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Repossessions

1234689

Comments

  • #252
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    Milk & Honey wrote: »
    All very well, but the bank then has to realise the asset. That means throwing more property on the market and further depressing prices. That leads to more negative equity and more arrears leading to further repossessions and on it goes. It will also cause higher rents since the supply of rental property will go down. This creates a problem for prospective buyers who cannot save a deposit because of higher rents and because the banks will insist on a higher deposit because of falling prices caused by selling former buy to lets.

    Your whole post is a mess and full of lies but I will point out this.
    Negative equity does not increase arrears.


  • #253
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Milk & Honey wrote: »
    All very well, but the bank then has to realise the asset.

    And what is wrong with the bank realising the asset? Would you rather the hard-pressed taxpayer toss a few billion more to the banks instead? Someone has to realise the asset and any profit or loss associated with it.
    Milk & Honey wrote: »
    That means throwing more property on the market and further depressing prices.

    Why do you imagine that the BTL properties will simply be put bank on the market depressing prices. The current proposals are to set up in the first instance agents for collecting rent from pre-existing tenants (this part is actually up and running) followed by small property management sections- who would manage the property and seek tenants for them, and fulfill all statutory obligations, on behalf of the bank towards the tenants. So- the bank would become a landlord. The issue here is- a lot of BTL landlords have decided unilaterally not to pay their mortgages, and divert the cash elsewhere.If the banks were getting their mortgages- they'd have no interest in going down this road at all.
    Milk & Honey wrote: »
    That leads to more negative equity and more arrears leading to further repossessions and on it goes.

    Negative equity doesn't lead to arrears, and the arrears in the case of BTL property are in a not insignificant number of cases, deliberate arrears.
    Milk & Honey wrote: »
    It will also cause higher rents since the supply of rental property will go down.

    How so? There is nothing here to change the supply of rental property. Banks are repossessing property. They are not seeking vacant possession. They are not kicking tenants out. They are appointing agents to collect rent. This is all happening right now. In future its foreseen that there could be some sort of joint management agency for the nationalised banks, with smaller ones for Ulster Bank and BOI that they may manage at a local level (I don't know how it might work- but the day we see property for rent in the window of the bank, may not be far away).

    You are making a lot of presumptions- that are not backed up with what is actually happening on the ground.
    Milk & Honey wrote: »
    This creates a problem for prospective buyers who cannot save a deposit because of higher rents and because the banks will insist on a higher deposit because of falling prices caused by selling former buy to lets.

    Prospective purchasers will have to save deposits. Sure. Deposits may be 20-30-40% of the purchase price of the property (or the bank valuation of the property- which may be an entirely different kettle of fish). This is how it happens everywhere- and is not some sort of bizarre punishment for Irish purchasers. 100% (or even 110%) mortgages were an aberration that should never have occurred, and which will never occur again. People need to get their heads around this.

    Of far more pertinence to property prices- is NAMA selling property with built-in 20/30% discounts to current prices without the balance being due for a number of years. Aka- offering an insurance policy to potential purchasers against further price falls, but by this action, also almost dictating further price falls going forward......???


  • #254
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    smccarrick wrote: »
    And what is wrong with the bank realising the asset? Would you rather the hard-pressed taxpayer toss a few billion more to the banks instead? Someone has to realise the asset and any profit or loss associated with it.



    Why do you imagine that the BTL properties will simply be put bank on the market depressing prices.
    Realising means selling.
    smccarrick wrote: »
    The current proposals are to set up in the first instance agents for collecting rent from pre-existing tenants (this part is actually up and running) followed by small property management sections- who would manage the property and seek tenants for them, and fulfill all statutory obligations, on behalf of the bank towards the tenants. So- the bank would become a landlord. The issue here is- a lot of BTL landlords have decided unilaterally not to pay their mortgages, and divert the cash elsewhere.If the banks were getting their mortgages- they'd have no interest in going down this road at all.

    The banks are doing it with larger portfolios. They will not be doing it with small portfolios. Most BTLs are in the small portfolio category. It is not efficient to appoint agents to small portfolios. the receivers have to be paid, the letting agent has to be paid. . Top dollar has to be paid for all repairs. The banks have announced sensibly that they will not be doing this.
    smccarrick wrote: »

    Negative equity doesn't lead to arrears, and the arrears in the case of BTL property are in a not insignificant number of cases, deliberate arrears

    If there are deliberate arrears the banks can just sue for the money.
    smccarrick wrote: »
    How so? There is nothing here to change the supply of rental property. Banks are repossessing property. They are not seeking vacant possession. They are not kicking tenants out. They are appointing agents to collect rent. This is all happening right now. In future its foreseen that there could be some sort of joint management agency for the nationalised banks, with smaller ones for Ulster Bank and BOI that they may manage at a local level (I don't know how it might work- but the day we see property for rent in the window of the bank, may not be far away).

