Explain to me why borrowers are responsible for the current mess?

Dannyboy83

Originally Posted by stepbar

Youse seem to be fully intent on absolving people (as in the borrowers) of any blame in all this.

I'm starting to very seriously believe the Indymedia lads have sent a few of yiz over to stir sh1te. Some of the stuff wrote in this thread is absolutely mindblowing

Two questions:
1. What is IndyMedia?

2. How are homeowners to blame for the current drama sweeping through our banking sector?

BTW, I'm not a homeowner so I'm not inclined to get offended, but I genuinely don't understand how people are deflecting blame from Bank managers onto home owners?

My understanding:
There was a monopoly, lack of supply, burst in demand
There was an unregulated market
There was a boom on property price increases


The only way that homeowners could be to blame in my understanding is if:
A) There was an alternative supply of houses at a significantly lower price which people dis-regarded for some bizzare reason?
and
There were alternative financial institutions offering significantly more competitive rates than the main six, which people dis-regarded for some bizzare reason?


Strictly speaking, the only homeowners who benefitted long term from the boom, were those who bought the property prior to the start of the boom.
There are many, many people who did not benefit at all and are in negative equity.

Can someone point out to me what I'm missing?

Darragh29

(1) IndyMedia is a heavily sensored Irish website that is a focal point for extreme left wing views.

(2) No, people who wanted to buy a home are not responsible for the current disaster. People who selfishly hoovered up property all over the place, are to a large degree responsible for this absolute mess. Also they were in cahoots with the banks, developers and FF, who are also responsible...

P. Breathnach

Dannyboy83 wrote: »

Can someone point out to me what I'm missing?

You are missing so much that it would take more time than I have to tell you (and I am retired, with plenty of time).

I'll give you one point to get you started: borrowers and homeowners are not the same set.

SkepticOne

Borrowers are not responsible for the current mess. Borrowers are responsible for their debts and if they don't pay their debts then they can, quite rightly, be pursued. However borrowers are not responsible for the financial health of lending institutions.

If a lending institution engages in reckless lending e.g. doing away with the deposit requirement during a housing bubble then they are responsible for the problems that ensue. This does not mean that those who took out those loans don't have to pay them back. They do. But they are not responsible for the problems of the banks. Banks, like any business, are responsible for their own financial affairs.

Zynks

Dannyboy83 wrote: »

2. How are homeowners to blame for the current drama sweeping through our banking sector?

Are you old enough to remember the old wild west movies that had scenes where someone shot a gun and it would trigger a mad mass run of bisons?

Well, the property bubble is a bit the same. A biased media benefiting from property ads together with low interest rates and banks getting silly on loans and mean estate agencies triggered something similar to one of those shots, and the homebuyers went mad buying.

Unfortunately a lot of stuff went wrong at the same time, resulting in a lot of property becoming available, but not enough people with the cash/interest to buy them. Value went down and banks entered the equivalent of negative equity.

That is like a shot from the other end, making the bisons turn around in the opposite direction.

In the case of those movies, the fault was of who shot the guns.

However, we are humans and supposed to know a bit better. That is why homeowners (at least the ones that bought into all that BS) have some responsibility for what's going on.

Darragh29

SkepticOne wrote: »

Borrowers are not responsible for the current mess. Borrowers are responsible for their debts and if they don't pay their debts then they can, quite rightly, be pursued if they happen to be a bank, they can be bailed out. All other debtors however can be pursued. However borrowers are not responsible for the financial health of lending institutions.

If a lending institution engages in reckless lending e.g. doing away with the deposit requirement during a housing bubble then they are responsible for the problems that ensue. This does not mean that those who took out those loans don't have to pay them back. They do. But they are not responsible for the problems of the banks. Banks, like any business, are responsible for their own financial affairs.

:rolleyes:

Dannyboy83

P. Breathnach wrote: »

You are missing so much that it would take more time than I have to tell you (and I am retired, with plenty of time).

I'll give you one point to get you started: borrowers and homeowners are not the same set.

Well, you can make a start, I'm all ears.

I'm aware borrowers are not the same set. There are many sub sets.

But presumably, borrowers repay their debts or default & face jail and have their assets/collateral confiscated.

Dannyboy83

Zynks wrote: »

Are you old enough to remember the old wild west movies that had scenes where someone shot a gun and it would trigger a mad mass run of bisons?

