Q&A: Housing initiative is expanded version of mortgage-to-rent scheme

Q. How does the scheme work?

A. It is an enhanced version of the existing mortgage-to-rent scheme. It is a joint initiative, between AIB, EBS, Haven, the Irish Mortgage Holders’ Organisation (IMHO) and new not-for-profit social housing organisation, iCare.

Under the deal, AIB will sell hundreds of distressed mortgages to iCare. AIB is understood to have provided in the region of €100m in funding to the social-housing organisation to buy the properties.

The properties will be leased by iCare to the local authorities, and rented back to the families on a long-term lease (approximately 30 years) at a social-housing rent rate.

The local authority will pay 92% of the market rent and the tenant will pay back, on average, €40 a week to iCare.

Q. What are the eligibility criteria to be accepted to the scheme?

A. Borrowers must have completed the mortgage arrears resolution process with the lender and must be eligible for social housing support in the local authority where the property is located.

They must not own any other property and the property must be of a value no more than €365,000 for a house, and €310,000 for an apartment or townhouse, in the areas of Dublin, Kildare, Meath, Wicklow, Louth, Cork, and Galway. The maximum values for the remainder of the country are €280,000 for a house, and €215,000 for an apartment or townhouse.

The property must suit the borrower’s needs (ie, not be over or under-accommodated), in accordance with local authority guidelines, plus two bedrooms.

The net household income must not exceed €25,000, €30,000, or €35,000 a year for a single person, depending on what part of the country the borrower(s) live in, plus an allowance of 5% per dependent adult and 2.5% per child, subject to a 10% limit for each category of a dependent.

The applicant cannot have capital assets worth in excess of €20,000 and the property must be in negative or marginal positive equity — margin of maximum €15,000 and not more than 10% of original market value. They must have a long-term right to remain in Ireland.

Q. Can the scheme be used by people who ‘won’t pay’, as well as those who ‘can’t pay’?

A. According to iCare chief executive, David Hall , a “triple-lock” application system ensures that only those who are in genuine risk of losing their home will be successful. These will be applicants who are eligible for social housing and have been unable to make any contribution to restructuring their mortgage, due to severe financial difficulties.

“They [the applicant] will approach the Irish Mortgage Holders’ Association, or iCare. They will be assessed. A proposal will be sent to the bank, but with that proposal comes an independent verification from a local authority that they are also eligible for social housing. If they are eligible, they are eligible; if they are not, they are not. It is very clearly prescribed. It is not an a la carte system. It is not there to allow, nor will it be there to allow, for people to gain from the system. It is for people who are in genuine arrears, who cannot pay their mortgage, and there are many safeguards”.

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