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From top: Minister for Housing, planning and Local Government, Eoghan Murphy and Taoiseach Leo Varadkar at the launch of the establishment of the Land Development Agency last week; Dr Michael Byrne

With Sinn Féin submitting a motion of no confidence and widespread revulsion at the eviction of the Take Back the City occupation in Dublin 1, Minister for Housing Eoghan Murphy finds himself once again scrambling to defend the Government’s response to the homelessness crisis.

Under these circumstances one would assume the government would take every opportunity to stem the tide of homelessness.

One such opportunity is to address the danger posed by the huge number of Buy-to-Let properties in arrears. But as has been the case with each aspect of this housing crisis, the government seems bent on ignoring the issue until it is too late.

The eviction of tenants from the private rental sector is central to the homelessness crisis.

In response to last week’s news that the numbers in emergency accommodation had reached almost 10,000, Focus CEO Pat Dennigan pointed out that the main reason families are becoming homeless is because they are evicted from the private rental sector when the homes they are living in are sold or repossessed.

And if the summer is anything to go by, this problem is going to get considerably worse as Irish banks offload their non-performing Buy-to-Let mortgage books.

In May, AIB sold a €1.1 bn loan portfolio, which included Buy-to-Let mortgages. In July, Permanent TSB agreed the sale of 10,700 mortgages, of which approximately 3,300 were reported to be Buy-to-Let loans, to an affiliate of Lone Star Funds.

This summer also saw Ulster Bank announce the disposal of 2,900 Buy-to-Let mortgages, while KBC offloaded €1.9bn, including Buy-to-Let loans, to Goldman Sachs.

The push to off load non-performing Buy-to-Let loans is in part a response to direction from the Single Supervisory Mechanism, an ECB institution responsible for ensuring the ‘safeness and soundness of the European Banking System’.

The SSM want Irish banks to bring the proportion of NPLS down to approximately 5% (at the end of 2017 the NPL ratios was just under 14%). This is an important goal as high levels of NPLs make the Irish financial system vulnerable to future shocks.

However, with Irish lenders aiming to hit the 5% target over the next few years, it is clear that thousands of tenants will find the properties they call home in the hands of vulture funds.

This can only mean eviction, and the risk of homelessness.

When it comes to vulture funds, politicians have focused their attention for the most part on so called family homes being sold to international funds. This an important issue.

But Buy-to-Let properties are family homes too – it’s just that in this case the families in question are renters.

Moreover, the impact of homeowner mortgages being off loaded remains somewhat unclear. In the Buy-to-Let sector, however, repossession always means eviction.

What makes this a scandal, rather than simply cause for concern, is that many of these lenders are in part state owned and have received massive government support in recent years. PSTB is 75% state owned and AIB is 71%.

The state, in a sense, is creating the very problem it is struggling to contain.

The good news is that there are immediate solutions, although they require careful consideration.

In 2015 (even then it was obvious this was a disaster waiting to happen) I proposed a NAMA-type intervention focused on non-performing Buy-to-Let loans. This would acquire loans and use rental income to cover the costs, keeping tenants in their home.

Similarly, the Oireachtas Committee on Housing and Homelessness final report, published in 2016, recommended a ‘rent switch programme’ which would allow Housing Associations or Local Authorities to purchase rental properties from receivers or investors.

The same Committee also recommended the removal of ‘sale of property’ as grounds for terminating a tenancy, i.e. an eviction. Properties could still be sold, but without effecting the tenant.

Finally, a temporary moratorium on any evictions in the private rental sector could be introduced.

Some might say we should simply let the logic of the market play out, even if this means thousands of evictions, and that state intervention on this scale is unwarranted.

The reality, however, is that this is not the law of the market. Most of the institutions who are selling Buy-to-Let mortgages simply would not exist where it not for the largesse of the tax payer.

Bailing out lenders may have been justified to address the financial crisis. But on that basis, surely emergency measures are justified to address the current housing crisis?

Central Bank data for the first quarter of 2018 tells us that there are currently 22,545 Buy-to-Let mortgages in arrears (19% of the total). During this period, 314 such properties had receivers appointed to them – that’s more than three every single day.

This scale of this problem should be of clear concern. But whatever your view on how this issue should be tackled, what is most damning of all is the fact that there is no plan whatsoever.

Dr. Michael Byrne is a lecturer at the School of Social Policy, Social Work and Social Justice, UCD and participates in the Dublin Tenants Association.

