BPFI told how defective homes are 'unmortgageable, uninsurable and unsellable'
The Chief Executive of Banking and Payment Federation Ireland has told a meeting of the Donegal Defective Blocks Committee that the banking industry has a ‘duty of care’ and cannot ‘advance credit’ to customers who have no way of repaying.
Brian Hayes, along with Michelle Byrne, Head of Consumer Banking at the BPFI, addressed the committee at a meeting last week.
The meeting was held in the council chamber but Mr Hayes and Ms Byrne attended it online, as did some councillors.
Mr Hayes said the BPFI recognises the ‘terrible misery people have gone through as a result of the defective blocks scandal’.
Ms Byrne told the meeting how BPFI and its members reiterated its commitment to supporting homeowners ‘where possible and continue to engage proactively on issues where the banking sector has a role to play, as where we believe we can make a positive contribution.’
She added how the BPFI is also awaiting the ‘final outcome’ of the National Standards Authority of Ireland’s review of IS465, (the standard used to evaluate homes impacted by defective blocks) and said the findings of this will be considered in the context of their position on mortgageability.
Ms Byrne told the committee there was a ‘clear desire across Ireland’s lenders’ to ‘support and work with customers’ to ‘find solutions’.
Councillor Joy Beard, of the 100% Redress Party, said there is currently a ‘situation where banks require engineers to sign off on the works for insurance, but many engineers will not sign off on a property where deleterious materials still remain.’
She described IS465 as ‘not fit for purpose’ and said, as a result, ‘homeowners can go through the scheme and still be left with a home that cannot be certified, is not mortgageable or insurable and that’s a fundamental failure of this scheme.’
She outlined how the ‘knock-on effects,’ on areas such as the housing market, are ‘unavoidable’ and told how people’s mental health is also being impacted. Colr Beard disclosed how homeowners are taking on ‘significant borrowing’ to remediate their houses, which in turn, she added, secures the bank’s assets and mortgage.
However, she said, ‘in many cases the banks only offer another loan, at a standard commercial rate, which means families are taking on all the risk, while the banks benefit from their restored collateral.’
Colr Beard also told the BPFI representatives that ‘nothing has changed’ in relation to regulation.
"Property owners from 2020 are approaching us with defective concrete issues, that won’t be able to access the scheme. For landlords, the scheme is even more flawed.”
Colr Beard said upfront costs are also ‘still a massive hurdle for families.’
"The average family needs 25,000 euro before they can start engaging with the scheme and this scheme is a clawback system. We need you to use your influence in government to fix what is clearly broken. Homes are unmortgageable, uninsurable and unsellable. Until remediated homes are guaranteed to be fully mortgageable, insurable and sellable, families will remain trapped in their homes in Donegal and the housing market will remain stalled.” Colr Donal Kelly highlighted how a number of impacted homeowners were in attendance at the meeting in Lifford and said there were ‘multiple reasons why the scheme is not good.’
Colr Martin McDermott said that ‘unless we have a situation where a house is remediated and is mortgageable, insurable and sellable, we’re going nowhere’.
He added how the new IS465 standard will have to be ‘crystal clear for everyone – for the banks, insurance, companies, engineers – for everyone, as to what remediation option they’re getting and what is mortgageable, insurable and sellable,’
Colr McDermott said that banks ‘haven’t stepped up to the mark’.
"There needs to be something there so that banks can help people a lot more than they are’.
Colr Denis McGee outlined how the mental health of many home and property owners is ‘on the floor’.
He addressed how a lot of older people also ‘don’t have time on their sides’.
Colr Gerry McMonagle said there needs to be a ‘changing attitude of government’, that 100% redress ‘is the only way out of this’ and ‘IS465 is not fit for purpose.’
100% Redress Party Councillor Ali Farren told the meeting that there are 100 defective block homes within a one mile radius of his house in Malin Head.
"I work in a community centre that is defective. That’s the enormity of it in my area and this is repeated in every parish in Inishowen, for sure.
Colr Farren queried if any of the ‘heads of the main banks came to Donegal and had a look for themselves to see how many defective houses they have mortgages on?’
Other councillors also reiterated the views of their fellow committee members, with many outlining how banks and credit institutions have a ‘duty of care’ to their customers. Groups such as the Banking and Insurance Redress Focus Groups were also praised for their work so far. Mr Hayes outlined how there is a BPFI multi-led stakeholder group, which was set up on the issue of defective blocks and said it was important that they had all been brought together. Mr Hayes said that the ‘three pillar banks’ have around 200 staff members in Donegal, across 22 branches and ‘are well aware of this problem’.
"I’ve heard from people that banks aren’t taking this seriously. This is a very serious problem. I can assure you, at board level, senior executive level, at regional and branch level, this is an absolute priority for the sector to get right.”
He told how the banking industry has a ‘duty of care to customers’ and added that, ‘what the industry cannot do, for it is illegal for the sector to do so, is advance credit for those who have no capacity to repay’. Mr Hayes agreed that the work on IS465 is ‘critical’ and added: “By all means, we hear you loud and clear.”