    You are making a lot of presumptions- that are not backed up with what is actually happening on the ground.

    You are assuming the banks are going to turn into landlords. They are no. they have said so. The banks have now realised in other sectors such as hotels that receiverships are a disaster. Rent receivership sounds well in theory but when the receivers have to confront the RTB they will soon find themselves in a morass. Months to get a hearing, anarchic decisions and no enforcement. How long will they put up wth it?
    smccarrick wrote: »
    Prospective purchasers will have to save deposits. Sure. Deposits may be 20-30-40% of the purchase price of the property (or the bank valuation of the property- which may be an entirely different kettle of fish). This is how it happens everywhere- and is not some sort of bizarre punishment for Irish purchasers. 100% (or even 110%) mortgages were an aberration that should never have occurred, and which will never occur again. People need to get their heads around this.

    Bigger deposits mean a longer saving period, less time in the market and lower prices. What goes on elsewhere does not change this.

    FDR solved the Great Depression in the 1930's by doubling the length of every mortgage. Money that was going into the banks paying off capital was freed up and spent in the economy thus stimulating investment and jobs.


  • #255
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    You are assuming the banks are going to turn into landlords. They are no. they have said so. The banks have now realised in other sectors such as hotels that receiverships are a disaster. Rent receivership sounds well in theory but when the receivers have to confront the RTB they will soon find themselves in a morass. Months to get a hearing, anarchic decisions and no enforcement. How long will they put up wth it?
    This doesn't explain how houses are disappearing into thin air when they are repossessed. Can you please explain how the amount of property available for people to live in decreases when the ownership of a property changes?


  • #256
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Monty Burnz wrote: »
    This doesn't explain how houses are disappearing into thin air when they are repossessed. Can you please explain how the amount of property available for people to live in decreases when the ownership of a property changes?

    A property may have been rented by a number of single people. When it is repossessed it may be sold to a newly formed household of persons previously living with parents. The number of houses available for rental on the market goes down. The number of available tenants does not go down correspondingly.


  • #257
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    A property may have been rented by a number of single people. When it is repossessed it may be sold to a newly formed household of persons previously living with parents. The number of houses available for rental on the market goes down. The number of available tenants does not go down correspondingly.
    Or a house may have been lived in by a single person/family, and when it is repossessed it is bought by a landlord who rents it to a number of single people...

    No? :confused:


  • #258
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Monty Burnz wrote: »
    Or a house may have been lived in by a single person/family, and when it is repossessed it is bought by a landlord who rents it to a number of single people...

    No? :confused:

    Much less likely. There are far fewer landlords in the market. The reality is that over a large sample there will be a reduction in the number of available rental units without a corresponding reduction in the number of tenants. Rents are rising in some areas due to the fact that the rental stock is declining. There is no new building and existing landlords are exiting the market. They are not being replaced by new landlords.


  • #259
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    Much less likely. There are far fewer landlords in the market. The reality is that over a large sample there will be a reduction in the number of available rental units without a corresponding reduction in the number of tenants. Rents are rising in some areas due to the fact that the rental stock is declining. There is no new building and existing landlords are exiting the market. They are not being replaced by new landlords.
    I'm sorry but this is total nonsense. I know for a fact that many landlords are expanding their holdings - the ones getting out are the small-timers who got in during the bubble to buy rental property 'as a pension'. Now the professionals and new entrants who dodged the bubble are mopping up these properties.

    Your whole post is a raft of unsubstantiated claims and conjecture posing as fact.


  • #260
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Monty Burnz wrote: »
    I'm sorry but this is total nonsense. I know for a fact that many landlords are expanding their holdings - the ones getting out are the small-timers who got in during the bubble to buy rental property 'as a pension'. Now the professionals and new entrants who dodged the bubble are mopping up these properties.

    Your whole post is a raft of unsubstantiated claims and conjecture posing as fact.

    There are more going out than in. There are some bottom feeders. There are published statistics regarding buyer profiles. The percentage of investors is way down.


  • #261
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    There are more going out than in. There are some bottom feeders. There are published statistics regarding buyer profiles. The percentage of investors is way down.
    Can you please link to these statistics?