Well, the property bubble is a bit the same. A biased media benefiting from property ads together with low interest rates and banks getting silly on loans and mean estate agencies triggered something similar to one of those shots, and the homebuyers went mad buying.

Unfortunately a lot of stuff went wrong at the same time, resulting in a lot of property becoming available, but not enough people with the cash/interest to buy them. Value went down and banks entered the equivalent of negative equity.

That is like a shot from the other end, making the bisons turn around in the opposite direction.

In the case of those movies, the fault was of who shot the guns.

However, we are humans and supposed to know a bit better. That is why homeowners (at least the ones that bought into all that BS) have some responsibility for what's going on.

This is one theory I can't reconcile I'm afriad.

As somebody who struggled for ages to buy a house, but salary never kept up with the pace (by a longshot), I understand that people really didn't have any alternatives.

In 2008, I was paying E1000 rent per month in Cork City (gf was sick and couldn't work). I could have paid a mortgage for less if I'd been approved for a mortgage.

Is it expected of people with families/starting families etc. to put their lives on hold and wait until the bubble bursts?

Lending to people who cannot repay I woud consider reckless (i.e. lending to me back in 2008)
Borrowing when you've been approved because you have no alternative however, I don't see it as reckless, unless you have lied in your application (in which case I would fully agree that the fault is on the borrowers shoulders)

herya

Dannyboy83 wrote: »

Well, you can make a start, I'm all ears.

I'm aware borrowers are not the same set. There are many sub sets.

But presumably, borrowers repay their debts or default & face jail and have their assets/collateral confiscated.

Borrowers (as in property portfolio owners and developers) fueled the trend by getting more and more loans for property which led to the increase in prices known as the bubble. If they wanted to become property tycoons thanks to their bank loan department having no means nor business sense then yes it's probably their fault.

SkepticOne

Darragh29 wrote: »

:rolleyes:

The state may not hold them responsible and may bail them out but that doesn't mean that everyone else has to. As far as I'm concerned, businesses are responsible for their own financial affairs. I might lend you money but it is up to me to make sure you will be in a position to pay it back. If you don't I can go after you but I can't expect wider society to help me out, which is what is happening now in Ireland.

glaston

Indymedia is a vile website, probably the scariest thing you will find on the internet.

Irish people got a bit carried away borrowing money. I think everybody should be personally responsible for their actions (not just those in positions of power) but many in the country dont subscribe.

http://www.independent.ie/business/irish/personal-debt-is-strangling-us-1428468.html

Zynks

Dannyboy83 wrote: »

This is one theory I can't reconcile I'm afriad.

As somebody who struggled for ages to buy a house, but salary never kept up with the pace (by a longshot), I understand that people really didn't have any alternatives.

In 2008, I was paying E1000 rent per month in Cork City (gf was sick and couldn't work). I could have paid a mortgage for less if I'd been approved for a mortgage.

Is it expected of people with families/starting families etc. to put their lives on hold and wait until the bubble bursts?

Lending to people who cannot repay I woud consider reckless (i.e. lending to me back in 2008)
Borrowing when you've been approved because you have no alternative however, I don't see it as reckless, unless you have lied in your application (in which case I would fully agree that the fault is on the borrowers shoulders)

I honestly wasn't hoping to get into this.

Issue #1: you were comparing rent vs. mortgage repayment when you should consider what was the total debt you were getting into

Issue #2: When comparing rent vs mortgage you should actually compare interests vs rent so you can compare "wastes" .

Issue #3: "I could have paid a mortgage for less if I'd been approved for a mortgage." - you mean the mortgage for the same place you were living in? I would be very surprised if that was the case. Most probably you would me moving to a smaller or lower-end place. If you look at issue #2 you might find it wasn't that interesting after all.

Issue #4: "Is it expected of people with families/starting families etc. to put their lives on hold and wait until the bubble bursts?": How does renting put people's lives on hold?

Don't get me wrong. I bought in 2003, and I was scared s#@tless at that time because I knew it was a bubble. I knew the risk I was getting into, but we took the risk because in our case it was acceptable enough and we had contingency plans.

We will probably be in negative equity at some stage, but we bought based on the value we perceived on the property and not based on how much the monthly installments were likely to be.

