Glut of repossessed houses could depress prices ‘by up to 25%’

jay0109 · 14-02-2014 11:25am

dinnyirwin wrote: »

But to be fair, I would rather see landlords who dont / cant pay their mortgages have their properties repossessed than ordinary people, as they are an investment that went wrong, not a family home in difficulty. But there wont be many investment properties in Dublin anyway that are in too much trouble nowadays.

Ah, that old nugget.....turfing out the renters is fair game, but not those that 'own' the house (even though they've stopped paying the mortgage). Renters can be families too....but they're not cool enough for the media to trumpet about

lima · 14-02-2014 11:27am

jay0109 wrote: »

Ah, that old nugget.....turfing out the renters is fair game, but not those that 'own' the house (even though they've stopped paying the mortgage). Renters can be families too....but they're not cool enough for the media to trumpet about

Let's not forget that 'Owners' rent money from banks!

lima · 14-02-2014 11:31am

dinnyirwin wrote: »

You sound bitter that more houses havnt been repossessed. Is that because you believe people are getting away with something, or is it really that its the selfish reason that you want house prices to fall on the back of others misfortune.
By all means if repos are on the market go ahead and buy, but wishing ill on people purely for your own future gain is a bit sick. It will make you a bitter old person.

This thread is a year old now. What will you do in a years time if there still arent enough repos to stop house prices rising. Will you buy then, or wait another year for the fabled flood of repos.?

It is because people are getting away with not paying, as well as the fact they are contributing to a restricted market.

I am not expecting a flood of repos. But I am not going to panic-buy like all the 60 years old's with their lump sums. I'd rather have options than have bought a crap house even if it is worth 20k more than last year.

The Spider · 14-02-2014 11:32am

lima wrote: »

It's a pity someone is in a situation that they are not happy with but they are hardly in a crisis situation. There are far poorer people that should get media attention who might be getting evicted from their rental house or who are already homeless but this countries obsession with property and the fact that a lot of the middle class voters are in negative equity means that you only get attention if you have a mortgage you cant pay.

It's first world problems, it really is

Completely different kettle of fish, if you get evicted form your rental you go find another one or the state provides one. If you get repossessed, you're still on the hook for the outstanding debt, even though you may never ever have the ability to pay it back, so not only have you lost the house, you're now paying back maybe over 150'000 for nothing, for the rest of your life?

Sorry but I wouldn't put up with that, I really couldn't give a fcuk about a country that allows that to happen and you'd better believe I'd put myself and family first.

I applaud anyone who gets a writedown and manages to keep the house, fair play I say, more of that sort of thing.

As for renters complaining about high rents? Frankly I couldn't care less, you're paying for a service, the same as dry cleaning, a hotel, a restaraunt a holiday, a b&b, a cleaner.

If the service is too expensive go somewhere where the service is cheaper, granted you may have to travel a bit, but if you can't afford the service in your area then that's what you have to do. Believe it or not it's cheaper for me to get my car repaired outside of dublin than in it, therefore I have a choice pay the extra to get the car fixed in Dublin or travel a bit to get it cheaper.

Really isn't rocket science now is it?

ArnieSilvia · 14-02-2014 11:33am

Quite obvious there's lots of vested interest in opinions on this debate.

Like someone (and me before) pointed out, sense of entitlement is crazy in this country.

People not willing to surrender house which is not their own?

That lady in "distress" could apply ages ago for council housing or rent privately as I do and get on. She would get 5+ grand to furnish that council house as well. Or get rent allowance and get most of it paid by SW. Put loan on hold and pay back when eventually back on track. Why is she doing all that drama

People not willing to surrender failed investment?

What kind of "investor" it is starting with the likes of 90% mortgage to buy BTL property while having their own house on a mortgage.
This essentially is 90% leverage using borrowed capital plus own mortgage and it is laughable from business perspective. No hedging at all, full exposure to market fluctuations, interest rates hikes etc all way.

Back to the topic of the thread, there'll be no glut of repossesions. Look at those investment funds buying properties and repossessions in bulk and see what is going to happen. They will crank up rent prices so people either have no disposable income or those who have money will start buying again, then when bubble is formed, funds start to offload slowly and by the time people realise this, oh well, here we go again. Ever heard about trends?

