Negative equity - STOP complaining!!

sandin

I'm sick of theose in negative equity moaning that they should pay the local property tax.

Here's why

For the vast majority of firtime buyers

1. There was NO stamp duty. Or a very small amount on the value of the land. (yes there were a few exceptions)

2. Those who were not first time buyers were taking a "profit" from their previous house. If you sepent that on a car / holidays - then that's your own business.

3. Almost all mortages between 2004 and 2008 were tracker mortgages at .75% - 1.25% above ECB.

4. Very very generous TRS has been given (they all seem to have forgotten that they are getting up to 4k a year back from the tax payer)


So here's a little calculatio to look at

500,000 3 bed semi in Dublin bought 2007 at peak - 30 year mortgage at 1% tracker. Monthly mortgage = 1843.57 less trs (assuming a couple) = 1513.24 net repayment.

Same house sells for 300,000 today (av. 3 bed semi price drop 40% in dublin from peak) 30 year mortgage @ 4.5% (average available mortgage rate) repayment 1504.01 and from jan 1st, no TRS.

So come January 1st - mr/mrs negative equity will have virtually the EXACT same monthly mortgage as the new buyer moving in next door. - Yet mr/mrs negative equity is complaining and doesn't want to pay his/her sahre of local service (but of course want to use all the services provided)


So next time you hear someone complaining that they bopught in the boom and are in negative equity - ask them if they have a tracker and ask them how much TRS they are getting from the government - lucky feckers I say,

Dob74

sandin wrote: »

I'm sick of theose in negative equity moaning that they should pay the local property tax.

Here's why

For the vast majority of firtime buyers

1. There was NO stamp duty. Or a very small amount on the value of the land. (yes there were a few exceptions)

2. Those who were not first time buyers were taking a "profit" from their previous house. If you sepent that on a car / holidays - then that's your own business.

3. Almost all mortages between 2004 and 2008 were tracker mortgages at .75% - 1.25% above ECB.

4. Very very generous TRS has been given (they all seem to have forgotten that they are getting up to 4k a year back from the tax payer)


So here's a little calculatio to look at

500,000 3 bed semi in Dublin bought 2007 at peak - 30 year mortgage at 1% tracker. Monthly mortgage = 1843.57 less trs (assuming a couple) = 1513.24 net repayment.

Same house sells for 300,000 today (av. 3 bed semi price drop 40% in dublin from peak) 30 year mortgage @ 4.5% (average available mortgage rate) repayment 1504.01 and from jan 1st, no TRS.

So come January 1st - mr/mrs negative equity will have virtually the EXACT same monthly mortgage as the new buyer moving in next door. - Yet mr/mrs negative equity is complaining and doesn't want to pay his/her sahre of local service (but of course want to use all the services provided)


So next time you hear someone complaining that they bopught in the boom and are in negative equity - ask them if they have a tracker and ask them how much TRS they are getting from the government - lucky feckers I say,

1. If you whereas first time buyer you wwould have paid vat. Average house was 300k so that's 40.5k.
2.if you where moving up any profit not put into the next gaff would be liable to cg tax.
3. Not all mortgages where trackers. Variables where being given out too.
4. Trs was just added to them price. Same as now, expect a nice decrease in prices in Jan.



You couldn't have bought a shoe box in Dublin for 500k in 07. Maybe a shoe box in mullingar


People should be given a break on taxes paid like vat and stamp duty. Would be quite easy to do.
The school teachers in charge of the countries finances would find this to complicated.
And the spiteful begrugders wouldn't have it. Debt forgiveness is for banks and property developers

murphaph

Dob74 wrote: »

2.if you where moving up any profit not put into the next gaff would be liable to cg tax.

Point of order...no it wouldn't. No CGT due on CG made in selling PPR, regardless of what it's used for.

AlekSmart

murphaph wrote: »

Point of order...no it wouldn't. No CGT due on CG made in selling PPR, regardless of what it's used for.

Point of (possible) disorder....It really does lead back to the question...What on earth was the thinking behind people,singles and couples,taking on the levels of VAST personal debt they did to buy resedential property....

I'm suggesting that for a substantial number of people,it was nothing more than greed,which the constant Government Assisted policy of "Getting On The Property Ladder"was only too successful at promoting.

