Vol. 877 No. 2
1. Deputy Michael McGrath asked the Minister for Finance the steps he will take to ensure that standard variable mortgage interest rates are reduced; if he will provide details of his recent engagement with the Central Bank of Ireland and the banks on this issue; and if he will make a statement on the matter. [17818/15]
This question raises once again the issue of standard variable mortgage interest rates, an issue we debated in this House on a number of occasions. The purpose of the question is to get an update from the Minister on the steps he is taking to address the issue of excessive standard variable mortgage interest rates in Ireland, to obtain details of his engagement with the Governor of the Central Bank and the banks, and to update the House on progress on this key issue.
As I outlined last week in the spring economic statement, the mortgage interest rates being charged by the banks in Ireland have not been reduced in line with the rate reductions by the ECB. I discussed the issue of mortgage interest rates with the Governor of the Central Bank on 2 April. As a result of this meeting, the Governor is currently reviewing the issue of the standard variable rates charged by the lenders. The Governor should be in a position to present this analysis to me in the coming days. I will then meet the six principal mortgage lenders in order to discuss this issue.
The lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities. I, as Minister for Finance, have no statutory role in regard to regulated financial institutions setting interest rates. 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.
Equally, the Central Bank has no statutory role in the setting of interest rates by regulated entities, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears. However, if the Central Bank proposed to me that it should get control of the regulation of interest rates, I would legislate for that.
It should be noted that there have been moves on interest rates. As the Deputy will be aware, on 1 May AIB Group announced a number of reductions to its mortgage interest rates for owner-occupier and buy-to-let mortgages.
A series of reductions over a fixed timeframe would be acceptable to me, and in that context I welcome AIB's announcement as a good first step. Competition between the banks will be crucial in ensuring that the price that the customers have to pay moves in the right direction.
I thank the Minister for his reply.
Most people understand "variable rate" to mean that the rate will vary in line with market conditions. I am sure the Minister will agree that the banks would not be too slow in hiking up their variable interest rate if conditions deteriorated in terms of their cost of funding, for example. Therefore, the rates need to come down. It is very clear now that Bank of Ireland, Ulster Bank and a number of other banks are playing hardball. They are not just going to roll over when they are called in to a meeting in the Department of Finance. Therefore, the Minister for Finance will need to have a plan B.
The AIB reduction is very welcome. It is modest but a step in the right direction. We need further rate cuts. A 1% cut in standard variable rates across the board would put about €400 million into the pockets of mortgage holders throughout the country, or 300,000 families. That would be a very significant boost and stimulus to the domestic economy. There is clear discrimination against existing customers. Bank of Ireland, Permanent TSB and KBC charge 4.5% to existing customers but significantly lower rates to new customers. That is simply unfair. The Minister needs to outline what he will do to bring competition into the market. What will be his message to the Central Bank and the banks when he gets around to meeting them?
The Central Bank figures show the average standard variable rate for a primary dwelling house is 4.2%. Like Deputy Michael McGrath, I welcome AIB's reduction, announced last week. It is the second reduction that AIB has made, and I hope the other banks will follow suit.
As I explained previously, the Central Bank is currently doing analytical work on the main lenders, namely, AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC and ACC. It is analysing the margin above the cost of money that the institutions are imposing for variable-rate mortgages. As soon as I get the data from the Central Bank, I intend to engage with each of the banks separately. I will ask them to justify their margin and explain why what they are doing is different from what the Central Bank analysis suggests. We will proceed from there. Ultimately, competition in the marketplace is the best lever to encourage lower interest rates. AIB has started the process and I hope others will follow. There are now some smaller lenders entering the mortgage market, so competition is increasing. I would encourage that.
Just as IDA Ireland is knocking on the doors of multinationals abroad, the Department of Finance and agents working on the Minister's behalf should be knocking on the doors of banks abroad to determine whether they would be willing to enter the Irish mortgage market to provide badly needed competition.
We also need an active switcher market. AIB, which now has the lowest rates in the market, should be encouraged to make resources available to advertise that and actively encourage customers of other banks to switch their mortgage. That is the kind of dynamic we need in the market. It is only when consumers have the option of switching mortgage from one bank to another to avail of a better interest rate that some of the other banks that are charging higher rates might reduce theirs.
