Sunday 4 December 2016

How does it work?

Published 09/11/2011 | 05:00

Families have to agree to give up ownership of their home. Only those who meet the criteria for social housing would benefit.

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The home would be valued on the basis of the current market value.

Once the bank takes ownership, the property would be leased to a county council under a 20-year lease as suggested in the Department of Finance's Keane Report on mortgage arrears.

The county council would rent back the house to the former homeowner. The rent would be based on the income or means of the family. Effectively those in the scheme will become social housing tenants.

It will most likely only apply to those who have lost their jobs or whose income has been destroyed.

Will I still owe money to the bank?

People who enter into the scheme will probably still owe money to their bank once the house has been taken back by the lender.

This is because they will have borrowed far more than the house is currently worth.

What are the advantages of this scheme?

The householder will avoid repossession and all the legal and psychological costs associated with that. And large-scale repossessions across the country would be avoided.

Neighbours will not have to know if people avail of the mortgage-to-rent plan.

Will people get their homes back?

The schemes will likely last 20 years. If people get back on their feet financially they may get first refusal on repurchasing the house. Otherwise, they will become long-term renters of the homes.

Who will cover maintenance?

That is likely to be dealt with by the local authority.

How much will the scheme cost?

No figure has been put on the overall cost yet. The Department of the Environment will end up subsidising the rents of those who avail of it.

However, the Keane Report estimated that the overall scheme would likely be cheaper than the €77m being spent at the moment by the Department of Social Protection on the mortgage interest supplement scheme.

Irish Independent

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