Dáil Éireann Debate, Tuesday - 4 April 2017
313. Deputy Michael D'Arcy asked the Minister for Housing, Planning, Community and Local Government his views on the recently published report following the review of the mortgage to rent scheme for borrowers of commercial private lending institutions, which sets out the percentage of MTR completed cases by lender up to December 2016; the percentage of MTR cases in the pipeline, by lender; and if he will make a statement on the matter. [16162/17]
Amharc ar fhreagraThe Housing Agency publishes statistical information on the operation of the Mortgage to Rent (MTR) scheme, including the number of both active and completed cases by lender, on its website on a quarterly basis at the following web link:
www.housingagency.ie/Our-Services/Housing-Supply-Services/Mortgage-to-Rent.aspx.
The statistics for Q1 2017 will be published on the Housing Agency's website later this week. In the meantime, I can advise that to the end of Q1 2017, a total of 3,672 cases have been submitted under the MTR scheme. Of these, 2,816 were ineligible or terminated during the process, 235 have been completed and 621 applications are being actively progressed.
I published the Review of the Mortgage to Rent Scheme for borrowers of commercial private lending institutions on 8 February 2017. The Review represents the completion of an early action in the Rebuilding Ireland Action Plan for Housing and Homelessness. The Review has explored the avenues and impediments to participation in the scheme and recommends a number of actions to make the scheme work better for borrowers. Key actions include:
- Lenders will be required to formally communicate with borrowers as to why they are not suitable for the scheme.
- The property price threshold for a house in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow is being increased to €365,000 (from €350,000), while the threshold for an apartment/townhouse in these areas is being increased to €310,000 (from €300,000). For the rest of the country, the threshold for a house is being increased to €280,000 (from €250,000) and for an apartment/townhouse to €210,000 (from €190,000).
- Flexibility will be provided in relation to the size of properties which qualify for the scheme. In practical terms, this means that an assessment of the property size suitable to a particular household will allow for a maximum of two additional bedrooms in the property above the actual needs of the household, with the property still being considered eligible.
- There are a number of actions to improve knowledge and understanding of the scheme. A range of state agencies will be facilitated to assist and guide borrowers who could benefit from the scheme. A Step by Step Guide for Borrowers will be produced alongside a range of other targeted information supports.
Implementation of the actions has already begun with changes to the scheme's eligibility criteria and some other process changes effective from 27 March 2017. I am confident that the implementation of the actions put forward in the Review will make the MTR process quicker, more transparent, easier to navigate for borrowers and, ultimately, more accessible to more households in mortgages distress.
In addition, the Review concludes that the current financial model of the scheme may not be capable of delivering the scale of successful cases that could benefit from the scheme over time. Currently, the MTR scheme relies on AHBs to purchase from lenders properties that have been voluntarily surrendered by eligible borrowers. A number of private equity firms have expressed an interest in purchasing mortgage debt portfolios from commercial banks with a view to exploring the potential for them to access the MTR scheme model for the borrowers in occupation of the mortgaged property. They are seeking an alternative arrangement that would see the mortgaged property staying in the funding firm’s ownership and the property itself leased back to the local authority in circumstances where the borrower is eligible for MTR and the borrower would therefore remain in their own home.
One of the outcomes of the Review is that in order to test the operability of alternative funding models for the scheme, the Housing Agency will work with a number of financial entities who have come forward with an interest in working with the MTR scheme to progress a number of pilot alternative lease arrangements. In advance of these pilots, a targeted marketing exercise is currently being carried out by the National Development Finance Agency, on behalf of my Department, to test the suitability of the leasing arrangements to ascertain if they would be viable for a mortgage to rent cohort. These pilot projects are in a developmental stage and so the detailed contractual and lease arrangements have yet to be agreed and my Department is working with the Housing Agency in this regard.
A detailed financial assessment of the structure of the funding of the MTR scheme will be undertaken in advance of the budgetary process for 2018. The assessment will be informed by the early impact of the other actions proposed by the Review, as well as the outcome of the experience with the pilot lease arrangements, and the availability of financial resources overall.