Extricating ourselves,Nationally,from this mess involves recognizing some uncomfortable truths,rather than adopting the Bono-esque mantra that Debt-Forgiveness will see us all right.

Sadly,Official Ireland still clings to the notion of Universal Resedential Property Ownership as being desirable,whilst allowing the Rental of Property to be seen as the preserve of shyster Landlords and Indigent Tenants.....:(

Cookie_Monster

How about we just call it debt, negative equity is such a stupid term.

bbsrs

sandin wrote: »

Monthly mortgage = 1843.57 less trs (assuming a couple) = 1513.24 net repayment.

I thought TRS was a percentage of the interest paid in a year on a mortgage and whether you are single or a couple the ammounts of TRS paid shouldn't change. Am I wrong?

shruikan2553

What local services? There are plenty of people in rural areas that get nothing and yet are expected to pay the same

MadsL

Dob74 wrote: »

You couldn't have bought a shoe box in Dublin for 500k in 07. Maybe a shoe box in mullingar

Exaggerate much? The average price of a property nationally hit the peak in February 2007 at €313,998, in Dublin in April 2007 at €431,016.

That's an average not a minimum.

Dob74

MadsL wrote: »

Exaggerate much? The average price of a property nationally hit the peak in February 2007 at €313,998, in Dublin in April 2007 at €431,016.

That's an average not a minimum.

That includes apartments. So a 3bed semi in ok neighbourhood 500k would've been in the low .er end.

MadsL

Dob74 wrote: »

That includes apartments. So a 3bed semi in ok neighbourhood 500k would've been in the low .er end.

The average price paid for a house in Dublin and outside Dublin in March 2007 was €429,151 and €265,767 respectively. The equivalent prices in December 2006 were €427,343 and €266,339.

https://www.permanenttsb.ie/media/permanenttsb/pdfdocuments/housepriceindex/8175+-+houseprice+index.pdf

You certainly could buy a house in Dublin for less than €500k, even during 2007.
http://www.thepropertypin.com/viewtopic.php?f=20&t=3861

Drumpot

More threads by the ill informed or just downright ignorant . .

Im not even debating whether or not people in negative equity should pay the property tax because I wasnt thinking that I shouldnt have to pay it just because my house is worth half what I paid for it . .

I have seen calculations that suggested up to 50% of the cost of a house goes directly/indirectly back to the government (VAT, employees taxes etc) .. This has funded an awful of of services and maintanence for the state . .

There is also the consideration that many of the people struggling with mortgages are ones in negative equity. It doesnt make any sense to put more financial pressure on these people because you might push them over the edge. Why dont we just give the house (thats only worth half what I paid for it) back to the bank and let the taxpayer cover the cost ? Did that cross your mind ? I took out a contract with a private entity, what do I care if they lose money (and by default the taxpayer foots the bill)?

I could go on, but Im not moaning about anything and not demanding anything . .I just always find it interesting when people discuss a topic in a one dimensional, ignorant view with zero consideration for all the variables in why the state may take a lenient view on those in negative equity. .

MadsL

Drumpot wrote: »

More threads by the ill informed or just downright ignorant . .

Im not even debating whether or not people in negative equity should pay the property tax because I wasnt thinking that I shouldnt have to pay it just because my house is worth half what I paid for it . .

I have seen calculations that suggested up to 50% of the cost of a house goes directly/indirectly back to the government (VAT, employees taxes etc) .. This has funded an awful of of services and maintanence for the state . .

There is also the consideration that many of the people struggling with mortgages are ones in negative equity. It doesnt make any sense to put more financial pressure on these people because you might push them over the edge. Why dont we just give the house (thats only worth half what I paid for it) back to the bank and let the taxpayer cover the cost ? Did that cross your mind ? I took out a contract with a private entity, what do I care if they lose money (and by default the taxpayer foots the bill)?

I could go on, but Im not moaning about anything and not demanding anything . .I just always find it interesting when people discuss a topic in a one dimensional, ignorant view with zero consideration for all the variables in why the state may take a lenient view on those in negative equity. .

The only variables you have identified is that the market value of your house has dropped by half of what you paid for it. You seem (rather obtusely) to be making the argument that this is the half that belongs to the Govt/Taxpayer - apart from the obvious fallacy about which half that is, this would appear to be an appeal for mortgage debt forgiveness. If so, we can rehash an argument about where my bailout for failed investments in the DotCom crash has got to.

