Government advised to 'accelerate resolution of loans that require repossession'

Government advised to 'accelerate resolution of loans that require repossession'

A leading international think tank has advised the Government to "accelerate through the court system the resolution of non-performing loans that require repossessions".

The 2015 OECD Economic Survey of Ireland report also warned the Government about the risk of cutting taxes and increasing spending.

With the Budget looming and electioneering under way, the Organisation for Economic Co-operation and Development (OECD) urged Ireland to use the revival in economic fortunes – the fastest growth in Europe – to solve the legacies of the country’s bankruptcy.

OECD Secretary-General Angel Gurria

The Paris-based agency urged Finance Minister Michael Noonan to put money and ideas into tackling unemployment and fix ongoing weaknesses in the banking system.

It also raised concerns about the rapid rise in property prices, both commercial and residential, and warned that subsidies for first-time home buyers would cause a further spike in prices and make it even harder for lower earners to get on the property ladder.

Ahead of next month’s budget, the OECD cautioned over growing pressure in political circles to give back to a hard-pressed public through tax and spending after years of austerity.

It said the Government should be looking at developing a better housing rental market while also accelerating the repossession of homes and properties which banks are losing money on.

One of the report's main findings was that "the repossession of collateral on non-performing loans is inefficient", stating later that "resolving some mortgages in long-term arrears will require repossessions if they cannot be restructured in a way that would be acceptable to both debtor and creditor."

The 2015 OECD Economic Survey of Ireland report also warned about welfare traps and urged a gradual reduction in cuts to housing assistance and family income support as people return to work and see wages coming in.

Other recommendations include improving access and affordability of quality childcare, particularly for low-income families, more investment to improve water quality and reduce leakages, and the development of modern, agile, relevant and gender-inclusive apprenticeships.

The think tank said: “Determined policy efforts have boosted confidence and underpinned the robust, broad-based recovery now underway in Ireland.

“Unemployment is falling steadily, the budget deficit is declining, public debt has peaked and continues to fall and international credibility has been strengthened.

“These propitious circumstances are the opportunity to resolve the legacies of the crisis, including remaining unemployment and banking system weaknesses.

“There is also a chance to carry out structural reforms to ensure the recovery is sustained.

“Real estate prices, especially in commercial and residential property in Dublin, are rising rapidly once again, and pressures to narrow the tax base and increase spending are growing.”

The OECD also said other priorities in the domestic economy could be to strengthen competition in the legal sector and ports.

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