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Social and Affordable Housing

Dáil Éireann Debate, Wednesday - 1 February 2012

Wednesday, 1 February 2012

Ceisteanna (122, 123, 124, 125)

Simon Harris

Ceist:

123 Deputy Simon Harris asked the Minister for the Environment, Community and Local Government when he intends to launch the buy-to-rent scheme for private home owners in which owners can surrender their house to their local authority and rent the property back; and if he will make a statement on the matter. [5725/12]

Amharc ar fhreagra

Robert Dowds

Ceist:

127 Deputy Robert Dowds asked the Minister for the Environment, Community and Local Government how a mortgage-to-rent scheme, as recommended by the Keane report on mortgage arrears, will work in practice. [5849/12]

Amharc ar fhreagra

Robert Dowds

Ceist:

128 Deputy Robert Dowds asked the Minister for the Environment, Community and Local Government, in respect of an upcoming pilot of the mortgage-to-rent scheme, if it will be up to each bank and financial institution to decide whether to get involved in such a scheme. [5850/12]

Amharc ar fhreagra

Robert Dowds

Ceist:

129 Deputy Robert Dowds asked the Minister for the Environment, Community and Local Government if it will be up to the banks and financial institutions or to persons with distressed mortgages to decide whether to get involved in a mortgage-to-rent pilot scheme. [5851/12]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 123 and 127 to 129, inclusive, together.

As part of the implementation of the recommendations in the Keane Report my Department is developing a mortgage to rent scheme on a pilot basis. This work has been assisted by Clúid Housing Association, a number of local authorities, the Housing and Sustainable Communities Agency, AIB, and more recently, New Beginning and another lender. The Keane reported recommended 2 such schemes or models on which a mortgage to rent option might operate. The same categories of household would be targeted under each scheme. These are households that:

have had their mortgage position deemed unsustainable under a Mortgage Arrears Resolution Process (as provided for under the Central Bank's Code of Conduct on Mortgage Arrears);

agree to the voluntary repossession of their home;

do not have significant positive equity, and;

are eligible for social housing.

In addition, the house must also be appropriate to household need. In other words, the household are not significantly over-accommodated (e.g. a couple residing in a home that is too large for their needs) or under-accommodated/overcrowded. Households availing of the scheme will become social housing tenants, paying a differential rent calculated on the basis of household income. The essential difference between the 2 options relates to ownership of the property after the voluntary repossession has taken place.

Under the first model, after voluntary repossession has taken place the property would be purchased by an approved housing body at current market value. The household would become a social housing tenant — they would no longer be homeowners.

The purchase of the property would be part loan financed (using loan finance generally obtained from the initial mortgage provider) and the Exchequer. My Department is also consulting with the Central Bank to ensure that the process through which households might be offered the option to participate in the scheme complies fully with all existing consumer protection and other regulatory requirements.

Under the second model, the lender would become the long term owner of the property after voluntary repossession had taken place. The household would become a social housing tenant of the relevant local authority and the local authority would, in turn, lease the property from the financial institution for the period of the lease. The household would enjoy the same benefits as any household already accommodated under the social housing leasing initiative in terms of security of tenure, differential rents, eligibility etc.

It is anticipated that the first transactions under the first model will take place very soon. Ultimately, the schemes will be rolled out nationally using the criteria set out above and it is hoped that all lenders will agree to participate.

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