Fianna Fail has called on the government to “rescue” the mortgage-to-rent scheme designed to help struggling homeowners after new figures showed a chronically low uptake.
Figures released by the Housing Agency show that only 217 borrowers have successfully used the scheme in four and a half years.
The previous government estimated that the programme, which allows people who are unable to meet their mortgage repayments to stay in their home on a rental basis, would help 3,500 homeowners.
Under the initiative, a family gives up ownership of their home to an approved not-for-profit housing body which buys it at market prices and allows the family to continue living in the property.
The home must be independently valued and the lender, a bank or a vulture fund, must agree a price with the relevant housing agency.
The proceeds of the sale go towards paying off the mortgage debt with the borrower and lender then agreeing a repayment deal for the remainder.
Michael McGrath, the Fianna Fail finance spokesman, said the low uptake highlighted the need for a “radical shake-up of the scheme”.
“When the mortgage to rent scheme was launched by the previous Fine Gael/Labour government in 2012 it was held up as a safety net to keep families who were deep in mortgage arrears in their homes. Since then it has delivered a paltry return,” he said.
“The scheme is overly bureaucratic, takes far too long and has proven to be a deeply frustrating experience for those in mortgage arrears who have sought to avail of it. Nothing short of a major overhaul including putting it on a statutory footing will suffice at this stage. Meaningful reforms are urgently needed to rescue this scheme and make it fit for purpose. Fianna Fail will be pressing this issue when the Dail resumes later this month.”
The figures released by the Housing Agency show that the major Irish banks were far less likely to take part in the scheme than other loan owners.
The country’s main lenders have completed just 71 mortgage-to-rent applications since the initiative was launched.
Bank of Ireland has been the most frequent participant in the scheme, processing 46 applications, followed by Permanent TSB with 11.
KBC Ireland has agreed deals with seven borrowers while EBS has helped six customers to use the scheme.
AIB, which is 99.8 per cent owned by the state, has completed just one application in four and a half years while Ulster Bank has not completed a single application.
In contrast, vulture funds have been more likely to allow customers to avail of the scheme.
Pepper, which acts on behalf of funds operating in Ireland, has been involved in about half of all successful applications, representing 107 borrowers.
“It has been clear for some time now that this scheme is simply not working. With over 43,000 family home mortgages currently in arrears for more than a year, the lack of support for the mortgage-to-rent scheme by the government and many of the main lenders is very apparent and offers little hope to those deep in mortgage arrears,” Mr McGrath said.
“The government talks a great game about keeping families in their own homes but is presiding over a scheme that is badly broken, while at the same time thousands of families are faced with the real risk of their home being repossessed.”
A spokesman for PTSB said in October that the bank would like to implement the scheme in more cases but had been prevented from doing so by the complicated nature of the process.
“The relative complexity of the scheme and meeting the requirements of the large number of stakeholders involved make it difficult to implement as frequently as we would like to,” he said.
AIB and Ulster Bank said they were committed to finding solutions for distressed borrowers.
A total of 3,575 applications have so far been submitted under the scheme, 635 of which are currently being evaluated.
The scheme has previously been criticised for having too many restrictions.
To qualify a borrower must be unable to meet their repayments and have completed the mortgage arrears resolution process with their lender.
Their home must be in negative equity and must not exceed a certain value, which varies by property type and location.
The borrower must also qualify for social housing and cannot have other assets worth more than €20,000.
A spokesperson for the Department of Housing said a review of the scheme was being conducted to evaluate how it could work better for lenders.