This issue will simply not go away. It is gaining momentum. The fact is that the rates in Ireland are way out of line with the average eurozone rate, as the Minister knows. He read into the record the average rate in Ireland of 4.2%. It is 2.09% in the eurozone area, which is exactly half the rate here. Can the Minister clarify when he plans to meet the Governor of the Central Bank? He indicated it would be this week. Is that still the plan? When does he plan to meet the six main lenders?
The information I have from the Central Bank is that the European average is 2.3%, not 2.09%.
That figure is a month out of date.
These are Central Bank figures; they are not my figures.
With regard to knocking on the doors of banks internationally, there was reluctance among foreign lenders to get involved in the Irish mortgage market until quite recently for the reasons we all know about, including high levels of arrears and difficulty in collecting. These factors discourage lenders from entering the market, but this is now righting itself as 115,000 mortgages have been reconstructed. There is now an indication that banks and other lenders outside the jurisdiction have an interest in getting into the market.
I did not say I would be meeting the Governor this week; I said I would be receiving the analysis that the Governor promised me. I believe I will have it sometime next week. My private secretary is arranging meetings with senior management of the six institutions that I referred to. I hope I will have seen them by mid-May.
2. Deputy Pearse Doherty asked the Minister for Finance if he will establish a full investigation into the Siteserv deal and other issues at Irish Bank Resolution Corporation to which his Department has raised objections; and if he will make a statement on the matter. [17768/15]
I wish to raise the issue of Siteserv and the planned review by KPMG of the sale of that company. It is very clearly an issue that will not go away. Why should it? The Minister's attempt last night to fob off and defend the KPMG investigation into the sale, which KPMG had its fingerprints all over, is not getting public support.
It is important we get to the truth of all this. Can the Minister outline why he is so opposed to a commission of investigation? What are the reasons for his belief that a commission of investigation into the sale, about which his own Department has raised concerns, is not warranted?
It was announced on 23 April 2015 that I would be directing the special liquidators of IBRC to review certain transactions which occurred between 21 January 2009, the date of the nationalisation of IBRC, and 7 February 2013, the date of the appointment of the special liquidators to IBRC. The review will cover transactions that resulted in a capital loss to IBRC of at least €10 million during that period or are specifically identified by the special liquidator as likely to give rise to potential public concern in respect of the ultimate returns to the taxpayer. I am informed that the review will cover over 30 transactions.
On 27 April 2015, I formally announced the terms of reference for the review. A copy of the ministerial direction which includes the terms of reference can be found on the Department of Finance website. Retired High Court judge, Mr. Justice larfhlaith O'Neill, will monitor any actual or perceived conflict of interest with the review. The purpose of this review is to determine whether there is evidence of material deficiencies in IBRC's performance in respect of such transactions and related activities and management decisions and whether it can be concluded that the transactions were not commercially sound. I have asked that the special liquidators carry out this review and provide a report of their findings before 31 August 2015. Following this, I will make the report available to relevant committees of the Oireachtas.
It is important to note that the commission of this review and report is to serve the public interest in light of recent speculation and is not being undertaken as the result of any evidence that such deficiencies existed or that transactions were not commercially sound. The special liquidators are best placed to undertake such a review thoroughly and expeditiously, given their access to all books and records of IBRC, the resources at their disposal to conduct such a review and the power set out under the IBRC Act which allows me to make this direction in the public interest. As I have stated, in order to manage or mitigate against any actual or perceived conflicts of interest, I have directed, with the agreement of the special liquidators, that they engage retired High Court judge Mr. Justice larfhlaith O'Neill to monitor any actual or perceived conflict of interest with the review. I am confident that this will ensure that the review process is robust.
The Joint Committee on Finance, Public Expenditure and Reform has requested a copy of the review upon completion. The review will be made available to the committee in line with the request.
I failed to hear why the Minister is so opposed to a commission of inquiry. He says he has instigated the review because of public concern about the sale, three years and two months after the issue was first raised in the Dáil. There remains public concern but that concern is not just about the sale - it is also about the review he has instigated. It is about the fact the Minister has asked the special liquidators from KPMG to investigate a transaction which KPMG had its fingerprints all over. KPMG, or people associated with it, has been involved in nearly every part of this transaction, whether in the past or the present. It was involved in the liquidation of Siteserv by the special liquidator of IBRC, it gave advice about the sale to directors of Siteserv and the company paid fees to KPMG for that advice. Does the Minister not realise that this will not garner public confidence? Can he explain to the Dáil why he is opposed to a commission of investigation that does not include KPMG reviewing a transaction in which it was involved?
