Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
PERMANENT TSB is offering some of its mortgage customers who haven’t made progress on their loans a chance to write-off their debt – but landlords are the only ones being made the offer.
The offer by the bank will benefit accidental landlords the most, according to the Irish Independent, which broke the story this morning. It also reports that financial experts believe other banks will begin to offer something similar in the near future.
In a statement to TheJournal.ie, Permanent TSB confirmed that it is writing to “certain buy-to-let mortgage customers” whose loans have been “non-performing for an extended period of time”.
Customers would have to agree to let the bank sell their properties in what’s called a voluntary surrender in order to secure the debt clearance. The bank said that at present there were no plans to extend the offer to private householders or other mortgage holders who aren’t landlords.
“For customers who are offered and who agree to a voluntary surrender in this initiative, the bank has agreed to clear any arrears or shortfalls that remain on the loan after the property has been sold and that it will not seek any further repayment by the borrowers in respect of the relevant mortgage,” the bank said.
The offer isn’t being made to all landlords however – it’s made to a select few customers based on the bank’s “detailed review of the relevant loan accounts”, as well as a declaration of assets and other documents that must be submitted.
The offer is limited to customers that the bank decides genuinely cannot repay their loan.
The offer is limited to customers who the bank believes have no means of meeting the repayment terms of the loan or the shortfall debt which will arise upon the sale of the property.
A spokesman for Permanent TSB said that the move followed recent comments by the Group Chief Executive of Permanent TSB, Jeremy Masding who said the bank would pursue a number of actions to deal with non-performing loans and that this initiative was part of that plan.
“While this current initiative is limited in scope, it is one of a number of initiatives which we are pursuing to reduce the number of non-performing loans at the bank. We believe it merits serious consideration by those customers who are invited to participate.”
Permanent TSB is 75% owned by the State.
To embed this post, copy the code below on your site
What about the hard pressed homeowner and taxpayer that bailed them out?.
@Trevor Hayden: Exactly! I don’t even bank with them..what are going to do for me ??? I am outraged very much indeed. Arrgh.
@Trevor Hayden:
If the hard pressed home owner agreed to the proposal then they would be made homeless
@Nick Allen: But nick the tenant will be homeless now….
@B9xiRspG:
The tenant would more than likely be in a position to need to find a new house to rent, just as he/she would be if the owner decided to sell the house. That is the risk associated with renting as opposed to owning a property in Ireland. If the landlord’s mortgage is impaired then the likelihood is that the house will be eventually repossessed anyone so that scenario is fairly inevitable anyway.
This has nothing to do with a favour or helping out distressed customers!
No doubt these properties will be very close to positive equity in terms of the original mortgages, why has it taken so long to produce such an initiative!
It saves the bank having to go to the expense of going to court and risking loosing the asset completely, as many of these landlords could probably claim that the reason they have been unable to pay back banks is due to the excessive taxes imposed on them to bailout the banks!!!!
Why can’t the Universal social charge be tax deductible for people who are actually paying their mortgages!!!!
Why are we still continuing to bail out these banks with the Universal Social Charge
why are we still bailing out the Quinns with an insurance levy – why are these penalties still being applied?????
This is a poorly worded article. They are not writing off the debt, they are offering the landlords the opportunity to voluntarily forfeit their property without having to go through the expensive and time consuming repossession process.
@Partysauras Rex: but the occupiers, who are paying rent to the landlord will likely be evicted?
@John Kavanagh: yes, that comes with renting. U never own it.
Cant wait to read all the comments on this one.
@Nollaig Elliot:
Surely this is what New Beginnings/ David Hall have been looking for for years?
Frees up housing stock, allows people to sell up and walk away without debt.
The taxpayer will pick up the tab (as the bank is 75% owned by the state) but it helps repair the bank balance sheet and hopefully increases housing supply.
@Brinster: yet mr hall still slating them on twitter…. typical
I’m confused…So the bank writes off your loan but sell off the house you’ve been paying mortgage on and you don’t get anything is return? They could make serious profit and you’re left without a house. Please don’t be mean to, just kindly explain. Is TSB being benevolent or not?
@The Girl:
It’s a dressed up property grab to turn a few pound. The offer won’t be extended to everyone – so in other words they’ll only want to get their grubby mitts on select properties they know they can blow out quickly at a tidy profit. The former buy to let owner is the weakest link and leaves with nothing.
