1. How do I know if Mortgage to Rent is the right housing solution for me?
Reaching the decision to give up ownership of your home is not an easy decision and care must be taken to ensure that it is the right decision for you and your family. You must take independent legal and financial advice in order to make an informed decision.
The Money Advice and Budgeting Service (MABS) will assist you in obtaining relevant independent advice through the Abhaile service. MABS may be contacted by telephoning 0761 07 2000 from 9am to 8pm Monday-Friday.
Alternatively, your lender is obliged to pay up to €500 for legal advice. If you wish, your lender will also pay €250 for you to get financial advice from an accountant on the Mortgage Arrears Information and Advice Service panel.
2. What are the steps in the Process?
The steps in the process are outlined in Section 7 of the MTR Guide.
3. What role do local authorities play in the scheme?
The local authority assesses if you qualify for social housing support, so you can access the MTR scheme. They will be your landlord if your property is sold to a private company. The local authority also signs the property’s lease or availability agreement with the private company or the Approved Housing Body. If the local authority is your lender, they administer the MTR scheme for you as a local authority borrower (Local authority Mortgage to Rent Scheme).
4. Can I choose who will buy my home?
If more than one party is interested in buying your home, your lender will inform you of the options available so you can choose the option that suits you best.
5. Who will value my property to determine the price?
A qualified valuer will value your property. Your lender and the party interested in purchasing the property will agree the price based on this valuation. You will be asked to agree to this price in the Final Letter of Offer, which will be sent to you before you will be required to make the final decision to accept MTR.
6. What is the purchase price of my house likely to be?
The purchase price of the property is that price that is agreed by your lender and the purchaser and approved by you. The price is typically the open market value of the property minus the cost of any repairs required to the property to bring the property up to private rented standards that are required to allow the property to be rented to you.
7. Is my outstanding mortgage debt (i.e. residual debt) written off under the Mortgage to Rent Scheme?
Any outstanding mortgage debt is a contractual matter between you and your lender. When the lender sends you the Final Letter of Offer asking you to agree to the sale, they will outline what will happen to your residual debt.
8. What happens if the property price goes above the limits allowable under the scheme during the process?
The property eligibility is checked at the outset of the scheme. If the eligibility of the property changes during the process e.g. the property goes into positive equity, each case will have to be assessed on a case by case basis. The purpose of the MTR Scheme is to try to keep people in their homes.
9. How is the rent calculated?
You as a social housing tenant will be charged a rent based on your income. This is calculated by the local authority using the differential rent system. It is based on your ability to pay, i.e. the lower your income the lower the rent. Under MTR, whether your landlord is the local authority or an Approved Housing Body you will be charged the same differential rent.
10. Who will maintain and repair the property once it’s sold under the Mortgage to Rent Scheme?
The buyer is responsible for the maintenance and repair of the property as set out in your tenancy agreement whether an Approved Housing Body or a private company buys the property. Properties made available for social housing purposes must meet private rental standards. Where properties do not meet these standards, the buyer will arrange to have the necessary works undertaken as soon as possible after the completion of the MTR process.
11. Could my house be sold during the term of the lease?
Yes, your home can be sold during the term of the lease, but your tenancy will not be affected. Your landlord remains the same and you will remain in the property under the same conditions and with the same protections as existed prior to the sale.
12. What if I change my mind during the application process?
You do not have to make the final decision to accept MTR until you are issued with the Final Letter of Offer which will contain all the information that you should need to get independent financial and legal advice and make an informed decision. The MTR process includes a ‘cooling off’ period following the return of the signed letter to your lender.
13. What are my options if my Mortgage to Rent Application is not successful or if I am ineligible for Mortgage to Rent?
If you are in danger of losing your home, but are not eligible for the MTR Scheme you may be eligible for other forms of social housing support. Even if you still legally own your home, the housing authority may consider you to be in need of social housing support if your mortgage is deemed unsustainable under the Mortgage Arrears Resolution Process (MARP).
