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New mortgage-to-rent scheme could help up to 3,500 families

The scheme will be available nationally to families on low incomes in houses less than €220,000.

The mortgage-to-rent scheme will be rolled out nationally from today.
The mortgage-to-rent scheme will be rolled out nationally from today.
Image: Sam Boal/Photocall Ireland

UP TO 3,500 struggling homeowners will be able to write off their mortgages under new plans being rolled out by the government later today.

The new national mortgage-to-rent scheme, to be announced by housing minister Jan O’Sullivan, will allow  people with no realistic chance of repaying their mortgages to sell their properties to a housing association - preventing thousands of people from being evicted across the country.

The family will then stay in their home as a tenant, paying rent to the housing association rather than as an owner occupier with a mortgage.

“Last year the Government placed housing associations at the heart of social housing provision,” said Simon Brooke, Head of Policy at Clúid Housing Association, which is involved in the scheme.

In the current economic climate this scheme really reflects how innovative solutions can prevent some people from losing their home.

AIB, GE Money and Start Mortages are taking part, with Ulster Bank and Bank of Ireland also expected to sign up.

Under the plan, families struggling to repay their mortgage give up their home to the bank that holds the mortgage. The bank then sells this to the housing association at the current market rate, not the value of the original mortgage. The bank will absorb the loss incurred from selling the property at lower than its original value.

The homeowner then becomes a tenant of the housing association, which sets the rent at a price the family can afford.

The scheme is only available to those on low incomes, and the house must be worth less than €220,000.

GE Money was involved in the first mortgage to rent scheme earlier this year, where a family was two days away from eviction. They now rent the home from Clúid, after GE wrote off almost €140,000.

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