2021 Irish Property Market chat - mod warnings post 1

hometruths · 19-02-2021 01:15PM

cnocbui wrote: »

How did they check? They know the plumbing is in good order, there is heating that works?

I own an unoccupied building not in Dublin and there is no f'n way in hell the CSO would have a clue about it or what state it is in.

We've been through this before. They check pretty thoroughly. They don't get every single right, but it is reasonable to believe they get the majority right.

PropQueries · 19-02-2021 01:36PM

schmittel wrote: »

This right here is everything that is f*cked up about our property market.

4,000 loans with an average balance of 300,000 means total loan book is valued at 1.2bn outstanding.

Mars Capital have bought this for a third of its value, meaning AIB and the taxpayer have booked a 66% or 800m loss and Mars will make a fortune.

There is nowhere in the country that a 300k property bought even at the height of the boom is worth only 100k. So even if every single mortgage was a 100% bought at top of market, AIB and the taxpayer would have got a better deal by repoing and selling the asset.

To add insult to injury they feel the need to bury the bad news not because they're making a poor decision, but because they're worried about vulture fund criticism.

The average time of default is 10 years. 90% of the portfolio entered default over 7 years ago.

The raft of unintended consequences as a result of our naive no repossessions policy is the single biggest factor causing the current housing problems.

This would not happen in any other country, whereas we happily support it. It is mind blowing.

No wonder the vulture funds think we're the gift that keeps on giving.

If you think Mars Capital is getting such a great deal, just imagine today's value of the underlying assets attached to the c. €200 billion in loans these funds purchased from Irish banks, NAMA etc. between 2012 and 2016.

If/when they decide to leave, they purchased them so cheaply that they can most likely sell many of the underlying assets at c. 25% of today's prices and still walk away with double their initial investment IMO

Only question I don't know is how much property they control (A lot more than people think IMO) and when will they decide to leave.

hometruths · 19-02-2021 01:45PM

PropQueries wrote: »

If you think Mars Capital is getting such a great deal, just imagine today's value of the underlying assets attached to the c. €200 billion in loans these funds purchased from Irish banks, NAMA etc. between 2012 and 2016.

If/when they decide to leave, they purchased them so cheaply that they can most likely sell many of the underlying assets at c. 25% of today's prices and still walk away with double their initial investment IMO

Only question I don't know is how much property they control (A lot more than people think IMO) and when will they decide to leave.

What concerns me is not that they're making money hand over fist. It is that nobody seems to understand the folly of this no repo, sell the loan book approach.

The fact that the vulture funds are coining it in is because of our collective stupidity. You can hardly blame them for looking a gift horse in the mouth.

I'd rather fix our understanding of the problem at hand, which would be a better result for the taxpayer/renter/buyer/homeless/government all round.

PropQueries · 19-02-2021 02:07PM

schmittel wrote: »

What concerns me is not that they're making money hand over fist. It is that nobody seems to understand the folly of this no repo, sell the loan book approach.

The fact that the vulture funds are coining it in is because of our collective stupidity. You can hardly blame them for looking a gift horse in the mouth.

I'd rather fix our understanding of the problem at hand, which would be a better result for the taxpayer/renter/buyer/homeless/government all round.

I get that point. But it's not like we're the UK or the USA where both the borrower and lender know in advance what happens in the event of default.

If they change the laws now, the only beneficiaries are the funds who now control most of these distressed mortgages, loans etc.

If the laws are changed and the repossession process made more quicker and efficient, the funds will leave faster than they initially intended and break the property market completely on their way out through their repossession sales IMO.

Just imagine if Mars Capital could initiate repossession proceedings like the UK or USA and get these people out in e.g. 6 months time? There would be an additional c. 4,000 homes for sale in 6 months time from this one deal alone.

Having said that, if a FTB is waiting to buy and the repossession laws were changed to be like the UK or USA, they would definitely be able to buy a house in any area in Ireland for c. 25% of current market value in the next 12 months if the rules around repossessions were changed tomorrow IMO

It's a tough one though. These legacy issues are literally destroying the country and will continue to do so for the foreseeable future

Villa05 · 19-02-2021 02:10PM

schmittel wrote:

This would not happen in any other country, whereas we happily support it. It is mind blowing.

schmittel wrote:

No wonder the vulture funds think we're the gift that keeps on giving.

Point 1, this is not something that started today. It's been going on for a decade

2 They continue to pay no tax on their profits

3 the degree of default on the loans would suggest that the occupants would have very low income so its highly likely that the state will be subsidising rents for the new owner or entering long term leases guaranteeing peak rental income tax free for new owners.

There is no other way to dress this up. It is outright legalised robbery.
It would work out cheaper for the state to write off the debt for the original lender

Governments housing policy is multiple children's hospital fiascos in terms of cost.

