I move: "That the Bill be now read a Second Time."
On behalf of the Minister for Justice and Equality, I am pleased to introduce the Land and Conveyancing Law Reform (Amendment) Bill 2019 in this House following its passage through the Seanad and I look forward to our discussion of its provisions here. I was very pleased with the strong support for the Bill from all sides in the Seanad and I trust that this support will also be evident in this House during our discussion.
Put simply, the principal objective of this Bill is to provide further protections for homeowners in mortgage arrears who are facing the risk of repossession proceedings in respect of their homes. For this purpose, the Bill proposes to insert a new section in the Land and Conveyancing Law Reform Act 2013. The Bill broadens the range of matters that a court must take into account when deciding whether to grant a possession order to a lending institution in respect of the borrower’s principal private residence. This Bill, which has its genesis in a Private Members’ Bill that I introduced prior to my appointment as Minister of State, will I firmly believe prove to be an important addition to the suite of Government measures to protect those who find themselves in mortgage arrears and are facing the prospect of court proceedings for repossession of their homes.
I am sure that everyone here will agree that repossession of a borrower’s principal private residence should be a last resort when all other possible remedies have failed. The Government remains committed to helping borrowers in mortgage arrears to remain in their homes.
Moving to the main provisions of this Bill, I want to reiterate that the Government’s objective is to broaden the range of matters that a court must take into account when deciding whether to grant a possession order to a lending institution in respect of a borrower’s principal private residence. The court may also take this broader range of matters into account where, for whatever reason, efforts to secure a personal insolvency arrangement, PIA, have failed or where despite the borrower’s participation in a scheme designed to enable borrowers with mortgage arrears to remain in their home, the court repossession proceedings have continued.
As required by Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union, the European Central Bank has been consulted on the Bill's proposals. The ECB has published its opinion of 18 February on its website.
Section 1 contains a definition of the Act of 2013, which is required for technical reasons, while section 2 makes a number of technical, consequential amendments to section 2 of that Act.
Section 3 is the key section of the Bill and it inserts a new section 2A, containing nine subsections, into the 2013 Act. Subsection (1) defines the scope of this new section. It means that the Bill's provisions will apply not only to those cases in which the court has previously adjourned proceedings under section 2 of the 2013 Act in respect of the borrower's principal private residence, but also in cases where, prior to or following commencement of the proceedings, the borrower has engaged the services of a personal insolvency practitioner, PIP, to assist in the resolution of his or her mortgage arrears, or the borrower has participated in good faith in a scheme designed to enable indebted borrowers to remain in their homes.
This means that section 2A will apply in the following cases: proceedings where the court had adjourned the proceedings of its own motion under section 2(2)(a) of the 2013 Act but, notwithstanding such adjournment, there is no resulting PIA; proceedings where the court refused to adjourn proceedings in response to a request of one of the parties under section 2(2)(b) of the 2013 Act, or adjourned them and notwithstanding such adjournment, there is no resulting PIA; proceedings that have not been adjourned under section 2 of the 2013 Act but where the borrower has, prior to the court hearing, participated in good faith in a scheme to assist borrowers in mortgage distress to remain in their homes, or engaged the services of a PIP to assist him or her to resolve his or her mortgage arrears difficulties and, despite such engagement, there is no resulting PIA.
Subsection (2) provides that when considering whether to make, or refuse to make, an order for possession in repossession proceedings in respect of a borrower's principal private residence, a court must take account of the matters referred to in subsection (3). The court may also do so when considering whether to grant any other order it considers appropriate in the circumstances of the case, for example, an adjournment, or further adjournment, of the proceedings.
