Halt to repossessions would 'worsen crisis', experts warn TDs
‘Some borrowers would stop making any effort to pay mortgage'
A recommendation by TDs that the Government introduce a moratorium on repossessions will worsen the arrears crisis, financial experts have warned.
The Dáil Housing and Homelessness Committee's proposal that home repossessions by banks should be halted immediately has been called into question by three experts in the field.
Between them, economics lecturer Séamus Coffey, Brendan Burgess of Askaboutmoney.com and mortgage broker Karl Deeter have attended 4,000 repossession hearings countrywide. They say a ban on banks taking back homes would make matters worse.
"If a moratorium was introduced, some borrowers would simply stop making any effort, which would compound their difficulties in the longer run," they told the Irish Independent.
They said that last year 48,000 mortgages were restructured, compared with just 687 houses that were taken into possession by the banks on foot of a court order.
"We estimate that there are between 2,000 and 6,000 vacant houses which the lenders find very difficult to repossess. A moratorium on repossessions would simply leave these houses vacant," they added.
However, the committee's chairman, John Curran, insisted that the 14 TDs deliberating on solutions to the housing crisis had considered the impact of a moratorium on repossessions.
He said they recommended that any halt to the practice would only be brought in after consulting the Attorney General and would only last as long as it took for the Government to implement plans to help householders in arrears.
The Fianna Fáil TD pointed out that the committee had recommended that the Government introduce these plans - including a dedicated arrears court - "as a matter of urgency, fully and quickly" and that this should take months, rather than years.
"We think it would be very, very unfair if people who are going through a process at the moment could lose possession of their homes while the Government is introducing new procedures," he said.
The proposal was among more than 70 recommendations made by the committee. Housing Minister Simon Coveney is to consider their report while drawing up an action plan to deal with the emergency.
They call for the provision of 50,000 social housing units by 2020 in what Mr Curran described as an "ambitious" target.
However, one committee member, AAA-PBP TD Ruth Coppinger refused to sign up to the report, saying this wasn't enough. She produced her own minority report and said the number of social housing units proposed was "far too low for the scale of the emergency".
Ms Coppinger said the committee had considered recommending that local authorities build all 50,000 houses but that this had been "watered down" at the last minute to include acquisitions and refurbishments.
Another member of the committee, Independent Dr Michael Harty, told the Independent.ie podcast 'The Floating Voter' that asking councils to build all 50,000 units would be "too ambitious".
Main recommendations by the Dáil's Housing Committee
- 50,000 new social housing units by 2020 through building, acquisition and refurbishment.
- The establishment of a Housing Procurement Agency.
- A rent-certainty system linking rent reviews to an index such as the Consumer Price Index.
- A moratorium on home repossessions until the Government's plans to deal with mortgage arrears is implemented.
- That the Government urgently seeks flexibility from the European Commission in the application of EU fiscal rules to finance social house building.
- Establishing of an off-balance-sheet funding mechanism to provide affordable housing.
- Rent supplement and Housing Assistance Payments should be increased to reflect current market rates.
- Increased support for first-time buyers, including examining a special savings scheme with safeguards to ensure that the scheme does not increase the cost of purchasing.
- The Central Bank review of mortgage rules should have special regard to those renting while trying to save for a deposit.
- Nama should use its cash reserves to tackle the housing and homelessness crisis.
- Ensure that no homeless shelters are closed until alternative accommodation is available.