Ultimately I did also contribute towards the bubble.

Dannyboy83

Zynks wrote: »

I honestly wasn't hoping to get into this.

Issue #1: you were comparing rent vs. mortgage repayment when you should consider what was the total debt you were getting into

Issue #2: When comparing rent vs mortgage you should actually compare interests vs rent so you can compare "wastes" .

Issue #3: "I could have paid a mortgage for less if I'd been approved for a mortgage." - you mean the mortgage for the same place you were living in? I would be very surprised if that was the case. Most probably you would me moving to a smaller or lower-end place. If you look at issue #2 you might find it wasn't that interesting after all.

Issue #4: "Is it expected of people with families/starting families etc. to put their lives on hold and wait until the bubble bursts?": How does renting put people's lives on hold?

Don't get me wrong. I bought in 2003, and I was scared s#@tless at that time because I knew it was a bubble. I knew the risk I was getting into, but we took the risk because in our case it was acceptable enough and we had contingency plans.

5. We will probably be in negative equity at some stage, but we bought based on the value we perceived on the property and not based on how much the monthly installments were likely to be.

Ultimately I did also contribute towards the bubble.

All good points.

1: No argument

2: At a conservative estimate, I've wasted E30,000 on rent in the last 5 years, realistically closer to E40k.

3: Fair comment, not in all areas, but in the 2 of the 4 areas I was living in, this was the case. On the other hand, renting has given me mobility and the ability to go from slave labour to a little below average.

4: Doesn't affect me personally as I've chosen not to have a child until I have the security of my own home. However, the expense of a child makes accumulating the lump sum necessary for payment very difficult.

5. Good point, but the problem was that values were distorted. e.g. somebody owning an apartment in a rural area may have paid through the nose, but is unlikely to be able to shift it for a very long time now.
If you bought in 2003, you should be fine, i'm sure inflation will take care of it. Agree all the same.

Last point, I presume the older generation owned some of the houses first and sold them for a profit. Surely they are as accountable as anyone else.
Hell, I'm probably to blame for paying extortionate rent, but I didn't fancy living in my car.:D

Dannyboy83

herya wrote: »

Borrowers (as in property portfolio owners and developers) fueled the trend by getting more and more loans for property which led to the increase in prices known as the bubble. If they wanted to become property tycoons thanks to their bank loan department having no means nor business sense then yes it's probably their fault.

By this definition, I can see the point made by stepbar.
But when has it ever been any different since the 16th century?

Either you earn money, inherit money or you borrow money (or in the case of poiticians just steal/embezzle it).

Most SMBs borrow it.

Zynks

Dannyboy83 wrote: »

All good points.

2: At a conservative estimate, I've wasted E30,000 on rent in the last 5 years, realistically closer to E40k.

That is cost of living, not waste. unless you have the option of living somewhere for free.

Dannyboy83 wrote: »

4: Doesn't affect me personally as I've chosen not to have a child until I have the security of my own home. However, the expense of a child makes accumulating the lump sum necessary for payment very difficult.

A bit of contradiction there. In any case, I would strongly recommend that you do not turn property ownership into a pre-requisite for parenthood. I can think of several more important things.

Dannyboy83 wrote: »

If you bought in 2003, you should be fine, i'm sure inflation will take care of it. Agree all the same.

We are more likely to see deflation for a while, which means in real terms my debt increases. But I should be fine, for other reasons.

Dannyboy83 wrote: »

Last point, I presume the older generation owned some of the houses first and sold them for a profit. Surely they are as accountable as anyone else.

Yeah, those elderly ladies ganged up and scared people into buying their houses at extortionate prices. They should all be in jail!!!

Going back to the main issue of the thread, I do think buyers have contributed indirectly to the banks' pains today, though that doesn't excuse them of acting like kids selling lemonade for pennies in stands in the street.

Dannyboy83

I was just watching this there.

Interesting Video: The Generation Game
http://www.davidmcwilliams.ie/category/media/video

Darragh29

herya wrote: »

Borrowers (as in property portfolio owners and developers) fueled the trend by getting more and more loans for property which led to the increase in prices known as the bubble. If they wanted to become property tycoons thanks to their bank loan department having no means nor business sense then yes it's probably their fault.