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  • #262
    TheTurk1972
    Registered Users Posts: 154 ✭✭TheTurk1972


    Milk & Honey wrote: »
    There are more going out than in. There are some bottom feeders. There are published statistics regarding buyer profiles. The percentage of investors is way down.

    I know a lot of investors either entering the the market now or just about ready to pull the trigger. DOnt know too many FTBs though.
    Where are these published profiles?


  • #263
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey - any chance of a link to those statistics you were relying on?


  • #264
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Monty Burnz wrote: »
    Milk & Honey - any chance of a link to those statistics you were relying on?
    http://www.independent.ie/lifestyle/education/latest-news/students-go-flat-out-in-rent-race-3203838.html

    If all of these buy to let investors are as active as you claim, why is the number of properties for rent 12% lower than last year?


  • #265
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    Milk & Honey wrote: »
    http://www.independent.ie/lifestyle/education/latest-news/students-go-flat-out-in-rent-race-3203838.html

    If all of these buy to let investors are as active as you claim, why is the number of properties for rent 12% lower than last year?

    That piece of seasonal tripe is based upon a daft report (which as usual should be taken with a large pinch of salt).
    Just because there are less properties to rent on Daft does not mean there are less rental properties.


  • #266
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    http://www.independent.ie/lifestyle/education/latest-news/students-go-flat-out-in-rent-race-3203838.html

    If all of these buy to let investors are as active as you claim, why is the number of properties for rent 12% lower than last year?
    Ok, so you made up these statistics. Fair enough - you could just come out and admit it.


  • #267
    jmayo
    Registered Users, Registered Users 2 Posts: 13,186 ✭✭✭✭jmayo


    smccarrick wrote: »
    Repossessing any property not protected under the Family Home act- is a total no-brainer..... Why is it so controversial? Its simple business practice- you have a loan secured on an asset. You are unable to service the loan. QED, you loose the asset. It really is that simple.

    Except one needs to always look at who is involved.
    There was a huge tranche of would be Donald Trumps created during the bubble and they aren't all builders or EAs.
    I would guess there are a hell of a lot, including the professional classes, up to their necks in debt because they got involved in the property game and these people are connected, organised and vocal enough to try and dictate the direction of policy.

    I always wonder how many more media heads besides Mike Murphy and Gay Byrne were playing the property game ?

    If you ever take a look at the threads or indeed the media articles against property tax, half of those very vocal against it are talking about how tenants should pay because they are the ones living in the area and using public services.
    Similar with the anti "removal of section grant status" brigade protecting their investments.

    BTW these drag out the poor families trying to scrap by and the protection of the home as a cover for themselves.
    Remember the Dalkey couple and their repossession ?
    Initially it sounded like the evil MAN was turfing some poor old pensioners out on their ear, until the real facts were made publicly known.
    Milk & Honey wrote: »
    All very well, but the bank then has to realise the asset. That means throwing more property on the market and further depressing prices. That leads to more negative equity and more arrears leading to further repossessions and on it goes. It will also cause higher rents since the supply of rental property will go down. This creates a problem for prospective buyers who cannot save a deposit because of higher rents and because the banks will insist on a higher deposit because of falling prices caused by selling former buy to lets.

    As others have pointed out that highlighted section is pure sh**e.

    And the only way that would be true is if people refuse to pay their mortgage because they think it is now worth a lot more than the value of their property.
    Note the word REFUSE.
    Zamboni wrote: »
    That piece of seasonal tripe is based upon a daft report (which as usual should be taken with a large pinch of salt).
    Just because there are less properties to rent on Daft does not mean there are less rental properties.

    Speaking of numbers on daft.
    I did a check the other day on that daft price monitoring website and found some properties are now marked as Sold or Delisted when in fact I know they are still For Sale and have even had viewing over last few months.

    I know there are properties on Daft (and probably Myhome) which have long since stopping having physical for sale signs outside them but are still advertised on line.
    Do we now have a situation where ads are being removed from online, but are still very much for sale ?

    I am not allowed discuss …



  • #268
    L1011
    Registered Users, Registered Users 2 Posts: 69,537 ✭✭✭✭L1011


    Many rental ads on Daft, mainly for MUDs, may have multiple properties behind the ad. I know of one case locally where there is one ad for 24 properties.

    Daft stats count it as one, reality is 24.


  • #269
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    MYOB wrote: »
    Many rental ads on Daft, mainly for MUDs, may have multiple properties behind the ad. I know of one case locally where there is one ad for 24 properties.

