Brendan Smith (Cavan-Monaghan, Fianna Fail)
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141. To ask the Minister for Housing, Planning, Community and Local Government his plans to expand the mortgage to rent scheme and improve the conditions of this scheme; and if he will make a statement on the matter. [19077/17]

Simon Coveney (Cork South Central, Fine Gael)
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A Review of the Mortgage to Rent Scheme for borrowers of commercial private lending institutions was published on 8 February 2017 and represents the completion of an early action in the Government’s Rebuilding Ireland Action Plan for Housing and Homelessness.  The Review is available on the Rebuilding Ireland website at the following link:

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The Review has explored the avenues and impediments to participation in the scheme and recommends a number of actions to make the scheme work better for borrowers.  Key actions include:

- Lenders will be required to formally communicate with borrowers as to why they are not suitable for the scheme.

- The property price threshold for a house in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow is being increased to €365,000 (from €350,000) while the threshold for an apartment / townhouse in these areas is being increased to €310,000 (from €300,000).  For the rest of the country, the threshold for a house is being increased to €280,000 (from €250,000) and for an apartment / townhouse to €210,000 (€190,000).

- Flexibility is being provided in relation to the size of properties which qualify for the scheme.  In practical terms, this means that an assessment of the property size suitable to a particular household will allow for a maximum of two additional bedrooms in the property above the actual needs of the household, with the property still being considered eligible.

- There are a number of actions to improve knowledge and understanding of the scheme.  A range of state agencies will be facilitated to assist and guide borrowers who could benefit from the scheme.  A Step by Step Guide for Borrowers will be produced alongside a range of other targeted information supports.

I am confident that the implementation of the actions put forward in the Review will make the MTR process quicker, more transparent, easier to navigate for borrowers and ultimately, more accessible to more households in mortgages distress.

In addition, the Review concludes that the current financial model of the scheme may not be capable of delivering the scale of successful cases that could benefit from the scheme over time.  Currently, the MTR scheme relies on Approved Housing Bodies to purchase from lenders properties that have been voluntarily surrendered by eligible borrowers. The Government has been actively exploring potential mechanisms that would facilitate investment in social housing, including the off-balance sheet potential of private institutional investment.  A number of private equity firms have expressed an interest in purchasing mortgage debt portfolios from commercial banks with a view to exploring the potential for them to access the MTR scheme model for the borrowers in occupation of the mortgaged property.  They are seeking an alternative arrangement that would see the mortgaged property staying in the funding firm’s ownership and the property itself leased back to the local authority in circumstances where the borrower is eligible for MTR and the borrower would therefore remain in their own home. 

One of the outcomes of the Review is that in order to test the operability of alternative funding models for the scheme, the Housing Agency will work with a number of financial entities who have come forward with an interest in working with the MTR scheme to progress a number of pilot alternative lease arrangements. In advance of these pilots, a targeted market testing exercise is currently underway by the National Development Finance Agency (NDFA), on behalf of my Department, to test the suitability of the proposed enhanced leasing arrangements to ascertain if they would be viable for a mortgage to rent cohort.  The objective is to explore what is available within the current market and to determine if this alternative model will benefit a greater number of households.

A detailed financial assessment of the structure of the funding of the MTR scheme will be undertaken in advance of the budgetary process for 2018.  The assessment will be informed by the early impact of the other actions proposed by the review, as well as the outcome of the experience with the pilot lease arrangements, and the availability of financial resources overall.