Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

In recent years, banks have been selling loans, including owner-occupier and buy-to-let mortgages, wholesale to vulture funds at knock-down prices. Figures provided by the Department of Finance to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach last week reveal that over €24 billion worth of loans have been sold to vulture funds at an average discount of 52%. While facilitating the sale of loans to vulture funds, the Government has designed a tax system that gives massive tax breaks to these funds, incentivising them to buy even more loan that the banks are more than happy to offload to them. The Government has provided the same tax incentives to other investment funds, some call them cuckoo funds, that are buying up property, pushing up house prices and squeezing first-time buyers out of the market. Vulture and cuckoo funds pay no corporation tax, no income tax and no capital gains tax in most cases. They do that because that was introduced in the Finance Bill with the support of Fianna Fáil, which is now crying foul. The only tax they pay is a dividend withholding tax which Sinn Féin championed, but they are still too many ways in which these funds can reduce or avoid paying that.

Last year, Ulster Bank sold a portfolio of loans known as Project Scariff worth €1.6 billion to a vulture fund called Promontoria Scariff. That portfolio consisted of approximately 3,600 owner-occupier loans and mortgages secured to 2,900 buy-to-let properties that are all in arrears. A company called Cabot Financial Ireland is now administering these loans on behalf of the vulture funds and has written to all buy-to-let mortgage holders who are behind in their payments demanding that all arrears be cleared within 30 days or a fixed asset receiver will be appointed. They are taking the assets in order to sell them. Clearing arrears in 30 days is impossible for the vast majority of these borrowers. This means those involved are taking the assets whether there is negative or positive equity. For those in positive equity, they will quickly see this disappear as receiver and legal fees are clocked up. The funds are not facilitating any arrangements with borrowers. Borrowers have stated that they will sell the properties with positive equity but are being told that they must clear the arrears in 30 days or a fixed asset receiver will be appointed. All of the tenants in these properties will be given notices to quit.

That to which I refer is a direct consequence of the Government's policy and the Minister’s rolling out of the red carpet to vulture funds, and pretending that it does not matter if a loan is sold to a vulture fund. Legally, these funds can do exactly what they are doing when they write these letters. The Central Bank is aware that the letters have been issued. It is time to clip the wings of these vulture funds once and for all. Given the actions of Cabot Financial and Promontoria Scariff, does the Tánaiste not agree?

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