General Questions relating to Irish Economy & Future

Dannyboy83

I know if you have a car taxed for a period, e.g. 3 months, and after 1 month, the car goes on fire, then you can reclaim those 2 months tax.

Does this also apply to (former) homeowners?
They took a mortgage of 350k with stamp duty of 25k, banks up the interest rates, house is reposessed.
Can those people now reclaim the 24/34 years worth of stamp duty?

jhegarty

Stamp duty is paid on the day of the sale , not for 35 years.

It's actually the same as selling the house after one day, you never get anything back.

Dannyboy83

jhegarty wrote: »

Stamp duty is paid on the day of the sale , not for 35 years.

It's actually the same as selling the house after one day, you never get anything back.

Thanks, its just I was reading about arguments against property tax and one of the common themes was people saying that Irish property tax is paid in one lump sum, rather than across 35 years, so I wondered if the same rules applied.

I'm surprised they don't screw us in the same way with cars, i.e. one lump sum per 10 year period.

Dannyboy83

I was going to start a new thread, but I'll just lump any other questions in here rather than clogging up the forum.



http://www.eddiehobbs.com/_blog/EddiesBlog/post/Property_bust

The real squeeze hasn’t started. Once NAMA is underway, banks will begin to pursue distressed debt with vigour as teams of salespeople morph from zealous sellers of debt to pernicious debt recovery agents. Everybody will be targeted and not just developers but anybody finding it impossible to meet repayments on car loans, mortgages, overdrafts, credit cards and any other type of debt. Meanwhile much larger numbers of borrowers will tip over into the debt trap as their spare cash burns up attempting to bridge the yawning gap between much lower income or the dole and, debt demands. Government better pray for a slow European recovery especially in Germany because as it gathers pace, interest rates will start rising sharply. It’s as ugly as it is inevitable.

Is it not in the banks best interest to string out these mortgages for as long as possible?

Assume the above scenario does happen, and interest rates rise sharply due to the recovery of the rest of the EU, that means house prices could realistically fall another 50% from current values.

Who would the bank sell it to?
They have an asset worth about 25% of the original mortgage value.

Wouldn't it make more sense to just string out the mortgages as long as possible, and hope recovery and inflation might reduce their risk in the medium term?

Perhaps I'm being naieve tho.
Could they lump all of these into the NAMA skip in the short term too?
If that is the case, most of the people who bought in the last 5 years are going to be homeless in the short term.

jhegarty

Dannyboy83 wrote: »

Thanks, its just I was reading about arguments against property tax and one of the common themes was people saying that Irish property tax is paid in one lump sum, rather than across 35 years, so I wondered if the same rules applied.

I'm surprised they don't screw us in the same way with cars, i.e. one lump sum per 10 year period.

Then nearest equivalent in cars is the Vat / VRT.

The money is gone when you drive out of the garage.

jhegarty

Dannyboy83 wrote: »

I was going to start a new thread, but I'll just lump any other questions in here rather than clogging up the forum.



http://www.eddiehobbs.com/_blog/EddiesBlog/post/Property_bust


Is it not in the banks best interest to string out these mortgages for as long as possible?

Assume the above scenario does happen, and interest rates rise sharply due to the recovery of the rest of the EU, that means house prices could realistically fall another 50% from current values.

Who would the bank sell it to?
They have an asset worth about 25% of the original mortgage value.

Wouldn't it make more sense to just string out the mortgages as long as possible, and hope recovery and inflation might reduce their risk in the medium term?

You bought a house for 500k on a 100% mortgage.

You don't make any payments and the bank reposes the house , now worth 100k.

The bank sells it for 100k , and then go after you for the 400k.

Dannyboy83

jhegarty wrote: »

You bought a house for 500k on a 100% mortgage.

You don't make any payments and the bank reposes the house , now worth 400k.

The bank sells it for 400k , and then go after you for the 100k.

But, speaking as someone who is still waiting until the climate looks right to buy, who will they sell it to for 400k?
They might be lucky to get 100k.
When I factor in interest rates into current prices, I'm still going to be holding off for another 12months minimum.

And if you've declared bankruptcy, they can't get a cent back, right?

Dannyboy83

Thanks for those answers JHegarty, very helpful.

Honestly, right now I'm thinking that I'm better off putting the idea of buying to bed for another 12 months minimum and closer to 24.

If I buy a house next year, by 2011, it will have lost another 25% of its value and I'll be in negative equity myself. And with everyone thinking like this, there must be no end in sight.

I see David McWilliams suggested that Irish houses should be priced on 10-15 times their return on rent. (avg rent in Cork was 900/1000 last year, closer to 750/800 now, but a buddy from Nothern France says they should be 400 per month maximum going by French figures and the exodus of the migrant workers)
I see rent in most places in Cork has fallen by 20%, and up to 30% in some places.

So if rent is 800 per month, then per year thats €9,600, meaning a correct price at 10-16 times would be 100 to 150k.
But if rent falls to 600 or even 400 as emmigration picks up and the scenario outlined by Eddie Hobbs occurs, we could be looking at prices of 400 per month for rent or 5k per year, meaning houses will be selling at 50-75k in 24 to 48 months time.

Amhran Nua

Dannyboy83 wrote: »

Is it not in the banks best interest to string out these mortgages for as long as possible?

Yes, Hobbes hasn't a clue what he's talking about here. If it were the case that banks were to be levied for shortfalls in what NAMA paid as part of the legislation, he would be right, but that is expressly not part of the legislation, and its not likely to be.

NewDubliner

Dannyboy83 wrote: »

And if you've declared bankruptcy, they can't get a cent back, right?

No, they take everyting you've got apart from your tools, allow you to draw a subsistance allowance/wage. They monitor your bank account, anything extra goes to your creditors, forever if needs be. No credit cards alowed, no loans.

Now if you're a property speculator who used a limited company, it's different. You liquidate the company, the bank takes a hit and gets it back by raising mortgage rates or it gets a bail out from the government or NAMA who get it back by raising taxes or cutting wages.

Dannyboy83

NewDubliner wrote: »

No, they take everyting you've got apart from your tools, allow you to draw a subsistance allowance/wage. They monitor your bank account, anything extra goes to your creditors, forever if needs be. No credit cards alowed, no loans.

Now if you're a property speculator who used a limited company, it's different. You liquidate the company, the bank takes a hit and gets it back by raising mortgage rates or it gets a bail out from the government or NAMA who get it back by raising taxes or cutting wages.

Yes, I was comparing Irish and UK bankruptcy law recently on a British forum, the Irish bankruptcy law seems medieval compared to the UK law.