Rollingnews

 

49 thoughts on “Prepare For Eviction

  1. Col

    “thousands of tenants will find the properties they call home in the hands of vulture funds.
    This can only mean eviction, and the risk of homelessness.”
    Do vulture funds sell up as soon as they buy these properties? Could they not keep the tenants in situ and continue collecting the rent? I assume the rental pressure zone rules apply so they can’t hike the rents up?
    It would be good to see sales with the “tenant not affected” setup you see in commercial properties.

    1. Yep

      I think it’s a relative fast buck enterprise for these types of funds. Money made on rental agreements pales in comparison to buying bulk distressed and selling within a short term. It’s a “gamble” but bit really.

      IMO before people go mental.

      1. LeopoldGloom

        They’re not all selling up though. They’ll only make money if they can sell them individually, which is time consuming and costly in itself or quickly flip them to some idiot investor who will then try to do what they wouldn’t.

        The smart ones are buying up portfolios, getting the likes of property managmeent companies to manage and have good, reliably steady tenants in for a x amount of years. They’re then getting a reliable annual return. They’ll no doubt all sell up down the line.

        I live in a Vulture Funded bough property. The best, most professional landlord I’ve ever had. They bought their portfolio for about 115million, they will have made at a minimum 25% of that back in the 3 years they have owned it. Say they hold onto it for another 3-7, they can then sell in lots, and more than double their money, while still having their initial investment more than covered

  2. b

    “In the Buy-to-Let sector, however, repossession always means eviction.”

    is there any evidence to back up this assertion? there’s some attempt to look at solutions in this article but i don’t see the need for this hyperbole, it’s clearly not true, the funds in many cases have an interest in keeping the sitting tenant

    1. jon

      I will tell you a story a true story
      Man who is pretty wealthy in 2006 bought 2 blocks of apartments at peak of property boom
      A Dublin corporation partnaship with developer in inner city rejuvenating project
      Bought using interest only first 10years offered by banks then final 10 years full capital repayments
      On completion of project before completing deal he surveyed apartments to find riddled with pyrite
      Man refused to complete deal on bases
      Developer filed for bankruptcy
      Council brought man to court for breach
      Man spent near on million to fight case
      Judgement reserved
      Man ends up having to complete deal
      Next year crash happens
      Then years fighting when bank went to town to call in guarantees
      2018 man still fighting to keep what’s left
      Banks took apartments
      Building he owned on Grafton street two other buildings
      Man on oxygen facing loosing family home that was up for collateral
      78 years old a lifetime of work
      Wife three children and he is destroyed
      Lives a life that he refuses to talk to anyone just waiting for the courts to get back from holidays and decide if he can keep his house
      He is my brother
      He refuses to take my phone calls and the only news I get is from his wife
      And we hear the banks tell us if tax relief on all the losses they made bankrupting the country is no longer allowed against future profits
      The tens if not hundreds of billions is not allowed then it will effect customers
      Imagine that tax what it can do to repair the damage and suffering they brought to this nation
      No one put a gun to their head to loan money

    2. Vanessa (off the Telly)

      It is Policy for Receivers, and Examiners, even the Official Assignee in Bankruptcy to retain the Tenants if the terms of the lease are being maintained, and or, until the lease agreement has expired. The latter will always seek to extend a tenants lease, for both residential and commercial rentals.

      I do not have any experience or knowledge of “Repossession always means eviction.”
      In fact Tenants now are regularly ordered to be put on notice by Creditors if they are seeking repossession orders from the Courts; subsequently Judges and County Registrars will hear from Tenants when the Case is called.

      Evictions take a long time to execute anyway. Years in many cases, particularly outside Dublin. Although that could well be about to change with the pressure on the Rental Accommodation sector.
      So I cannot understand the need to suggest a “moratorium” especially if the Tenant is now paying the creditor who got the Repossession Order the agreed rent and not the former Landlord BTL Owner.

      A word of advice here everyone. Judges and CRs take a very dim view on Defendants in these cases who have been collecting rent but not paying their mortgage.

      There is (currently) no evidence of Private Equity Funds / Vulture Funds applying to the Courts for eviction orders if the Tenants they inherited are performing their lease agreement. All bets are off of course if the Tenants have been troublesome and they have a sloppy payment pattern.

      I could add, particularly about Local Authorities trying to get permission to buy and Eoghan Murphy’s Housing Agency and the Gazumping of Voluntary Housing Associations, but I won’t. Likewise if the tenants affected have special needs.
      But I have already absorbed enough trolling to last me ’till next Easter.

