The mortgage-to-rent scheme allows distressed borrowers to surrender their home but remain in the property as social housing tenants
The State’s mortgage-to-rent scheme has been “irrevocably undermined” by the entry of a commercial player, which is outbidding the not-for-profit agencies for the properties involved, according to mortgage campaigner David Hall.
The scheme, set up in the wake of the financial crisis, allows distressed borrowers to surrender their home but remain in the property as social housing tenants.
In a submission to the Department of Housing as part of a consultation on the initiative, Mr Hall, who runs iCare Housing – one of the approved housing bodies (AHBs) involved in the scheme– said the department’s decision to allow investment firm Home for Life into the process had “all but ended the scheme as we know it”.
Because Home for Life can potentially sell the properties for a profit after leasing the home to the local council for a 25-year period, it can pay higher prices than the approved housing bodies at the outset, he claimed.
This is leading to prices being driven up and approved housing bodies don’t have the commercial opportunity being gifted to the private companies to sell an attractive portfolio with State aid for a profit, he said in his submission.
Mortgage-to-rent data show Mr Hall’s iCare has acquired 256 properties via the scheme since 2018 while Home for Life has acquired 180.
However, the pipeline of properties under active consideration by Home for Life is 807 compared with iCare’s 721. The next biggest is Tuath Housing Agency with fewer than 100.
Mr Hall said the figures indicate that banks were now bypassing the AHBs in favour of Home for Life. He said the private operator was effectively getting a 25-year Government bond and its process would lead to higher buy-back options for the households at the end of the lease.