Last night Dublin City Council were provided with a presentation on some aspects of the home loan schemes run by the council. There is a lot of interesting material in the presentation and we will focus on just some aspects of it.
Dublin City Council have a loan book with 2,588 accounts (it is one account per household) with a total amount outstanding at the end of 2014 of €309 million, giving an average of just under €120,000 per household.
Of these accounts, 1,192 or 46 per cent were in arrears and these represent €157 million or 51 per cent of accounts by value. The average balance of the accounts in arrears is €131,000 and the average amount of arrears is €12,677. Just over half (605) of the 1,192 accounts are in arrears of more than 12 months and these represent for 89 per cent of the arrears amount.
More interesting perhaps are some of the outcomes in relation to sustainability and repossessions. The presentation states:
At the end of 2014, a total of 251 accounts are categorised as unsustainable with 154 being assessed for mortgage to rent and the balance of 97 being assessed for possession (there are 25 properties due for repossession in 2015, 12 of which are abandoned).
In terms of DCC repossessions, to date there have been 16 cases of voluntary surrender and 93 District Court repossessions (a total of 109 properties have therefore been taken into DCC’s possession). The vast majority of these (n=100) relate to shared ownership including ‘affordable’ shared ownership. Repossessed properties are located across the city, with the majority in Dublin 10 and Dublin 11.
To date, only TWO households entered homeless services as a result of possession. Both departed to PRS.
DCC try to modify loans (mainly using interest-only periods) to reduce the payments for those who engage with them and complete a standard financial statement. According to the report “the majority of borrowers [in arrears] are working” but around one-quarter are unemployed.
In such cases it may not be possible to make the loan affordable though it is not clear what metric was used to adjudge the 251 accounts as “unsustainable” though a bar of 30 per cent of net income for the payment required under the terms of the loan is used later in the presentation.
DCC have 90 borrowers who are not paying and not engaging. These non-payers and non-engagers correspond to 3.5 per cent of borrowers from DCC.
Of the 251 accounts judged to be “unsustainable” the loan agreement will be ended and the property repossessed 97 (nearly 40 per cent) of cases. The remainder are being assessed for a mortgage to rent scheme.
DCC have already repossessed 109 properties with 85 per cent of these having taken place on foot of a court order. It is not stated what happened in these 109 cases and whether the household, if any, continue to live in the property under a tenancy agreement.
The presentation highlights that two household contacted DCC’s homeless services following the repossession. It is not clear why the number was highlighted with the use of capitals. It could be to highlight that repossessions can result in homelessness though the report does say that both households “departed to the PRS” (presumably private rental sector). It could also be to highlight that repossession leads to a possibility of homelessness in very few cases – the 109 repossession resulted in ‘just’ two households contacting DCC’s homeless services.
The presentation also indicates that of the 25 properties due for repossession in 2015 that 12 have been abandoned. In these cases the repossessions will lead to an increase in the supply of housing available and 98FM report that “Houses that have been taken back by the council are given to people who're waiting on the council's social housing list.”
While there can be a threat of homelessness for those who face repossessions it will also be case that repossessions can increase the supply of housing market by bringing back in to use houses that are otherwise vacant and abandoned.
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