A total of 1,135 possession orders were made by the Irish courts in the first nine months of 2015. This is an increase of almost 70% on the same period in 2014, and a 350% increase on the same period in 2013.
While the number of possession orders made by the courts has risen, the number of residential mortgages in arrears has significantly reduced. By the end of September 2015, and for the ninth consecutive quarter, the number of mortgage accounts in arrears had declined and stood at 92,291, which amounted to 12.3% of all residential mortgage accounts. Of these, 65,584 (71.1%) were accounts in arrears for over 90 days, and 37,267 (40.4%) were accounts in arrears for over 720 days.
Statistics compiled by the Central Bank of Ireland and the Courts Service of Ireland highlight the increase in both the level of repossession proceedings being initiated, and possession orders made, in the Irish courts over the last number of years, particularly in the Circuit Court.
A number of key trends can be seen from the above statistics:
- Arrears: The number of residential mortgage accounts in arrears is continuing to decline, with 12.3% of all residential mortgage accounts in arrears by the end of September 2015.
- Proceedings issued: There has been a marked increase in the number of proceedings issued in the Irish courts for the enforcement of security in respect of principal dwelling houses (PDHs) since July 2013. However, the number of possession proceedings issued in the Irish courts stabilised, and fell slightly, over the first three quarters of 2015.
- Possession orders made: The greatest increase in the orders made for possession of both PDHs and non-PDHs has undoubtedly been in the Circuit Court, which is a direct consequence of the provisions of the Land and Conveyancing Law Reform Act 2013 (see further below). The period between 2009 and 2013 saw an average of approximately 317 court orders for possession made, with this increasing significantly to 1,063 in 2014, and 1,088 in respect of the first nine months of 2015. The vast majority of these court orders for possession relate to PDHs.
- PDHs actually repossessed: The number of PDHs actually repossessed on foot of court orders, however, remained relatively stable for each quarter prior to October 2014. Since then, there has been a sharp increase in the number of repossessions of PDHs, with 564 PDHs repossessed by court order in the first nine months of 2015, as compared to a total of 313 PDHs repossessed in respect of all of 2014.
WHAT IS AT THE ROOT OF THIS INCREASE IN COURT TRAFFIC?
The rise in court traffic is largely due to the introduction of the Land and Conveyancing Law Reform Act 2013 and the revisions to the Code of Conduct on Mortgage Arrears in July 2013. The 2013 Act rectified a legislative loophole identified by the High Court in Start Mortgages Limited v Gunn .This loophole made it very difficult for lenders to get orders for possession in the case of residential mortgages created before 1 December 2009, and lenders were effectively left with no option but to appoint receivers over family homes, a route which traditionally would rarely have been chosen.
The 2013 Act sought to remedy this loophole. It confirmed that certain legislative provisions repealed or amended by the Land and Conveyancing Law Reform Act 2009 would continue to apply to mortgages created pre-1 December 2009. The 2013 Act also brought the court procedure for applications for possession of principal private residences mortgaged pre-December 2009 in line with that applicable to post-1 December 2009 mortgages. Now any application for possession of a principal private residence must be brought in the Circuit Court, whether the mortgage was entered into pre- or post-1 December 2009.
While it was initially anticipated that these measures would have an immediate effect on the level of possession orders granted by the Irish courts, this did not materialise. In fact, it would appear that the full impact of the 2013 Act was not fully appreciated until mid-2014.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.