In my opinion, it's fundamentally wrong that people are expecting tenant to pay interest AND capital AND extra return which is more than interest??? This is not going to end well.

As much as you Irish hated English ruling this country, paying them high rents on the land, you're allowing same being done now by your better off Irish fellow, being not able to buy house by forcing you to rent that makes you bankrupt. English replaced by Investment Funds like in some Orwell reality.

cookie1977 · 14-02-2014 11:36am

ArnieSilvia wrote: »

Quite obvious there's lots of vested interest in opinions on this debate.

Like someone (and me before) pointed out, sense of entitlement is crazy in this country.

People not willing to surrender house which is not their own?

That lady in "distress" could apply ages ago for council housing or rent privately as I do and get on. She would get 5+ grand to furnish that council house as well. Or get rent allowance and get most of it paid by SW. Put loan on hold and pay back when eventually back on track. Why is she doing all that drama

People not willing to surrender failed investment?

What kind of "investor" it is starting with the likes of 90% mortgage to buy BTL property while having their own house on a mortgage.
This essentially is 90% leverage using borrowed capital plus own mortgage and it is laughable from business perspective. No hedging at all, full exposure to market fluctuations, interest rates hikes etc all way.

Back to the topic of the thread, there'll be no glut of repossesions. Look at those investment funds buying properties and repossessions in bulk and see what is going to happen. They will crank up rent prices so people either have no disposable income or those who have money will start buying again, then when bubble is formed, funds start to offload slowly and by the time people realise this, oh well, here we go again. Ever heard about trends?

In my opinion, it's fundamentally wrong that people are expecting tenant to pay interest AND capital AND extra return which is more than interest??? This is not going to end well.

As much as you Irish hated English ruling this country, paying them high rents on the land, you're allowing same being done now by your better off Irish fellow, being not able to buy house by forcing you to rent that makes you bankrupt. English replaced by Investment Funds like in some Orwell reality.

It might be worth listening to the full podcast before commenting on it.

ArnieSilvia · 14-02-2014 11:46am

cookie1977 wrote: »

It might be worth listening to the full podcast before commenting on it.

I read this:
http://www.independent.ie/irish-news/mother-breaks-down-in-tears-as-bank-moves-to-repossess-her-small-converted-garage-having-already-repossessed-her-family-home-30007650.html

What a load of BS

cookie1977 · 14-02-2014 11:55am

ArnieSilvia wrote: »

I read this:
http://www.independent.ie/irish-news/mother-breaks-down-in-tears-as-bank-moves-to-repossess-her-small-converted-garage-having-already-repossessed-her-family-home-30007650.html

What a load of BS

No disrespect to the indo but sometimes it's best to hear it from the horses mouth.

Piriz · 14-02-2014 12:02pm

The Spider wrote: »

Completely different kettle of fish, if you get evicted form your rental you go find another one or the state provides one. If you get repossessed, you're still on the hook for the outstanding debt, even though you may never ever have the ability to pay it back, so not only have you lost the house, you're now paying back maybe over 150'000 for nothing, for the rest of your life?

Sorry but I wouldn't put up with that, I really couldn't give a fcuk about a country that allows that to happen and you'd better believe I'd put myself and family first.

I applaud anyone who gets a writedown and manages to keep the house, fair play I say, more of that sort of thing.

As for renters complaining about high rents? Frankly I couldn't care less, you're paying for a service, the same as dry cleaning, a hotel, a restaraunt a holiday, a b&b, a cleaner.

If the service is too expensive go somewhere where the service is cheaper, granted you may have to travel a bit, but if you can't afford the service in your area then that's what you have to do. Believe it or not it's cheaper for me to get my car repaired outside of dublin than in it, therefore I have a choice pay the extra to get the car fixed in Dublin or travel a bit to get it cheaper.

Really isn't rocket science now is it?

Wow hold on there with your 'isn't rocket science', your argument on those in mortgage arrears V's those who rent is pathetic and childish..

mortgage holders have signed legal contracts and have placed themselves in the scenario that the home is not theirs until it is fully paid for.

