Serious issue re mortgages

mozattack

Hi all,

I have a friend of a friend who is in serious difficulty which was just compounded today by Kilkenny Council Council.

Basically she co-owns a house with an ex and he pays the mortgage as maintenance. She now lets her old home with a good tenant who was paying €650 per month, around €300 over the bank repayment (loan is on capital plus interest) and that excess was used to help with the mortgage on the house she lives in and for living expenses. She is on the dole with no work being available and barely makes end meat.

The house that is let is probably worth €150k and the loan is €194k - the interest only period is set to expire very soon and there is no way she can repay capital at this time. However, the rent was ok and the tenant was brilliant.

Kilkenny Co. Council writes to her bullying her into accepting €600 p.m. under the RAS scheme subject to inspection. The inspection is carried out and they write down a load of trival things which will cost an arm and leg to finish. It has driven her to spare and could push over the edge as she has it hard with a 1 year old child. She doesn't have the money to fix the house (the house is 3 yrs old and fitted out lovely - Kilkenny Co. Council are taking the p*ss) nor can she borrow to do the "repairs" so she will lose the tenant now and have an empty house out there.

She has to meet the bank tomorrow and doesn't know what to do and is thinking of "handing back the keys". What can happen in this circumstance? Presume the house will be taken back and then sold at a discounted price but what will the bank do or what can they do? I hear it will be a common trend over the next 2 years as landlords simply cannot maintain the bank payments.

She has a house which is with another bank and co-owned with her ex. The ex pays a large chunk of the mortgage as maintanence - how will this house be effected by the events re the rental property.

This is not a cop out - how the hell can someone afford to carry out so much repairs for a County Council inspection when the repairs are not necessary. You should see this letter, it is pathetic. The tenants were happy there so what was the point - it is putting a gun to someone's head.

ravima

Firstly she is under NO obligation to take a RAS tenant. She should point out to tenant that rent is €650. She should also talk to local auctioneers to see if she can relet at that figure. If she can, then if tenant cannot pay the rent, s/he must leave.

I have heard of a house in Cork, costing €400K at height of boom, built in 2007, where Cork Co Co wanted windows replaced, extractor fans put in all bathrooms as well as other 'improvements' to be made.

Secondly, if she hands keys back, she still owes the mortgage. She will need to meet bankers and explain her position. I understand that banks are supposed to act sympathetically and 'to the borrowers benefit' under nre guidelines. If she can continue to pay interest, then that is all she can pay and there is no point in the bank trying to get blood from a stone.

Like the greens and fianna fail, she's playing senior hurling now!

Yawns

Why is she is the ras scheme?

Tell her to end it. Get a private tennant in for 650. You can also accept the rent allowance tennants without needing to be on the ras scheme. The ras scheme requires a lot of things in the house in order to qualify. She should not get these things and end the scheme participation. If the tennant wants to stay, then the rent is 650 a month. End of.

mozattack

The lure of the RAS scheme is that she keeps the same tenant who has been there for 2 yrs, losing her is a risk when the regular rent is essential to making the morgage.

Also the risk of getting the usual anti-social person is putting her off renting on the open market.

They even asked that evidence of the property being up to date with service charges.


[do we not agree that there will be a lot of people who will default when interest rates increase, no point in the banks screwing them indefinately on loan arrears]

chris85

Renting to another tennant in the open market would be better possibly. The risk of unsocial people can be drastically decreased by proper vetting of potential tennants by getting references and possibly calling the references to ensure the potential tennant is of decent manner.

Yawns

Agree with Chris. As a landlord you can do some serious proper vetting of would be tennants. Have a stipiulation that you require references and then call these people. A serious tennant will want to view the place and this is a perfect opportunity for the LL to ask questions and discover more about them.