Subsection (3) specifies the matters that the court must take account of in considering whether to make or refuse to make a possession order. Paragraph (a) provides that the court must consider whether the making of the possession order would be proportionate in all the circumstances of the case. This is a significant development. In providing for this matter, the Bill recognises the essential role of the court in balancing the interests of both the borrower and the lender when considering whether to make, or refuse to make, an order for possession. Paragraph (b) provides that the court must always take into account the circumstances of the borrower and any dependants who are resident in the home. Paragraph (c) provides that the court must take into account whether the lending institution has made a statement to the borrower of the terms on which it would be prepared to settle the arrears problem in such a way that the borrower and his or her dependants could remain in their home. This means that there will be an onus on lenders to clarify their positions. Paragraph (d) makes it clear that the court must also consider the details of any proposal put forward by or on behalf of the borrower, whether prior to or following commencement of the proceedings, which would enable him or her, and any dependants, to remain in their home or, alternatively, to secure other accommodation. The Minister has asked me to stress that consideration of proposals which would allow the borrower to remain in their home will include examination of any proposal for participation by the borrower in a scheme to assist persons in mortgage distress to remain in their principal private residence. Paragraph (e) provides that the court must take into account the response, if any, of the lender to the borrower's proposal to remain in their home. This will place an additional onus on lenders to engage in a constructive manner with any proposals put forward by, or on behalf of, the borrower. Paragraph (f) makes specific reference to the conduct of the parties in any attempt to find a resolution to the borrower's mortgage arrears difficulties. The provision makes it clear that the court must take account of a lending institution's refusal or reluctance to engage in attempts to find a resolution of the mortgage arrears problem, and also of any borrower's refusal to engage in a meaningful manner with the lending institution.
Subsection (4) specifies certain additional information that the court may take into account when considering whether the making of an order for possession would be proportionate in all the circumstances of the case. These include the overall amount of debt outstanding on the mortgage concerned, the level of arrears due on foot of the mortgage concerned, and the advised market value of the principal private residence at the date on which the legal proceedings commenced. The Minister has provided a definition of "advised market value", AMV, in subsection (9). This definition, based on the corresponding definition in section 2 of the Property Services (Regulation) Act 2011, will ensure that the market value of the property is valued in a professional, objective manner. This AMV must be provided by the holder of a current licence issued by the Property Services Regulatory Authority, PSRA, under that Act.
Subsection (5) has a technical purpose. It clarifies that the fact that there is no PIA in a specific case may arise because a proposal for a PIA has not been made or, alternatively, such a proposal has been made but the procedure has ended without a successful outcome.
Subsection (6) identifies the circumstances in which, under the Insolvency Act 2012, the PIA procedure is considered to have ended. This applies in the following cases: where a PIP has prepared a proposal for a PIA and the debtor has consented to that proposal and the calling of a creditors' meeting, but that meeting does not take place before the expiry of the protective certificate as set out in section 106(3) of the 2012 Act; where, under section 108(8)(b), at the taking of a vote at a creditors' meeting in regard to a PIA proposal, the proposal is not approved by a majority of creditors in accordance with section 110 or deemed to be approved, and the PIA procedure has terminated; where, in a case under section 111A, there is only one creditor and the creditor does not approve the proposal under section 111A(8), or the personal insolvency practitioner fails to give the creditor a written notice of the proposal before the expiry of the protective certificate under section 111A(9); where the court upholds an objection to the PIA under section 120 and the procedure is deemed to come to an end in accordance with section 114(3); where, under section 115A(9), the court refuses to make an order confirming the coming into effect of the proposed PIA following a court review under that subsection; where the debtor is in arrears with his or her payments for a period of six months of the PIA and it is deemed to have failed under section 123.
Subsection (7) permits the Minister for Justice and Equality to designate a scheme for the purpose of subsection (1 )(c)(i) and subsection (3)(d)(i). Any such scheme would have to comply with the following conditions: the objective of the designated scheme must be to provide those borrowers with mortgage arrears difficulties in respect of their homes with assistance that is reasonably likely to enable them to address these difficulties and facilitate, as far as possible, their remaining in their homes, and it is reasonably likely that such assistance will in fact be provided under the scheme.
Subsection (8) provides that an advised market value must be set out in a statement provided by a licensee under the Property Services (Regulation) Act 2011.
Subsection (9) is a standard provision containing a number of relevant definitions for the purposes of this new section.
Section 4 contains standard provisions relating to the Short Title, collective citation and commencement provisions.
On behalf of the Minister for Justice and Equality, I underline again the urgency attaching to this short Bill. Its key objective is to provide further protections for homeowners in mortgage arrears who are facing the possibility of repossession of their homes. When enacted, the Bill will provide a clear checklist of factors that a court must take into account when deciding whether to grant a possession order to a lending institution in respect of a borrower's principal private residence. The measures provided for in this Bill are worthy of support and will prove to be an important addition to the suite of Government measures to protect those who find themselves in mortgage arrears and are facing the risk of court proceedings for repossession of their homes. I commend the Bill to the House.