Banks to take over rents on buy-to-lets in arrears
BANKS are moving to get their hands on rents from investment properties where the mortgages are not being repaid.
The lenders are effectively taking control of thousands of buy-to-let investment properties by appointing rent receivers -- a process that saves the banks having to apply to the courts to repossess the properties.
Rent receivers are set to be appointed to close to 2,000 rental properties, Finance Minister Michael Noonan revealed.
And rent receivers are set to be appointed to another 250 properties in the coming weeks, the minister told the Dail in response to a question from Fianna Fail's Michael McGrath.
Rent receivers are appointed in cases where landlords are collecting rent but not passing it on to the bank to pay a mortgage in arrears.
Bank of Ireland had appointed rent receivers to over 1,235 properties by the end of June.
AIB has appointed rent receivers to over 540 residential properties with a further 250 properties expected to be covered by the end of the year.
Permanent TSB said it appointed rent receivers over 144 properties, and the appointment of a receiver is pending for a further 10 properties. The bank advised the Department of Finance that appointments were on a case-by-case basis.
Mr McGrath said the figures showed evidence that some buy-to-let mortgages were in trouble, because landlords were collecting rents from tenants but not passing it on to lenders.
Mortgages on more than 40,000 buy-to-let properties are three months or more in arrears, according to Central Bank data.
A rent receiver is a way for a bank to gain control over the rent without having to take possession proceedings. Most investment property mortgage contracts allow a rent receiver to be appointed where repayments are not being made.
Banks have to give just seven days' notice of the appointment of the receiver if the mortgage is in arrears.
The receiver is authorised to collect the rental income from the tenant on behalf of the bank and act as the letting and property management agent.