Not paying your mortgage distorts the market, it leads to increased rent, reduced supply of housing stock, increase in new mortgage interest rates and many more knock on effects financially and socially...

Yet you want the renters to compromise by paying more, renting for longer, living further away and having no legal rights to accommodate those who are unable to fulfil their contract...

your analysis of this situation is so bias and what you advocate for is so problematic financially and socially you can not be taken serious.

ArnieSilvia · 14-02-2014 12:10pm

lima wrote: »

It is because people are getting away with not paying, as well as the fact they are contributing to a restricted market.

I am not expecting a flood of repos. But I am not going to panic-buy like all the 60 years old's with their lump sums. I'd rather have options than have bought a crap house even if it is worth 20k more than last year.

I agree with above and will also add what my wife said about buying a house:

We'll wait till prices start going up again as even if we lose 20k by waiting we might save loads.

Well, having observed price fluctuations in area we wanted to live, we luckily bought a suitable house recently and I agree, supply is very limited.

The Spider · 14-02-2014 12:23pm

Piriz wrote: »

Look, we all know you have a mortgage that is 'outside' Dublin and you would have liked to buy a house in Clontarf but couldn't afford it despite your income being in excess of 100k and your job is great, your peers earn 150k and you are happy with all the land around your current home...fair play... but your analysis of this situation is so bias and what you advocate for is so problematic financially and socially you can not be taken serious.

Wowah! hold in there Pally I said Clontarf is the one area in Dublin I would like to live, if I had to not that I'd rather live there than where I am. Finally managed to get out of Dublin.

Anyway I've said before I have no problem with repos as long as the debt dies with the repossession.

Now as for renters, sorry even when I rented I looked on it as a service I was paying for, and frankly that's what it is, a service that you pay for.

If rents go up you have alternatives, share a house, or move further out, when I rented I had the same choices, rents now are nowhere near what they were years ago, in 2002 I rented a dark basement apartment in Rathmines for 1270 a month between two of us, salary then was about 28 grand.

In 1998 I rented a three bed apartment in harolds cross with two others for the equivalant of about 1100 irish a month, salary around then was about 20-22000 a year.

1995 I rented the top floor of a house around croke park for 550 pounds a month with one other salary then was about 8 grand a year.

So take a look, rents if anything are going back to where they were, all of the above was pre-boom, and salary was certainly way below what the average in Dublin is now, yet somhow I managed to rent in Dublin...

ArnieSilvia · 14-02-2014 12:37pm

The Spider wrote: »

If rents go up you have alternatives, share a house, or move further out, when I rented I had the same choices, rents now are nowhere near what they were years ago

Now this might be a solution, maybe those in distress should think about renting out part of their house or move further out, this would solve some of high rent problems as well.

The Spider · 14-02-2014 12:38pm

ArnieSilvia wrote: »

Now this might be a solution, maybe those in distress should think about renting out part of their house or move further out, this would solve some of high rent problems as well.

Hey years ago plenty of people lived in digs! so yeah maybe that is a solution.

marathonic · 14-02-2014 1:01pm

ArnieSilvia wrote: »

In my opinion, it's fundamentally wrong that people are expecting tenant to pay interest AND capital AND extra return which is more than interest??? This is not going to end well.

Except that, in most cases, this is not the case. Here's some realistic, sample figures for a recent opportunity I analyzed:

Purchase Price 80000
Legal Expenses 900
Surveying prior to initial purchase 200
Furnishing 3000
Total Purchasing Costs 84100

Rent 500
Months 11
5500

Interest on 75% Mortgage 3450
Letting Agents fee 550
LPT 90
PRTB 90
Insurance Premiums 350
Maintenance 800
Accountant 150
5480

Gross Profit 20

Tax @ 40% 8
USC @ 7% 1.4
PRSI @ 4% 0.8
Net Profit 9.8

So I tie up my 25% deposit, expose myself to the risk of property prices falling further - and all for a measily return of €9.80 per year.

If I happen to be lucky enough to get a rent increase in a couple of years of €50 per month, I'll profit by an extra €600 - or €288 after tax, USC and PRSI.

