A call from the head of the Central Bank for banks to repossess more buy-to-let properties would cause “chaos” in the market, according to a national housing charity.
Addressing the Limerick Law Society on Wednesday, Patrick Honohan said that in cases of “loan delinquency”, it is “past time for the banks to be dealing more proactively with the situation of over-indebted, buy-to-let borrowers no longer able to service the debts they assumed in order to take investment positions — now loss-making — in property”.
He said there are many circumstances in which there is less reason to be inhibited about repossessing buy-to-let properties.
“With almost €100bn of mortgage debt outstanding in the banks guaranteed by the Government, the working out of troubled mortgage debt is a matter of immense national importance.”
The chairwoman of Threshold said increased repossessions would cause chaos in the market.
Aideen Hayden said: “The private rented sector provides homes for over half a million families and individuals in Ireland. Many of these are people who have no option but to live in rented accommodation.
“Most people caught with buy-to-let properties would love to sell them and climb out from under the debt they owe. But the reality is Ireland no longer has a functioning property market. Our housing market is dead so there is no way for those who own buy-to-let properties to sell them on.”
Liam Twomey, Fine Gael’s vice-chairman of the Dáil’s finance committee, warned the governor was being too simplistic.
“Many of the buy-to-let properties are also owned by people who have mortgage arrears, and many people would have bought a buy-to-let property as a security for their future when they purchased it at the height of the Celtic Tiger.”
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