If that is all your argument is, then you are a fine one to be accusing people being "one dimensional, ignorant view with zero consideration for all the variables" when you have provided only a bizarre and seriously flawed reasoning for mortgage debt forgiveness.

southsiderosie

MOD NOTE:

Some of these comments are getting way too personal. Please dial it down.

MadsL

^

Sorry Rosie, wasn't intended to be personal in any way, I should have phrased it in the abstract. Apologies.

Scortho

If we wrote off debt where does it end?
Do we compensate all the people who bought shares in Aib, boi, Anglo, ibrc, eircom and aer lingus as a pension because they were once worth more than they are now! My car has fallen 40% since I bought it? I don't go looking for a bailout.

So why is it any different for houses. They're all assets! They all go up and down in value. Just because your home is worth half what you paid for it doesn't mean that it won't have recovered in 20 years time!

So what's the big deal? You have a home that you pay back a mortgage payment on every month. If you were renting, you'd still have to pay a monthly payment to live there!

If people want a write down fair enough, be willing to give up that proportion of your house. So if you want a 25% write down then give 25% of your house up! If I have to share your losses, I want to share your future gains!

_Kaiser_

Fully agree with the OP - I'm sick of people complaining about debts they took on of their own free will, but now want someone else to pay for.

As I've said here previously ...

I have a much simpler outlook...

You signed the mortgage of your own free will (no one dragged you in off the street and held a gun to your head), you were aware (or should have been as a adult) that there's no guarantees in life and "your investment may go down as well as up", and as such you (not me, or other taxpayers - who are the ones who end up paying for this crap) are liable for every cent you borrowed.

Certainly yes, your lender should be forced to work with you to agree realistic repayments that change with your circumstances, but under no circumstances should you be able to "walk away" scot free!

My point is, if you took on a debt, it's on YOU to pay it back not cry "can't someone else do it". If it takes you till you retire to clear it, that's what you do... or is it in fact the case that my parents were wrong and you're not in fact responsible for your actions anymore??

And yes, I have been through ups and downs in the last few years too.. new job, moved back to Dublin, unemployed for a year etc - but through it all I just had to MANAGE my loan/credit card/bills and NEGOTIATE with my creditors to come to new payment agreements when necessary.

At no point was just NOT paying an option or even considered by me. Why? Because it was my CHOICE to take on these debts - not anyone else's - and therefore it's up to me to sort it out.

Y'know.. like an adult..??

Drumpot

MadsL wrote: »

The only variables you have identified is that the market value of your house has dropped by half of what you paid for it. You seem (rather obtusely) to be making the argument that this is the half that belongs to the Govt/Taxpayer - apart from the obvious fallacy about which half that is, this would appear to be an appeal for mortgage debt forgiveness. If so, we can rehash an argument about where my bailout for failed investments in the DotCom crash has got to.

If that is all your argument is, then you are a fine one to be accusing people being "one dimensional, ignorant view with zero consideration for all the variables" when you have provided only a bizarre and seriously flawed reasoning for mortgage debt forgiveness.

Eh, where exactly did I say anything about debt forgiveness ? Please quote me on that or perhaps did you put words into my post?

And for the record, "Debt forgiveness" doesnt exist . . Heres a free lesson for you, if a financial institution loses out on a loan it provded its called a bad debt . . Hopefully that will prevent you from using this silly phrase thats only used by people who have no understanding of loans/mortgages . .

MadsL

Drumpot wrote: »

Why dont we just give the house (thats only worth half what I paid for it) back to the bank and let the taxpayer cover the cost ?

Sorry, that sounds an awful lot like debt forgiveness to me.

Is it something else???

Sponge Bob

People have been known to cut a deal with the lender where they

1. Hand back the house to the lender.
2. Make an agreed series of payments for N years

The rest is forgiven. Consider it a personal examinership.

Just don't expect the taxpayer to give you your own personal NAMA except for managing your bankruptcy process if required.

Most mortgages are small and most people do not carry imprudent quantities of debt.

Drumpot

MadsL wrote: »

Sorry, that sounds an awful lot like debt forgiveness to me.

Is it something else???

Its a bad debt . .