There are other housing support options available immediately through the local authority for borrowers who lose their homes such as the Housing Assistance Payment (HAP) programme whereby the prospective HAP tenant (you) can source a HAP property to rent, within certain rent limits.
14. I am a joint borrower. Can I avail of Mortgage to Rent if the other borrower is no longer living in the property?
If the other party to the loan is willing to sign the Voluntary Surrender form allowing for the transfer of the property to the lender for sale, then yes you may be eligible for MTR.
15. If I cannot get in contact with the other party to the loan, can I avail of Mortgage to Rent?
You will need to ensure that the title to the property is available to you to allow for the sale of the property under the MTR scheme. You may need to go through the legal system for this.
16. If my circumstances improve, can I remain a social housing tenant?
Yes, once you adhere to the requirements of your tenancy agreement. However, it should be noted that if your income increases you will be required to pay an increased rent.
17. Can Mortgage to Rent form part of an insolvency arrangement?
Yes, a Personal Insolvency Practitioner (PIP) may suggest MTR as a solution under an insolvency arrangement.
A list of PIPs can be located on backontrack.ie/PIA
18. Can I apply for an insolvency arrangement if I complete the Mortgage to Rent process?
Yes, as your debts will be unsecured debts once MTR is completed, you can apply for a Debt Relief Notice or a Debt Settlement Arrangement depending on your debt level.
More information on debt solutions can be found on backontrack.ie
19. I am bankrupt. Can I avail of a Mortgage to Rent solution for my home?
If your mortgage, home and household meet the detailed eligibility criteria for MTR already described and the Official Assignee, who oversees bankruptcies, is satisfied that the sale of your home will not produce a return for your bankruptcy estate, the Official Assignee will work with you and your mortgage lender to facilitate the sale of your home under the MTR scheme.
20. Can I buy my property back if my circumstances improve?
Yes, if you can obtain the finance for the purchase you can buy the property. The price you will pay will be the open market value at the time you purchase it back or the price the buyer paid for the property, including costs with a clawback applied (the value of which relates to time between the buyer purchasing it and you buying it back). You will be given the opportunity to choose either option and the cost of both when and if you are in a position to purchase.
Not Discounted Purchase Price
(Property Owner purchases the property at Open Market Value, less repairs)
Buyback - Option A Only
• You have the option to buy back your home after 5 years (or earlier if agreed but, only at the discretion of the Property Owner) at the Open Market Value (OMV) on the date of the buyback. The property cannot cost less than the price that the Property Owner paid for the property.
Discounted Purchase Price
(Property Owner negotiates a discount with the Lender and purchases the property at a discounted price i.e. below Open Market Value)
Buyback- Option A
You have the option to buy back your home after 5 years (or earlier if agreed but, only at the discretion of the Property Owner) at the Open Market Value (OMV) on the date of the buyback. The property cannot cost less than the price that the Property Owner paid for the property.
Buyback - Option B
You have the option to buy back your home after 5 years (or earlier if agreed but, only at the discretion of the Property Owner).
You will pay:
• Price (discounted) that the Property Owner paid for it;
• Cost of repairs incurred by the Property Owner in bringing the property up to private rental standards during the period of the tenancy;
• Cost of finance by the Property Owner on the property transaction and ongoing during the period of the tenancy
• Legal costs incurred by the Property Owner.
• If you sell the property within 20 years you will have to pay the Property Owner a percentage of the proceeds of the sale - known as a clawback. The percentage is the percentage difference between the sale price and the Open Market Value of the house. This amount will be reduced by 5% each year after you have bought back the property.
• If you sell you sell your home after 20 years, you will not have to pay any clawback to the Property Owner.
• The Open Market Value at the time you sell your home is used to calculate the amount of clawback due. If the gap between the original sale price and the Open Market Value has narrowed, the amount of clawback will also reduce. If the proceeds of the sale of your home are below the initial price paid, you will not be liable to pay the Property Owner a percentage of the proceeds of the sale.
The buyback (Option A or B) will need to be specified in a separate legal agreement between you and the Property Owner