@The Girl:
It seems reasonable enough to me. Especially If the landlord is in negative equity. He is basically cutting his loses and running. S/He wont owe the bank a thing.
Puts houses on the market too.
The only loser is the person in the house paying rent, where will they live?
@The Girl:
It is only for landlords so they would not lose their home, they would lose their investment which they are struggling to service the mortgage on and the property is in negative equity
@Tweed Cap: rubbish, if that’s the case the landlord would just sell it in the open market
@The Girl: Its in negative equity. The bank will get less than they lent for it. Given they will have received repayments to date so might not be out of pocket. This is what New Beginnings have been asking for from the banks for years, its a good thing for some people. Others it might not suit.
@The Girl: No one would be left without a house because this applies to “Buy To Lets” only.
They are being benevolent but it is important to note that the bank is 75% state owned – so effectively it is the taxpayer picking up the tab.
What it means is that if you owe €300k but can only sell your house for €200k, then the €100k shortfall will be written off.
You sell the investment property and walk away debt free.
Hopefully this will encourage some to sell up and will increase the supply.
@Brinster:
I am not sure that they are being benevolent. The cost of repossession is very high. I would assume that PTSB has analysed their impaired ‘buy to let’ book and determined that it is more cost effective to implement this proposal than to repossess.
@Fluich Go Craicean:
Ok another way:
Joe soap gets himself a buy to let property in 2005 for €250k on interest only mortgage. They were popular back then.
He pays €1000k per month without ever putting a dent in the capital sum.
So since then he’s paid the bank €140k but still owes the full €250k. Tough sh!t for him but the bank takes that into account when they tell him they are taking him off interest only terms which they know he can’t afford to repay. He can’t sell either cause it’s only worth €175k today so they basically they him by the gonads and they still make a profit. Selectively done on interest only buy to let’s.
@Brinster: the problem is that the existing tenants are pushed out and most buy to lets which are purchased by foreign investors are stock piled with vacant possession and not relet. They are effectively taken out of the rental market. In years to come, such properties will be sold on and available again for owner occupation or renting but not now during the housing and homelessness crisis when most needed.
@Tweed Cap:
You are forgetting the fact that Joe would have had 250k of the bank’s money for the last 12 years. PTSB could have invested this money elsewhere and realised a profit on it. Furthermore PTSB has incurred costs in selling both selling and administrating the mortgage. As a tax payer and therefore 75% owner of PTSB I would want to see them being fiscally responsible with my money
@The Girl: plenty of buy to let’s around the country still In negative equity. And I’m guessing with no tenants either
@Fiona deFreyne:
Certainly a danger – potentially a vacant property tax could impact here.
@Nick Allen:
Yes – I was conflating benevolent with beneficial.
It will certainly be beneficial for the landlord but of course the bank is not motivated by mere benevolence – they’ll have run the figure and surmised this represent the best possible return (lowest loss).
@Nick Allen:
Well Nick the reality is they’ll be fiscally responsible for their own money first long before yours or mine. As we all know by now they’re certainly no charity organisation.
They’ll be selectively making profits on this offer, don’t worry about that.
@Tweed Cap:
No matter what way you dress it a bank does not make a profit by debt forgiveness on impaired mortgages. At best they reduce potential loss and operational costs.
@Brinster:
I am sure the marketing team will be selling it as benevolent though so I think you are on the right track
@Nick Allen:
You’re right but that’s why the key word here is selective – it’s not and never will be general debt forgiveness. That’s an alien concept to a bank.
@Tweed Cap:
Couldn’t agree more. That said sometimes there is sometimes a solution which actually benefits both the bank and the consumer, like this scenario. I have to say fair play to PTSB for finding and implementing such a solution
@Nick Allen:
Yes brilliant on paper indeed.
But don’t go applauding PSTB’s newly acquired charitable attributes just yet Nick. It remains to be seen how many struggling buy to let owners actually sign up to it willingly after they’ve been bullied off interest only.
@The Girl: if it was in positive equity. Why would the owner not have already sold it to clear the arrears and get out of the legal process?
Investors are often prioritised against owner occupiers. Investors can walk away. Owner occupiers are truly trapped. Their home, a roof over their heads, is powerful leverage.
Even if an owner occupiers tries to cut a deal by surrendering a home in negative equity, the leading institution will only rarely and in very unique circumstances waive any meaningful balance of the loan.
The owner occupiers is trapped. The lending institiution or vulture fund will got for full recovery.