    Daft stats count it as one, reality is 24.

    Yet RTE made this story all doom and gloom yesterday on the news.
    The media don't question the data sufficiently. They just see a seasonal headline.
    So a top story on national news is actually - An interpretation of an interpretation of a bad data set constructed by vested interests.
    It is so sad it is funny.


  • #270
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    http://www.davidmcwilliams.ie/2012/08/23/austerity-cant-help-were-heading-for-mass-defaults

    David seems to think a couple of strategic defaulters could be the thin end of the wedge and go "viral".
    If this is a possibility, it should be damned clear that repossession of the asset will be a definite consequence.
    If anything the repossession moratorium is an incentive to strategically default.


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  • #271
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Monty Burnz wrote: »
    Ok, so you made up these statistics. Fair enough - you could just come out and admit it.

    No, I didn't make them up.

    http://www.thepropertypin.com/viewtopic.php?f=10&p=605487


  • #272
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    There are more going out than in. There are some bottom feeders. There are published statistics regarding buyer profiles. The percentage of investors is way down.
    Milk & Honey wrote: »
    No, I didn't make them up.

    http://www.thepropertypin.com/viewtopic.php?f=10&p=605487

    How do these stats back up your claim that more landlords are getting out of the market than are getting in? :confused:


  • #273
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    There actually aren't any definitive figures- other than those of a single estate agent, and even then- they aren't providing any comparative data- simple facts for one quarter in particular, nothing else.


  • #274
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    Milk & Honey wrote: »
    If all of these buy to let investors are as active as you claim, why is the number of properties for rent 12% lower than last year?

    A possible reason for this is due to the increase of people who are renting.
    After all our would-be first time buyers have to live somewhere.

    As an example my parents have a few rental properties as their pension. Normally they would only ever have had 1 year leases and then the people would move out. But in the last 6 months all tenants have renewed for another year.


  • #275
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Ok. Heres another one.

    http://sherryfitzgerald.files.wordpress.com/2012/05/irish-residential-market-review-spring-2011.pdf


  • #276
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Milk & Honey wrote: »
    Ok. Heres another one.

    http://sherryfitzgerald.files.wordpress.com/2012/05/irish-residential-market-review-spring-2011.pdf

    Before I waste more time trawling for facts (you made up) to support your argument below, is there any particular part of this report I should be looking at?
    Milk & Honey wrote: »
    There are more going out than in. There are some bottom feeders. There are published statistics regarding buyer profiles. The percentage of investors is way down.


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  • #277
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    Milk and honey heres a link which may explain as to why the supply of properties for rent has fallen 12%
    http://www.independent.ie/business/personal-finance/property-mortgages/fewer-irish-people-own-their-own-homes-and-renters-jump-by-47pc-in-latest-cso-figures-3215254.html


  • #278
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Scortho wrote: »
    Milk and honey heres a link which may explain as to why the supply of properties for rent has fallen 12%
    http://www.independent.ie/business/personal-finance/property-mortgages/fewer-irish-people-own-their-own-homes-and-renters-jump-by-47pc-in-latest-cso-figures-3215254.html

    It is simply a snapshot of the state of the market and does not explain anything. My point is that forcing buy to let investors out of the market will further diminish the supply of rentals. Your parents tenants are staying put because having surveyed the market, they cannot improve their deal. As supply tightens, prices will be bid up. Next year your parents will be in a position to review rents upwards if this continues.


  • #279
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    Milk & Honey wrote: »
    It is simply a snapshot of the state of the market and does not explain anything. My point is that forcing buy to let investors out of the market will further diminish the supply of rentals. Your parents tenants are staying put because having surveyed the market, they cannot improve their deal. As supply tightens, prices will be bid up. Next year your parents will be in a position to review rents upwards if this continues.

    Supply is diminishing for 2 reasons.
    1 new housing developments aren't being built.
    2 there has been a jump of 47% in the number of households who are renting.

    buy to lets are being forced out of the market because they previously based property investment on the potential capital appreciation. It was never the rental yield. The function of the rent was to cover the mortgage payment.

    Very few of them bought on the basis of the rental yield. 5 years ago one would have gotten a better return on a deposit account or government bonds. They never bought these properties so that renters could have cheaper rent. This was seen across the board in most categories of property investors. One only has to look at Mcnamaras purchase of Castle street in Dublin 2. http://www.irishtimes.com/newspaper/finance/2012/0229/1224312517361.html

    There is still the large scale investor-landlord buying into the market at the moment. These people are buying large blocks of high quality appartments such as Clancy Court and the Gasworks.