Every fact about this issue has been put on the table by the Department of Finance and myself, whether by way of parliamentary questions or freedom of information requests made by Deputies. Not a single fact or piece of evidence has been brought forward by any of the people who are making third party allegations.
I see this as possibly the first step in an investigation. When KPMG liquidators have carried out the report and given it to me and after the Government has cleared it, I will send it to the relevant Dáil committees. I have already received a request from the Joint Committee on Finance, Public Expenditure and Reform and I have told it I will send the report to it expeditiously. I presume the Committee of Public Accounts will also look for a copy of the report and then it will be up to whoever adjudicates on who deals with work in the House to decide which committee will deal with it.
I will not inhibit the committees in any way in continuing with an investigation. If further action is required at that time, the Government will facilitate it. The Deputy can see this, as with many other such cases in the past, as a first step, a scoping exercise by the people who have all the data at their disposal. His concerns, and those of many other people, have been about perceived or actual conflicts of interest and I have dealt with that by appointing retired High Court judge Mr. Justice larfhlaith O'Neill and he will decide whether there are perceived or actual conflicts of interest.
The Minister says this is the first stage of an investigation and he mentioned the committees of this House. If one of those committees recommends a commission of investigation, will the Government facilitate that process after scrutiny of the KPMG review? He said the review would involve some 30 transactions. Can he confirm that every transaction that resulted in a loss of €10 million to the State will be investigated by KPMG? Will the review have the powers to look beyond the companies which traded on behalf of individuals to discover who the individuals were who bought shares in Siteserv around the time of the transaction?
The scope of this review is far too short. The Minister will know that others who bid for assets of IBRC while it was in liquidation by the special liquidator have raised concerns that not all financial information was available to them. The Racing Post transaction, for example, was one where an individual is on the record in the media as saying he withdrew from the auction because the information was not available. There is concern among the public about this and I ask the Minister and the Government to commit to facilitating a full commission of investigation in the event that a committee of this House recommends one.
The key issue of concern to a number of Deputies is over conflicts of interest. The modus operandi is that no institution will be involved in scrutinising itself. That is why the judge is involved. It is not a question of KPMG investigating 30 transactions. If KPMG has a perceived or actual conflict of interest, some other forensic accountants will be brought in to carry out that piece of the review and it is the role of the High Court judge to monitor the transactions.
My commitment is to send the report to the relevant committees of the Houses of the Oireachtas. I presume the committees will discuss it and we will see what is necessary after that but I will not pre-commit because the review has just commenced and we will wait for the results before we take further steps. The information will be shared with the relevant committees and if the Deputy is on one of those committees, he will be able to have his say on what happens next.
Will all transactions be examined?
We must move on to Question No. 3 in the name of Deputy Ruth Coppinger.
The question I asked was not answered.
The review will include 30 transactions of over €10 million.
Is that all of them?
There are others which may excite concern and they may be taken too.
I ask speakers to adhere to the time limits. It is unfair to other Deputies when their questions are not reached.
3. Deputy Ruth Coppinger asked the Minister for Finance if he is satisfied that the inquiry into the sale of Siteserv and other companies at the Irish Bank Resolution Corporation contains sufficient safeguards to prevent any conflicts of interest; and if he will make a statement on the matter. [17762/15]
My question is also on conflicts of interest relating to Siteserv. The Minister said that any potential public concerns about conflicts of interest will be addressed by a High Court judge and that every fact has been put on the table. Some 19 questions were asked of the Minister before this blew up and the information has been pulled and dragged from him, rather than put on the table. Can he not see how one company investigating itself is not an independent inquiry?
