Mortgage-to-rent reboot promised after months of limbo

The Housing Agency is set to unveil a reboot of the mortgage-to-rent scheme following months of heightened uncertainty over the future of the programme, which had left distressed borrowers, lenders and players in the sector in limbo.

Officials from the Department of Housing have informed lenders and organisations involved in a previous pilot mortgage-to-rent scheme that the agency will this week launch a call for expressions of interest from private and approved housing body sector entities interested in becoming mortgage-to-rent providers, capable of delivering “at scale”.

Interested parties will have about two weeks to respond to the call, according to the notification seen by The Irish Times. Those that meet minimum eligibility requirements will be given a further five weeks to submit necessary documents.

Only 16 mortgage-to-rent deals were completed in the first quarter of this year, down sharply from 98 and 175 for the corresponding periods in 2022 and 2021 respectively, according to Housing Agency data.

Student accommodation: A market plagued by bed shortages, rising rents and 51-week leases

---

An attempt to buy the next election with a giveaway budget would be a gross miscalculation

---

The outlook for interest rate cuts is changing - so should Irish borrowers be worried?

---

IDA gives Intel €30m in aid package

---

The slump was largely down to the agency moving late last year to temporarily suspend entering into lease agreements with Home for Life, the only private sector participant in the previous pilot scheme, as it worked through repairs and remedial work on its existing portfolio. There had been a backlog of inspections by local authorities on properties as a result of the Covid-19 pandemic.

The Department of Housing allowed Home for Life to restart the completion of active cases in May.

David Hall, chief executive of iCare, the leading approved housing body participant in the pilot scheme, said the decline in cases going through so far this year was also down to “massive uncertainty” since late 2022 about the future of the scheme. “Everyone has been hesitant to move since late last year, including lenders and hundreds of borrowers in distress. The delays have had a very significant negative impact on the advancement of cases.”

The department officially terminated the pilot scheme on May 25th but missed its own deadline for starting a new expression of interest process in a successor scheme at that stage. A subsequent plan to issue a call in early July also passed.

Some 2,130 mortgage-to-rent deals have been completed since an initial scheme was launched in 2012 on foot of a recommendation in a government-commission report on the mortgage-arrears crisis at the time. A tweaking of the scheme in 2017 gave rise to the pilot programme that had been operating until last month.

Home for Life, the only private sector participant, which is led by chief executive Paul Cunningham and funded by UK investment firm LCM Partners and AIB, had completed 1,024 cases by the end of March, according to Housing Agency figures.

iCare, the second-biggest provider, had put through 477 cases. Its purchases have been financed by loans from AIB, a State facility for approved housing bodies and funds from an immigrant investor programme. However, it has maxed out allocations under the latter funding line.

Banking and Payments Federation Ireland (BPFI) chief executive Brian Hayes, whose organisation represents both mainstream banks and non-bank lenders, welcomed confirmation of the imminent launch of the new process. “We hope this process can be expedited given the fact that mortgage-to-rent can provide a real solution to customers in long-term debt.”

The 2020 programme for government and the Government’s Housing for All plan, unveiled the following year, had each committed to strengthening the scheme and ensuring it was available to those who need it.

Irish mortgage default cases have fallen from a peak of almost 13 per cent of owner-occupier home loans in 2013 to 4.1 per cent as of the end of March, according to the Central Bank. However, almost half of the 29,300 cases where borrowers were at least 90 days behind in repayments were instances where borrowers were more than five years in arrears.