At the same time, my tenant would think I'm living the high-life with his €550 monthly rent. In reality, the high life would involve spending €2.45 of the profit every 3 months on a cup of coffee to reward me for my hard work and high-risk venture.

ArnieSilvia · 14-02-2014 1:15pm

marathonic wrote: »

Except that, in most cases, this is not the case. Here's some realistic, sample figures for a recent opportunity I analyzed:

Purchase Price 80000
Legal Expenses 900
Surveying prior to initial purchase 200
Furnishing 3000
Total Purchasing Costs 84100

Rent 500
Months 11
5500

Interest on 75% Mortgage 3450
Letting Agents fee 550
LPT 90
PRTB 90
Insurance Premiums 350
Maintenance 800
Accountant 150
5480

Gross Profit 20

Tax @ 40% 8
USC @ 7% 1.4
PRSI @ 4% 0.8
Net Profit 9.8

So I tie up my 25% deposit, expose myself to the risk of property prices falling further - and all for a measily return of €9.80 per year.

If I happen to be lucky enough to get a rent increase in a couple of years of €50 per month, I'll profit by an extra €600 - or €288 after tax, USC and PRSI.

At the same time, my tenant would think I'm living the high-life with his €550 monthly rent. In reality, the high life would involve spending €2.45 of the profit every 3 months on a cup of coffee to reward me for my hard work and high-risk venture.

You've just posted an example of what I was talking about.

You are buying a property. Your return is the capital that your tenant is paying to your bank plus interest on leveraged deposit you'd pay (you'd pay now 20k to get a 80k house, this is 4x leverage)

And yes, this is a high life if someone else bought you a house that you will continue to rent out after it's fully paid and then getting way more by pocketing full rent. Nice pension scheme.

The Spider · 14-02-2014 1:17pm

ArnieSilvia wrote: »

And yes, this is a high life if someone else bought you a house that you will continue to rent out after it's fully paid and then getting way more by pocketing full rent. Nice pension scheme.

Nothing to stop you doing it, if you consider it the high life!

marathonic · 14-02-2014 1:23pm

ArnieSilvia wrote: »

You've just posted an example of what I was talking about.

You are buying a property. Your return is the capital that your tenant is paying to your bank plus interest on leveraged deposit you'd pay (you'd pay now 20k to get a 80k house, this is 4x leverage)

And yes, this is a high life if someone else bought you a house that you will continue to rent out after it's fully paid and then getting way more by pocketing full rent. Nice pension scheme.

The figures I gave involve an interest only mortgage so I don't see how my figures confirm your arguments? My return is less than €10 per year.

As interest only mortgages are extremely rare, if at all possible, these days, I'd be paying the capital down with my own salary.

Basically, the only way to make money investing now is via expected increases in rent and/or property prices.

A repayment type BTL mortgage over 25 years would cost €521 per month - or €6252 per year. So, in effect, this investment would be taking €2,792 out of my pocket annually (but I'd end up with the house in 25 years). At that point, I'd pocket the €550 monthly rent less expenses and 52% tax - somewhere in the region of €141 per month.

Edit: Just to add, the expected monthly income would probably be above €141 per month if this were someones retirement plan. The reason for this is that they would no longer be expected to be 40% tax payers in retirement.

lima · 14-02-2014 1:23pm

The Spider wrote: »

Completely different kettle of fish, if you get evicted form your rental you go find another one or the state provides one. If you get repossessed, you're still on the hook for the outstanding debt, even though you may never ever have the ability to pay it back, so not only have you lost the house, you're now paying back maybe over 150'000 for nothing, for the rest of your life?

Sorry but I wouldn't put up with that, I really couldn't give a fcuk about a country that allows that to happen and you'd better believe I'd put myself and family first.

I applaud anyone who gets a writedown and manages to keep the house, fair play I say, more of that sort of thing.

As for renters complaining about high rents? Frankly I couldn't care less, you're paying for a service, the same as dry cleaning, a hotel, a restaraunt a holiday, a b&b, a cleaner.

