Threshold – the national housing charity – has said increased repossessions of buy-to-let properties would cause chaos in the housing market and negatively impact on the lives of thousands of families living in rented homes. The organisation was reacting to comments made last night by the Governor of the Central Bank, Professor Patrick Honohan.
According to the Chairperson of Threshold, Senator Aideen Hayden, wide-scale repossessions of buy-to-let properties would destabilise the private rented sector.
“The private rented sector provides homes for over half a million families and individuals in Ireland,” she said. “Many of these are people who have no option but to live in rented accommodation.
“Their landlords – those who own the buy-to-let properties – are not developers and, generally, do not own vast amounts of property; they are just ordinary people. In fact, we know that roughly two-thirds of all landlords in Ireland own only one or two properties. Many of them were encouraged to buy properties during the boom years and are now facing negative equity. And many of their properties are secured against family homes so, ultimately, an increase in repossessions of buy-to-let properties would put family homes at risk.”
Senator Hayden said the majority of those who own buy-to-let properties would prefer to dispose of them, but this was not an option due to stagnation in the property market.
“Most people caught with buy-to-let properties would love to sell them and climb out from under the debt they owe,” she said. “But the reality is Ireland no longer has a functioning property market. Our housing market is dead, so there is no way for those who own buy-to-let properties to sell them on.
“It would be more pertinent for Professor Honohan – and for policymakers generally – to address this issue, before speaking of large-scale repossessions. As a starting point to fixing our housing problems, we need to develop effective measures to reactivate the property market and stimulate financial lending. Without such measures, there is no point in putting properties on the market.
“Professor Honohan suggested that banks could take on a landlord function and manage tenancies in properties they had repossessed. But Threshold has met with the main banks and we know there is absolutely no desire or appetite amongst them to manage rented properties. In light of this, Professor Honohan’s suggested repossessions would merely lead to former buy-to-let properties lying vacant for long periods of time: people would not have access to finance to buy them, and banks would not have the experience or desire to rent them out.
“Surely, it is better to have properties inhabited and generating an income, than to have them lying vacant. At a time when rental property is in high demand, we can ill-afford to have properties lying empty.”