      Besides I actually have to work. Not talk about it.
      Regards everyone
      VEF

      1. johnny

        “As a tenant your accommodation is a temporary arrangement. It is not permanent because you don’t own the home and you don’t have security of tenure”

        Larkin/Tyrrelstown.

        …Strand Apts limerick….
        …Tyrrelstown….

        vast majority of these situations don’t make it to court, relying solely on judicial situations is flawed.

      2. Anne

        “Evictions take a long time to execute anyway. Years in many cases, particularly outside Dublin. Although that could well be about to change with the pressure on the Rental Accommodation sector.”

        Would we not need more security for tenants, not less because of pressure on the rental sector. Like turfing people out quicker isn’t going to ease any pressure is it?

        Just on the lease agreements expiring as you mentioned also, you don’t need any lease agreement.You fall into part 4 tenancy after 6 months.

        Bit shoddy there really talking about leases expiring, Vanessa off the telly.

        https://www.threshold.ie/advice/ending-a-tenancy/how-your-landlord-may-end-your-tenancy/

        How your landlord may end your tenancy
        Where a lease agreement exists, notice normally cannot be given to you unless you are in breach of your obligations as a tenant, there is a break clause or both you and the landlord agree at the time to end the tenancy. At the end of a lease, your landlord cannot simply end your tenancy. If you have been in the tenancy for more than 6 months and have not been served with a notice of termination you automatically acquire a’ Part 4′ Tenancy’ and may remain in the tenancy for a further 5 ½ years. There is no legal obligation on your landlord to offer you a new lease or for you to sign a new lease and you cannot be given notice if you chose not to do so. Once the Part 4 tenancy expires you automatically move on to another 6 year cycle called a ‘Further Part 4 tenancy’ and so on.

        Of course no one follows the law, or knows it. My next door neighbour was given 35 days to vacate the house as the landlord was moving back, but while still in the period of her lease, which shouldn’t have happened. Also, the sworn declaration was a pile of sh*te.
        I’ve also had a co-worker whose solicitor landlord tried to up the rent by 25% after one year. He was all apologies when he was reminded of the law.. he’s only a solicitor for the lols like.

        1. Cian

          There are a few cases where a landlord can evict a tenant. One of these is if they, or their family, want to live in the house.

          If you neighbour was kicked out, and the landlord didn’t move in (but got new tenants) – then they can take a case to PRTB and could get damages from the landlord.

          1. anne

            I am aware of those.. refurbishments being another. Most of them are not following the law in terms of notice requirements for those excuses anyway.

            No one has the time for cases with the RTB when they’re homeless either.

            My comment was in response Herself off the telly, about leases expiring. After 6 months, it’s irrelevant. You don’t need a lease.. and after it expires you don’t need to sign another one.

          2. Vanessa (off the Telly)

            Which is why those that I quoted are known to keep tenants in situ.

            If you live in any property as your home / primary residence. It doesn’t matter if you are an owner occupier or a tenant. It is still your Principal Primary Resistance / Family Home.
            As already mentioned, again, those I specifically mentioned above tend to observe and respect this.

            Thanks for replying Anne
            Her

          3. anne

            selling up is another excuse to get rid of tenants though isn’t it? They can sell in bulks of 10 properties at a time is it & tell the tenants you’re not coming along in situ?

            And i suppose if they decide they’ll keep the tenants in situ you’d be talking about landlords buying off them when they offload/sweat the asset.. nama will probably buy them back for market prices, as they’ve been known to do.

          4. Vanessa (off the Telly)

            Yes Anne. Unfortunately the For Sale sign provides the legal guillotine that is exercised by landlords of all types.

            Reit, Co-op groups, Pension Trusts, Sole Trader, Retirees even the albeit now rarer, accidental.

            This is where legislation should be considered if the property is the tenants PPR.
            It is a norm for Commercial usage tenants in single unit sales.

            Incidentally, there is a requirement for all State purchases to represent Market Value. So when you hear of a Local Authority or a Voluntary Housing Association purchasing property from, maybe as vulture fund that was previously held by NAMA, for a higher price than NAMA sold / bundled it off for, this is why. I call it the State gazumping the State,.

            Yes, I know that’s not exactly gazumping in most peoples experience, but in mine its close enough.

            Thanks
            V

  3. MaryLou's ArmaLite

    How’s about you pay your mortgage? No excuses anymore.

    Few are left in negative equity. Nearly full employment. A lot just don’t want to pay their mortgage, but keep the asset.