  • #280
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Thats a good summation.
    You can get a risk free (relatively- depending on your view of Irish government bonds) return of 6% without having to lift a finger- so why put your soul into a business that has a much lower return on investment? The negative capital appreciation, punative taxation of investors (and property owners in general), and continued downward pressure on rent via reductions in the state sponsored schemes- mean only one thing- why would you bother?


  • #281
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Scortho wrote: »

    There is still the large scale investor-landlord buying into the market at the moment. These people are buying large blocks of high quality appartments such as Clancy Court and the Gasworks.

    I never heard of any investor buying so that tenants could have cheaper rent. It is simply a natural consequence of buying to let that there will be downward pressure on rents.
    Buy to lets are leaving the market. The large scale operators are entering in very limited circumstances. It is not sufficient to replace the number of investors exiting. forcing more buy to lets out of the market will reduce supply and force up rents.


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  • #282
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    Milk & Honey wrote: »
    I never heard of any investor buying so that tenants could have cheaper rent. It is simply a natural consequence of buying to let that there will be downward pressure on rents.
    Buy to lets are leaving the market. The large scale operators are entering in very limited circumstances. It is not sufficient to replace the number of investors exiting. forcing more buy to lets out of the market will reduce supply and force up rents.

    If they are forced out of the market, what do you think happens those properties? The investor will want to realise any equity in the asset.
    They get placed on sale and increase the supply of properties for sale, thus lowering property prices.
    As property prices lower, tenants will begin buying rather than renting.
    This reduction of renters will ease pressure on rental prices.


  • #283
    arbitrage
    Registered Users Posts: 150 ✭✭arbitrage


    smccarrick wrote: »
    Thats a good summation.
    You can get a risk free (relatively- depending on your view of Irish government bonds) return of 6% without having to lift a finger- so why put your soul into a business that has a much lower return on investment? The negative capital appreciation, punative taxation of investors (and property owners in general), and continued downward pressure on rent via reductions in the state sponsored schemes- mean only one thing- why would you bother?
    i would imagine there are very few people buying to let these days.

    Irish bonds are 6% for a reason.

    Your advice is too late for tens of thousands of people and the last central bank report had approx 128,000 people in mortgage arrears with all indications to say things will get worse.


  • #284
    murphaph
    Registered Users, Registered Users 2 Posts: 19,031 ✭✭✭✭murphaph


    Zamboni wrote: »
    If they are forced out of the market, what do you think happens those properties? The investor will want to realise any equity in the asset.
    They get placed on sale and increase the supply of properties for sale, thus lowering property prices.
    As property prices lower, tenants will begin buying rather than renting.
    This reduction of renters will ease pressure on rental prices.
    Very few renters will be in a position to buy their home without requiring credit, something that is much more difficult (should always have been the case) than a few years ago. No credit means even if a house costs 50k, that most renters will be unable to buy it.

    I know that my tenants would like to be home owners, but have no chance of getting the required credit, or so they tell me.

    Banks may never return to that business model as it was fundamentally flawed. They may remain conservative and chase smaller profits derived from banking services (you pay more for day to day banking) and small loans than the bigger profits (and risks) associated with mortgages. If banking remains conservative, renting (at least for the first 20 years) will be the norm, not the exception.


  • #285
    Zamboni
    Registered Users, Registered Users 2 Posts: 4,306 ✭✭✭Zamboni


    murphaph wrote: »
    Very few renters will be in a position to buy their home without requiring credit, something that is much more difficult (should always have been the case) than a few years ago. No credit means even if a house costs 50k, that most renters will be unable to buy it.

    I know that my tenants would like to be home owners, but have no chance of getting the required credit, or so they tell me.

    Banks may never return to that business model as it was fundamentally flawed. They may remain conservative and chase smaller profits derived from banking services (you pay more for day to day banking) and small loans than the bigger profits (and risks) associated with mortgages. If banking remains conservative, renting (at least for the first 20 years) will be the norm, not the exception.

    There is a difficult to quantify cohort of potential FTBers who have been renting and accumulating capital (for possibly 6 or 7 years at this stage) - eventually the decreasing property price costs + reduced financing requirement, will tip the rent v buy balance.

    The rent versus buy argument is different than Milk & Honey's unsupported claim that reduced BTL numbers leads to inevitable rent increases.