At the end of the day, we haven't been paying developers and bankers hundreds of thousands of taxpayers Euro a year to run the country for us. People will naturally do what they perceive they can get away with. This is why we have laws and a system of governance that we are supposed to place our trust in as citizens. The people who we trusted to protect the common good and our common interest as citizens of Ireland, have completely and utterly failed us. That's how I see it. I'm noticing that people are getting more angry by the hour now at what is unfolding.

herya

That's true. But everyone who willingly jumped on the property bandwagon has mostly themselves to blame. Some circles created this fashion of adding properties to your ahem portfolio yearly or upgrading or remortgaging or name it... as it was in their interest. What could state institutions actually do when people followed willingly? That's the downside of the free market, you can lose your money freely.

It's like every other fashion - you are bombarded with messages and it's hard to resist when your neighbours and family lead with example. But at the end of the day nobody holds a gun to your head.

I think I'm a libertarian?

thebman

herya wrote: »

That's true. But everyone who willingly jumped on the property bandwagon has mostly themselves to blame. Some circles created this fashion of adding properties to your ahem portfolio yearly or upgrading or remortgaging or name it... as it was in their interest. What could state institutions actually do when people followed willingly? That's the downside of the free market, you can lose your money freely.

It's like every other fashion - you are bombarded with messages and it's hard to resist when your neighbours and family lead with example. But at the end of the day nobody holds a gun to your head.

I think I'm a libertarian?

The State probably could have discouraged it and introduced measures to make lending unreasonable amounts to people impossible.

Why the hell where people allowed to borrow this amount? The banks shouldn't have done it and the government/regulator should have put a restriction on the max allowed to be borrowed by someone (such as 3 times their salary).

Permabear

This post has been deleted.

Scofflaw

donegalfella wrote: »

This post has been deleted.

You make it sound like a bad thing...

cordially,
Scofflaw

eoinbn

herya wrote: »

What could state institutions actually do when people followed willingly?

Google: Bacon report housing.

Permabear

This post has been deleted.

jmayo

donegalfella wrote: »

This post has been deleted.

I think you are the only one that sees taking over Anglo as an enrichment process what with their probable 20 billion bad debts

Permabear

This post has been deleted.

Scofflaw

donegalfella wrote: »

This post has been deleted.

Er...this is about real estate?

puzzled,
Scofflaw

Permabear

This post has been deleted.

bobbiw

You make your bed you have to sleep in it. Borrowers would not complain if they made a 30% return, they dont even want to pay tax on that money do they.

So if they make a loss its the same thing.

But you only have negative equity when you sell. If you are going to live in the house for 20 years you can expect it to go up and down in price. But its a home.

there were a lot of little snobs talking blah blah blah about location location, now they are not.

People should have seen it coming. Ireland is just a launching pad for US companies, nothing more, people need to face that the boom was just that, a boom and it may not come back again.

djpbarry

Zynks wrote: »

Issue #4: "Is it expected of people with families/starting families etc. to put their lives on hold and wait until the bubble bursts?": How does renting put people's lives on hold?

I don’t understand this mentality either. Why is it essential to own the building in which you live?

Dannyboy83 wrote: »

2: At a conservative estimate, I've wasted E30,000 on rent in the last 5 years, realistically closer to E40k.

3: Fair comment, not in all areas, but in the 2 of the 4 areas I was living in, this was the case. On the other hand, renting has given me mobility and the ability to go from slave labour to a little below average.

If you’re not the best-paid person in the world, then why are you paying so much rent? In Cork?!? As a rough estimate, I’d say I’ve spent about €24k on rent over the last 5 years in Dublin. And it’s not “waste” if that money has provided you with somewhere to live, is it?

jmayo

donegalfella wrote: »

This post has been deleted.

Sorry my definition of the state was you, me, all of us and our kids.
I think your definition here is the apparatus of government.

You are right though that certain people in high positions, be it public or private see this problem as somehting the "little" poeple can carry.

The problem with some of the real estate is that it no longer is worth a fraction of what it was at the time of the loan.

Sure the state has loads of real estate anyway what with all those lovely decntralisation office sites around the country, that were probably bought from friends of de party :rolleyes:

Carawaystick

djpbarry wrote: »

I don’t understand this mentality either. Why is it essential to own the building in which you live?