If the service is too expensive go somewhere where the service is cheaper, granted you may have to travel a bit, but if you can't afford the service in your area then that's what you have to do. Believe it or not it's cheaper for me to get my car repaired outside of dublin than in it, therefore I have a choice pay the extra to get the car fixed in Dublin or travel a bit to get it cheaper.

Really isn't rocket science now is it?

It's tough luck I'd say.

Anyone who is in NE it's entirely their own fault and in a capitalist world they they subscribed to when they bought the house, they should lose their house and pay the outstanding loan they owe.

A mortgage is a service. You rent money from the bank to buy a house. You ask for 400k to buy a house. Your house becomes worth 200k and at the same time you lose your job. You can no longer pay for your service, so but the bank still wants it's 400k + interest. it takes the house, that's only 200k paid off, it is entitled to the rest.

I don't understand your hostility towards renters, and your bias towards owners. Why are you so sympathetic towards owners?

ArnieSilvia · 14-02-2014 1:24pm

I would not do it with so much leverage (too much risk in interest rate variations) especially if I had my own morgage to pay.

If I had my own house paid for, I could take a risk but I'd prefer to buy for cash or at least 50% deposit because I try to make responsible decisions.

So easy to turn nice easy life into a grief and disaster

Apologies if I derailed the thread:D but nice talk in this shyte weather while off from work

The Spider · 14-02-2014 1:29pm

lima wrote: »

It's tough luck I'd say.

Anyone who is in NE it's entirely their own fault and in a capitalist world they they subscribed to when they bought the house, they should lose their house and pay the outstanding loan they owe.

A mortgage is a service. You rent money from the bank to buy a house. You ask for 400k to buy a house. Your house becomes worth 200k and at the same time you lose your job. You can no longer pay for your service, so but the bank still wants it's 400k + interest. it takes the house, that's only 200k paid off, it is entitled to the rest.

I don't understand your hostility towards renters, and your bias towards owners. Why are you so sympathetic towards owners?

I'm not hostile towards renters at all, what annoys me is when someone renting a place looks on it as anything other than that, it's not theirs talking about greedy landlords is nonsense, it's like me renting a movie and talking about how greedy xtravision is, it's like staying in a centrally located hotel and complaining about the price, you'll get a cheaper one by the airport.

A mortgage is a service, however I'd question the bank being entitled to the rest, the bank took as much a risk lending the money as the borrower did getting it, therefore the burden is both the banks and the borrowers, bank gets the house, that'll be the end of it.

techdiver · 14-02-2014 1:39pm

The Spider wrote: »

A mortgage is a service, however I'd question the bank being entitled to the rest, the bank took as much a risk lending the money as the borrower did getting it, therefore the burden is both the banks and the borrowers, bank gets the house, that'll be the end of it.

If it was a non recourse mortgage like in the US, then that would be fine. The issue is, everyone knows the rules here when they signed up to the mortgage in Ireland. If the value of the house sky rockets and the mortgage holder sells up at a healthy profit, do they share that with the Bank or the Tax Payer? Do they ****! So why should it be any different the other way around. People need to learn that taking out credit is a risk!

It's the typical Irish attitude of not taking responsibility for our own actions.

The Spider · 14-02-2014 1:43pm

techdiver wrote: »

If it was a non recourse mortgage like in the US, then that would be fine. The issue is, everyone knows the rules here when they signed up to the mortgage in Ireland. If the value of the house sky rockets and the mortgage holder sells up at a healthy profit, do they share that with the Bank or the Tax Payer? Do they ****! So why should it be any different the other way around. People need to learn that taking out credit is a risk!

It's the typical Irish attitude of not taking responsibility for our own actions.

Yeah including those the banks called in and offered multiples of their salaries for mortgages the banks should know they can't afford, sorry banks took the risk, some lad who left school at fifteen and works as a carpenter cant be expected to be financial genius, he goes to the bank and they tell him he can afford it, who's he to disagree?

Anyway old ground, any repos that happen, the debt'll be cancelled out, guaranteed, elections and all that, and like I said previously the majority of renters more than likely don't vote as they're transient moving from one area to another, politicians need to keep house owners happy or else they'll be out on their ear.

simples!!