They will bankrupt us

Hubertj · 19-02-2021 02:12PM

I’m going to call up some of the banks to see if there are any distressed loans going. Looks like money to be made. I have to go to the bank now anyway so will ask at the counter.

cnocbui · 19-02-2021 02:17PM

Hubertj wrote: »

I’m going to call up some of the banks to see if there are any distressed loans going. Looks like money to be made. I have to go to the bank now anyway so will ask at the counter.

I just want to get on a plane and get a long way away from this madhouse - permanently.

Cyrus · 19-02-2021 02:18PM

PropQueries wrote: »

If you think Mars Capital is getting such a great deal, just imagine today's value of the underlying assets attached to the c. €200 billion in loans these funds purchased from Irish banks, NAMA etc. between 2012 and 2016.

If/when they decide to leave, they purchased them so cheaply that they can most likely sell many of the underlying assets at c. 25% of today's prices and still walk away with double their initial investment IMO

Only question I don't know is how much property they control (A lot more than people think IMO) and when will they decide to leave.

They purchased the loans not the assets and we have already established if they are private dwellings getting their hands on the assets is nigh on impossible

Villa05 · 19-02-2021 02:23PM

Hubertj wrote:

Iâ€™m going to call up some of the banks to see if there are any distressed loans going. Looks like money to be made. I have to go to the bank now anyway so will ask at the counter.

A family member had a couple house purchases for ppr fall through because banks were bundling up the mortgages for portfolio sale.

When I was buying my ppr one of the options I was looking at was being "reserved for preferred customer". It had obvious investment potential

PropQueries · 19-02-2021 02:24PM

Cyrus wrote: »

They purchased the loans not the assets and we have already established if they are private dwellings getting their hands on the assets is nigh on impossible

Excellent point. The home owners of those loans that Mars Capital have just purchased have nothing at all to worry about (said in jest of course)

Truth is, whoever controls your loan controls you and they definitely control any assets used as security for that loan.

It applies to companies, it applies to sovereign states and it really really really applies to individuals.

hometruths · 19-02-2021 02:30PM

Villa05 wrote: »

Point 1, this is not something that started today. It's been going on for a decade

Therein lies the problem. It was a stupid idea ten years ago, even more so today.

Villa05 wrote: »

2 They continue to pay no tax on their profits

Assuming they are obeying the tax laws I don't have a problem with this. Yes I'd agree the law should not be so favourable, but it does not anger me as much as the fact that they were sold the loans in the first place.

Villa05 wrote: »

3 the degree of default on the loans would suggest that the occupants would have very low income so its highly likely that the state will be subsidising rents for the new owner or entering long term leases guaranteeing peak rental income tax free for new owners.

This is nonsense for a whole raft of reasons but principally the degree of default on mortgage loans in Ireland shows some very odd characteristics - eg we're the only country in the world that mortgage defaults rose even as unemployment rates fell. Look at the spike in the mortgage default rate around the time of the Dunne ruling. This is one area where Ireland really is different. We have a strategic default problem.

The idea that repossessing 4,000 houses = occupants of those 4,000 houses automatically being added to the housing list is ridiculous.

Villa05 wrote: »

There is no other way to dress this up. It is outright legalised robbery.
It would work out cheaper for the state to write off the debt for the original lender

Governments housing policy is multiple children's hospital fiascos in terms of cost.

They will bankrupt us

If by robbery you mean the vulture funds are robbing us that's another myth. We're giving it away, and the funds would be fools not to take advantage.

We have to stop giving it away rather than complaining about being robbed.

Villa05 · 19-02-2021 02:36PM

Cyrus wrote:

They purchased the loans not the assets and we have already established if they are private dwellings getting their hands on the assets is nigh on impossible

The original owner will eventually die, if they can't afford the mortgage, that's fine, the State will pay full market rent which will be greater than the mortgage repayments

We have essentially sold them a goldmine with the state doing the mining for them and they can leave without paying any tax

Hubertj · 19-02-2021 02:43PM

Villa05 wrote: »

The original owner will eventually die, if they can't afford the mortgage, that's fine, the State will pay full market rent which will be greater than the mortgage repayments

We have essentially sold them a goldmine with the state doing the mining for them and they can leave without paying any tax

What’s that saying about death and taxes? Oh wait....

Hubertj · 19-02-2021 02:47PM

Villa05 wrote: »

The original owner will eventually die, if they can't afford the mortgage, that's fine, the State will pay full market rent which will be greater than the mortgage repayments

We have essentially sold them a goldmine with the state doing the mining for them and they can leave without paying any tax

What’s that saying about death and taxes? Oh wait....

