Lorraine Higgins (Labour)
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If ever there was as reason to save the Seanad, it might be the dedication seen tonight from various Senators, including Senator Ó Clochartaigh, Byrne and myself. On a more serious note, I thank the Minister of State for coming into the House. It is the first time I have raised a matter in the wee hours of the morning so I am grateful he is here. The matter relates to the upcoming legislation which will be debated in the House on the proposal to address the legal lacunae which exists following Ms Justice Elizabeth Dunne’s judgment in 2011 on the rights of mortgagers repossessing property belonging to mortgage holders. I am fearful that the implementation of the Land and Conveyencing Law Reform Bill 2013 will negatively impact on those homeowners who fell into mortgage arrears prior to 1 December 2009 and who, as a consequence of this Act, will be at severe risk of losing their homes. I am fearful that we as a Government will fail not only to help those struggling with mortgage debt, but also homeowners who may not yet be subject to court proceedings but are in mortgage distress as we speak. Some of these people may have some equity in their homes and have a legitimate expectation that they will be able to sell their properties. However, due to the potential flooding of the market with possibly tens of thousands of properties this will adversely affect the value of these properties. By taking action and allowing potentially tens of thousands of properties on the market for sale as a result of this legal lacuna in that many of them will be coming on the market at one time, this could, and possibly will, lead to a depression in house prices. It will play monopoly with the lives of thousands of people who are struggling to pay their way. We must be mindful of the fact that although house prices have slightly increased in the Dublin area, if we strip out this locality we will see a decrease in house prices right across the country, and they are down as much as 3% which indicates that house prices on the whole remain on a downward trajectory. House prices in my constituency of Galway East are predicted to fall by 0.3% next year. Some analyses estimate that as a result of this conveyancing Bill between 6,000 and 20,000 homes are at risk of being repossessed which will put considerable pressure on house prices throughout the State and will contribute to the continued downward trend in house prices. There is no doubt that this influx of repossessed properties and homes will only exacerbate the situation further. Some of my constituents who unfortunately are in mortgage arrears at this time are on the verge of this predicament.

While commentators in the ESRI believe that the future is bright for the country and I believe there is no doubt about that, the Government is taking significant steps to ensure that this is the way it will be into the next few years. Hopefully, next year many more will be gainfully employed and the economy will have improved and, as a consequence, house prices on the whole will begin to rise again.

As last week's figures suggest, we are back in a recession technically, and as a result, I contend, that the prospects for stabilisation or an increase in house prices remain minute. While I recognise the fact that the ugly truth is that these financial institutions must be become self-sufficient again, my question for the Minister for Justice and Equality is whether he has discussed any of the repercussions of the potential number of home repossessions may have on the housing market with the financial lenders and analysts and, if so, what approach are they going to take in that respect in the interests of stabilising the housing market?

I want to raise a related issue regarding the legal costs associated with financial institutions hiring barristers and solicitors to act on their behalf when issuing repossession proceedings and seeing these proceedings right through the courts. I know of a number of people who have been asked to pay tens of thousands of euro to have their homes repossessed or, worse still, to stop the bank from repossessing their homes. Would it not be better for the banks to hire in an in-house counsel or solicitor to act on their behalf as this would lead to lower legal costs and would not result in further indebtedness for their borrowers?

Fergus O'Dowd (Louth, Fine Gael)
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I am taking this matter on behalf of the Minister for Justice and Equality. I thank the Senator for raising this issue.

As the Minister indicated to this House just yesterday, the Land and Conveyancing Law Reform Bill 2013 does not create any new right of repossession on the part of lenders. It restores a right which was specifically intended to continue to exist under reforming legislation enacted by the Oireachtas in 2009 in circumstances in which certain High Court judgments have raised doubts about the ability of lenders to exercise that right. The main provision in section 1 restores necessary certainty to Irish law in these circumstances.

While there is a troika commitment to introduce this legislation, the legislation is necessary in any event because we cannot sustain an ongoing lack of certainty with regard to the legal position on mortgages and we cannot sustain a situation in which banks are expected to lend money by way of mortgages on the one hand and on the other hand there is a lack of certainty about the exercise of their rights when it comes to major default by a borrower.

As the Minister and the Government have stated a number of times, repossession of a family home or a principal private residence is intended to be the very last resort after all other avenues have been tried but have failed. Even where the point of a court action for repossession of a person's home is reached, this Bill makes very specific provision for a late intervention safeguard for borrowers by allowing for an adjournment for the parties to investigate the alternative of a personal insolvency arrangement. In addition, the Bill also provides that repossession proceedings in relation to the principal private residence must be commenced in the Circuit Court which will reduce the cost of the proceedings for the parties.

This Bill is not an isolated measure. It exists within the context of a range of interventions which this Government has made to assist with the debt and mortgage arrears crisis which we face. For example, the Personal Insolvency Act 2012 introduced major bankruptcy and insolvency reform, in the year after this Government took office, where precisely nothing had been done in this area by our predecessors.

I do not believe, as has been suggested both in the Oireachtas and in the media, that the passing of this Bill will open the floodgates for repossessions. One of the main reasons for this view is precisely the issue raised tonight by Senator Higgins. It makes no economic or financial sense for financial institutions to place too many houses on the market as it would, as the Senator suggests, depress house prices even further.

In respect of the potential number of repossessions actions which will come before the courts on the passing of this legislation, the Minister has asked me to say that it is impossible to put a figure on this issue given the number of variables that exist. The Minister hopes that, rather than going directly to repossession proceedings, parties will seek to avail of the insolvency mechanisms contained in the Personal Insolvency Act when the Insolvency Service of Ireland becomes fully operational within the coming weeks.

I will the Deputy last point regarding legal costs to the attention of the Minister.

Lorraine Higgins (Labour)
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I thank the Minister of State for his response. I want to make it clear that I am not against the introduction of this law. I was a practising barrister for a number of years and would have acted for and against financial institutions during that time. It is important that banks and those people who are availing of loans have certainty. For banks in particular, it is a commercial reality that they would have certainty in that if they lend money and somebody is not able to pay it back they are entitled to call in the loan in certain circumstances. I raised this issue because I am concerned about the impact on the property market of a plethora of houses, or even increased number of houses coming on the market or being released for sale at any one time. I feel my question has not been answered. I am worried about the possible saturation of the property market and house prices being further depressed. People who have houses that are in-equity and are trying to salvage something by way of mortgage repayments, or in terms of being able to sell their house and pay off some of their mortgage, will be left in a very difficult situation. I have put up with the answer I have been given but I appreciate that the Minister of State will bring to the attention of the Minister the matter regarding the excessive legal costs that are being presented to people who are already indebted and trying to save their homes.

Fergus O'Dowd (Louth, Fine Gael)
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I thank the Senator for her views and assure her that I will convey them to the Minister. I repeat that for a lender to seek a court order to repossess the home of a mortgagor who has defaulted in repayments that should be a last resort where all other avenues to resolve the arrears situation have been exhausted. That is the context of the reply, namely, that it will be done as a last resort after everything else has been tried. Ultimately, the recourse, when it becomes absolutely necessary, that our legal system provides, and is seen to provide, are processes which work properly to give effect to a lender's age old right to repossess, as a very last resort, where there is a very serious default.

Lorraine Higgins (Labour)
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It is very important for the Government to get that message out. I am very mindful of the fact that it is a last resort but I am concerned about any distortion of the property market.

Michael Mullins (Fine Gael)
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I thank the Minister of state, the Senator and the officials for facilitating us at this late hour.

Fergus O'Dowd (Louth, Fine Gael)
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I thank the translators as well.