Minister for Housing wants to decrease rules on mortgage-to-rent (MTR) scheme to help expand the programme. Relaxing the criteria will dramatically increase the number of MTR homes.
The goal of the scheme to allow an option for people who can’t qualify for social housing.
How it works?
A group of investors will buy trouble mortgages and will let the houses to the tenants as a form of social housing.
The aim of the programme was to aid around 250 homes a year. Currently, the statistics have shown that from 2012 to the end of March only 240 have went through the programme. This is out of 3,672 applications submitted.
This scheme can take up to an 18 month turnaround which is too long for a lot of investors.
To help out the scheme currently, a homeowner can surrender their home to the lender which goes to the Housing Agency. They can offer them an approved housing bodies (AHBs). Then AHBs buys the home and lets it to the borrower as social housing.
The revised version of MTR.
It consists of increased valuation thresholds, relaxed criteria, and quicker application processing.
The investor side has them buying the troubled mortgage at face value. The homeowner will have tenancy for 20-30 years. The householder paying around 15% of their net income to the local authority. The local authority will pay the investor the contracted amount. Investors will be responsible for house repairs and upkeep.
This new plan will give more return yields to the investor which therefore increase attractiveness of this scheme.
In reference to Minister aims to expand mortgage-to-rent scheme by Kitty Holland in the Irish Times.