Villa05 · 19-02-2021 02:49PM

schmittel wrote:

Assuming they are obeying the tax laws I don't have a problem with this. Yes I'd agree the law should not be so favourable, but it does not anger me as much as the fact that they were sold the loans in the first place.

schmittel wrote:

This is nonsense for a whole raft of reasons but principally the degree of default on mortgage loans in Ireland shows some very odd characteristics - eg we're the only country in the world that mortgage defaults rose even as unemployment rates fell. Look at the spike in the mortgage default rate around the time of the Dunne ruling. This is one area where Ireland really is different. We have a strategic default problem.

Legalised robbery is the tern I used perpetrated on the taxpayer. Sorry my post looked a bit agressive, it was meant to enhance your point rather than attack it

There is a element of strategic default but there are also areas where people lost their jobs and struggled to get new employment
Eg
Dell workers would struggle to get employment in the many industries that replaced Dell. Many did get work but many did not

I'm sure there are other examples

19-02-2021 02:57PM

awec wrote: »

Bray will eventually be consumed into south Dublin.

Bray is already in South Dublin. The county boundary is along old connaught ave for some of it, plenty of estates in Bray are in Co. Dublin.

MacronvFrugals · 19-02-2021 03:34PM

Piece on IRES in today's IT - cough cough trickling supply...

State’s biggest landlord increased revenue by 20% last year

Ires Reit says average monthly rent was €1,624 per unit, up from €1,596 the year before

“Being cognisant of the challenges faced by many arising from the onset of the Covid-19 pandemic, the group has not implemented any rent increases on renewals since April 1st,” chief executive Margaret Sweeney said.

The group had a portfolio of 3,688 residential units across 34 properties in the Dublin region and one property in Cork as of December 31st.

She said the Dublin and Irish market continued to attract “significant investor demand” during 2020 despite the impact of Covid-19 and related restrictions.

Looking forward, Ms Sweeney said social and economic uncertainty is likely to continue due to Covid-19, but that “ongoing supply constraints and resilient demand drivers for housing will underpin the performance of the group for the remainder of the financial year”

https://www.irishtimes.com/business/commercial-property/state-s-biggest-landlord-increased-revenue-by-20-last-year-1.4489413?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Fstate-s-biggest-landlord-increased-revenue-by-20-last-year-1.4489413

Hubertj · 19-02-2021 03:44PM

Ha repossession always been difficult in Ireland? Or did it only become an issue following 2008?

Gael23 · 19-02-2021 03:51PM

Hubertj wrote: »

Ha repossession always been difficult in Ireland? Or did it only become an issue following 2008?

There’s protection for the family home so it has become even more difficult. Perhaps to protect children from homelessness more so

hometruths · 19-02-2021 04:02PM

Hubertj wrote: »

Ha repossession always been difficult in Ireland? Or did it only become an issue following 2008?

Wasn't a widescale problem pre 2008 as most people paid their mortgages, and those who were unable to did not think it unreasonable that they might have to give up the house.

That's been turned upside down since 2008.

PropQueries · 19-02-2021 04:06PM

MacronvFrugals wrote: »

Piece on IRES in today's IT - cough cough trickling supply...

State’s biggest landlord increased revenue by 20% last year

https://www.irishtimes.com/business/commercial-property/state-s-biggest-landlord-increased-revenue-by-20-last-year-1.4489413?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Fstate-s-biggest-landlord-increased-revenue-by-20-last-year-1.4489413

I think the opposition should try get details on how many units in the build-to-rent sector are partially or fully funded through HAP or long-term lease agreements.

They could just ask the department to give the percentage without breaking down which BTR crowd benefits from this state largesse without divulging "secret" or "commercially" sensitive information.

Back in 2018: "11% of I-RES's total portfolio of rental properties of 2,678" were HAP recipients according to RTE. That figure probably excludes other supports e.g. long-term lease agreements or whatever thing existed back then etc.

Updated figures would be very interesting and would most likely show how much these reits etc. rely on the state's privatised social housing model for the majority of their profits IMO

Link to 2018 RTE article here: https://www.rte.ie/news/2018/0809/983942-housing-social-tenancies/

PropQueries · 19-02-2021 04:11PM

schmittel wrote: »

Wasn't a widescale problem pre 2008 as most people paid their mortgages, and those who were unable to did not think it unreasonable that they might have to give up the house.

That's been turned upside down since 2008.

But isn't that more due to because they thought the downturn would be a year or two max and then they could get back on their feet?

Once the downturn got into year 3, 4, 5 etc. and the private sector worker began to realise that the bankers, the civil servants and the public sector workers had all been bailed out and that he's been left holding the can, I wouldn't blame him for shutting off his payments to the banks etc. IMO

hometruths · 19-02-2021 04:19PM

PropQueries wrote: »

But isn't that more due to because they thought the downturn would be a year or two max and then they could get back on their feet?