    PS: I put on the poor mouth with my landlord too. :-)


  • #286
    murphaph
    Registered Users, Registered Users 2 Posts: 19,031 ✭✭✭✭murphaph


    Zamboni wrote: »
    There is a difficult to quantify cohort of potential FTBers who have been renting and accumulating capital (for possibly 6 or 7 years at this stage) - eventually the decreasing property price costs + reduced financing requirement, will tip the rent v buy balance.

    The rent versus buy argument is different than Milk & Honey's unsupported claim that reduced BTL numbers leads to inevitable rent increases.

    PS: I put on the poor mouth with my landlord too. :-)
    I think the mindset hasn't yet shifted enough for the above to be the case. I doubt many people renting in 2005/6 saw the way things would pan out and immediately set about saving every penny for the day when prices would be so low that they could buy with little or no credit. The rent itself of course means it's more difficult to save up such sums in the first place.

    Nobody can really say for certain what is/will happen in this area. I can only offer anecdotal evidence that my tenants haven't made a peep about rent reduction since last year (they were previously quite vocal about "the market rate") so I can only assume they do not feel they'd get anything cheaper in the area.

    I think (as I've said before) that we need to be clear about different types and locations of property. IMO rents will continue to fall in many parts while in the cities they will hold steady and begin to increase again. Time will tell.


  • #287
    grover_green
    Banned (with Prison Access) Posts: 64 ✭✭grover_green


    smccarrick wrote: »
    Thats a good summation.
    You can get a risk free (relatively- depending on your view of Irish government bonds) return of 6% without having to lift a finger- so why put your soul into a business that has a much lower return on investment? The negative capital appreciation, punative taxation of investors (and property owners in general), and continued downward pressure on rent via reductions in the state sponsored schemes- mean only one thing- why would you bother?


    while i agree that certain stocks , goverment - corporate bonds offer a yearly income which is equal to if not better than property , not only can you not borrow to buy either stocks or bonds , you cannot use stocks or bonds as collateral either when trying to borrow for something else

    i hope to borrow some money to buy a particular property in a years time ( not a house ) and while i have around two hundred k in cash which i could stick in vodafone or irish goverment bonds , i hope to instead buy a house around dublin 7 which will return about 6% yield but which can also be used as security against future borrowings , i realise such a scenario wont apply to most people but my point is that their is more to value in property than the anual yield , were this not true , farm land would not be the price it is witth a yield of half of what houses presently return


  • #288
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    Milk & Honey wrote: »
    I never heard of any investor buying so that tenants could have cheaper rent. It is simply a natural consequence of buying to let that there will be downward pressure on rents.
    Buy to lets are leaving the market. The large scale operators are entering in very limited circumstances. It is not sufficient to replace the number of investors exiting. forcing more buy to lets out of the market will reduce supply and force up rents.

    If you look at the rent rates from 2005-2007 there were significant rent rises. This was at a time when the buy to lets were at there most strongest.

    Also no investor is going to invest if he knows that a consequence of investing is a reduction on the return.


  • #289
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    grover_green wrote: »
    while i agree that certain stocks , goverment - corporate bonds offer a yearly income which is equal to if not better than property , not only can you not borrow to buy either stocks or bonds , you cannot use stocks or bonds as collateral either when trying to borrow for something else

    i hope to borrow some money to buy a particular property in a years time ( not a house ) and while i have around two hundred k in cash which i could stick in vodafone or irish goverment bonds , i hope to instead buy a house around dublin 7 which will return about 6% yield but which can also be used as security against future borrowings , i realise such a scenario wont apply to most people but my point is that their is more to value in property than the anual yield , were this not true , farm land would not be the price it is witth a yield of half of what houses presently return

    I understand where you're coming from here. One of the great things about property is that it sits on land. And at least with property if the value falls you still have the bricks and mortar there anyway. It mightn't be worth the amount you paid, but it could be worth twice that amount in 20 years time. Buy at the right time though and it will make you stinking rich.

    Buy shares and their value could collapse overnight. You end up donating them towards a piece of artwork on the celtic tiger. But then the best investors never have their eggs in the one basket.


  • #290
    Milk & Honey
    Banned (with Prison Access) Posts: 1,950 ✭✭✭Milk & Honey


    Scortho wrote: »
    If you look at the rent rates from 2005-2007 there were significant rent rises. This was at a time when the buy to lets were at there most strongest.

    .

    Where can I look at these rent rates? I recall rents were higher in 2001-2002 than they were in 2005 to 2007. What sort of rises were there. Rents dropped significantly
    from 2007 because of the massive increase in supply.


