Willie Penrose (Longford-Westmeath, Labour)
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While the Minister, Deputy Kelly, is unavoidably absent, the Minister of State, Deputy Kevin Humphreys, has intimate knowledge of this problem with social housing issues and arrears. Young Irish families throughout the country have suffered the disastrous effects of what has been a perfect financial storm. First, there was a massive banking collapse and the deepest recession in living memory, which was savage by any standards. It has ruined many lives and businesses and has wrought terrible devastation. Uniquely to Ireland's situation, we have a pooled currency, which means the natural process of inflation eating away at debt was not available to help the people. People borrowed in euro and must repay in the same currency, which has the lowest inflation rates in the world. To make matters worse, we have had the harshest laws in the western world in respect of debt. The result was and is that hundreds of thousands of people had no way out other than emigration or begging for mercy from banks and creditors. This begging has gone on for almost eight years now and still, the entire economy is shackled by unsustainable debts. This has not been not good for people or the banks and certainly has not been good for Ireland. All this was due to change in 2012 with the enactment of the new insolvency laws but only a tiny number of deals have been done. The process needs an injection of reality and it needs it quickly.

Two weeks ago, I introduced draft legislation before the Oireachtas proposing that the bankruptcy period be reduced to one year. There is a misconception abroad that the period is three years but one should consider section 157 of the Personal Insolvency Act 2012 and its insertion of section 85D(1), section 85D(2) and section 85D(3) into the Bankruptcy Act 1988. In law, at any time during the term of adjudication of three years, the credit institution can apply to the courts for an instalment order by way of variation for a period not greater than five years. As a result, if a person earns an additional €10, that enables banks to act. Consequently, it can go on for eight years and Members should not fool themselves in that regard. This is why I proposed that reduction.

I believe that after eight years, people have the right to move on. How it is justifiable to keep people tied up with debts they can never repay for so long? It does not happen in the jurisdictions of our nearest neighbours in England or Northern Ireland or in the United States. Moreover, I note the United Kingdom and United States were two of the economies that rebounded fastest from the recession. They have not collapsed, the sky has not fallen in because they have had in place a one-year bankruptcy rule. A quick bankruptcy term will give thousands of citizens a way in which to be free of unmanageable debt and will give them the opportunity to get on with their lives. More importantly, however, it will force the banks to do deals they should have done years ago. This will be good for everybody, including the banks. I also proposed that if the official assignee does not dispose of the family home in a bankruptcy case within three years of adjudication, ownership of such a home would revert back to the bankrupt. This is in line with the position in the North of Ireland and stops the official assignee from seeking money from people who simply wish to pay their mortgage and get on with their lives. The assignee has stated that he or she does not wish to sell the family home and that is proper. If people have all their unsecured debt written off and can pay even a restructured mortgage, then I believe they should be given every chance to get on with their lives.

However, what about the 50,000 people who have no solution? My colleague Ross Maguire has frequently stated the mortgage debt crisis in Ireland can be divided into three categories. The first category is comprised of the self-fixers, that is, those people who now are getting back on their feet as the economy improves. They have the time and the income to be able to meet their debts without need for outside intervention. The second category is comprised of people who need help. The insolvency system, driven on by a new bankruptcy term meaning that people can be out of bankruptcy within a single year, should mean that tens of thousands of citizens can be helped back to recovery. The banks have a role here to offer long-term and sustainable deals. However, there is a third category for which there is no obvious solution. I refer to the up to 50,000 homes where there is not enough income to sustain a mortgage and where the debt is too much to be repaid. As Minister of State with responsibility for housing, I introduced a mortgage-to-rent scheme that was designed for those people who could not afford either the mortgage or a restructured mortgage. The idea was that the owner would surrender the home to the bank, which the bank would then sell to a housing association, which in turn would lease it back to the former owner.

However, only a very small number of deals have been done under the scheme and quite simply, an industrial solution to the problem is needed.

