The majority of new mortgages for residential investment property make provision for
the appointment of a Rent Receiver, in circumstances where there has been a default
in repayments on the part of the borrower. A Rent Receiver is authorised to collect the
rental income from an investment property on behalf of the Lending Institution, and to act
as the Letting & Property Management Agent for the particular property.
However, seldom has such a power been exercised in the residential sector given
a history of appreciating property values and the unwillingness of banks to become
involved in the management of mortgaged properties.
However, the current state of the Irish property market has created a new set of
challenges for lenders:
Consequently, the appointment of a Rent Receiver to manage the mortgaged property
for the benefit of the lender has become a real alternative to the repossession / sales
- The number of non-performing loans has increased greatly in the past 18
months, meaning that Banks face bringing a far higher number of repossession
cases before the Courts.
- Following repossession, the Bank maybe left with a property that is impossible to
sell at a price that will cover the outstanding mortgage.
- Income generation from the properties may not be maximised as borrowers
struggle to come to terms with the challenging environment.
- The properties themselves may deteriorate and become dilapidated.
- Undermanaged/ Uninsured/ Under rented/ Fraud potential.
By outsourcing the management of their property assets, Banks can benefit from the
expertise and established systems & processes of rent receivers experienced in the
property management arena, rather than tying up internal resources whose principal
area of expertise is in Banking & Finance. This is a cost effective and result focused
solution, with no fixed overhead to be considered.
Although the Rent Receivership model is still in its early stages in Ireland, to date Herbert Property Services has been appointed to the role of Rent
Receiver by a number of Lending Institutions.
The feedback so far has been extremely positive as mortgage accounts which
have fallen into significant arrears, with no payments made for periods of 12
months or more, have now begun to receive the rental income from the mortgaged
properties on a monthly basis.