A COUPLE WITH two children were left “in limbo” after a vulture fund bought the home they were renting, as both the landlord and the new property owners refused to engage with them on the status of their tenancy or how they’d get their deposit back.
The issue of vulture funds and how it affects homeowners has hit the headlines in recent months but renters can be left just as vulnerable in such a situation, according to housing charity Threshold.
Its CEO John-Mark McCafferty told TheJournal.ie that while the issue of homeowners facing vulture funds deservedly gets public and political attention, renters could find themselves evicted through no fault of their own in such a situation.
“Because the owner can’t pay [their mortgage], it’s the tenant that gets it in the neck,” he said.
In many cases, tenants are left dealing with receivers appointed by the vulture funds, with previous deals or agreements made with landlords rendered null and void. The actions of receivers appointed by these funds have been highlighted in the past, with one Monaghan farmer being threatened with the sale of his stock and machinery.
Left homeless
In one case, a college student was left homeless after receivers were appointed to his property.
He received a phone call from a fellow tenant who said that agents acting on behalf of the new owners of the property had turned up at the door, accompanied by a “bouncer”.
The tenant had already been notified of the appointment of the receiver but they had not been given any information regarding bank details or what forms of payment should be used for the rent.
The man was told to leave the property at once, despite not receiving a notice of termination.
He said he felt like he had no other option but to vacate the property, and said he felt “quite intimidated by the presence of the ‘bouncer’ with the agent”.
The tenant received a payment of €500, and a padlock was placed on his door.
He is now homeless. A case has been submitted to the Residential Tenancies Board, which has the power to offer him redress if it adjudicates in his favour.
Left vulnerable
The couple with two children were told in December 2017 about receivers being appointed to their property.
After seeking help from Threshold, the couple were advised to contact the receiver requesting a deed of appointment and clarification around the deposit if or when the tenancy ends.
The receiver told the tenants that they must retrieve the deposit from the landlord.
The landlord told the clients that the receivership was “none of his business” and that the couple should continue paying the rent to him as normal.
The receiver’s agent meanwhile refused to intervene leaving the tenants in a vulnerable position.
Threshold wrote to the landlord with the deed of appointment, requesting that the landlord stop requesting rent from the couple until he was out of receivership. The landlord then denied asking the tenants to keep paying him rent.
The charity said the case highlights how “receivership can leave the tenants vulnerable and in limbo, through no fault of their own, especially when the receiver does not proactively engage with the landlord to prevent interference in the tenancy while the property is in receivership”.
No running water
Another case the charity dealt with involved a single man living in an apartment block in the city.
His rental agreement included refuse collection and electricity for the communal area, with this electricity required for the water pump.
Receivers were appointed to the property in May 2017, but the refuse collection and electricity supply was not paid from that point on.
This means the bins have only collected once since June of last year. The electricity supply to the property was then cut off in January of this year, leaving tenants with no access to running water.
When the man got in touch with Threshold, the agency wrote to the receiver and the management agency for the building last month, and only then were arrangements made to resume the refuse collection and reconnect the electricity supply.
And, in another case, a couple with five children found themselves without a home after receivers were appointed to their property.
‘Must offer protection’
McCafferty said that cases such as these demonstrate how little protection there is for tenants in such cases.
With PTSB and Ulster Bank recently signalling intentions to sell off thousands of distressed mortgages, he said that renters will likely feel the effects.
He said: “Recent figures from PTSB includes 4,000 buy-to-lets [among the planned sell-off]. That could affect up to 10,000 tenants. And that doesn’t include Ulster Bank.”
With roughly 3,000 units available in the private rental sector right now, McCafferty said that people entering the market will find it difficult.
“They’re moving into a market with almost nothing in relation to available properties, such is the demand,” he said.
Rightly there is a focus on those mortgage holders living in their family home who are affected. But we need to protect renters who are caught up in this too.
The tenant has very few rights in the situation where a receiver moves in. The receiver wants to monetise that loan. And regardless of how well the tenant has paid the rent, the receiver can evict them from their homes in a way they can’t with the homeowner.
McCafferty says that the government should introduce legislation so that, in the event of a receiver being appointed after a vulture fund buys a distressed mortgage, it must “step into the shoes” of the landlord, and all the obligations a landlord has.
He added: “It is unlikely that a tenant will know anything about the details of their landlord’s mortgage, so every tenant in the country will sleep a little less easy from now on, unsure of whether or not the mortgage on their home will soon be sold to a vulture fund.
We have called in the past for the amendment of the Residential Tenancies Act 2004 to recognise the appointment of receivers and their right to collect rent in place of the landlord, and as a result, provide that receivers must ‘step into the shoes’ of the landlord and take on their obligations.
Action on this issue was promised in December 2016 as part of the Rebuilding Ireland plan and was due in late 2017 but it just hasn’t happened.
Speaking last September, Minister for Housing Eoghan Murphy admitted that this was a problem which can leave the tenant in a “very difficult and vulnerable position”.
He said: “I am also very conscious of the precarious position that some tenants are finding themselves in where their landlord’s property is taken over by a receiver.”
Murphy added that a working group established by the department had said there was a “sound legal basis” for changing the laws and said he would “act quickly to bring in these protections”.
In a statement to TheJournal.ie, a spokesperson for the Department of Housing said: “The objective is to protect the rights of tenants during the receivership process by ensuring that persons appointed as receivers will be required to fulfill the obligations of a landlord.
To inform its work, the working group has sought legal opinion on the feasibility of amending legislation to provide greater protection of tenants’ rights during the receivership process. The working group expects to finalise its report shortly.
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