I thought I explained to you that debt forgiveness doesnt exist in the financial industry . . Perhaps you are confusing it with loans among friends and family ?

The ONLY people who use the phrase debt forgiveness are those who have a very limited understanding of the industry . .

Drumpot

Sponge Bob wrote: »

People have been known to cut a deal with the lender where they

1. Hand back the house to the lender.
2. Make an agreed series of payments for N years

The rest is forgiven. Consider it a personal examinership.

Just don't expect the taxpayer to give you your own personal NAMA except for managing your bankruptcy process if required.

Most mortgages are small and most people do not carry imprudent quantities of debt.

My loan is with a foreign bank thats not owned by the state . . If I declared bankrupcy they would chalk it down as a bad debt . . It wouldnt be forgiveness of any sort, its simply a company writing down a loss . .

yosser hughes

Drumpot wrote: »

Its a bad debt . .

I thought I explained to you that debt forgiveness doesnt exist in the financial industry . . Perhaps you are confusing it with loans among friends and family ?

The ONLY people who use the phrase debt forgiveness are those who have a very limited understanding of the industry . .

YOU bought a house in the middle of the biggest property bubble in history and now you're questioning other peoples understanding of finance? Good man:)
You're being disingenuous as well.

sandin

The whole idea of the OP was firstly to get those persistent moaners not to forget the positives of their situation and secondly for the silent majority who grin and bear it without complaining to also realise, that its not nearly as bad as the media and naysayers would have you think - and possibly realising that your monthly payments and overalcost of ownership over the period of the mortgage is not too different from those buying today.

The only issue is if you need to move (up or down) - and for that people must insist that the tracker balance is transferable.

A clasiic moaner was on pat kenny, complaining that he had to pay 60+k stamp duty on a 750k house. He forgot to say that he made 200k or whatever on selling his previous house and also forgot to say he was on a tracker. - Again, his NET repayments would be no different if he bought today.

Scortho

Drumpot wrote: »

My loan is with a foreign bank thats not owned by the state . . If I declared bankrupcy they would chalk it down as a bad debt . . It wouldnt be forgiveness of any sort, its simply a company writing down a loss . .

This would involve you declaring bankruptcy though.
If you think that bankruptcy is your way to go then go declare bankruptcy. Just be willing to accept the sacrifices that one must take when they declare bankruptcy. If you bought with your wife/partner, you are both jointly and severely liable for the repayment of the loan.

Yes the bank may end up taking a write down, but you have to saccrifice a lot in order to get said write down.

I would not seek bankruptcy over negative equity. I would however seek bankruptcy if i had a business with a large amount of debt of which I'm liable for.

eyescreamcone

I have a few rental properties (all in negative equity). I'm struggling to pay interest only mortgages. I'm topping up the rents with my own reduced salary.
I signed the contracts - I'm a big boy, I will bust my ass to pay my way.

However, I'm a small fish in the property pond.
My borrowings are lower than the NAMA 5M limit. I can't just walk away like the big boys.

I can only claim 75% interest as an expense.
I now have to pay tax on negative assets.

No other business is treated like this.

30% of buy to let mortgages are in arrears at the moment. This is going to increase greatly with this new property tax.

Landlords will move to cash in hand and declare a pittance.
I reckon this property tax will collect less money in tax than it loses in undeclared rental earnings and mortgage arrears to state owned banks.

Drumpot

yosser hughes wrote: »

YOU bought a house in the middle of the biggest property bubble in history and now you're questioning other peoples understanding of finance? Good man:)
You're being disingenuous as well.

Property goes up and down . . I know that . . I havent moaned about my financial situation and havent asked or demanded anything . . I didnt buy a house as an investment , I bought it to live in and have a family . . Im delighted where I live . .

Now that I have that insignificant information out of the way can the OP actually answer my questions instead of making broad assumptions that I somehow asked for debt forgiveness ?

To do that, the OP has to explain what debt forgiveness is and either they dont understand the phrase or they have just realised its a stupid ill informed populist way of saying debt writedown (that makes it sound like some sort of moral forgiveness or charity from the institution) . .

Negative equity doesnt just effect people because their house is negative worth (again all the einsteins on here seem to oblivious to whats going on). Many have lost their jobs, taken paycuts or their partners have lost their jobs and are struggling to meet the repayments. .