  • #291
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    Milk & Honey wrote: »
    Where can I look at these rent rates? I recall rents were higher in 2001-2002 than they were in 2005 to 2007. What sort of rises were there. Rents dropped significantly
    from 2007 because of the massive increase in supply.

    http://www.daft.ie/news/2007/daft-rental-report-august-2007.daft

    Rents rose 9% in the year to August 2007.

    There is a thread from then on here http://www.boards.ie/vbulletin/showthread.php?t=2055060845

    After that it discusses rents falling in the report. This was due to the increase in supply as a result of developers unable to sell properties rather than in buy-to-lets buying up apartments. Houses had begun to stop selling at this point and developers decided that it'd be better to rent out the properties and hope that sales would pick up in 2008.


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  • #292
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,427 ✭✭✭✭Marcusm


    grover_green wrote: »
    while i agree that certain stocks , goverment - corporate bonds offer a yearly income which is equal to if not better than property , not only can you not borrow to buy either stocks or bonds , you cannot use stocks or bonds as collateral either when trying to borrow for something else

    I'm not sure why you think it's impossible to borrow to buy equities or bonds but you are wrong, as they are readily marketable and capable of being valued to a realisable price, they are used as collateral everyday - if you're doing it through your broker it's called buying on margin. Likewise they are regularly accepted by banks as collateral for other loans. You may have misinformation from your local bank official.


  • #293
    grover_green
    Banned (with Prison Access) Posts: 64 ✭✭grover_green


    Marcusm wrote: »
    I'm not sure why you think it's impossible to borrow to buy equities or bonds but you are wrong, as they are readily marketable and capable of being valued to a realisable price, they are used as collateral everyday - if you're doing it through your broker it's called buying on margin. Likewise they are regularly accepted by banks as collateral for other loans. You may have misinformation from your local bank official.


    was told in no uncertain terms that a stock portfolio offers no security to a bank


  • #294
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,427 ✭✭✭✭Marcusm


    grover_green wrote: »
    was told in no uncertain terms that a stock portfolio offers no security to a bank

    Whoever told you that is uninformed; as it can be readily liquidated it offers much better security than a house. I speak from experience, not from some theoretical viewpoint.


  • #295
    grover_green
    Banned (with Prison Access) Posts: 64 ✭✭grover_green


    Marcusm wrote: »
    Whoever told you that is uninformed; as it can be readily liquidated it offers much better security than a house. I speak from experience, not from some theoretical viewpoint.

    so if i own 100 k in vodafone shares which generate a dividend yield of 6% per anum , a bank manager should rate this as highly as a one bed appartment ( which i might pay 100 k for ) with a rental yield of 7.5 % or thereabouts , less when you take off the managment charge

    if that is what you say with confidence , its a no brainer for me , vodafone has far more potential to increase value than any one bed appartment in dublin

    will speak to another bank but i can see them refering to 2008 where the market saw a 40 % price drop within the space of six months


  • #296
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,427 ✭✭✭✭Marcusm


    grover_green wrote: »
    so if i own 100 k in vodafone shares which generate a dividend yield of 6% per anum , a bank manager should rate this as highly as a one bed appartment ( which i might pay 100 k for ) with a rental yield of 7.5 % or thereabouts , less when you take off the managment charge

    if that is what you say with confidence , its a no brainer for me , vodafone has far more potential to increase value than any one bed appartment in dublin

    will speak to another bank but i can see them refering to 2008 where the market saw a 40 % price drop within the space of six months

    It's not that simplistic and the yield is the least thing they are interested in from a security perspective; the principal issues are liquidity (the ability to sell quickly) and volatility (a historic analysis of the movement in the share prices). These are considered in setting the %age they will lend you against the portfolio. You are entering into a transaction not that dissimilar to Quinn's CFD transactions with the differences that liquidity is not an issue (as you own an irrelevantly small part of a huge company). Volatility, I no longer have the tools to assess. From that point, it's a mechanical exercise to determine how much would be lent. Yield would be close to irrelevant.


