Around 25,600 households are more than two years of payments in arrears on their mortgages, according to Central Bank data.
But nationwide just 1,004 have completed a deal under the mortgage-to-rent scheme brought in by the Department of Housing in June 2013, as a way to keep people in their homes albeit as renters rather than owners.
In Dublin, up to the end of 2020, just 229 households across the four local authorities had completed the deal.
For many, it is a choice between that and presenting as homeless, says David Hall, CEO of iCare Housing, an approved housing body (AHB). “It’s a very clever scheme.”
But those figures are lower than they should be, he says. “The fundamental problem is that there are a significant number of people who can’t pay their mortgage.”
Of the approximately 25,500 primary-home accounts in arrears of more than two years nationally, around 11,200 are cooperating with the bank but have no arrangement in place to restructure their loans, shows Central Bank data.
More research is required into their circumstances, says Hall, but clearly many more people could benefit from the scheme.
The Department of Housing is due to finish a review of the mortgage-to-rent scheme by the end of this month, said a spokesperson.
How It Works
Under the scheme – which is for those entitled to social housing – an approved organisation buys the home from the homeowners, and they can stay living there as social tenants.
Courts in Ireland are generally slow to grant repossessions of people’s homes, so lenders can also benefit by saving themselves a lengthy court battle, says Paul Cunningham, CEO of Home for Life.
Home for Life is the only private company currently approved to operate the mortgage-to-rent scheme. The others are AHBs.
Home For Life recently bought 620 distressed mortgages from Allied Irish Banks.
The company has an advisory board to oversee its work, which includes Fr Peter McVerry, the anti-homelessness campaigner, and Aideen Hayden, the chair of the housing advice charity, Threshold.
After Home for Life buys the home, it leases it to the local council and the tenant becomes a council tenant.
So far, Home For Life has bought 24 homes in Dublin, and is in the processing of buying 89 more.
Meanwhile, iCare Housing has bought 66 homes in the Dublin region and is processing 96 more applications, says Hall.
Like Home for Life, iCare buys the home from the lender and rents it back to the householder as a social home.
As an AHB, though it gets 30 percent of the value of the home from government grants, says Hall, and then borrows 70 percent from a bank to buy the property.
What’s Stopping Them?
In some parts of Dublin, and especially in the Dún Laoghaire-Rathdown County Council area, high property values mean that otherwise suitable applicants can’t get on the scheme, says Cunningham.
Of the 289 homes saved in Dublin, just eight of those were in Dún Laoghaire-Rathdown, 88 were in the Dublin City Council area, 66 were in the Fingal County Council area and 67 were in the South Dublin County Council area.
Usually those living outside Dublin who qualify for social housing are eligible for the mortgage-to-rent scheme, he says. But in Dublin “there are disproportionate numbers that cannot avail of it”, he says.
The value of the home must be less than €310,000 for an apartment and under €395,000 for a house.
A Department of Housing spokesperson said that those caps are the same as the caps that apply to councils when they buy social housing.
Hall and Cunningham point to other barriers they see, as well. If the property hastoo many bedrooms, or if the householder has more than €15,000 in positive equity, they cannot access the scheme.
Those rules aren’t rational, says Hall. “Is that a realistic, logical and coherent policy? They will end up in homeless accommodation.”
The question should be whether they are genuinely unable to pay the mortgage, he says.
Often the applicants with some positive equity are older people reaching retirement age with high levels of debt, says Cunningham.
They might have some equity in the home but they can’t sell to realise it, as they would be homeless, he says. So solutions need to be found, says Cunningham.
Several of Hall’s clients have adapted homes because of disabled children, but some are in positive equity, he says. “So what happens?”
There is no disadvantage to the state if an AHB takes on a home with some positive equity, he says. In fact, it’s an advantage, he says.
Another flaw is that a person cannot decide to apply for the scheme, he says. The lender has to nominate them.
The Programme for Government includes a commitment to strengthen the mortgage-to-rent scheme, says a spokesperson for the Department of Housing.
Officials are going through the submissions to its consultation with “stakeholders”, they said. “The review will examine all aspects of the operation of the scheme and the eligibility criteria.”
The results of that review are expected at the end of March, they said.
For the customer, it makes no difference at all if they sign up with a charity or a private company, says Cunningham of Home for Life.
The scheme runs the same, says Cunningham. “You pay the same rent, you have the same buy-back option, you get the same repairs, you have got the same security.”
Hall strongly disagrees. If the customer goes with an AHB, they can be guaranteed that they will remain in their home for life, he says.
Whereas the state has only rented the home from the private company on a 25-year lease, he says.
The challenge facing AHBs is that a private company can pay more, says Hall.
An AHB can’t compete on price with a private company, which is both getting its mortgage paid and also ending up with a valuable property at the end, he said.
That means the banks are incentivised to direct people towards Home For Life instead of AHBs, he says.
Also, if someone wants to buy back the home, it would be more expensive because the company paid more, he says.
Hall says he can’t understand why the state doesn’t include a clause in the contract so it would at least have the first option on buying the home at the end of the 25 years.
He thinks the name of Cunningham’s company is misleading to customers, he says. “They get a 25-year gig, after being told that it’s a home for life.”
Says Cunningham: “We would love to lease it to the local authority for 30 years, 40 years and 50 years, but they can only go to 25 years under Eurostat rules.”
It doesn’t matter anyway because the state will still be responsible for housing the person so they’ll come to an arrangement before the 25 years is up, he says.
“There is every likelihood you will stay in your home, but if not the state is obliged to provide for it,” he says.
Cunningham says it’s a good business but it is fair. “If we were making excess profits there would be more operators coming in,” he says.