Because if the landlord has a niece or nephew he wants to allow live in the house, you are out on your ear, looking for somewhere else to live.

There is very poor security of tenure for renters in Ireland compared to continental Europe where renting is more common.
Also after 25 years you will still be paying rent.

djpbarry

Carawaystick wrote: »

Because if the landlord has a niece or nephew he wants to allow live in the house, you are out on your ear, looking for somewhere else to live.

That's what a lease is for.

Carawaystick wrote: »

There is very poor security of tenure for renters in Ireland compared to continental Europe where renting is more common.

I'm not sure it's because renting is more common, it's because there is a different attitude towards renting.

Carawaystick wrote: »

Also after 25 years you will still be paying rent.

Possibly, but one has to weigh up how much rent they have paid versus how much interest would have been paid on a mortgage over the same length of time.

hedgeh0g

thebman wrote: »

The State probably could have discouraged it and introduced measures to make lending unreasonable amounts to people impossible.

Why the hell where people allowed to borrow this amount? The banks shouldn't have done it and the government/regulator should have put a restriction on the max allowed to be borrowed by someone (such as 3 times their salary).

Friend of a friend got a false p60 with loads of overtime on doctored pay slips etc. A broker would do the rest for you to get it approved (Ive heard loads of brokers knew the score and just wanted the %)

Dannyboy83

djpbarry wrote: »

That's what a lease is for.

Honest question, as I don't know:

A) How do you get a 25 year lease on residential property?
Would you have permission to put up a shelf on the wall or give a lick of paint if its a long term lease?
C) Itenerary?


[

djpbarry

Dannyboy83 wrote: »

Honest question, as I don't know:

A) How do you get a 25 year lease on residential property?

That's for you to agree with the landlord, although admittedly, it's very unlikely that either the tenant or the landlord would be willing to agree to such a long lease! But, as far as I am aware, there is no law against it.

Dannyboy83 wrote: »

Would you have permission to put up a shelf on the wall or give a lick of paint if its a long term lease?

Once again, that’s between you and the landlord, although most landlords won’t object to their tenants’ giving the place a once-over with a paint-brush! Saves them the trouble of doing it.

Dannyboy83 wrote: »

C) Itenerary?

I’m not sure what you mean?

Dannyboy83

djpbarry wrote: »

That's for you to agree with the landlord, although admittedly, it's very unlikely that either the tenant or the landlord would be willing to agree to such a long lease!

Again - just wondering what happens in these scenarios?
Some of them are relevant to the current market.

1. What happens if the lease is agreed, then the owner sells the house after 10 years?
2. What if the owner dies and passes it on to someone planning to live there?
3. what if the owner goes bankrupt and its repossessed?

But, as far as I am aware, there is no law against it.
Once again, that’s between you and the landlord, although most landlords won’t object to their tenants’ giving the place a once-over with a paint-brush! Saves them the trouble of doing it.

I've found most landlords object to it, even when its at your own expense.

Itenerary: I’m not sure what you mean?

Sorry, I mis-spelt it: Itenerary.
What happens here?

the_syco

djpbarry wrote: »

I don’t understand this mentality either. Why is it essential to own the building in which you live?

When you stop working after 40 years, owning the house will be nice, as you'll only need to pay the bills and food. Paying for rent + bills + food from your pension may not be possible.

Also, it can be seen as an investment: once you own the house, you live there rent free. You could even rent rooms to others, to suplement your pension.

asdasd

Governments adopted an expansionary monetary policy that involved holding interest rates too low, printing fiat currency, and creating a huge credit bubble that was passed along to the consumer in the form of mortgages,

Did Ireland adopt an "expansionary monetary policy" or was it the ECB. Still though Germany and France seemed not to boom so much, a point to get back to later.

This whole thing must be a bit distressing for the libertarian mindset. The problems in the US were caused by loose regulation, and (indeed) easy money and were driven by an ideology - the libertarian ideology of utter fruit basket and Ann Randian follower Greenspan.

Germany did not have a property boom with the same level of interest rates - because over strong government regulation on the amount people could borrow. Same with France. When banks were given their heads here - a factor of loose regulation and little government - we had a bubble.

i have to lol at the libertarian argument that "expansionary credit" caused by loose regulation is the same as governing too much.

