Mortgage scheme could save ‘thousands’ from losing home

The expansion of the mortgage-to-rent scheme has been welcomed by charities and other groups working with distressed debtors and will help many thousands of families stay in their homes, it has been suggested.

The proposals to be rolled out by Minister for Housing Simon Coveney will allow private finance houses bulk-buy the mortgages of struggling families and lease the properties back to the State.

Under the scheme, families who qualify will become the State’s tenants, with a guaranteed 20-year lease and an option for a further 20 years. It is understood there will be another option for families to buy back their homes at the market rate any time they choose.

The scheme will see the price threshold for a qualifying house in counties Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow set at €365,000, with the corresponding figure for an apartment or townhouse at €310,000, from €350,000 and €300,000 respectively.

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The rest of the country will see the thresholds rise to €280,000 and €210,000 from €250,000 and €190,000.

Expansion welcomed

The Phoenix Project charity, which helps people in mortgage arrears deal with banks, welcomed the expansion of the mortgage-to-rent scheme and said it would work with the Government to provide long-term solutions to borrowers.

The project’s chairman, John McGrath, described the mortgage arrears crisis as “a bigger threat to the economy than Brexit” and said it put social cohesion and stability in the Republic at risk.

Outlining the scale of the mortgage crisis, Mr McGrath said there were 200,000 households in Ireland in arrears, and 45,000 in arrears of more than two years.

“I think these proposals will make a huge difference and they are ones we have sought for a long time. If even half the people in long term arrears were able to benefit from the scheme it would make a huge difference to the country. It could keep many thousands of people in their homes.”

He said that while there were 475 repossessions last year, banks “had reached a stage where they were no longer willing to adjourn repossession cases and were saying ‘we want our money’”.

Mr McGrath said the the income and property price parameters should have been widened from €360,000 for a home to €425,000, and a €45,000 income cap in Dublin and a €35,000 cap in the rest of the State.

“There has been a surge in property prices, especially in the capital in recent years, and it is now very difficult to purchase a three-bedroom house in Dublin for under €400,000. The Phoenix Project feels that the parameters for this scheme should be extended both in income and property price caps,” Mr McGrath said.

‘A good day’

The head of the Irish Mortgage Holders Association (IMHA), David Hall describe the changes as “very welcome”.

He said many of the 35,000 people in long term arrears were facing repossession. “Given the current housing crisis, it is imperative that we try and keep these families in their homes”.

He said the IMHA has been working to establish an approved housing body, Icare Housing, to buy these homes over the last seven months.

He said as a result of the changes, the not-for-profit body will be able to now progress and seek applicants. “I estimate that it will allow an additional 3,000 families be eligible for mortgage to rent. This is a good day and I would strongly encourage anyone in mortgage arrears to engage with a trusted third party.”

While a mortgage-to-rent scheme already exists it has been criticised because it meant holders of distressed mortgages were dealt with on a one-on-one basis, and was not attractive for private finance to become involved. The current scheme is administered by housing bodies and county councils only.

Since the existing scheme’s introduction, only 217 homes have gone through the process, with a further 635 “reaching conclusion”.