Our View: Estia was bad enough, the new plan is even worse

The Estia scheme, by which the taxpayer will subsidise the loans of people that have not been repaying their mortgages will now be extended to those who are ineligible to join the scheme. In short, people that could still not make a monthly repayment to the bank, with the state contributing 30 per cent of it, would be given additional assistance by the taxpayer, according to government plans.

On Wednesday the cabinet asked the finance minister to draft a plan for helping out those that could not join the state debt-relief scheme because their loans had been deemed unserviceable, even with the taxpayer covering 30 per cent of the monthly repayment. “Today’s cabinet decision confirms the government decision to support borrowers who, despite meeting the basic criteria of the Estia scheme, could not be included because of failing the viability criterion,” said the deputy spokesman after cabinet meeting.

By this he meant the borrowers did not have an adequate monthly income to repay their loan. But is the rational solution to increase the state assistance to these borrowers or to tell them to sell the house they cannot afford and buy a smaller one? If someone cannot repay a loan on house valued at €300,000 (the maximum set by the scheme), even with the taxpayer contributing a third of the monthly loan repayment, the answer is for the borrower to move into more affordable premises, a flat valued at €100,000 or €80,000. The monthly repayment would be much lower and affordable.

The idea that a person’s primary residence is sacrosanct and cannot be foreclosed – an idea promoted by all the political parties – has led to this bizarre situation by which the taxpayer has to pick up the bill for the houses the so-called owners cannot afford to pay for. Is someone who may have paid 10 or 20 per cent of the value of their primary residence an owner that the state must protect? Does the state really have to protect someone who took a housing loan from the co-op with no intention of repaying it? And does this person actually own the house for which he may have paid less than 20 per cent of its value, while paying nothing for the last 10 years?

Who will the government actually protect with the new plan the finance minister was asked to draft? The Estia scheme is bad enough, the state, scandalously, rewarding people that refused to pay their housing loans for years, with cash assistance. And now, with a new plan, even more assistance will be offered by the government to debt defaulters so they can stay in a house that is beyond their means, because the politicians have decreed a primary residence cannot be foreclosed.