Fiddling around at the edges cannot solve this problem because the scale is far too big. Two ways of doing this can be explored - first, through a refocused and recast mortgage-to-rent scheme involving local authorities or, second, through approved housing bodies. Both ways would ensure that families with unsustainable loans or mortgages remain in the home and continue to pay the appropriate rent. All those would have their mortgages deemed unsustainable under the mortgage arrears resolution process or MARP process, and would clearly have agreed to surrender the house.

It is also good for social stability and would ensure that no major disruption is inflicted through families having to move elsewhere. Family life, including schools, would be disrupted by relocation. Currently, the home must be in negative equity and a householder be deemed eligible for social housing in accordance with the Housing (Miscellaneous Provisions) Act 2009. There is also a limitation on the valuation of property in Dublin and across the country. It is clear that those conditions must be changed. The income threshold must be increased to a realistic level, by at least 20%, and likewise with the valuation threshold in order to accommodate the maximum number of people and protect people in their homes.

The mortgage-to-lease programme might also be a solution.

Joanna Tuffy (Dublin Mid West, Labour)
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The Deputy's time is up.

Willie Penrose (Longford-Westmeath, Labour)
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Under such a programme, a public private partnership could provide social housing throughout the country. A pension fund or other investors seeking a safe, long-term investment would purchase these non-performing loans from banks, leaving the banks free to get on with future lending to first-time buyers and small businesses.

Joanna Tuffy (Dublin Mid West, Labour)
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I must ask the Deputy to wrap up.

Willie Penrose (Longford-Westmeath, Labour)
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Yes, I am just finishing.

The new programme would mean that people would surrender their homes to the new owners in exchange for an immediate and unconditional debt write-off. The former owners would then be offered long-term leases should they wish to stay in their homes. The State can help people to pay their rent if their income is not enough and gradually people could recover knowing that their homes are safe.

It is time we re-examined this whole scheme to ensure that people who are meant to be looked after are accommodated in an appropriate fashion.

Kevin Humphreys (Dublin South East, Labour)
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I thank the Deputy for raising this matter. The work he has done on the Private Members' Bill concerning bankruptcy has much merit. I look forward to the Government's proposals being published shortly after Easter. I always appreciate Deputy Penrose's insight on housing because he obviously has quite an amount of experience in this area.

There are currently two mortgage-to-rent schemes in operation through the Department of the Environment, Community and Local Government. A scheme exists whereby a local authority can acquire ownership of properties with unsustainable local authority mortgages, thus enabling the household to remain in their home as a social housing tenant - that is, the local authority mortgage-to-rent scheme.

The other scheme provides for an approved housing body, AHB, to acquire ownership of a property with an unsustainable private mortgage, which also enables the householder to remain in their home as a social housing tenant. It is the latter scheme, AHB mortgage-to-rent, to which the Deputy is referring. This scheme is designed to assist families with income difficulties whose mortgages are unsustainable, and where there is little or no prospect of a significant change in circumstances in the foreseeable future.

To be eligible for the approved housing body mortgage-to-rent scheme, a householder must have had their mortgage position deemed unsustainable under the mortgage arrears resolution process, agree to the voluntary surrender of their home, be in negative equity, and be deemed eligible for social housing in accordance with section 20 of the Housing (Miscellaneous Provisions) Act 2009. The Deputy has already outlined those conditions.

In addition, in order for a property to be considered under the AHB mortgage-to-rent scheme it must be purchased by an approved housing body for less than €220,000 per property in the greater Dublin area and €180,000 per property in the rest of the country. These limits were determined by a working group taking account of available market data, including the current social housing acquisition limits. The Minister, Deputy Kelly, considers that they continue to be reasonable in respect of the income bracket that is targeted by the scheme.

While progress is now being made on this scheme, it has been acknowledged that take-up of the scheme overall has been slow. In recognition of this, and in an effort to increase the numbers delivered under the scheme, a new protocol between all parties in the process has already been agreed and came into operation in 2014.

