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Tuesday 28 November 2023 Dublin: 1°C

€20m fund to assist distressed local authority mortgage holders

The new fund will move people onto the mortgage to rent scheme for those who have unsustainable mortgages.

LOCAL AUTHORITY MORTGAGE holders who are in the most distress will be able to access a new €20 million fund.

The fund will be used to offer the “mortgage-to-rent” solution to these local authority mortgage holders across the country.

The initiative comes after the latest figures from the Department of the Environment show that almost one third of local authority mortgages are in arrears. 4,900 mortgages are in arrears of over six months, with 1,300 in arrears for three months.

Local authority loans

Local Authority mortgage loans are issued by the local authority. Under law, if you are unable to get a loan from a building society or bank, you may be eligible for a mortgage from your local authority.

Speaking about the new fund, Minister for Housing and Planning, Jan O’Sullivan said approximately 31 per cent of all loans in arrears for 90 days or more.

To avail of the mortgage to rent scheme mortgage holders must:

  • The mortgage must be deemed unsustainable with any change unlikely in the future
  • The mortgage holder must be engaging with the Arrears Support Unit in the local authority
  • Property must be the sole property of the mortgage holder and the primary residence of the mortgage holder
  • Property must have a current market value of less than €220,000 in the Greater Dublin area and not more €180,000 in the rest of the country
  • The property must be in negative equity
  • Household must be eligible for social housing support from the local authority and net household income must not exceed a maximum of €25,000, €30,000 or €35,000 a year depending on where a family is located

“It is important that these households are given access to the same options available to other mortgage holders.  The Mortgage Arrears Resolution Process (MARP) has been implemented across the local authority sector and today’s announcement will ensure that the ‘mortgage to rent’ option is available to local authority mortgage holders,” stated Minister O’Sullivan.

Keeping families in their homes

She said that the mortgage to rent option was identified in the Keane Report on mortgage arrears, which will allow middle income families in an unsustainable mortgage situation to remain in their home.

For mortgage holders who have mortgages from private lenders, then there home is bought at current market value and the family becomes a tenant of an approved housing body.

To date, 33 mortgage to rent transactions are complete, another 61 are at sale agreed stage, 22 are under offer and 61 are at valuation stage.

“The €20 million fund will allow local authorities to offer the mortgage to rent scheme to local authority mortgage holders with unsustainable mortgages.  This will enable families to stay in their home and their established community,” she said.

She acknowledged that “surrendering the ownership equity in a home is a very difficult decision for a family” but said the mortgage to rent option does provide families with “stability and continuity after an often long period of financial turmoil”.

Under the scheme the ownership of the home transfers to the local authority and the family pays a differential rent.

“This is just one of a range of solutions available to local authority mortgage holders in arrears. The most important step any family in arrears can take is to engage early with the Arrears Support Unit of the local authority.  Solutions are available and advice should be sought as early as possible,” said O’Sullivan.

Last year, local authorities issued 99 mortgage approvals.

Read: Local authorities issue 99 mortgage approvals this year>

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