Balmed Out · 14-02-2014 2:00pm

The Spider wrote: »

like I said previously the majority of renters more than likely don't vote as they're transient moving from one area to another,

Have you any source for that because I dont believe its true and certainly is increasingly less so.

I keep reading posts here that seem to be misinformed as to what a home owner is. A home owner is someone who has the title deeds to the house. If you have a mortgage the bank is the home owner.

If you cant afford to buy a house out right you have two choices.
One is to rent the other is to take out a mortgage on a house.

Renting has the advantage of not being tied to a property or responsible for maintenance but the disadvantage of never owning the house so you will always have to pay rent.

A mortgage has the advantages of being able to make any changes to the property you want and greater security and that one day you will have paid off the mortgage and be rent free, it has the disadvantage of the potential of not being able to afford to keep up repayments and thus losing your home and owing a lot f money.

A principle reason for not investing in a house purchase is to avoid the risk of repossession and owing the bank money.

The Spider · 14-02-2014 2:04pm

Balmed Out wrote: »

Have you any source for that because I dont believe its true and certainly is increasingly less so.

I said "more than likely", and speaking from personal experience with people across all social strata, when you rent it's for a year (probably) you move somewhere else and you have to reregister, most people don't bother even if they registered in the first place.

You're also not as bought in to the community as in your head you could move when the lease is up, if something better in another area comes available, not to mention the constant thoughts of buying a place, and that may be miles away.

Why do you think there was such a fuss over the local elections being held midweek? Because all the students couldn't go home to vote!

Same thing I'll bet that most renters are still registered to vote at home, be they from Dublin or not.

Balmed Out · 14-02-2014 2:23pm

The Spider wrote: »

I said more than likely, and speaking from personal experience with people across all social strata, when you rent it's for a year (probably) you ove somewhere else and you have to reregister.

Why do you think there was such a fuss over the local elections being held midweek? Because all the students couldn't go home to vote!

Same thing I'll bet that most renters are still registered to vote at home, be they from Dublin or not.

Are you under the impression that only students and young professionals rent in Ireland?!!!!!!!!

The Spider · 14-02-2014 2:32pm

Balmed Out wrote: »

Are you under the impression that only students and young professionals rent in Ireland?!!!!!!!!

Obviously not, however I'll bet that they outnumber the amount of families in private rented accommodation significantly, I'll stand to be corrected.

Oh and I'll add not so young single professionals into the mix.

cookie1977 · 14-02-2014 2:39pm

Balmed Out wrote: »

Are you under the impression that only students and young professionals rent in Ireland?!!!!!!!!

Ask and yee shall receive:

http://www.scsi.ie/news_reports/tenure_mix

cookie1977 · 14-02-2014 2:40pm

I think you'll agree for the most part Spider is correct

jay0109 · 14-02-2014 2:52pm

cookie1977 wrote: »

I think you'll agree for the most part Spider is correct

correct about what???? That renters don't really matter as they are just passing through and paying for a service...so no harm in turfing them out if the situation calls for it,
but that those with mortgages (no matter how new the mortgage is or perhaps how long it's being since it was last paid) should be treated with kid gloves and looked after

I'm on the other side of the whole house price/repossession debate to Spider but on the whole, I agree with a fair amount of what he's posted here.
But I find his point about renters/mortgage holders posted a couple of pages ago to be plain daft and nonsensical, I have to say

cookie1977 · 14-02-2014 2:53pm

jay0109 wrote: »

correct about what???? That renters don't really matter as they are just passing through and paying for a service...so no harm in turfing them out if the situation calls for it,
but that those with mortgages (no matter how new the mortgage is or perhaps how long it's being since it was last paid) should be treated with kid gloves and looked after

I'm on the other side of the whole house price/repossession debate to Spider but on the whole, I agree with a fair amount of what he's posted here.
But I find his point about renters/mortgage holders posted a couple of pages ago to be plain daft and nonsensical, I have to say

I meant about the stats.

I didn't think I'd need to explain that.

Glut of repossessed houses could depress prices ‘by up to 25%’

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