Kevin Moran (Longford-Westmeath, Independent) | Oireachtas source

The Government is opposing these amendments. The basic objective of the Bill is to propose added protection for people in mortgage arrears in respect of their principal private residence. This amendment will not help such people in any way for the simple reason that the receivers are not appointed to a principal private residence. Receivers are generally appointed to buy-to-let properties with the purpose of ensuring that any rental income on the property is used to service the mortgage. In the case of the principal private residence, there is no rental income and so the appointment of a receiver would be of no benefit to the lender. However, receivers may be appointed to buy-to-let premises on which there is a house loan mortgage where the borrower continues to collect the rental income but is not using it to service the mortgage. The appointment of a receiver in such a case is fully justified, for the same reason that a receiver may be appointed to receive rent in the case of other commercial properties. It is not clear why, in such circumstances, the borrower should benefit from the additional protection set out in the amendment.

The rationale behind the proposed amendment is to assist certain borrowers who, for whatever reason, rent out their principal private residence with a view to serving the mortgage. Such an action is itself a breach of the mortgage contract. It is not clear how often this happens. However, the proposed amendment would cover all instances where the lender decided to appoint a receiver, which would include all buy-to-let mortgages. This would invariably cause difficulty for the Courts Service, given the demands on its time and the cost of processing applications for court orders. Recent figures from the Central Bank indicate that receivers have been appointed to more than 5,600 buy-to-let mortgage accounts, and approximately 300 receivers are appointed to such accounts every quarter. This requires lenders to apply for a court order prior to the appointment of a receiver and leads to increased demands on the Courts Service's time and cost.

I should add that, apart from any statutory power to appoint a receiver, mortgage deeds normally reserve the contractual right for the mortgage to appoint a receiver when conditions such as those in section 108(1) are satisfied. The amendment seeks to set aside terms that may be contained in the mortgage agreement contract and could lead to a legislative challenge. If the amendment is passed, the Minister has indicated that it will be necessary to obtain legal advice prior to Report Stage, which would delay the passing of the Bill. That is why we will be opposing the amendment.