Dáil Éireann Debate, Thursday - 5 May 2022
150. Deputy Thomas Gould asked the Minister for Housing, Local Government and Heritage if his attention was drawn to the fact that approved housing bodies are being bypassed in the mortgage to rent process in favour of a private operator. [21480/22]
View answerThe Mortgage to Rent (MTR) scheme was introduced in 2012 for borrowers of commercial lending institutions and is targeted at those households in mortgage arrears who have had their mortgage position deemed unsustainable by their lender under the Mortgage Arrears Resolution Process (MARP), who agree to the voluntary surrender of their home and who have very limited options, if any, to meet their long-term housing needs themselves. In addition, the household must be deemed eligible for social housing support. The concept of the scheme is that a household with an unsustainable mortgage goes from being a homeowner to being a social housing tenant.
Under the MTR scheme, the borrower surrenders their property to their lender and it will be then sold to the MTR provider who is interested in the property. This can be either an Approved Housing Body (AHB) or since 2018 a private company, Home for Life Ltd. If more than one party is interested in buying the property, the lender will provide information to the borrower around the options available to them and the borrower will make the decision on who purchases the property. The AHB or local authority (in the case where the property is sold to a private company) becomes the landlord and the borrower remains in the property as a tenant paying a differential rent to the landlord based on his or her income.
In the initial years of the scheme, the scheme relied solely on AHBs to purchase from lenders, properties that have been voluntarily surrendered by borrowers. A Review of the MTR scheme for borrowers of commercial private lending institutions was published in February 2017. While there are obvious social and economic benefits to be derived from the MTR scheme, most significantly by facilitating individual households in mortgage arrears to remain in their home, the 2017 Review acknowledged that consideration needed to be given to the capacity of AHBs to intensify their involvement in the MTR scheme given the ambitious targets for the AHB sector around delivering new social housing supply.
The 2017 Review committed to exploring the potential of private institutional investment in MTR in order to allow the MTR scheme to deliver at scale. The capital outlay to purchase these properties could be provided through private finance to avoid competing for upfront exchequer capital resources within the overall funding available for social housing. An Expressions of Interest (EOI) Request issued in 2017 inviting parties from the private sectors to express their interest in participating in a new alternatively funded long-term MTR lease model. The National Development Finance Agency (NDFA) acted as financial advisor during the process, undertaking due diligence on the financial capacity of the proposers to commit to the long-term undertaking of the scheme. The outcome from the EOI process was that a new MTR alternatively funded lease model was announced in 2018 with Home for Life Ltd. as the participant from the private sector.
The inclusion of a private entity, in addition to the existing AHBs who continue to be an integral part of the MTR scheme, gives opportunities to achieve greater scale and meet the long-term housing needs of a greater number of borrowers who have unsustainable mortgage arrears. This is evident through the increased number of completed cases since the private entity has entered into the scheme. In 2021, approximately 250% more cases were completed as part of the scheme than in 2019.
Given the sizeable cohort of borrowers still in long-term mortgage arrears, all the MTR providers participating in the scheme are needed in order to meet the demand for the scheme. In all scenarios, my Department and the Housing Agency are focused on meeting the long-term housing needs of the greatest number of households in unsustainable mortgage arrears.