Clearly for those of us with less warped ideological views the problem was too little regulation, not too much.

And what is the libertarian argument against "Fiat Money" printed by the nasty gubmint. If there is too much government involvement in the "printing of money" should we all get to print money? or just the individual banks? and if it the the banks who decides which bank currency is legal tender ( I suggest the government do that, and if so, it may as well print the damned money).

Problem was, then, up to now not too much government, but too little. Libertarians needs a new worldview, but since that would involve independent thought, we should hold our breath.

ednwireland

to the person who thinks that they've wasted 30-40 k in rent in the last 5 years, if you had bought a house that was worth 350k and its now worth 250k (or worse still you cant sell so its worthless ) you've actually saved 60k. i'm really lucky in that i bought my 2 houses in 97 (long story it wa stoo difficult to split the deeds) so they're probably worth what i spent on them.
as to france and germany there is a lost less property ownership (as in much of the eu) there any many reasons for this bank lending being one of them. but protection for long term tenants regulated rents hence minimising the rents moving. if you get a flat in austria (mother in law) you have to put in sinks baths etc or buy them from the previous tenants.

asdasd

you've actually saved 60k

The general point is correct, but:

What he has saved, over his lifetime, is the mortgage replayments not the difference between the original cost and rent, but the difference in overall mortgage repayments on the house he could've bought then, and the cost ( plus) interest of the same house now minus rent.

I.e. if he saved 100K on the house by the time he buys, he really saves the 100K and mortgage term interest over the lifetime of the loan. Which could be as much as 200K for a long term loan.

( of course, he may just end up buying a much better house for the same original price, but he is still better off).

The Corinthian

Dannyboy83 wrote: »

2. How are homeowners to blame for the current drama sweeping through our banking sector?

Homeowners are not 'to blame'. My parents bought their home in the eighties, so you can hardly point the finger at them.

More correctly, those who purchased property, leveraging themselves financially to a dangerous degree, within a market that was clearly overheating share the blame with the banks, et al.

Think of it this way. There has been a tendency in the US in recent years to blame fast food chains like McDonalds for rates of obesity. Certainly, one can argue that people were misled as to the health implications of gorging themselves on fast food on a regular basis, or that certain additives make the food 'addictive', but this does not exonerate people from overeating junk food and continuing to do so long after the effects of this over eating are apparent.

The same goes for the property market. Historically, we like to own our homes. However, we went beyond this, and many bought more than one property for investment purposes. It was the road to fast capital appreciation, outpacing all other forms of investment, and when the margins in Ireland began to tighten, we started to buy in eastern Europe.

Even in Ireland, we jumped on the investment bandwagon, and there have been numerous budding property developers (often groups of friends who clubbed together) who built or restored a few houses and sold them on at obscene mark-ups.

And the banks didn't sell this notion to us. We did. In pubs we'd hear how such-and-such had made a killing on a land deal, and how another had bought for 200k and sold a year later for 270k. We all wanted a piece of the action.

Of course, the banks were irresponsible. Giving away 100% mortgages was crazy - even if you limited it to professionals (imagining that a solicitor who specialized in conveyancing had a secure job was the height of idiocy). And less said about some of their other shenanigans.

However, it does not change the fact that many of us scrambled to jump onto a property bandwagon, even long after it was obvious it was a bubble that was going to burst. Not all of us did so for the noble purpose of buying our own homes either, many bought for purely investment purposes - look at all the shoe boxes that were built in the cities, how many of those are owner dwellings?

Personally I had a business that drained any resources that could have been used to purchase a house, up until around 2005, when I closed it down and just became a mercenary. But by the time I had capital again, I looked at the market and the time to buy had passed, as far as I was concerned - the bubble was already overextended, and it was only a matter of time before it would pop. So I held off and am very glad I did.

People are big into rights, but tend to forget that with those rights come responsibilities, and that is largely what we're seeing now. It was no secret that we were in a bubble. We've been discussing it for years. But people were still buying with 100% mortgages or off the plans up to the end.

And now they're angry, and frightened and financially screwed and want to blame someone else. But the reality is they played a part in it too. Banks loaned stupidly, but home owners borrowed stupidly too and you cannot escape that fact.

Caveat emptor.

djpbarry

Dannyboy83 wrote: »

Again - just wondering what happens in these scenarios?
Some of them are relevant to the current market.