    1. Cian

      This.
      There are (anecdotally) a number of landlords that are charging tenants full rent, but pocketing this – and the lender is seeing none of it.

      1. johnny

        ..how would that work-you’d have get cash as its very straightforward for any lender to ‘lock box’ (garnish) rent/income deposited, the tenant would have be in on it and induced by paying significantly below market.
        Sounds very far fetched Cian or perhaps one or two but definitely not in the thousands, its almost like something a FG hack would make up or ridicule GoD for suggesting,its just a cover for evictions/repossessions/homeless by FG.
        Why can’t FG accept that by flogging all the family silver via NAMA they are scrambling around in bare cupboards looking for developable land, with the land agency, local authorities, please.
        NAMA was given 70 BILLION of real estate assets to manage-how many houses did they build ?

          1. johnny

            WOW-so if i accept that rather opaque term NAMA ‘funded’ these, it works out to be less than 2,000 houses per annum.
            Yeah,yeah,but guess what Cian the chap who owned that shopping center/office building is now bankrupt or was asset stripped by FG,so now that the market has recovered he can’t get a loan to build any houses….
            But NAMA which only appears to approve fire sales to yanks, will fund him right!

          2. Cian

            You asked how many houses NAMA funded. I got you an answer.

            Now your turn.
            a) where are you pulling the 70 BILLION from?
            b) how much of this 70 BILLION was development land?

          3. johnny

            your right Cian it was 74 BILLION !

            “By the end of 2011, a total of €74 billion in loans had been transferred to NAMA by the five participating institutions and €31.8 billion has been paid as consideration to the institutions, an overall discount of 57%. Table 1 summarises the position by institution:”

            All of it really,they had be development/developer loans,McKillen won a famous case NOT allowing the transfer of his loans from anglo to NAMA as they weren’t ‘development loans”

            https://www.nama.ie/financial/key-financial-figures/

      2. jon

        Yes there is and unfortunately most are not doing that
        Also there are some also creating over crowded ghettos
        It is up to government to ensure this dose not happen
        Its called regulation and policing such
        If we did have this just maybe the housing crises might not be so bad
        Mind you if we had accountability then maybe just maybe we might have a country to be proud of

      1. Boj

        *insert assertion here*
        Plenty of loose lips today…lots and lots of facts being posted (he said with a wink).

        1. The Old Boy

          There are a few heads around here of late who seem very happy to make broad assertions of fact backed by nothing but hazy anecdote, rumour and opinion and yet, bizarrely, are the first in line to demand irrefutable proof with citations and sources when anyone disagrees with them.

          It’s a very ugly tactic, but I presume they are fooling nobody but themselves.

          1. Papi

            I am the King of Norway and I am currently world no. 1 at the computer game fortnight.
            And savage in the sack.

      2. Martco

        no @Starina they don’t, really they don’t

        just pay your mortgage

        nearly full employment

        lovely glib statements, they roll off the tongue a bit like “family hub”

        we’re heading for the bottom, I wonder who wins

  4. johnny

    Great piece Michael,any work done on the ‘spread’ or difference in value between a vacant property and one encumbere by a tenancy?
    In other words two similar houses/apartments both for sale,will the vacant one attract a higher price or premium by owner occupiers or do investors pay similar for it as a BTL.

    Completely disagree on a “NAMA”,FG was gifted a 70 Billion real estate portfolio, comprising thousands of developable acres suitable for housing.They chose to fire sale the lot to offshore vulture funds, that have never built housing, they are speculators/flippers.

    FG stripped Irish developers/builders off their assets/land preventing them from getting financing when the market rebounded, as they have no assets to borrow against, so they can’t build in any scale/volume its small ball stuff.

    Glenveagh Properties PLC which is run by NAMA’s most senior property expert, has now also hired NAMA’s number 2 Mary Birmingham,joining John Mulcahy.Its actively buying land from NAMA where they both worked with back off Oaktree Vulture Fund,NAMA’s biggest client its a shocking indictment of FG and its policies.

    1. Cian

      I’m not sure where you are going with this. NAMA was set up by FF in 2009. There was legislation passed in 2009 to control how NAMA would work. NAMA is an state agency, not directly under government control.

      You keep mentioning 70 billion of real estate – but a lot of this was property outside Ireland.
      Of the Irish portion there was a mix of residential and commercial (undeveloped) land as well as (developed) assets (both residential and commercial) that the borrowers had put up as collateral.

      Secondly, as linked above, NAMA have build 5,500 homes.

