Do guidelines exist around keeping a house in a PIP scenario, and are they fair?


Frequent Poster
The McNamara case has got me thinking over the last 2 days. In this scenario, the PIP agreed allowed them to remain in their house, valued at 550k. They will repay the mortgage on 520k at very favourable terms, and the remaining 30k shelved.

However, this is quite a large house, currently 435 square meters (according to the below report) and it also appears to have extensive grounds, although some are being sold as part of the arrangement.

But it does raise the question, in a PIP arrangement, what is a reasonable house to be allowed (or expected) to remain in? The McNamara's had nearly 3m of debt written off, and yet are allowed to remain in a pretty large house, on very favourable terms. Terms which I am unable to get if I go into the bank today. In effect it is being subsidised by others, including ourselves.

I understand they have 4 children, but they are between their late teens and mid 20's. Its likely they have already moved out, or will be doing so soon.

Would it not have made a lot more sense for the PIP arrangement to downsize to a house for half the cost (and size), and have a mortgage finishing at a reasonable age, rather than their late 70's. I fully expect this to be back in the courts within the next decade !

The bigger question is - are there guidelines on the size of the house a people in a PIP arrangement can keep, or the value of the house they can keep? If not, should there be ? My view yes !

Brendan Burgess

Hi gnf

A very good question. This is what the Act says.

104.—(1) In formulating a proposal for a Personal Insolvency Arrangement a personal insolvency practitioner shall, insofar as reasonably practicable, and having regard to the matters referred to in subsection (2), formulate the proposal on terms that will not require the debtor to

(a) dispose of an interest in, or
(b) cease to occupy, all or a part of his or her principal private residence and the personal insolvency practitioner shall consider any appropriate alternatives.

(2) The matters referred to in subsection (1) are—
(a) the costs likely to be incurred by the debtor by remaining in occupation of his or her principal private residence (including rent, mortgage loan repayments, insurance payments, owners’ management company service charges and contributions, taxes or other charges relating to ownership or occupation of the property imposed by or under statute, and necessary maintenance in respect of the principal private residence),
(b) the debtor’s income and other financial circumstances as disclosed in the Prescribed Financial Statement,
(c) the ability of other persons residing with the debtor in the principal private residence to contribute to the costs referred to in subsection (2), and
(d) the reasonable living accommodation needs of the debtor and his or her dependants and having regard to those needs the cost of alternative accommodation (including the costs which would necessarily be incurred in obtaining such accommodation).

I don't know if the Insolvency Service has given further guidelines on this.

But it's clear that the Act was not designed so that an elderly couple could continue to occupy a 5,000 sq ft house.

What would the cost of maintenance of this house be over the next 19 years?