Written answers

Thursday, 9 March 2023

Department of Housing, Planning, and Local Government

Mortgage Resolution Processes

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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117. To ask the Minister for Housing, Planning, and Local Government for details of the cost to date of the mortgage to rent scheme; if he will provide a breakdown of the funding provided to the scheme in each of the years since 2012, in tabular form; if any analysis has been carried out into the amount of money paid out by approved housing bodies and the approved private company in the purchasing of homes under the scheme; if any analysis has been carried out into the amount of money paid to approved housing bodies and the approved private company in rent under the scheme; and if he will make a statement on the matter. [11813/23]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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The Mortgage to Rent (MTR) scheme was introduced in 2012 for borrowers of commercial lending institutions and is targeted at those households in mortgage arrears who have had their mortgage position deemed unsustainable by their lender under the Mortgage Arrears Resolution Process (MARP), who agree to the voluntary surrender of their home and who have very limited options, if any, to meet their long-term housing needs themselves. In addition, the household must be deemed eligible for social housing support. The borrower surrenders their property to their lender who sells it to a MTR provider which can be either an Approved Housing Body (AHB) or since 2018 a private company, Home for Life Ltd.

The AHB or local authority (in the case where the property is sold to a private company) becomes the landlord and the borrower remains in the property as a tenant paying a differential rent to the landlord based on his or her income.

To the end of 2022, 2,114 households with unsustainable private mortgages have completed the MTR scheme since its introduction. A total of 6,078 individuals are benefitting from the scheme, which comprises of 3,350 adults and 2,728 children. The Housing Agency publishes, on a quarterly basis, detailed statistical information on the operation of the MTR scheme. This information is available on the Housing Agency's website at the following link: www.housingagency.ie/housing-information/mortgage-rent-statistics

The Capital Advance Leasing Facility (CALF) funding is capital support provided to AHBs by local authorities to facilitate the funding of construction, acquisition or refurbishment of new social housing units, including units acquired through the Mortgage to Rent scheme. My Department can provide CALF funding of up to 40% in the case of the Mortgage to Rent scheme for eligible projects, with the housing units provided to local authorities for social housing use under long-term lease arrangements known as Payment and Availability Agreements. A nominal interest rate of 2% fixed per annum is charged by the local authority on the initial capital amount. Repayments on either the capital or interest are not required during the term of the loan (between 10 and 30 years), although where an AHB chooses to, repayments can be made during the term. At the end of the term, the outstanding capital amount plus the interest accrued, is owed and repayable to the local authority. The local authority issues the CALF monies to the AHB and the local authority, in turn, recoups same from my Department. The remainder of the capital cost is sourced by the AHB through other borrowings to which the local authorities are not party. All proposals for CALF are submitted to my Department by AHBs for review, to ensure that each project complies with the terms of the CALF and that there are sufficient funds available.

My Department also supports AHBs on MTR projects by providing CALF funding for eligible start-up costs of up to 1.5% of the total capital cost or since March 2018, up to €3,300 (ex. VAT), whichever is lesser. Up to the 30th November 2021, these costs were paid directly from my Department to the AHB. For cases approved from 1 December 2021, AHBs will submit these claims to the local authority, who will then seek recoupment from my Department for the vouched expenditure.

The table below shows CALF capital expenditure by my Department for the AHB Mortgage to Rent scheme. It is important to note that owing to the nature of the CALF, expenditure relating to properties may span a number of payment periods.

AHB – MTRCALF Funding
Year Expenditure
2012 €0m
2013 €0.227m
2014 €0.381m
2015 €0.780m
2016 €1.794m
2017 €3.019m
2018 €4.379m
2019 €8.902m
2020 €6.697m
2021 €12.716m
2022 €6.679m

There is no capital funding provided to the private provider in the scheme.

The sale price agreed between a lender and the MTR provider, whether AHB or private company, is a matter for both parties and the Department has no involvement in this.

As outlined above, the AHBs in the scheme are funded through CALF and a long-term lease agreement know as a Payment and Availability (P&A) Agreement. The P&A agreements are based on a variable discount of the market rent of a property. The tenant also pays an affordable rent, known as differential rent, to the AHB. As of end 2022, the average annual P&A agreement payment was €10,734.

In the case of the private MTR provider, they enter 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 under a tenancy agreement with the local authority. In each case, the local authority must agree to the rent proposed by the provider, which is based on market rent valuations with a 5% discount then applied.

As of end 2022, the average annual lease agreement payment made to the private provider through the local authority was €13,246. As the local authority is the landlord, the tenants pay differential rent to the local authority – this figure does not take account of the differential rent receipts.

A key benefit of the MTR scheme is that a unit is being brought into social housing rather than an additional social housing unit having to be sourced from the rental market at a time of increasing acute supply issues in the rental market or removing an additional rental unit from the rental market. The availability of the scheme means that people can avoid losing their homes and the associated family upheaval. As the household are at risk of losing their home, the scheme avoids an additional person or household being placed on the social housing list or additional reliance on other housing support schemes such as the Housing Assistance Payment.

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