  • #297
    grover_green
    Banned (with Prison Access) Posts: 64 ✭✭grover_green


    Marcusm wrote: »
    It's not that simplistic and the yield is the least thing they are interested in from a security perspective; the principal issues are liquidity (the ability to sell quickly) and volatility (a historic analysis of the movement in the share prices). These are considered in setting the %age they will lend you against the portfolio. You are entering into a transaction not that dissimilar to Quinn's CFD transactions with the differences that liquidity is not an issue (as you own an irrelevantly small part of a huge company). Volatility, I no longer have the tools to assess. From that point, it's a mechanical exercise to determine how much would be lent. Yield would be close to irrelevant.

    if yield is not relevant , im struggling to see how a stock portfolio offers as much security as a property portfolio , sure a stock can be sold at the click of a mouse but what if i own 100 k of bank of ireland shares instead of a solid company like vodafone , how does the bank know i wont make foolish descisions with my portfolio , i.e , sell apple and buy facebook ( 50 % drop since going public ) , my point is that a house - appartment is more tangible and static


  • #298
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    grover_green wrote: »
    was told in no uncertain terms that a stock portfolio offers no security to a bank

    There are 2 reasons. Security of the asset and the risk of the borrower.

    While you mightn't be able to borrow of your bank, who will most likely laugh you out the door, you can borrow in a way to build up shares.

    An example of this is spread betting or Contracts for difference which provide an investor with leverage. Other ways are through CDOs and CDSs. However these are more aimed at your large funds and seasoned investors who have a good track record.

    A Bank however would have no problem giving Warren Buffet or John Paulson billions in money to invest in shares.

    They would have a problem with giving you money as they'd see you as being a very high risk.

    When you start of investing you invest only what you can afford to lose.

    A possible reason for them not giving you a loan to buy shares, but would give you one to buy a house is because the bank would understand the risks associated with mortgage. They mightn't neccessarily understand the risks around shares.

    Shares prices can collapse overnight. This is especially seen during October 1987. On black monday the dow jones collapsed by over 20% in one day alone.

    While we might like to think it, Irish house prices never fell by 20% in one day.


  • #299
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,427 ✭✭✭✭Marcusm


    grover_green wrote: »
    if yield is not relevant , im struggling to see how a stock portfolio offers as much security as a property portfolio , sure a stock can be sold at the click of a mouse but what if i own 100 k of bank of ireland shares instead of a solid company like vodafone , how does the bank know i wont make foolish descisions with my portfolio , i.e , sell apple and buy facebook ( 50 % drop since going public ) , my point is that a house - appartment is more tangible and static

    It wouldn't work like that - the lender wud control the shares and the volatility inherent in new stock purchases (which considers the risk of significant price changes over a short period) would be reappraised when the portfolio changed. Taking Vodafone and Bank of Ireland as you have suggested, the VOD volatility is around 19% on a 3 month basis while that for Bank of Ireland Is over 540% capturing the wild swings in the latter's share price. That higher volatility would feed through into a decision not to lend (depending on other aspects of your custom) or only to lend against a very high margin.

    What is not clear to me is whether you have a share portfolio you want o borrow against or whether you're simply looking at leveraged investments (ie investments partly funded by borrowings). If the latter, leveraged equity exposure would be better obtained by using CFDs rather than margin ending as it increases the range of institutions you could deal with.


  • #300
    grover_green
    Banned (with Prison Access) Posts: 64 ✭✭grover_green


    Marcusm wrote: »
    It wouldn't work like that - the lender wud control the shares and the volatility inherent in new stock purchases (which considers the risk of significant price changes over a short period) would be reappraised when the portfolio changed. Taking Vodafone and Bank of Ireland as you have suggested, the VOD volatility is around 19% on a 3 month basis while that for Bank of Ireland Is over 540% capturing the wild swings in the latter's share price. That higher volatility would feed through into a decision not to lend (depending on other aspects of your custom) or only to lend against a very high margin.

    What is not clear to me is whether you have a share portfolio you want o borrow against or whether you're simply looking at leveraged investments (ie investments partly funded by borrowings). If the latter, leveraged equity exposure would be better obtained by using CFDs rather than margin ending as it increases the range of institutions you could deal with.


    if i spend 100 k on an apt , it will be with my own cash , i already own 100 k ( plus ) in stocks

    im sceptical about your suggesting that a lender would ( or could ) control a borrowers share portfolio


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  • #301
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,427 ✭✭✭✭Marcusm


    grover_green wrote: »
    if i spend 100 k on an apt , it will be with my own cash , i already own 100 k ( plus ) in stocks

    im sceptical about your suggesting that a lender would ( or could ) control a borrowers share portfolio

    I note your scepticism but it's regular private banking/stockbroking/weath management business even in Dublin.

    How do you hold your equities, paper certificates or a brokerage account. If the latter, simply ask about margin trading facilities.


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