Dáil debates

Thursday, 22 September 2011

4:00 pm

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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I am delighted to welcome the Minister of State. The new approach to dealing with topical issues is excellent. It is my first time speaking on it.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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If the Deputy gets an answer.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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If we do not get the right answer we will pursue it. At least we have an opportunity to do so. In the previous system we could not pursue anything, there was a set reply and that was the end of it.

How we deal with housing and distressed mortgages, in particular the family home, is a major burning issue of the day. The family home is sacrosanct and a fundamental principle should inform all our deliberations, namely, that no family should ever have the roof over its head taken from it because of an inability to meet its payments. As long as a family is making a serious effort to deal with the situation - circumstances have arisen such as mortgages, employment and other things - it should not lose the roof over its head.

There is a very strong declaration of intent from the Government in its programme for national recovery. A policy of putting the interests of big developers and the banks ahead of people looking to purchase a home was a direct cause of Ireland's disastrous property boom and bust, something I am sure the Minister of State knows. The Government is committed to helping homeowners in distress to weather the recession and ensure Ireland has a sustainable housing policy. Both parties believe more protection is needed for homeowners with distressed mortgages. The recommendations of the Cooney report are inadequate to address the scale of the current crisis and a more radical approach is needed to protect families in fear of losing their homes.

We all agree it is the intention of the Government to address those issues. We need to determine how to put it into practical operation. A two-year moratorium has been introduced, mortgage interest supplement is available and there is the flexibility of interest only repayments. We now need to have more radical reforms because the number of people having difficulty with their mortgage repayments is increasing by the day.

I am dealing with two deadlines on 1 October. A self employed consultant became unemployed and was entitled to nothing. He has three young daughters in secondary school. He was not entitled to jobseeker's allowance, mortgage interest supplement or the advice of a community welfare officer. No aspect of the current system is of any value to him.

After much toing and froing he eventually managed sort out his jobseeker's allowance but has been adamantly refused any mortgage interest supplement because his wife is working. She is on a low wage but it has prevented him from accessing it. The repayments for a home that was bought during the boom are substantial and he is simply not able to meet them. He is facing repossession on 1 October and the matter has been put into the hands of a debt collection agency which is insisting on it.

The second case involves a 73 year old woman who ten years ago signed over her house to her son when he started a garage business on the understanding, but without the legal provision, that she would be there for the rest of her life. The bank is now owed more than the value of the house, repossession has been sought and the court has determined that she has to be out by 1 October.

She has been told by the debt collection agency to go to the local authority who will deal with the issue, but it has told her it cannot do anything until the house is handed over, in other words until she has been evicted from her home. Is it satisfactory that the roof is taken from over the head of the poor senior citizen concerned simply because the market operates in an unreal and artificial fashion?

There are many such cases. I look forward to the response of the Minister of State.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I thank the Deputy for raising the matter. He assured me that this is his first time to speak on Topical Issue Matters and it is also my first time. I hope it proves to be a more useful engagement on the issues.

The issue to which he referred, on which there is common cause among all Members, is that no family home should be lost because of inability to pay a mortgage. The programme for Government proposes to introduce "a two year moratorium on repossessions of modest family homes where a family makes an honest effort to pay their mortgage". Of course there will always be circumstances in which it may be in an individual's interest because of burdening debt to get a fresh start. However, in the great majority of cases, including the two examples the Deputy put on the record, we must use as an instrument of public policy a clear desire and determination to ensure people can stay in their homes and work through their financial difficulties.

As the Deputy is aware we now have in place the recommendations of the Cooney report, which came to a conclusion last year. The biggest new issue from that is the proposed introduction of a deferred interest payment whereby if people can pay two thirds of the interest on the mortgage, one third can be set aside. Given that it has taken eight months for this system to be introduced, we must ask whether the banks are operating this. Are people seeking it or even aware of it? When people get into the kinds of difficulties the Deputy mentioned, the first objective must be to get to some manageable payment, regardless of how small, for a period of time to see if the person can work through his or her difficulties. The Minister for Finance has been clear in his direction to the banks and lending agencies to ensure that option is available to people.

