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Column: Tenants shouldn't pay the price for landlords struggling with mortgage repayments

There’s a crisis in the buy-to-let sector due to landlords falling into mortgage arrears and innocent tenants are getting caught in the chaos. Receivers have to realise people renting properties are not commodities, writes Bod Jordan.

Bob Jordan

IMAGINE AN UNEXPECTED knock on your front door. When you answer, a stranger is standing there, demanding you pay him your rent from now on.

He says he’s been appointed by your landlord’s bank because your landlord has fallen into mortgage arrears. You haven’t had any notification that the property you live in is in receivership, and the man on your doorstep does nothing to prove his claim.

You phone your landlord, who says you should ignore this person and continue to pay him the rent; his relationship with the bank is none of your business.

You return to the man at your door, who says you and your family will be treated as squatters and evicted if you do not switch your rent payment to him. Faced with this threat, you agree to pay.

But, once you do this, your original landlord issues a notice of termination, claiming you are in rent arrears. And both the receiver and the landlord say they have no responsibility to return your deposit.

Crisis in the buy-to-let sector

This is not a fictional scenario from some Kafkaesque novel; it is, rather, the nightmare situation currently faced by tenants all over Ireland.

Dubliners Dave and Emma* contacted Threshold in recent weeks to tell us a story that mirrors the exact details above. Together with their two young children, they have been living in an apartment in Dublin 6 for the past three years. Now, caught in the crossfire between their landlord, his bank and the receiver appointed by the bank, they are faced with the terrifying prospect of losing their home.

The property crash of recent years has led to a major crisis not only for home-owners, but also for ‘buy-to-let’ landlords – those who, in the euphoria caused by the housing bubble, saw an opportunity to buy property with the sole intention of renting it out to tenants.

Many buy-to-let landlords are now struggling to meet their mortgage repayments, and increasing numbers are finding themselves in mortgage arrears. According to the most recent figures, 28,000 buy-to-let mortgages are in arrears of 90 days or more.

Banks no longer receiving payments from such struggling mortgage-holders are appointing receivers to collect whatever monies they can on their behalf. And the actions of these receivers are frequently resulting in horrific situations for tenants.

Treating tenants as commodities

Most receivers are not used to dealing with properties in the private rented sector. Traditionally, they were appointed to commercial properties, where they could quickly sell off whatever goods or contents had cash potential. But clearing something like a stock-pile of freezers from a commercial warehouse does not equip you for dealing with long-term tenants who risk losing their homes.

Banks and receivers need to realise that, in pursuing monies from buy-to-let landlords, tenants – who, typically, have not fallen into arrears on any payments and have not taken out mortgages they could not afford – become their innocent victims.

This disregard for tenants’ rights is a symptom of an unspoken but widely-held belief within Irish life: that those who live in rented properties are not living in ‘real’ homes; that a ‘family home’ is only ever a house that has been purchased outright or passed down through the years.

The truth is that rented houses, apartments and flats are family homes for one in every five households in Ireland. Treating tenants as expendable commodities that can easily be moved on at short notice shows a blatant disregard by banks and receivers for this fact.

Need for regulation

If banks and receivers continue to aggressively pursue tenants while ignoring their rights, their actions will destabilise the private rented sector. There is a need for this area to be regulated as a priority.

A statutory code of conduct – clearly setting out the ‘rules of engagement’ between buy-to-let landlords, banks, receivers and tenants – must be introduced. Furthermore, the legislation governing the private rented sector must be revised to explicitly state that receivers become the ‘landlord in law’ once they take over a property and, as such, have responsibility for all landlord obligations.

In an economy where rents are rising and the private rented sector is growing, we cannot allow paying tenants to continue to be displaced from their rented homes.

For further information about Threshold’s work, or advice on any housing issue, go to: www.threshold.ie.

* Not their real names.

Threshold was founded in 1978 and is a not-for-profit organisation whose aim is to secure a right to housing, particularly for households experiencing the problems of poverty and exclusion. Its main concentration of work is within the rented sector. It provides advice and representation to over 20,000 people each year. Further information is available at www.threshold.ie.

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About the author:

Bob Jordan

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