I thank the Deputy for her question. In light of the recent concerns raised in the Houses of the Oireachtas and elsewhere regarding the Siteserv transaction and the public discourse this has caused surrounding the handling of other transactions undertaken by IBRC, I have directed the special liquidators of IBRC to review certain transactions which occurred between 21 January 2009, the date of the nationalisation of IBRC, and 7 February 2013, the date of the appointment of the special liquidators to IBRC. The review will cover transactions that resulted in a capital loss to IBRC of at least €10 million during that period, or that are specifically identified by the special liquidator as likely to give rise to potential public concern, in respect of the ultimate returns to the taxpayer. The retired High Court judge Mr. Justice Iarfhlaith O'Neill will monitor any actual or perceived conflict of interest with the review. I am informed that the review will cover over 30 transactions.
The review and report will evaluate whether there is any evidence of material deficiencies in the performance of their functions by those acting on behalf of IBRC, including the board, directors, management, employees and agents of IBRC and whether it can be concluded that any of the transactions were not commercially sound. I have asked that the special liquidators carry out this review and provide a report of their findings before 31 August 2015. Following this, I will make this report available to relevant committees of the Oireachtas. The Joint Committee on Finance, Public Expenditure and Reform has requested a copy of the review upon completion. The review will be made available to the committee in line with the request.
I want to stress that the commission of this review and report is to serve the public interest in light of recent speculation and is not being undertaken as the result of any evidence that such deficiencies existed or that transactions were not commercially sound.
The special liquidators are best placed to undertake such a review thoroughly and expeditiously given their access to all books and records of IBRC, the resources at their disposal to conduct such a review and the power set out under the IBRC Act which allows me to make this direction in the public interest. As I have said, in order to manage or mitigate against any actual or perceived conflicts of interest, I have directed, with the agreement of the special liquidators, that retired High Court judge Mr. Justice Iarfhlaith O'Neill monitor any actual or perceived conflict of interest with the review. I am confident that this will ensure that the review process is robust.
The Minister has appointed KPMG to investigate a sale in which it was involved. Many of its directors also had links with Siteserv. This is an old boys network that is in place. Two weeks ago, the Tánaiste told myself and other Deputies that there would be an independent inquiry into this by a competent authority and now we have KPMG investigating itself. Can the Minister say why Walter Hobbs, who was the overseer of the sale, is also a director of KPMG? Mr. Hobbs defended the sale on a "Prime Time" programme and he also has shares in three companies.
The Deputy cannot make allegations in the Chamber. This is Question Time.
How can this be an independent inquiry? In regard to the Minister's role, in any other state, even under capitalist democracy, he would be gone because he has told two different stories.
Will the Deputy ask a question, please? It is Question Time.
The Minister has misled the Dáil. He told-----
The Deputy cannot make statements like that.
Obviously, the Minister was very concerned about this sale but-----
Will the Deputy resume her seat? The time is up. Thank you, Deputy. Will the Minister please respond?
-----in response to 19 questions from several Deputies he said that there was nothing to see and we should move along. He has embarked on a path-----
Deputy, will you please resume your seat?
I am just finishing now.
The time is up. It has expired. The Deputy had a minute to put her question, not to make statements or allegations.
Can the Minister say why he has told two different stories?
I ask that the microphone not be switched on when the Deputy is out of order.
What allegations, a Cheann Comhairle?
You were making allegations of all sorts of corruption and everything else. The Minister to reply.
It is obvious the Minister misled the Dáil in his response to questions.
The Deputy cannot make a statement that the Minister misled the Dáil like that. She cannot throw out those allegations in a democratic assembly.
We are finding that out through freedom of information requests now. We can say it.
The Deputy is not going to get away with constant allegations in this Chamber as long as I am in the Chair.
Obviously, we are not going to get to the truth as long as you are in the Chair.
The Deputy should withdraw that comment.
There is a thing called democracy where people are entitled to their good name.
I have set out the position in reply to other Deputies and also in a lengthy debate last night on a motion put down by the Fianna Fáil party, and we set it out in full. I have issued a legal instruction to the special liquidators to carry out a review. I have dealt with the concern about conflicts of interest by appointing a retired High Court judge to monitor and advise on any perceived or actual conflicts of interest. That process has now commenced. I am certainly not getting into a position of carrying out a parallel inquiry here in the Dáil in reply to allegations, but I will put this to the House. There is not a single allegation being made that is not based on information that I put before the Dáil. We have given full information both in reply to parliamentary questions and freedom of information requests. The information given by the Department of Finance and by me is the basis of everything that has been said, so to accuse me of not giving full information is a pretty ridiculous charge in that context.