28,000 0wner occupier householders are facing disaster. Allowing for a conservative average of 4 persons per household, that exposes 112,000 more people to the spectre of destitution and homelessness. The private sector can’t take these 112,000 people.
The Banks’ problem is again imposed on the State and on society.
Looking at the Courts Lists, it will take about 2 years for the 28,000 houses to reach physical repossession stage. The Banks, the vulture funds, the Central Bank of Ireland , the Department of Finance and the large investors fare keeping their fingers crossed that the increase in residenntial property prices will continue until the repossessions and subsequent sales are achieved.
And the problem is compounded by the reality that there are many non Irish prospective investors piling into the Irish market buying up properties and leaving them vacant, depending on short term speculative capital appreciation.
Homelessness wise, you ain’t seen nothing yet.
@Fiona deFreyne: Wally?
@Chemical Brothers: I don’t think that’s Wally, its too well written with actual facts and proper English! :)
@Chemical Brothers: is there anything specific in that you would like too rebut?
@B9xiRspG:
I would agree, also it didn’t suggest that we simply print more money to solve the situation
@Chemical Brothers: It certainly sounds like Wally
Buyer beware – PTSB calling market top ??? You know when the banks are agreeing to this they don’t see any further upside only downside to property prices.
I would add that the only reason prices are at this level is because supply has been intentionally manipulated to keep it low and force up prices, albeit on very low sales volumes.
@Doh: Can you prove any of that? There is no signs that the government have ever shown an ability to mastermind anything close to what you suggested. It is much likely that inaction from incompetence is the cause.
When there were warnings about an impending housing crisis was coming down the line the public laughed. So no political will to do anything so nothing was done.
@methodical2020: and the tenant is now homeless…..
@B9xiRspG: actually, that is a very hard reality which is so easily lost sight of. Well done for mentioning it. Thank you.
The rich getting preferential treatment again.
@Ian Heaton: You think people who have mortgages they can’t pay, in debt and not enough equity to clear a mortgage are rich????
@Ian Heaton: naive. if they were rich the banks would be chasing them for their money. It’s because they can’t service their debt that they are in arrears and receiving this offer.
“Accidental Landlords” can’t service the loan, AL hands the keys back to the bank, bank sells the house in an inflated market, Bank makes their cut, AL debt free with no roof over their head. Simple.
@methodical2020:
If the bank could sell the house in an over inflated market then so too can the owner. I think you are completely missing the point
@Nick Allen: if you’re in negative equity and the value achieved at sale won’t cover the debt outstanding then you can’t sell the property without the permission of the lender. So selling the house on the open market may not be an option.
@Sean: yes and the point I am making in reference to an over inflated market.
@methodical2020: Yes, and you forgot, AL possibly paid interest only and the taxpayer already bailed out the bank for their projected loss.
Repossess the 28,000 homes in mortgage arrears, put more than 100,000 people on the roadway, sell the repossessed houses to foreign investors who will stockpile them before selling on in a few years time at a tax free gain.
In the current climate , a landlord who can’t pay on his mortgage probably shouldn’t have been allowed buy in the first place…
@Hardly Normal: I would assume they are referring to landlords that purchased back in the Celtic Tiger time.
@B9xiRspG: yes, most mortgages on but to let’s are now easily serviceable but arrears, interest, penalties and legal costs render the total debt unmanageable.
@Hardly Normal: yes well maybe the landlord did all his sums before investing and then the rents dropped to half, the mortgage interest rates shot up snd the government changed the goalposts in relation to increased taxes, reductions in what you can claim back and regulations that are nearly a part time job. Maybe all that.
Interesting that they are only offering this to landlords. So they can resell or relet the properties at a much inflated rate to people who are starved of accommodation.
They wont offer it to owners of family home because theyd be accused of adding to the homeless crisis then!
Contact the hub-ireland,stay in your home and fight the banks.the hub offers free services.they are not a government organisation so they are not corrupt.
@@mdmak33: These are the mortgage holders homes. If you aren’t paying your rent or mortgage why should you get to stay. Somebody is paying. By the very nature of what they are doing they sound like corruption.
@Kal Ipers: the roadside is not a great option.
@Fiona deFreyne: Either is being hungry but stealing the best quality food to feed yourself at the expense of somebody else isn’t exactly fair either. Not paying rent is stealing a service. Not paying your mortgage means others have to pay for it. Next time you complain about bank interest rates remember that.
@Kal Ipers: off with you and have a bank!
have your say