Wednesday 29 January 2020

Is it ever right to evict?

In the wake of the high-profile eviction of a couple from their home, George Garvey and David Hall examine the issues around people, property and the banks

YES: Yesterday's emotional scenes at the eviction of Brendan and Asta Kelly from their home in the upmarket Dublin suburb of Killiney should not blind us to the fact that Mr Kelly is a professional landlord who knew exactly what he was doing rather than a naif.

It remains one of the powerful images in the Irish psyche: the bailiff evicting the poor innocent, put-upon tenant farmer from their smallholding.

It was the reaction generated by the wave of evictions of tenant farmers following the failure of the 1879 harvest that created the mass movement that would eventually result in the creation of the independent Irish State less than a half a century later.

Indeed, one would have to have a heart of stone not to have been deeply moved by the events in Killiney. No one should be without a roof over their heads. But should that home be a palatial 3,800sq ft mansion in an exclusive gated community?

During the eviction proceedings, the Kellys, Mr Kelly in particular, were loud in their objections to the apparent wrong being done to them.

However, when Mr Kelly was asked detailed questions about his other properties, of which there are up to 18, not alone did the decibel count drop dramatically, he was remarkably unforthcoming. He did however concede that he was a professional "landlord".

In truth IBRC, the run-down vehicle which has taken over the Kellys' mortgage from Irish Nationwide Building Society finds itself in an impossible situation, damned if did and damned if it didn't.

It was granted a repossession order against the Kellys two years ago. Given that it takes at least a year for a repossession order to make its way through the court system -- and the fact that the courts are loath to even entertain such a case unless the arrears are already of long standing -- it seems reasonable to assume that the mortgage arrears on the Kellys' home stretch back to 2008 or even 2007.

To which one is entitled to ask, with several years to negotiate some sort of a compromise arrangement, how come we were treated to yesterday's spectacle?

Were Irish Nationwide and the IBRC utterly unreasonable, or did they bend over backwards in their dealings with Mr and Mrs Kelly? Did the Kellys offer to sell the Killiney property, which is about four times the size of the average family home, and move to less salubrious quarters?

Given the fact that Irish banks are extremely reluctant to repossess family homes, and that this case seems to have dragged on for several years, it is difficult to resist the conclusion that it was not the banks but the Kellys who are being unreasonable. Mr Kelly's refusal to provide any meaningful details about his other property assets would tend to support this view.

Bailing out the banks has cost an absolute fortune, with last year's state-funded recapitalisation providing for up to €9.2bn of losses on mortgage lending.

That is money which the ordinary taxpayer, most of whom live in considerably less style than the Kellys, have had to pay through higher taxes and reduced public services.

It seems that IBRC were left with little choice but to evict them.

If it hadn't, it would have ended up paying the cost of writing off their mortgage. Thanks, but no thanks.

George Garvey is a financial journalist

NO: Putting a family out of their home today is an attack on our society. The solutions are there but the courage is not. This lethal combination means that we are now facing the perfect storm.

On the one hand, we have a long-standing and pervasive love affair with ownership of property. On the other, we no longer control our currency and this is hampering efforts to exit the debt cycle. Normally an indebted country would naturally inflate itself out of this hole. Debts are eaten away by moderate inflation and life goes on.

But when your currency is controlled by Germany, where inflation-prevention is the holy grail (as a result of their history), the debt is both permanent and immovable.

Finally, we have the most antiquated insolvency laws in the developed world. There is no personal insolvency other than bankruptcy and that is an effective life sentence.

So put yourself in the position of one of the hundreds of thousands of young families with vast unpayable mortgages. Every month the white envelopes arrive and every month the debt grows like a cancer.

And we saw the devastating and distressing results of that unsustainable debt this week.

It is completely inappropriate for such force to be used to remove people from their family homes. Repossessing a family home at this time only punishes the borrower and costs the State. There is also serious pressure on families as a result of being hounded, the stress of which cannot be underestimated.

Furthermore, to repossess a house and to try to sell it in a distressed market benefits no one. How can the bank make any money on an asset that nobody wants to buy?

The banks already have almost 1,000 repossessed home that they are trying to offload. Why add to this?

So what are the options for those facing repossession?

Well, the homeowner can sell or can voluntarily surrender. The upshot of this is that you have no home for your family and are saddled with an enormous and growing personal debt that will eat away at your future.

And unfortunately, if you go to the bank and ask for help, the best that you can expect is a six-month interest-only grace period. That may be of help to some but, in reality, it is just storing up the problem for most people.

We have been at this nonsense now for four years and the terrible truth is that there are no options left anymore.

We are facing a social time bomb.

We are turning our back on the young families of all classes who were caught in a bank-made property bubble. In every other country they have taken steps to address this. Why haven't we?

The answer is simple. Our law-makers are afraid. They talk the talk, but then stand still.

They have been petrified by the lenders since that faithful night in September 2008, when they sold our future to Anglo Irish Bank. They have been terrified into using our national wealth and forfeiting our sovereignty in order to save insolvent banks. And when it comes to standing up for families, they pontificate but do little.

Repossession of a family home at this time, and in the absence of any legal solution for borrowers, is deeply unfair. The argument of 'moral hazard' and payment of debts is the same argument used by those who supported the penal laws in the 19th century. The tenant could not pay so the absentee landlord had the family evicted. The law was on the landlord's side and no doubt the phrase 'moral hazard' or something similar was heard in the drawing rooms of the big houses.

David Hall is co-founder of New Beginning, which promotes Fairness in relation to housing debt

Irish Independent

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