Minister Eoghan Murphy welcomes iCare Housing Mortgage to Rent Scheme Initiative
Minister for Housing, Planning and Local Government, Eoghan Murphy, T.D., today (27 September 2017) welcomed the announcement by iCare Housing that, working together with a number of specific lenders, they intend to make the Government’s recently reformed Mortgage to Rent scheme work for a large number of households in mortgage arrears around country.
Speaking today Minister Murphy said “I am pleased to support, iCare’s initiative and commend their commitment to using the Mortgage to Rent scheme in order to benefit a large number of households in long-term mortgage arrears. Changes made following the review of the scheme published in February mean that the scheme is now more accessible to more households who may be at risk of losing their home because of unsustainable mortgage arrears. However, delivering the scheme at scale remains a challenge. The announcement by iCare Housing that, for the first time, there is an official arrangement between a lender and Approved Housing Body that will allow a significant number of borrowers to remain in their home as social housing tenants, without the worry of having to deal with legacy debt, is significant. I would encourage other AHBs and lenders to consider how they can work together to utilise the scheme in order to benefit a greater number of eligible borrowers.”
The Minister acknowledged that the Mortgage to Rent Scheme is not a first choice for those in mortgage arrears difficulties. “It is no small matter to lose ownership of your house. However, where this seems to be the last resort, to have the additional option of remaining in your own home and community is invaluable to many families. The key role of the Abhaile Service, the Insolvency Service and the Money Advice and Budgetary Service in communicating the availability of the MTR scheme and the eligibility criteria to borrowers in arrears is critical to the successful delivery of the scheme and I would encourage borrowers in long-term mortgage arrears to engage with these services.”
Underlining the Government’s commitment to the successful operation of the scheme, the Minister remarked “Ultimately we want the scheme to be capable of being a real long-term solution for the families who it is designed for. My Department and the Housing Agency will work with iCare Housing and all the other participants in the scheme to meet the needs of more borrowers who require long-term support with their housing needs.”
Notes to Editors:
The Approved Housing Body Mortgage to Rent Scheme for borrowers of private commercial lending institutions was developed as part of the implementation of the recommendations of the Keane Report on Mortgage Arrears in 2011 and is one part of a concerted effort across the whole of Government to tackle the mortgage arrears crisis. The scheme is part of the overall suite of social housing options and an important part of the mortgage arrears resolution process.
Mortgage to Rent (MTR) targets the most acute mortgage arrears cases where a situation is unsustainable and where there is little or no prospect of a significant change in the householder’s circumstances in the foreseeable future. Under the scheme, a householder with an unsustainable mortgage goes from being a homeowner to becoming a social housing tenant of an Approved Housing Body (AHB). They voluntarily surrender their property to their lender who, in turn, sells the property to an AHB. The AHB becomes the landlord and the household gets to remain in the family home.
The household must be eligible for social housing and the property must meet the appropriate standards for social housing. Householders are able to buy out the property at a later stage. However, in reality, their circumstances would have to have changed very radically in that period for them to be in a position to access mortgage finance.
Review of the Mortgage to Rent Scheme (February 2017):
A review of the MTR scheme published in February identified a number of key changes to the scheme:
- Lenders are now required to formally communicate with borrowers as to why they are not suitable for the scheme.
- Flexibility has been 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.
- The property price thresholds for eligibility under the scheme have been increased in line with the acquisition thresholds for social housing generally. The threshold for a house in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow has been increased to €365,000 while the threshold for an apartment / townhouse in these areas has been increased to €310,000. For the rest of the country, the threshold for a house is now €280,000 and for an apartment / townhouse €210,000. The most significant increases are in the more rural locations which is consistent with market findings. These thresholds will be subject to regular reviews taking account of the market at the time and will continue remain in line with the acquisition thresholds for social housing generally.
- A significant change if that the application by the borrower for Social Housing Support is now made by the borrower to the local authority prior to submitting the MTR application to the Housing Agency. This change means that the borrower will know from an early stage of SHS eligibility or not, and if not will need to focus attention on other options to deal with their debt.
- A key objective of the actions – and a measure of success – will be reduction in the average length of time for the completion of a transaction will reduce from between 12-18 months currently to less than 9 months.
- Increasing the visibility and familiarity of the scheme among borrowers is a critical objective. The new Abhaile Service and MABS are important in that context. There are specific actions focused on engaging those agencies and their nationwide support services.
Further information on the operation of the scheme to date is available from the Housing Agency’s website:
iCare Housing became a registered Approved Housing Body in October 2016 in accordance with the relevant statutory requirements and have signed up to the Voluntary Regulation Code. The organisation proposes to work with the Housing Agency, who administers the Mortgage to Rent on the Department of Housing’s behalf, utilising the existing MTR scheme to complete a significant number of MTR arrangements around the country. Under iCare proposal, for the first time there is an official arrangement between a lender and AHB on multiple properties rather than negotiations on a per property basis. It should be noted that the MTR scheme is voluntary and is based on the borrower voluntarily surrendering their home to their lender who then sell it to an AHB.