      Thirdly, when NAMA was set up it had a 10 year life. It was to reduce it’s portfolio year-on-year. People were hired on contracts that expired once they had done their jobs. It’s not surprising that someone with experience from NAMA would end up in a property company.

      Lastly, you seem to confuse FG and NAMA an awful lot.

      1. johnny

        Again with the ‘confusion’ allegations and smears -I’m not in slightest bit confused but I do need nip out grab a coffee shortly:)

        NAMA reports to the Minister of Finance-Pearse Doherty oh hold on……

        Cian-the Minister instructs and directs NAMA,picks its board and sets its policy that’s the reality.

        Nothing would surprise me with NAMA/FG but if you think theres no whiff off the two most senior NAMA’s employees now buying land to develop from the state agency that employed them your the one ‘confused”.

        1. Cian

          It’s funny really. I make factual statements – and you accuse me of allegations & smears.

          *You* are making serious allegations about 2 senior ex-NAMA people.
          *You* choose to mix up NAMA and FG – they are separate entities.

          Jeez; black = white in your world.

          1. johnny

            …did i not just say I’m jonesing for a coffee:)
            ok quick this is a blatant, barefaced lie/false/fabrication/fake and you know it.

            NAMA stated it ‘financed’ them-in so much as if a builder had a half finished estate/scheme with a loan transferred to NAMA,it honored the loan commitment from the original lender to fund construction-yippee!

            Other normal people call it doing their job,you and NAMA lie/make stuff up about BUILDING houses,which they did NOT !

            But they did sell most the country’s developable land at fire sale prices to yank non tax paying funds, which is why theres no HOUSING !

          2. johnny

            “Former Nama executive Mary Birmingham has joined Irish housebuilder Glenveagh Properties.
            Ms Birmingham has been appointed to the position of chief investment officer at Glenveagh Living – a subsidiary of the Dublin-listed housebuilder. Before taking this role, Ms Birmingham was head of asset management at Nama up to May 2018. It’s understood she has been on gardening leave since then.
            Ms Birmingham is among a number of top executives at the State body who left to pursue work in the private sector, including Glenveagh’s executive chairman John Mulcahy ”
            https://www.irishtimes.com/business/construction/former-nama-executive-joins-glenveagh-properties-1.3624528

          3. Cian

            NAMA is winding down. It has sold most of the properties. The staff are being released (from contracts) and look for other jobs (or choose to leave – there is no future in NAMA).

            Skilled[1] people in one property company get new jobs in different property company.

            [1] well, senior people – I dunno if they are skilled!

          4. johnny

            Cian-Oaktree is NAMA’s number 2 client based on loans purchased,its backing Glenveagh,NAMA is a joint venture partner of Oaktree,this JV was established with Oaktree when Mulcahy/Birmingham were the most senior property experts at NAMA.

            https://www.reuters.com/article/nama-loans-idUSL8N1914TJ

            There’s lots of property companies out there,but only one that has done more business with NAMA where John and Mary both worked together, selling state assets to Oaktree.Their stated plan is to buy MORE state assets from NAMA,none this strikes you as a bit like 1980’s Ireland ?

            Thankfully,there’s a election soon, at which point the country can vote on FG’s failed policy regarding its absolute and complete disaster on housing.

  5. johnny

    Great piece Michael,any work done on the ‘spread’ or difference in value between a vacant property and one encumbered with by a tenancy?

    In other words two similar houses/apartments both for sale,will the vacant one attract a higher price or premium by owner occupiers or will investors pay similar for it as a BTL.

    Completely disagree on a “NAMA”,FG was gifted a 70 Billion real estate portfolio, comprising thousands of developable acres suitable for housing.They chose to fire sale the lot to offshore vulture funds, that have never built housing, they are speculators/flippers.

    FG stripped Irish developers/builders off their assets/land preventing them from getting financing when the market rebounded, as they have no assets to borrow against, so they can’t build.

    Glenveagh Properties PLC which is run by NAMA’s most senior property expert, has now also hired NAMA’s number 2 Mary Birmingham,joining John Mulcahy.Its actively buying land from NAMA where they both worked with the backing off Oaktree Vulture Fund,NAMA’s biggest client, its a shocking indictment of FG and its policies.

      1. johnny

        nah im heavily moderated/comments get edited/read/disappear/duplicates/reappear cause how i normally treat useless as**oles like you:)

  6. johnny

    oh it was just a little sting,held back injecting the venom, are you once again trying lure me into a exchange Millie:)

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