Theres also the responsibility of the financial instition that were supposed to engage in professional due diligence (before giving out the money) had the most lax rules/guidelines in deciding how much they gave a person .

Oh and the financial regulator that basically let banks give out whatever money they wanted to people with the most pathetic regulation possible . .

But lets ignore the professional financial institution giving money to an average Joe who took what they were told they could afford. Lets forget about the absentee regulator . . The ONLY responsibility in this topic should fall 100% on the homeowner (even if bankrupcy laws are in place for a reason and have no mention of "forgiveness"). .

Drumpot

Scortho wrote: »

This would involve you declaring bankruptcy though.
If you think that bankruptcy is your way to go then go declare bankruptcy. Just be willing to accept the sacrifices that one must take when they declare bankruptcy. If you bought with your wife/partner, you are both jointly and severely liable for the repayment of the loan.

Yes the bank may end up taking a write down, but you have to saccrifice a lot in order to get said write down.

I would not seek bankruptcy over negative equity. I would however seek bankruptcy if i had a business with a large amount of debt of which I'm liable for.

I have no intention of declaring bankrupcy . . I am not even giving out . .

I am just trying to educate to the misguided rants of the OP and their followers . .

Scortho

Drumpot wrote: »

I have no intention of declaring bankrupcy . . I am not even giving out . .

I am just trying to educate to the misguided rants of the OP and their followers . .

Drumpot Im fairly confused by your posts.
Most posters here are against blanket write downs/write downs with out recourse. Id say if you were to run a poll on most of the people who disagreed with you, whether they'd accept the person surrendering their house in return for bankruptcy/restricted lending for a number of years many would vote yes.
What most of us are against is simply a write down without any recourse.

Scortho

eyescreamcone wrote: »

I reckon this property tax will collect less money in tax than it loses in undeclared rental earnings and mortgage arrears to state owned banks.

Property tax will be collected by revenue who have much more powers than your local authority.

They can see who last paid the stamp duty on a property. If you require a tax clearance cert, they wont provide you with one unless you're fully tax compliant, which includes the property tax.

They know that you were making a return this year on your rental income. If you fail to make a return next year, they will come knocking and look for proof of you having sold the properties.

Revenue aren't the easiest people to avoid. You might get away with it for a year or two but they generally get you in the end and when they do, it aint pretty!
See here http://www.revenue.ie/en/press/defaulters/defaulters-list1-sept2012.pdf

Drumpot

Scortho wrote: »

Drumpot Im fairly confused by your posts.
Most posters here are against blanket write downs/write downs with out recourse. Id say if you were to run a poll on most of the people who disagreed with you, whether they'd accept the person surrendering their house in return for bankruptcy/restricted lending for a number of years many would vote yes.
What most of us are against is simply a write down without any recourse.

Im not arguing for a blanket writedown, I am saying the state has to take responsibility in this topic . .

Whether its the state writing down a debt or a financial institution run by the state, its not debt forgiveness . . That phrase is so annoying its not funny because it doesnt make any sense. . Its a debt writedown, the phrase suggests its some sort of charitable action . .

Im trying to broaden out the topic by asking what responsibility does the state have in this whole scenario . . Most People are taking responsibility for the debt they owe, surely the state should share the burden for its criminal negligence in regulating the industry ?

I know people think you either have to be for or against something , Im just hoping that the art of debate isnt completely lost . .

Scortho

Drumpot wrote: »

Theres also the responsibility of the financial instition that were supposed to engage in professional due diligence (before giving out the money) had the most lax rules/guidelines in deciding how much they gave a person .

Oh and the financial regulator that basically let banks give out whatever money they wanted to people with the most pathetic regulation possible . .

But lets ignore the professional financial institution giving money to an average Joe who took what they were told they could afford. Lets forget about the absentee regulator . . The ONLY responsibility in this topic should fall 100% on the homeowner (even if bankrupcy laws are in place for a reason and have no mention of "forgiveness"). .

Lets not forget about the consenting adult who signed on the dotted line having read the mortgage contract, agreed that all that he had stated was true and agreed to the terms and conditions of the contract, particularly the one that contains "Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it."

They even went as far as reminding people of this very fact in newspapers, tv adds and on the radio. It was and is the most important part of a mortgage agreement: that is that your home is not yours until you have your mortgage or other debts which are secured against it cleared in full.