The point is that we are meant to believe there are Chinese walls between people who are investigating, KPMG. It is just ludicrous. Nobody outside this Chamber-----
Will the Deputy put a question? This is Question Time.
-----believes that. How does the Minister expect people to believe in this when somebody who had a beneficial interest in this sale is now investigating it and that a judge will step in on occasion? That is not an independent inquiry. I know the Minister was concerned because he had a number of meetings about this whole issue and his officials were clearly concerned, but it seems that he can tell the Dáil another story. He should have come out at that stage when he was asked questions-----
The Deputy cannot make allegations of that sort in this Chamber. The Minister has stated his case and the Deputy cannot make allegations that are false. Thank you.
Did the Minister not attend a number of meetings about this in which he expressed his concern? He said that his patience was wearing thin in relation to all of the players involved-----
Thank you, Deputy.
-----but yet he came into the Dáil on a number of occasions and he did not give that information.
First of all, there was no difference of opinion between the Department of Finance and myself. My role and that of the Department of Finance was to hold IBRC accountable. It was difficult to do so because of the arrangements made by the previous Government in the legislation that nationalised IBRC, the former Anglo Irish Bank, and also because of the relationship framework that was put in place. I understand why those arrangements were made because I remember the debate at the time and there were all sorts of allegations that there would be political interference. The attempt to protect against political interference went so far that it put me and my Department in a difficult position to exercise accountability. There were a lot of issues that concerned me but I was not asked about them in the questions. Any fair examination of the parliamentary replies will find that they were properly answered. The Deputy put down the first question and her leader put down the second question. At that stage, it was before I became aware of the Siteserv situation, so the Deputy got less than full information and so did Deputy Gerry Adams, but that was because I gave the Deputy the information that I had. After that, everything was answered in a lengthy fashion. Everybody knows that what one looks for under freedom of information is not what one looks for in a parliamentary question.
4. Deputy Michael McGrath asked the Minister for Finance his plans to announce new measures to address the mortgage arrears crisis; his views on the issues currently being examined to improve the way mortgage arrears cases are dealt with; and if he will make a statement on the matter. [17819/15]
I understand an announcement will be made next week as regards the mortgage crisis and that new measures will be announced. I look forward to that. The purpose of this question is to have a debate on the nature of the changes that we need in dealing with the mortgage crisis. For me, the single key issue is to ensure that the final word in the restructuring of a mortgage is by somebody who is objectively independent. That must be the fundamental change that is required in terms of dealing with mortgages in distress. I look forward to hearing what the Minister has to say.
I thank the Deputy for his question. As the Deputy is aware, the Government has put in place a broad strategy to address the problem of mortgage arrears and family home repossessions. The primary focus of this strategy is to support those home owners in difficulty with their mortgage repayments and, in so far as possible, to avoid repossession of the family home.
The Central Bank of Ireland's code of conduct on mortgage arrears sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears on their primary residence and 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.
Where a borrower engages with his or her lender, a sustainable restructure arrangement to address his or her mortgage arrears situation is put in place in the majority of cases. The Central Bank's most recent quarterly release on residential mortgage arrears and repossessions, that is, for quarter 4 of 2014, indicates that almost 115,000 restructure arrangements have been put in place.
A key focus of any forthcoming initiative from the Government will be to ensure that distressed borrowers are fully informed about appropriate supports, how to access them and how these can help. Many borrowers can find solutions through the options offered by the Insolvency Service of Ireland, ISI, and the Government will ensure that the personal insolvency process is as fair and effective as it can be and that the objectives as set out in the Personal Insolvency Act are realised as much as possible. My colleague, the Minister for Justice and Equality, and her officials are actively preparing amendments to the legislative framework for personal insolvency. This is aimed at enabling the Government's objectives to be met. The aim is to ensure that more people in distressed debt access the available mechanisms than has been the case to date.
Where a mortgage in arrears is deemed to be unsustainable by the lender, the mortgage-to-rent scheme administered by my colleague, the Minister for the Environment, Community and Local Government, Deputy Kelly, may be a viable alternative and enable families to remain in the family home. His Department is examining the possibilities for more throughput via this mechanism.
