Minister for Housing Darragh O’Brien is set to widen access to the mortgage-to-rent scheme, in a move that would allow some people living in higher value houses and more older people to take part.
The scheme, established a decade ago after the banking crash, helps borrowers at risk of losing their property, because of unsustainable long-term mortgage arrears, to remain in their homes.
People whose acute financial problems are deemed unlikely to improve in the foreseeable future can switch from owning their home to renting it as social housing tenants.
The scheme is targeted at households in a formal mortgage arrears resolution process with lenders and who agree to voluntarily surrender their home. Banks can sell the homes to an approved housing body or private company, who then collect rent from the former owner. Almost 1,500 transfers had been completed by September and a further 850 were in progress.
The Government pledged in the Housing for All plan to strengthen the scheme with the aim of completing an average of 1,000 cases every year.
Central Bank data shows that 47,681 primary dwelling mortgage accounts were in arrears in September, 5,430 of them for more than 10 years and another 9,648 for between five and 10 years.
Mr O’Brien is advancing plans to enhance the scheme by widening the eligibility criteria and streamlining its administration.
With property valuations rising, the changes will increase the scope of distressed borrowers whose homes are in “marginal” positive equity to participate in the mortgage-to-rent scheme. A mortgaged home is in positive equity when the value it would realise on the open market is deemed to be greater than the principal amount outstanding on the loan.
The property must be in negative equity to participate in the mortgage-to-rent scheme as it stands, meaning its market value should be less than the loan amount. Still, there are openings to consider homes assessed to have positive equity of up to €15,000, and no greater than that amount.
To further widen access, it is understood that Mr O’Brien will soon raise the positive equity limits to €25,000-€35,000. Such rates will be differentiated across three regions of the State.
The Minister will also increase the valuation caps on houses and apartments eligible for participation in mortgage-to-rent arrangements.
Under new rules, the scheme will open to distressed borrowers in houses valued at up to €450,000 in Dublin, Kildare, Meath, Wicklow, Louth, Cork and Galway – up from the current €395,000 limit. Still, there will be no change to the €310,000 limit on the value of apartments and townhouses in such areas that can participate.
Mr O’Brien will raise the cap on the value of eligible houses in the rest of the State to €345,000 from €305,000 and he will increase the cap on the value of apartments and townhouses in such areas to €230,000 from €220,000.
Participants in the current scheme must be living in a home that “suits their needs”, a restriction that means the property should not be too small for their requirements (over-occupied) or too large (under-occupied).
The Minister’s plans will introduce “additional flexibility” for borrowers aged 65 and above, it is understood. The measures will also widen access for people with a disability. Such changes will apply in cases where the property has been adapted to meet the person’s requirements or where the property has not been adapted but is suitable to their specific needs.