The protocol includes such measures as the provision of a single independent valuation for the purpose of agreeing the purchase price. The valuation and condition surveys are now carried out earlier in the process to give more certainty to all parties in the process including the borrower. The new protocol is endeavouring to ensure that as much certainty is being provided as early as possible in the process to minimise uncertainty and late withdrawals from the scheme.

Willie Penrose (Longford-Westmeath, Labour)
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I thank the Minister of State for his reply. The problem, however, is the resource limitation by the Government and that is why the mortgage-to-rent scheme might not work. That is also why the mortgage-to-lease scheme might be a solution, not as an alternative but by operating in tandem with a mortgage-to-rent scheme. We would hope that, in time, many people in the mortgage-to-lease scheme may be able to repurchase their homes. They should be given a share in any price increase during the programme. For example, a couple might have a mortgage of €300,000 which they cannot pay, while the property is now only worth €100,000. If they agree to surrender their home and have the right to rent the property back at a controlled rent over seven years or more, in that time hopefully people's circumstances will improve. They can then exercise an option to repurchase the property at the current market price in seven years time at €200,000. The cost to those people would be €150,000 as the price increased by 50% during the programme.

The bottom line is that such people would then have a sustainable mortgage, which they could afford. They would not have to leave their homes. If they had to leave their homes, they would need social housing, yet we know there is a huge shortage of social housing throughout the country. For those who cannot afford the entire rent, there will be a rent supplement so the programme works for them also.

There are also people whose circumstances are so impaired that they cannot afford to rent at all, so they will need social housing. That is where the significant social housing programme, promised by the Minister, can play a role. The Labour Party has always played a role in the provision of social housing.

In the mortgage-to-lease programme, the new owners would create a social fund by leasing the properties to local authorities on long-term or perpetual leases. Local authorities can then house those people in their own homes. The new owners would get long-term, low-yielding returns backed by local authorities. There would be a huge demand for this scheme.

This week, Irish Government bonds were issued at negative equity, meaning that one has to pay the Irish State to have them take one's money. At this time of ultra low interest rates, there is a great opportunity to develop a massive public private social housing model. In time, this can be expanded. There has never been a better time to roll out a massive social housing programme nationwide.

If people's circumstances improve they should be given an opportunity to exit the social programme, pay their own rent and go on to re-acquire the property. It is about feeding into a positive cycle and accepting the universal truth that where people are given a real chance, they will step up to the plate and succeed.

For too long Irish families have had to bear the burdens of past mistakes made by others. Those self same families put their shoulders to the wheel during our darkest economic days and especially for the past seven years. Now is the time to give them a break so that they too can enjoy recovery and, by their own efforts, expand and enhance the recovery for the nation as a whole. Things can only grow when they are allowed to grow. We must give our people the opportunity to recover. That is our challenge. It is time to move on, be innovative and to recast and remodel those schemes, so as to ensure that the maximum number of people can avail of them. In that way, they can ensure the security of their own homes in an affordable way, so they will not have to be relocated. By way of rent or lease, they can thus continue seamlessly in the same environment where their children can attend school. It is good for society and the morale of those concerned. We must grasp this nettle once and for all in order to offer a solution. This is the last piece of the jigsaw that must be addressed so that people can be put on the road to sustainability.

Kevin Humphreys (Dublin South East, Labour)
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The operation of the scheme is closely monitored on an ongoing basis by the Department of the Environment, Community and Local Government. Housing agencies are regularly contacted by the approved housing bodies and financial institutions. To date, a total of 2,762 cases have been submitted under the approved housing body mortgage to rent scheme. Of these, 1,897 were deemed ineligible or terminated during the process. Of the remaining 865 cases submitted, 88 have now been completed. In a further 42 cases, agreement on the sale could not be agreed. Some 169 are currently with the lenders, while the remaining 566 are being actively progressed.

The Minister has said that he is keeping the scheme under constant review. Any improvements within the scheme should be moved forward speedily.

I thank the Deputy for having raised this issue today.