The effective management of the mortgage arrears issue is an issue that remains under continual review. More concerted action can be undertaken by the banks to assist customers in arrears. As the Deputy is aware, the Taoiseach announced that the Government was considering a range of options to support the existing framework and to improve the uptake of personal insolvency solutions. Given the importance of the issue, his Department is co-ordinating the response across various Departments and Government agencies and I anticipate that a detailed announcement will be forthcoming shortly.
I thank the Minister. We need a greater throughput on the issue of mortgage to rent. Fewer than 100 cases have been completed. The process needs to be revamped, streamlined and made more efficient. We need a clear definition of what a sustainable solution is from the point of view of the borrower and we need consistency in its application. Personal insolvency practitioners, PIPs, need to be more available via a publicly funded panel of PIPs to persons who are dealing with debt. We need those solutions that are working to be deployed. The most popular is one of the least effective, namely, arrears capitalisation. We need consistency in the way split mortgages are treated.
I will revert to my initial point. Above all else, we need the final say in the restructuring of a person's mortgage to be taken out of the hands of the bank and put in the hands of someone or something that is independent, be it the Insolvency Service of Ireland or a court of law. Perhaps the Minister will address this issue and confirm the accuracy of media reports to the effect that the Government is planning changes along these lines so as to dilute the banks' veto at a minimum or, ideally, to remove it.
When we entered into office, we quickly put a range of options in place so that banks and lenders could interrelate with people who were in arrears and devise solutions that would enable the latter to remain in their homes while continuing to pay all or part of their mortgages. There was a menu of solutions, but we realised that there was no one-size-fits-all solution. Some options would suit one borrower while other options would suit another borrower. By and large, this approach has been successful, with 115,000 mortgages reconstructed. There are more mortgages reconstructed than there are in arrears.
Going down the scale of difficulty, however, there is a residue of mortgages that the menu of options is not addressing or seen to be addressing. We are returning to the issue to propose new options, one of which is to amend the insolvency Act so that something along the lines of what the Deputy has suggested can be put in place. I expect the Minister for Justice and Equality to bring her proposals to the Government shortly.
That is a change that we would warmly welcome. Taking the final decision out of the hands of the banks is something for which we have called for a considerable period. Be it a court of law or the insolvency service that would have the final decision-making power on objective grounds, based on an analysis of a person's repayment capacity and the available suite of options, with a view to keeping the family in its home if possible, that must be the core objective underpinning the Government's strategy for dealing with mortgage arrears. I call on the Minister to do this because the figures are frightening. More than 100,000 restructurings have been put in place, but we still have 110,000 accounts in arrears. As the Minister knows, under the targets programme, the figures show that the banks have proposed 30,000 so-called solutions that involve the loss of the family home, with 16,000 of those under the heading "Concluded". While that many houses have not been repossessed, if there is not a fundamental shift in thinking and in how mortgage arrears are dealt with, there will be a major ramping up of enforcement activity and the loss of family homes. It is in the country's interests to avoid that situation if possible.
I accept the Deputy's sincerity on this issue. No one has a monopoly on the knowledge about how to resolve this issue. It has proven difficult internationally. When people lose their jobs and fall into arrears, they do not have the wherewithal to service their mortgages, so one must devise solutions to keep them in their homes. It is the Government's policy that people remain in their homes. Most of the suite of options to which the Deputy referred are designed with that end result in mind. We are adding to the suite. The Minister for Justice and Equality will bring her proposals to the Cabinet shortly, but other proposals are also being considered, particularly through the Department of the Environment, Community and Local Government.
5. Deputy Ruth Coppinger asked the Minister for Finance if he will report on the practice of banks evicting sitting tenants of repossessed buy-to-let properties; his plans to instruct the banks or introduce legislative change to oblige banks to honour existing leases; and if he will make a statement on the matter. [17840/15]
I wish to ask about the policy of banks repossessing homes that, though buy-to-lets, have tenants, sometimes of many years. These tenants are now becoming homeless. I have several cases involving families that are in hotels, sleeping in cars or sofa surfing, as it is called. I put it to the Minister that encouraging banks to repossess homes while prices are rising is a sanctioned Government policy and that he has the power to initiate a policy to stop it.
