents albeit NAMA takes a very close interest in their efficient management and sale with a view to maximum loan repayment in order to protect the position of taxpayers.
NAMA's primary concern is that properties securing its loans are professionally managed at the most economical cost to ensure that rental and occupancy is optimised towards the servicing of interest and capital repayment on related loans. The owners/professional managers are responsible for the efficient running of properties, which includes the collection of rents and service charges, arrangements for letting of vacant units and the operation of rent reviews in accordance with the leases into which tenants have entered. As lender and holder of security on the asset, NAMA's approval is needed for key decisions such as significant new leases, rental reductions or abatements and plans for ultimate sale of the property. The Deputy will be aware that, following the acquisition of loans in 2010 and 2011, NAMA introduced a significant change on the previous practice of the banks in ensuring that it had full visibility over rental income and that it was appropriately captured. As a result of that policy, NAMA has to date generated €5bn in non-disposal income, mainly rental income from properties held by its debtors and receivers.
NAMA advises that across its entire Irish portfolio of secured assets aggregate arrears on commercial leases, including rent arrears, outstanding service charges and other unpaid charges, are of the order of €18m relating to approximately 100 individual tenancies. NAMA is working with its debtors and receivers to ensure that arrears are addressed. It is NAMA policy and practice that all income generated by assets securing the Agency's loans is captured and applied towards repaying a debtor's indebtedness to NAMA.
As the Deputy is aware, in December 2011 NAMA introduced a rent abatement initiative to help small and medium businesses in the retail sector which were experiencing difficulties meeting their contractual rent obligations as a result of the economic downturn. Under that initiative, NAMA has received 370 applications for rent abatements through its debtors and receivers. Of these, 339 have been approved and a further 19 are currently being assessed. The aggregate annual value of approved rent abatements is €23m. NAMA has also approved long-term rent reliefs worth in excess of €40m to small and medium sized retailers around the country.
78. Deputy Terence Flanagan asked the Minister for Finance his plans for selling Government holdings in Allied Irish Banks, Bank of Ireland and PermanentTSB; and if he will make a statement on the matter. [3214/15]
View answerAs the Deputy will be aware the Irish banking system is now in a much stronger position than it has been in recent years. Profitability is improving, balance sheets have been restructured and we have started the process of returning cash to the taxpayer following the huge investments that were made over the 2009-2011 period.
As I have previously stated it is not the State's intention to remain a holder of the banking investments in the long term. Given the high debt to GDP ratio income from the sale of these investments over time should be used to reduce the State's debt burden.
With regards to AIB, much of the banking-related work in the Department of Finance this year will focus on that bank. Given the scale of the State's investment some €20.8 billion and the range of options available to recoup value from the bank, officials within my Department have appointed Goldman Sachs International to assist us with moving the bank to the next phase of its development.
The focus will be on ensuring that the best decisions are made regarding potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer. All options remain on the table and it is too early to specify what steps will be taken next or to put a timeline on decisions.
Following the successful sales in 2013 of the BOI CoCos and Preference Shares investments, the State's remaining investment in the bank is its almost 14% equity stake. With the current share price at 30 cent, the value of this equity stake today is c. €1.4 billion. Any decision to sell this stake will be influenced by valuation and the need to manage the trajectory of the State's debt to GDP ratio. Officials in my Department monitor market conditions and valuation on an ongoing basis.
In the case of Permanent TSB, the Comprehensive Assessment Adverse Stress Test result identified a shortfall of €855 million. As a consequence the bank has submitted a Capital Plan to the ECB, which outlines how the bank intends to meet the capital shortfall. Much of the shortfall has been met through performance in 2014 and deleverage of loans. The remaining shortfall will require the bank to raise capital, including equity capital, from private sources in 2015, diluting the State's shareholding. Details of the capital raise have not yet been finalised. While there are no current plans to sell shares held by the State during the process I will keep this under review as it may be required to ensure a successful capital raise process for the State and other shareholders.
I am of the view that the best way to protect the value of the State's shareholding is to ensure Permanent TSB is well prepared, that it conducts a comprehensive and competitive exercise to raise the capital with appropriate legal and financial advice, and that the State has meaningful oversight and involvement in the process. Officials from my Shareholding Management Unit and our financial advisers, JP Morgan Cazenove, are well placed to fulfil this role.
