What is the mortgage-to-rent scheme?
If you are having trouble paying your mortgage, the mortgage-to-rent scheme lets you switch from owning your home to renting it as a social housing tenant. Under the scheme, you choose to give up ownership of your home to your lender. This means you will no longer own your home or have any financial interest in it. An approved housing body (AHB) or approved private company then buys your home from your lender and rents it back to you. You become a social housing tenant, which means you pay an affordable rent based on your income. If your income increases the rent increases. If your income falls the rent decreases.
Under the scheme, you become a social housing tenant with a right to have your housing needs met by the local authority indefinitely. This means that if your needs change, the local authority will provide alternative accommodation that meets your changed needs. If your financial situation improves, you have an option to buy your home back.
The mortgage-to-rent scheme is only for people whose mortgage is with a private lender. There is a separate mortgage-to-rent option for local authority borrowers in arrears.
To qualify for the mortgage-to-rent scheme, your mortgage, home and household must meet the detailed eligibility criteria below. On 14 February 2022 some of the qualifying criteria for the scheme changed. These changes are incorporated below and include new limits on the value of homes that can access the scheme and the amount of positive equity allowed.
- You must be unable to make the repayments on your mortgage loan and your lender must have decided that this situation is unlikely to change in the future
- You must be engaging with your lender to try to find a solution
- You must have completed the Mortgage Arrears Resolution Process (MARP) with your lender
- In general, your property must be in negative equity. However, a property
with a small amount of positive equity can be included in the scheme. The
limit on the amount of positive equity allowed differs depending on where
you live, see table below:
Location Maximum positive equity allowed Cork City, Dublin City, Dún Laoghaire Rathdown, Fingal, Galway City, Meath, South Dublin, Kildare, Wicklow €35,000 Cork County, Kerry, Kilkenny, Limerick City and County, Louth, Wexford, Waterford City and County €30,000 Carlow, Cavan, Clare, Donegal, Galway County, Laois, Leitrim, Longford, Mayo, Monaghan, Offaly, Roscommon, Sligo, Tipperary, Westmeath €25,000
- Your property must suit your needs – you must not be over or under-accommodated in accordance with local authority guidelines. However, the mortgage-to-rent scheme allows your home to have 2 more bedrooms than specified for your family size in the local authority guidelines. There is some flexibility on this for older people and people with disabilities.
- Depending on the type and location of your property, it must not exceed a certain value, see table below:
|Type of property||Location||Maximum value|
|House||Dublin, Kildare, Meath, Wicklow, Louth, Cork and Galway||€450,000|
|Apartment or townhouse||Dublin, Kildare, Meath, Wicklow, Louth, Cork and Galway||€335,000|
|House||Elsewhere in the State||€345,000|
|Apartment or townhouse||Elsewhere in the State||€230,000|
- You must qualify for social housing support in the local authority area that the home is located. As part of this requirement, your net household income must not exceed certain limits, depending on which part of the country you live in and how many adults and children there are in your household. The income limits for different locations and households are in this table. Net household income is your household income after taxes and social insurance have been taken off. You must apply for social housing support before submitting an application to the mortgage-to-rent scheme.
- You must not own any other property or have assets in excess of €20,000.
- You must have a long-term right to remain in the State (pdf).
You must get legal and financial advice before the mortgage-to-rent process can go ahead.
Your lender will 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.
The Money Advice and Budgeting Service (MABS) can provide debt advice, as well as general information on the scheme.
How the mortgage-to-rent scheme works
Changing your status from owner to tenant of your home involves a complex set of legal and financial arrangements, all of which must be signed off before the transfer of property takes place.
When all these arrangements have been agreed, including the purchase price of your home (see below) you voluntarily surrender possession of your home to your mortgage lender. The lender immediately sells your home to a housing association or approved private company, who will then rent it to you. If an AHB buys the property they will own it and be your landlord. If an approved private company buys your home they will own it, but your local authority will be the landlord. See ‘Housing associations and approved private companies’ below.
Purchase price of your home
Before your home can be sold to a housing association or private company, it must be valued independently and the lender and the housing association must agree a price. The price will be based on several factors, including the market valuation of the property and the cost of any necessary repairs. If the lender and the housing association or private company cannot agree a price, the arrangement will not go ahead.
After the sale
The proceeds from the sale of your home will go towards your mortgage debt and you come to an arrangement with your lender for the remaining balance that you owe, if any. This remaining balance is now an unsecured debt. (A secured debt is a loan on which goods or property are available as security against non-payment – for example a housing mortgage, where you offer the property as security and it may be repossessed if you cannot pay the mortgage.)
You will no longer own your property but you can continue living in your home as a social housing tenant and you will have a tenancy agreement with the housing association, or the local authority if a private company buys your home. Once the property is 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.
If your financial situation improves, you will have an option to buy your home back from the housing association or approved private company after 5 years, or earlier if agreed.
Housing associations and approved private companies
Under the mortgage-to-rent scheme, your home can be bought by a housing association or an approved private company. If a housing association buys your home, they will own it and be your landlord. But, if an approved private company buys your home, the private company will own your home, but your local authority will be your landlord. However, with both options you will be a social housing tenant and your rent will be set at an affordable rate by the local authority. For more details on the differences between these options, see mortgagetorent.ie.
If your lender does not agree that you are suitable for the mortgage-to-rent scheme, they must tell you why in writing. You can appeal to the lender’s Appeals Committee under the Mortgage Arrears Resolution Process (MARP).
If the local authority decides that you are not eligible for social housing support (which means that you cannot access the mortgage-to-rent scheme), you can appeal this decision through the local authority’s internal appeals system. If you are not happy with the outcome, you can contact the Ombudsman.
How to apply for the mortgage-to-rent scheme
Where appropriate, your lender will offer you the opportunity to apply for the scheme and give you an application form for mortgage-to-rent. If you are interested, you give consent in writing to your lender to submit your details to a number of organisations involved in the scheme.
You then need to complete several steps:
- You apply for social housing support with your local authority.
- You agree to surrender ownership of your home in exchange for a tenancy agreement with a housing association or local authority.
- You complete your Mortgage to Rent application.
The Housing Agency has published a Guide to the Mortgage to Rent Scheme (pdf).
Where to apply
Contact your mortgage lender to discuss your suitability for the mortgage-to-rent scheme.