I thank Deputy Coppinger for her question. Issues relating to the rental market and tenancy rights are for my colleague, the Minister for the Environment, Community and Local Government, Deputy Kelly. I am informed by his Department that, in circumstances where a receiver is appointed to a landlord's interest in a dwelling, it is essential that the rights of tenants be protected. While the circumstances of each case may vary depending on the terms of the mortgage or charge under which the receiver is appointed, the policies and procedures of banks in appointing receivers cannot affect the statutory or contractual rights of tenants. The tenant continues to enjoy the same security of tenure. The appointment of a receiver does not mean that a tenant loses his or her rights under the Residential Tenancies Act 2004. That Act sets out the procedures and notice periods that must be complied with when terminating a tenancy.
In documentation submitted prior to recent meetings with the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, AIB, Bank of Ireland and Ulster Bank confirmed that they adhered to the legislative framework when dealing with the repossession of buy-to-let properties. Furthermore, I understand that the Private Residential Tenancies Board, PRTB, is aware of the impact on tenants of receivership and repossession proceedings. The board is looking to engage with the Central Bank and the financial institutions with a view to developing a code of practice to apply in such situations. The main purpose of the code will be to ensure that the financial institutions are fully aware of the rights, duties and obligations under the Residential Tenancies Act and to ensure that there is a consistency and fairness in the treatment of tenants in these cases.
Under our laws, there is nothing that a tenant can do if a bank or landlord - the owner of a property - decides to sell it. After due process has been followed, the tenant must vacate the property. Buy-to-lets are the homes of the people renting them, but those people are the group most likely to suffer from poverty and most in danger of becoming homeless because they cannot find alternative rented accommodation. Some are in receipt of rent allowance, while some are low-paid families.
The current homelessness crisis is the worst in the history of the State. The Government has a role in the two issues that have led to this situation. The mortgage arrears resolution targets, MARTs, that have been set by the banks put an onus on them to repossess properties. No code of conduct protects non-home owners. The code only protects those who have residential mortgages. Something could be introduced in this regard. The Minister has stated that he favours the continual rise in house prices because he believes it will lead to a recovery.
This is also why the banks are selling but nobody benefits other than the very wealthy.
As I noted in my original reply, when a buy to let is sold, the rights of the tenants continue. They do not lose any of their rights because of a change of ownership. In circumstances where a receiver is appointed to manage a landlord's interest in a dwelling, it is essential that the rights of tenants are protected. While the circumstances of each case may vary depending on the terms of the mortgage or charge under which a receiver is appointed, the policies and procedures of banks in appointing receivers cannot affect the statutory or contractual rights of tenants. The tenant continues to enjoy the same security of tenure. The appointment of a receiver does not mean that a tenant loses his or her rights under the Residential Tenancies Act 2004. Security of tenure under the 2004 Act is based on a rolling four year tenancy cycle. Where a tenant has been in occupation of a dwelling for a continuous period of six months and no notice of termination has been served in respect of that tenancy prior to the expiry of the six months, the tenancy is established for the remainder of the four year period and it becomes a Part 4 tenancy.
If the bank and the receiver decide to sell the property, the tenant can do nothing about it. I am all in favour of the bank continuing to rent to the tenant in situ but the banks are not doing that because the Minister, the Government and the banks have set targets for repossessing properties. With house prices rising, it is worthwhile for the banks to sell properties and reduce the debt on their balance sheets. This problem is known to the Government and in August 2013, it committed to reviewing the laws on rent, receivers and tenants, and Threshold has asked it to do that. Nothing further has been done, however, and we are encountering the resulting human misery and suffering in our clinics. The Minister's own clinics must be dealing with similar issues. I have a large caseload of people who were made homeless because of repossessions by the banks. The Minister will be familiar with the case of Martin and Violet Coyne last year but they are only one of many families in this situation.
The Deputy did not ask me in her original question to introduce legislation to prevent lending agencies from selling buy-to-let properties. She asked me to introduce legislation to oblige banks to honour existing leases. That is a tenant rights issue. Under the 2004 Act, lending agencies are obliged to fulfil the tenant rights obligations on a change of ownership. If a problem arises in practice whereby certain lending agencies are either unaware of, or are ignoring, the law, I noted in my reply that discussions are ongoing at Central Bank level to introduce a protocol to ensure all lending agencies are very clear on the rights of tenants under the 2004 Act and that even with a change of ownership, they are obliged to continue to comply with the rights of tenants under that Act.