1. What happens if the lease is agreed, then the owner sells the house after 10 years?
2. What if the owner dies and passes it on to someone planning to live there?
3. what if the owner goes bankrupt and its repossessed?

I suggest you have a read of your rights and obligations here:
http://www.citizensinformation.ie/categories/housing/renting-a-home

Dannyboy83 wrote: »

Sorry, I mis-spelt it: Itenerary.
What happens here?

Sorry, I still don’t know what you mean?

the_syco wrote: »

When you stop working after 40 years, owning the house will be nice...

Hey, I’m not saying it would not be nice to own a place (I would if I could), but it would be nice to own a nice car and a nice big TV too, but none of these things are essential. They’re certainly not worth sacrificing your financial wellbeing.

Boggle

I don’t understand this mentality either. Why is it essential to own the building in which you live?

Because how can you establish a life in a property deal when the owner will not negotiate a long term lease and even when he does, he can kick you out on a whim to "sell the property".

I have had several landlords over the past 10 years and of all of those, only one was professional in how he acted (everything above board, required maintenance carried out and due respect afforded the tenants).

So, how is it wrong for someone to want a little stability in their life??

asdasd

So, how is it wrong for someone to want a little stability in their life??

I agree with that but we could reform the laws.

SkepticOne

The Corinthian wrote: »

Think of it this way. There has been a tendency in the US in recent years to blame fast food chains like McDonalds for rates of obesity. Certainly, one can argue that people were misled as to the health implications of gorging themselves on fast food on a regular basis, or that certain additives make the food 'addictive', but this does not exonerate people from overeating junk food and continuing to do so long after the effects of this over eating are apparent.

The difference, though, is that the fast food chains are not looking to the State for help to continue in business. The situation with the banks is that even if we assign full responsibility for borrowing on the borrower, the banks should not lend to the extent that they can no longer continue in business.

If I lend €10K to a wino under a bridge and subsequently need it for my business I can't go running to the tax-payer for help when the money is not forthcoming. Yet this is what the banks are doing.

karen3212

Because we should know by now that bubbles are part and parcel of the economy if left to it's own devices completely and that people do have a tendency to get carried away with the crowd, no matter how intelligent or high up the expert chain they are - even rating agencies have humans working for them, the same with banks.

Hopefully this generation have learned by experience from the car crash, that it would have been better to have forced people to wear seat-belts, but will we let the next generation go through the same experience? It's very difficult to find just the right measure of restraint, but other countries are not doing as badly at the moment so we can look at what they did differently.

But it is up to us, as we know the government we elect will represent the majority of us and our sentiments pretty well. They reflect our thinking back to us, human too it seems.

djpbarry

Boggle wrote: »

Because how can you establish a life in a property deal when the owner will not negotiate a long term lease and even when he does, he can kick you out on a whim to "sell the property".

Well, that’s not entirely true – there is a legal minimum period of notice with which the tenant is to be served in the event that the landlord wants to sell the property (or whatever else they want to do with it).

Boggle wrote: »

I have had several landlords over the past 10 years and of all of those, only one was professional in how he acted.

How long did you tolerate the unprofessional landlords? That’s a big part of the problem – people simply put up with the unprofessional (and in many cases, illegal) behaviour. It never ceases to amaze when otherwise sensible people tell me that, for example, they pay their landlord in cash and have no record of their rent payments; they’re setting themselves up for a fall.

Boggle wrote: »

So, how is it wrong for someone to want a little stability in their life??

Nothing at all, but as asdasd says, if people want the laws changed, it’s up to them to see them changed. But the first step is people educating themselves on the existing laws.

The Corinthian

Boggle wrote: »

I have had several landlords over the past 10 years and of all of those, only one was professional in how he acted (everything above board, required maintenance carried out and due respect afforded the tenants).

As I said, we like to be home owners historically. As such we tended to buy as soon we 'settled down', while on the continent people rent until much, much later in life, and often never actually buy. As a result, regulation (and enforcement) of the rental market is far more mature in counties such as Italy, Germany or France than in Ireland, where quality-related regulations, for example, have been introduced only fairly recently - which is why, apartments built in the first half of the nineties tend to be made of cardboard.