The Government's economic council, comprising the Taoiseach, Tánaiste, Minister for Finance and Minister for Public Expenditure and Reform, has asked for a report on this issue by the end of the month to analyse what further action can be taken. The Deputy rightly referred to the mortgage interest relief component, rent supports and now the new deferred interest proposal, but not enough is being done. Many banks are now restructuring debts, but the question is whether they are doing so in a realistic manner. The most recent information worryingly indicates that even on those mortgages that had been restructured, a significant proportion got into difficulty again, which begs the question as to whether banks are being realistic about what people can afford to pay.

The Government is acutely aware of the issue. The economic council, a very important sub-committee of Cabinet, has asked for this report by the end of the month. Following that report, which I presume will be published, we will then consider what additional measures can be taken by the Department of Social Protection, the Department of Finance, other Departments, the Central Bank and others to ensure we manage the issue and achieve the objective of ensuring that people do not lose their homes.

The level of repossessions in this country by comparison with the UK and other countries is still relatively low. I believe my prepared script points out that figures from the Central Bank show that by the end of June this year, 54 residential properties here had been repossessed. In the same period there were 119 voluntary surrenders. Those figures are relatively small in the context of the numbers with which we are dealing. The bigger issue is the insurmountable debt people have and in time the Government will introduce additional measures to address that and make it manageable.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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I thank the Minister of State for that reply and his prepared script also seems comprehensive - I look forward to having some bedside reading from it.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I hope the oral reply is better than the written reply. I think it probably is.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The quantity is there - I will check the quality. Certainly the oral reply was excellent. However, I have not received an answer to the question I posed. The Government should abide by the fundamental principle that no family should lose the roof over their heads. We then need a mechanism to prevent that happening where there is an honest effort being made by the household members, who may no longer include a breadwinner because of the circumstances that have arisen, to do what they can to sort it out. A safety net needs to be put in place to continue the process rather than simply taking court action that seeks repossession and the involvement of a debt collection agency which has no care in the world other than to extract what it can, including repossession if the debt cannot be dealt with.

There is the commitment to the personal debt management agency which would have quasi-judicial powers. A safety net needs to be introduced as quickly as possible to assist people such as the 54 people who have had repossessions and the 119 who surrendered possession voluntarily. We do not know what happened in other cases where people move lock, stock and barrel to Australia or elsewhere and leave everything behind. However, we must provide the support for the thousands of people who are in serious debt arrears. The existing supports are very welcome - we need to look at how the bank restructuring has taken place there, but at present we do not have a bottom line, which I would like the Minister of State to address.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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The Deputy's point is well made. What is the principle? The principle is that people can stay in their homes and some form of debt resettlement is put in place. However, it is not realistic to suggest that would happen in every circumstance - I am not suggesting that is what the Deputy is proposing. On some occasions because of the level of indebtedness it is not in the interest of the person for that principle to be extended wholesale.

The Deputy has referred to the very sensible suggestion of a personal debt management agency which is, as he knows, contained in the programme for Government. This would operate as a halfway house between the banks and the people to come to a fair assessment as to whether the banks have reached a settlement. There is considerable merit in what he is saying. I know this is an issue the expert group is reviewing and will come to a view with Government in due course.

There is a fundamental point as follows. At the moment, if I am dealing with a bank that comes to a view as to the level of indebtedness and how much I can afford to pay, even if I disagree with its assessment, where do I go to appeal it? I appeal it to an appeal board within the bank - it is an internal decision of the bank as the Deputy will be aware. We need a beefed up agency like the Credit Review Office for small business, which comes to an independent assessment given all the information. That has the advantage, first, that the banks are given a clear steer and, second, if it ever gets to court there is an independent assessment of the facts and figures presented to that agency. That would make considerable sense. I am not second-guessing the outcome of the expert group that is due to report shortly.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Will that be at the end of this month?

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I understand the economic council expects to receive the report by the end of the month. It will then be a matter for Cabinet to make a policy decision on it. The proposal the Deputy has made, which is in the programme for Government, is under active consideration at the moment. The Government is minded to pursue this suggestion once the Cabinet has had a chance to review the expert group's report.