Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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302. To ask the Minister for Housing, Planning, and Local Government if his attention has been drawn to the problem of private sector mortgage-to-rent providers outbidding not-for-profit mortgage-to-rent providers in the acquisition of homes from mortgage holders in mortgage distress with the consequence of increasing the cost to the State of these properties; and if he will make a statement on the matter. [3574/21]

Darragh O'Brien (Dublin Fingal, Fianna Fail)
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The Mortgage to Rent (MTR) scheme introduced in 2012 is targeted at supporting households in mortgage arrears who have had their mortgage position deemed unsustainable by their lender under the Mortgage Arrears Resolution Process (MARP); agree to the voluntary surrender of their home and are deemed eligible for social housing support. The property in question must also meet certain eligibility criteria.

Up to the end of December 2020, 1,004households with unsustainable private mortgages have completed the MTR scheme since its introduction nationally in 2013. The 1,004 households in the scheme represent 1,688 adults and 1,522 children who have remained living in their homes and communities. There are currently 1,212active cases being progressed under the scheme.

A Review of the MTR scheme for borrowers of commercial private lending institutions published in February 2017 explored the avenues and impediments to participation in the scheme and identified a number of actions to make the scheme work better for borrowers. My Department and the Housing Agency have worked with all stakeholders to ensure that the actions set out in the review are being effectively implemented to benefit a greater number of households. As a result of the improvements implemented, an upward trend in case completions has been evident since 2018.

The MTR Review taking account of capacity within the Approved Housing Body (AHB) sector given that sector's role in delivering ambitious targets around new social housing supply, also recommended that alternative funding options, including the off-balance sheet potential of private institutional investment, be explored in order to allow the MTR scheme to deliver at scale. An Expressions of Interest (EOI) Request issued in 2017 inviting parties from the private sectors to express their interest in participating in a new alternatively funded long-term MTR lease model.

Under this alternatively funded model, a participant from the private sector purchases a property or properties from lenders subsequent to their voluntary surrender by borrowers that meet the MTR eligibility criteria and then enters into a long-term lease arrangement with the local authority in whose area the property is situated for a defined term at an agreed rent, thereby enabling the borrower to remain living in their own home. The outcome from the EOI process is that a new MTR alternatively funded lease model was announced in 2018 with Home for Life Ltd. as the participant from the private sector.

AHBs are an integral part of the MTR scheme and their participation in the scheme has enabled and continues to enable a significant number of borrowers to remain in their homes as social housing tenants.

In the MTR scheme, AHBs and the private sector participant operate under different funding models. AHBs fund the cost of purchasing units from a combination of low interest borrowings under the Capital Advance Leasing Facility (CALF) administered by my Department and only available to AHBs, and private finance or other borrowings. While the CALF debt is not required to be paid back to the State for a further 20-30 years, the private finance must be repaid over that period. This debt and the ongoing maintenance and management of the unit is financed from the income from the payment and availability payments made by the local authority and recouped from my Department which are related to the market rent of the property. The private company operates under a lease model, acquiring units with private funding and receiving monthly rents under a long-term lease arrangement with the local authority in whose area the property is situated for the duration of the lease, payments made are related to the market rent of the property. Given the nature of the individual property transaction underpinning MTR, the decision to purchase a property under the MTR scheme is a matter for the particular MTR provider. It is a matter for each MTR provider to determine its financial viability to purchase a property based on its individual funding approach.

Where both AHBs and Home for Life Ltd., are invited to express an interest in a particular property by request of a lender, the valuation for the property in question is based on an independent property valuation commissioned by the Housing Agency. Where the provider chosen decides to make a purchase offer on the property, the offer will be on the basis of the independent valuation commissioned by the Housing Agency and it is only the selected provider who can make an offer on the property.

In addition, both AHBs and Home for Life Ltd. may work directly with lenders to develop joint-agreements to purchase properties at discounts on market values. Such an approach can achieve a greater number of successful MTR cases.

The inclusion of an MTR provider from the private sector has facilitated more individuals and families staying in their homes. Given the sizeable cohort of borrowers still in long-term mortgage arrears, all the MTR providers participating in the scheme are needed in order to meet the demand for the scheme. In all scenarios, my Department and the Housing Agency are focused on meeting the long-term housing needs of the greatest number of households in unsustainable mortgage arrears.

The Programme for Government includes a commitment to strengthen the Mortgage to Rent Scheme and ensure that it is helping those who need it. Building on the significant improvements already made to the scheme since 2017, my Department is currently working closely with the Housing Agency and key stakeholders to identify any further improvements required to the scheme. My Department is currently analysing submissions that have been received to date and the review will examine all aspects of the regulation and operation of the scheme. It will also consider questions regarding the income and occupancy thresholds, eligibility and issues regarding positive equity. It is intended that the review will be completed by the end of Q1.