On Wednesday 18th March 2020 the 5 main banks in the state (AIB, BOI, KBC, PTSB and Ulster Bank) announced that they would be putting in placed support measures to assist those borrowers who had been affected by the Covid19 crisis.
The following day the Non-bank mortgage lenders and credit servicing firms (also known as Investment/Vulture funds) confirmed that they will also support the measures announced by the country's five main banks.
It is clear from the recent discussions and conversations that we have had with the banks on behalf of our clients that this support package is subject to a strict credit application process and that all requests for payment breaks must be explained and documented clearly by the borrower.
Supports being provided by Banks
The measures being introduced by banks can be summarised, as follows:
1. Implement a payment break of up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation. Customers wishing to avail of a payment break should contact their respective bank.
2. The banks agree there is a need for a simplified application process to make it as easy as possible for businesses and personal customers impacted by Covid-19 to receive support from their banks. They are working with all member banks to achieve this.
3. The banks want to ensure that any Covid-19 application for a payment break and further reviews will not adversely impact the customer's credit record, and the banks reporting of these facilities. Banks want to avoid this and are meeting with the Central Bank of Ireland to urgently achieve a solution in this regard.
4. Banks will also defer court proceedings for three months.
5. The banking system stands ready to provide working capital support for those affected by the Covid-19 crisis.
In addition to the measures being introduced by the banks, the Minister for Finance is requesting that the banking industry increase the limit on contactless payments to €50 (from €30). Paschal Donohoe said the increased limit would cover most transactions as the average value of debit card transactions is €41.52.
The minister is also deferring the collection of stamp duty on credit cards to July. This is normally levied in April. Revenue also confirmed that the duty of €30 per year per credit card account would now be levied on 1 July, three months after the legislated date of 1 April.
Tenants and Landlords
Some of the country's largest landlords and institutional property investors have said they will support tenants who are impacted by the disruption caused by the coronavirus pandemic through measures such as deferral of rent payments and payment plans.
Elsewhere, landlords who are members of the Irish Institutional Property (IIP) organisation have also committed to temporarily suspending the issuing of notices to leave to impacted tenants going through short term financial stress as a result of the pandemic. The body is also to suspend any pending rent increases during the acute phase of the outbreak.
IIP counts among its members the country's largest private landlord, Ires REIT, as well as large residential property investors and developers such as Cairn Homes, Glenveagh Properties, Henderson Park the new owners of Green REIT, Hibernia REIT, Hines Real Estate Investments and Kennedy Wilson.
Tenants whose landlords are member of IIP and who are impacted by the Covid-19 emergency are being encouraged to contact them as soon as possible. Special phone and online support will be put in place by IIP to help tenants.
In the event that tenants are in the process of moving and wish to suspend their plans, IIP landlords will assist them with continuing accommodation.
Members of IIP are also in contact with the Government over the provision of self-isolation accommodation if required.
Ban on Evictions and Repossessions
The Government has announced a temporary ban on evictions and a pause on rent increases for an initial period of three months, while the Covid-19 crisis is ongoing. The legislation is expected to be brought before the Dáil next week.
Minister for Housing Eoghan Murphy, who announced the measures, said they were necessary measures to help renters. He said: "If you're a renter and your rent is frozen for the period of this emergency you can't be asked to pay more in rent than you're currently paying.
"Also if you're a renter you can't be asked to leave the accommodation that you are in for the period of the emergency."
The Government said tenants will be expected to pay rent during this period and it said income supports and rent supplement is available to those struggling to do so.
Central Bank Releases Banks to allow Customer Support
The Central Bank has given banks here permission to use a capital buffer they are required to hold in order to support the continued provision of credit to households and businesses. The Counter Cyclical Capital Buffer (CCyB) will be reduced from 1% to 0% by April 2.
The move is aimed at helping the economy, businesses and households through the economic shock that has been brought about by the Covid-19 pandemic.
The regulator had been coming under increased pressure to release the buffer, as banks unleash a raft of measures to support customers through financial difficulty.
As can be seen from all the measures above which were announced during the week, there is an acceptance by all parties, including the government, the central bank and the banks themselves, that they urgently need over the short term to put in place supports, systems and procedures to assist their customers get through the financial challenges of the next few months.
It will be interesting to see if this is a genuine effort or just a PR exercise by the banks.
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