SkepticOne wrote: »

The difference, though, is that the fast food chains are not looking to the State for help to continue in business.

Not yet, but as with the auto industry, they could chance their arm on the basis that there are jobs to be protected.

Of course, this does not condone the help the banks are getting from the government, I personally don't think the government should in a number of cases - although then you would have to consider the consequences of not doing so.

But ultimately, that banks are getting bailed out now, does not mean that the consumer is blameless. The former might be wrong, but it does not absolve the latter. Don't confuse the two.

If I lend €10K to a wino under a bridge and subsequently need it for my business I can't go running to the tax-payer for help when the money is not forthcoming. Yet this is what the banks are doing.

All those people who bought overpriced apartments to rent out are also looking for help from the government though. And getting it, or did you think that all those measures to stop repossessions ATM are for family homes alone?

Seriously though, it could be worse. Feel sorry for the 60% of Polish mortgages that were taken out in Swiss Francs because of the Franc's low inflation rate. A year ago, the Zloty got you 0.45 CHF, today it's worth 0.32 CHF. That's bound to hurt when translated to repayments...

SkepticOne

The Corinthian wrote: »

But ultimately, that banks are getting bailed out now, does not mean that the consumer is blameless. The former might be wrong, but it does not absolve the latter. Don't confuse the two.

I don't believe I'm confusing the two. I believe there's a distinction to be made between poor business practice (the banks) and uwise borrowing (some borrower). If I borrow money then I'm responsible for paying it back, nothing more. I'm not responsible for the overall banking mess.

This is true notwithstanding the assistance to borrowers now being extended by the State.

There is responsibility on both sides but the responsibility is for different things.

bonkey

SkepticOne wrote: »

The difference, though, is that the fast food chains are not looking to the State for help to continue in business.

If I understood ***** correctly, his point was that there is a degree of personal responsibility from the consumer.

This, as a response, seems to suggest that this responsibility is somehow absolved if the system tanks and goes to the wall.

Put into the fast food analgy...if I'm a fat ****ard because I live off McDonalds, TC's point is that I carry a certain burden of responsibility for my own actions. If, however, the fast food industry collapses and McDonalds look to Uncle Sam to bail them out, you seem be be suggesting that I'm somehow relieved of that burden...that it becomes someone else's fault.

The situation with the banks is that even if we assign full responsibility for borrowing on the borrower, the banks should not lend to the extent that they can no longer continue in business.

I guess it depends on what you mean by "no longer continue".

If I, as an indiviudal, find myself in a situation where I've amassed a stack of debt that all materialised at the same time (unexpectedly), I can look to the bank for loan restructuring to help me out. I end up paying back more, over a longer period of time, but restructured in a way that I can afford it. It would make far more sense for everyone to allow me this restructuring rather than have me declare personal bankruptcy because I found myself in a short-term tight spot.

If I, as a business owner, find my business in a situation where there is a temporary-but-significant shortfall of cash in an otherwise sound business, then it again makes sense for a bridging or restructuring loan to be used, so that I can continue in business, rather than let if fail.

In both of these cases, its not a question of whether or not I cocked up. Its a question of whether or not it makes more sense to let things fail, or to restructure things somehow to prevent them from failing.

The banks cocked up. That doesn't mean that their business is no longer tenable...they just need short-term assistence. Due to fantastic timing, this comes at a point where they can't just be bought by a bigger bank, or where investors are lining up. That still doesn't mean that their business is no longer tenable. It doesn't mean they can't continue.

If I lend €10K to a wino under a bridge and subsequently need it for my business I can't go running to the tax-payer for help when the money is not forthcoming. Yet this is what the banks are doing.

No, but you probably could go to the bank or an investor (private equity) and point out that your otherwise-profitable business is in dire straits because you did something stupid. You'd almost certainly find someone willing to take a share of your business for the cut-price deal you'd offer to keep it afloat.

This too, is what the banks are doing.

The concept of "lender of last resort" isn't new.

I admit, the government aren't likely to act as lender of last resort for your theoretical business, but that would be most likely because the collapse of your theoretical business wouldn't have enough of an impact on the national economy.

bonkey

djpbarry wrote: »

That's what a lease is for.
I'm not sure it's because renting is more common, it's because there is a different attitude towards renting.

In my experience, its mostly because there's a completely different set of legislation.