Once the downturn got into year 3, 4, 5 etc. and the private sector worker began to realise that the bankers, the civil servants and the public sector workers had all been bailed out and that he's been left holding the can, I wouldn't blame him for shutting off his payments to the banks etc. IMO

The more it became clear that public opinion and thus govt policy was that it was the banks' fault that people were in mortgage arrears, the more it became clear that there was little prospect of losing your PPR in a hurry if you were in arrears.

As this went on, for many who were deep in negative equity, and at the time believed there was no prospect of ever getting into positive equity, the rational decision was to stop paying your mortgage, irrespective of whether they could afford it or not.

tigger123 · 19-02-2021 04:20PM

PropQueries wrote: »

But isn't that more due to because they thought the downturn would be a year or two max and then they could get back on their feet?

Once the downturn got into year 3, 4, 5 etc. and the private sector worker began to realise that the bankers, the civil servants and the public sector workers had all been bailed out and that he's been left holding the can, I wouldn't blame him for shutting off his payments to the banks etc. IMO

How were the public and civil service bailed out? Was it through those civil and public service pay cuts?

cnocbui · 19-02-2021 04:23PM

tigger123 wrote: »

How were the public and civil service bailed out? Was it through those civil and public service pay cuts?

They were bailed out by not being let go - insulated from unemployment such as befell many in the private sector.

PropQueries · 19-02-2021 04:26PM

tigger123 wrote: »

How were the public and civil service bailed out? Was it through those civil and public service pay cuts?

The vast majority of our current debt is due to keeping civil servant and public sector salaries and pensions at near enough boom time levels.

The state has already got back a significant portion of the money used to bail out the banks. The PRSI fund was in the black through most (maybe all?) of the downturn so the social welfare payments weren't the cause of our current debt problem either.

PropQueries · 19-02-2021 04:30PM

schmittel wrote: »

The more it became clear that public opinion and thus govt policy was that it was the banks' fault that people were in mortgage arrears, the more it became clear that there was little prospect of losing your PPR in a hurry if you were in arrears.

As this went on, for many who were deep in negative equity, and at the time believed there was no prospect of ever getting into positive equity, the rational decision was to stop paying your mortgage, irrespective of whether they could afford it or not.

I don't think many people who could afford to pay their mortgage on their home refused to pay if they could afford it.

Receiving letters and calls every second week would drive any person crazy and the end game is that you're more than likely to lose your house anyway.

So, I don't think the percentage of these "strategic defaulters" is as large as some make out.

I think it's just a way for the funds to get the public onside regarding repossessions and extract the maximum value from the mortgages they bought for a pittance over the past several years.

cnocbui · 19-02-2021 04:37PM

I wonder if thes funds have a 'cunning plan' to take the Irish government to court in the US and get a judgement forcing them to change the laws to allow reposessions?

I'm thinking of that lovely guy, Singer, who bought up Argentina's defaulted soverign debt for cents in the dollar and then took the Argentinian government to court in the US and got a judgement against a formerly sovereign country.

Gradius · 19-02-2021 04:50PM

Banks are in trouble because massive loans were given out on massive mortgages on massively overpriced housing encouraged massively by governments and banks. And that means this entire country is in trouble.

Nothing has been done to rectify it since the recession even though many called out the fact that the "recovery" was anything but an actual recovery. The can has been kicked down the road and now the end of that road is rapidly approaching.

Forgetting complexity, a simple thrust of "calling it quits, starting over" should certainly be considered.

It's better to start from bottom and have an upward trajectory rather than this quagmire of perpetual descent.

hometruths · 19-02-2021 04:50PM

PropQueries wrote: »

I don't think many people who could afford to pay their mortgage on their home refused to pay if they could afford it.

Receiving letters and calls every second week would drive any person crazy and the end game is that you're more than likely to lose your house anyway.

So, I don't think the percentage of these "strategic defaulters" is as large as some make out.

We'll have to agree to disagree on that point. You only have to read some of the posts on this thread to see how we have normalised the idea that "Your home is at risk if you do not keep up repayments" is an empty threat.

Like so many things about our housing market we are an outlier in this area, and people are unable to accept the obvious answer:

Welcome to Ireland, Where Mortgage Payments Are Optional

PropQueries wrote: »

I think it's just a way for the funds to get the public onside regarding repossessions and extract the maximum value from the mortgages they bought for a pittance over the past several years.

I think you've got that back to front. The funds were the solution to the public and political opposition to repossession not the cause.

The funds have the advantage over the banks, that they can play the long game.

They're buying problem loans at a huge discount precisely because enforcement is difficult. If the wind changes any successful repossessions or repayments are simply a bonus.

Longer term, ultimately they will get possession, people have to sell and move out at some stage due to their own circumstances - death, divorce etc. The capital appreciation in the meantime is vast.

2021 Irish Property Market chat - *mod warnings post 1*

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2021 Irish Property Market chat - mod warnings post 1