Shortening probate to help alleviate housing shortage

Holiers

I have a suggestion to make a small impact on the current housing crisis.

There are currently waiting times of at least 26 weeks for the probate office in Dublin assess probate applications. This is for the initial assessment and interview. I'm not sure about other offices across the country. It means in many cases a family home is sitting vacant while they wait for probate to go through so they can sell it. My understating is that the delay is due to staff shortages in the probate office.

My suggestion is that the state makes an investment in temporary probate office staff to clear this backlog. The objective is to alleviate the current situation where properties are lying empty for a number of months while the executors wait form their probate application to be processed.

I have written to a number of government departments and my TD about this. No signs of uptake on the idea.

What do people think? I'm not saying this would solve the crisis but surely it could help. Is it a no brainer or am I missing something?

intheclouds

All it would do is produce an influx of the back log, then things would be back to normal after a few weeks or months. Do you have any idea of numbers of properties being held up this way?

The problem is that continuous and ongoing supply is needed, not just a one off influx of homes.

Also probate properties tend to be big old family homes, we need influx at the lower end of the market too.

Glass fused light

Are there any published metrics on the numbers of probate applications the staff are dealing with and where and why blockages happen? And what are the number of executor sales as a portion of the housing market?
Adding more staff will help but lobbying by way of fact finding what the metrics show would allow you to build a better case.

I would think that most of these sales are executor ones where the house has to be sold as part of the 'cashing up' of the assets. If so most of the sales process can run alongside the probate process, and most of the organised prople will have received advice from their solicitor about looking for an appointment as early as possible, plus should have all their documentation etc sorted.

So is the delay due to the probate office have been inundated by a large number of cases, or due to the complex nature of one or more cases, or is it just because people comming in are not organised?

Holiers

I'm not for a minute suggesting that it would resolve the problem but there is no simple fix for this issue so surely it could help.

My guess is there are approx 5,000-10,000 homes in this situation at any point in time - I'm happy to be corrected if anyone knows of the real figures involved.

There is a trickle down impact here. There are lots of family's currently renting modest houses and apartments that would like to purchase a large family home. Also many of the homes going through probate would be perfect starter homes for new families.

I seriously doubt there would be a sudden influx. It will take the probate office a period of time to gradually clear the backlog and then new houses will come on stream as people pass away.

Holiers

Courts.ie have an annual report with the number of probate cases but only a number of them will have property attached. Not my area of expertise but my interpretation was there are approx 15,000 cases a year.

The executor gets the paperwork sorted and submits the application. It sits in a pile not looked at by anyone for 6 months due to staff shortages.

The_Conductor

Holiers wrote: »

Courts.ie have an annual report with the number of probate cases but only a number of them will have property attached. Not my area of expertise but my interpretation was there are approx 15,000 cases a year.

The executor gets the paperwork sorted and submits the application. It sits in a pile not looked at by anyone for 6 months due to staff shortages.

Approximately 7,000 of them have property attached (many of those with assets that are likely to enter probate use various tax avoidance schemes to transfer those assets before death- Revenue have made several statements on the matter lately- the most common ploy is to allow a son or daughter live in a property for a period (I think its 6 years) so it can be signed over to them without any tax implications as a PPR.

Most of Ireland's wealthy use tax avoidance aggressively to transfer assets between generations- without getting savaged by inheritance tax etc.

In addition- of the 7,000 properties which end up in probate annually- a majority of them are inhabited- often by a spouse or a child- there is nothing to say that they will ever enter the general housing supply.

I see where you're coming from with your suggestion- I just don't think it adds up.

Some sort of a scheme to encourage high spec assisted living for retirees- enabling them to offload family properties in a tax efficient manner- is whats needed- not a plan to rush through probates.........

At the end of the day- the elderly have nowhere to go- in exactly the same manner as our younger workers have nowhere to buy. The system is gummed up. We need to plan decent and desireable retirement villages for our elderly- such as they have in the States- where the elderly are pampered hand to foot- but have independence to do as they wish at the same time.

Our current system is not working- for anyone.

4ensic15

intheclouds wrote: »

All it would do is produce an influx of the back log, then things would be back to normal after a few weeks or months. Do you have any idea of numbers of properties being held up this way?

The problem is that continuous and ongoing supply is needed, not just a one off influx of homes.

Also probate properties tend to be big old family homes, we need influx at the lower end of the market too.

That logic is thoroughly flawed. If there are an average of x no. of houses lying idle because of delays in the probate office and the waiting time halves, that is the equivalent of building 50% of X number of houses. Whatever type of house they are is irrelevant. Once they come on the market they most likely will be bought by trader uppers. This will free up starter houses. Reducing void periods in housing as some local authorities have done is the equivalent of building. It is much less costly and far better for the environment.
A lot of probates do not involve occupied houses but those that do should be dealt with in priority.

bleary

There's no one big solution but this is a practical suggestion, I thought I remembered some reference to this in the housing action plan, they definitely referenced tacking vacancies and the causes of it including that caused by fair deal fees.
It's a myth to say that probate only applies to large houses , every house I went to see in Marino, 2-3 beds were probate sales.

The_Conductor

bleary wrote: »

There's no one big solution but this is a practical suggestion, I thought I remembered some reference to this in the housing action plan, they definitely referenced tacking vacancies and the causes of it including that caused by fair deal fees.
It's a myth to say that probate only applies to large houses , every house I went to see in Marino, 2-3 beds were probate sales.

I don't think anyone mentioned 'large homes' in this context- I've been looking at sales in Marino recently too- and as you said, the vast preponderance of them are probate sales- however, the flipside of the coin- is this is the norm in Dublin- not the exception- and probate sales fall through at very least twice as frequently as regular sales (very often one or more of the parties has unreasonable expectations regarding the value of the property).

D3- akin to most areas anyway convenient to the city centre at all- has not featured new construction to any perceptible amount- pretty much over the last 2 decades (with the exception of a few obvious developments).

A 3 bed in Marino by the way- is at least 320k- possibly up to 400k- depending on location, state of the property- and other factors. If you were to drop 400k in rural Ireland- you'd have a mansion. The actual size of the property doesn't affect its value- as much as the location does- and in Marino- despite its historic reputation- you are very much paying for location.

bleary

intheclouds wrote: »

All it would do is produce an influx of the back log......

Also probate properties tend to be big old family homes, we need influx at the lower end of the market too.

My reference to larger homes was in relation to the post above that clearing probate backlog would have minimal effect on supply.

Glass fused light

The_Conductor wrote: »

Approximately 7,000 of them have property attached (many of those with assets that are likely to enter probate use various tax avoidance schemes to transfer those assets before death- Revenue have made several statements on the matter lately- the most common ploy is to allow a son or daughter live in a property for a period (I think its 6 years) so it can be signed over to them without any tax implications as a PPR.

Most of Ireland's wealthy use tax avoidance aggressively to transfer assets between generations- without getting savaged by inheritance tax etc.

I am objecting to the implication in the word 'ploy', that bit of tax law was introduced to protect and facilitate for people who have no legaly recognised relationship and for people who's housing needs were provided for by family as a matter of necessity, not as a wealth transfer scheme. I personally know of a number of unmarried couples who did not realise the tax implications of joint ownership or not being an owner of the house at all, and these are not same sex couples. (Edit some did not even think that they needed a will)
As the facility is available to everyone it's understandable that people who can afford tax planning will take advantage, but if this was not available another method would be used.

I think that the benefit of facilitating the elderly within their local community is something which definitely needs to be looked at in a wider social context too.

Glass fused light

bleary wrote: »

There's no one big solution but this is a practical suggestion, I thought I remembered some reference to this in the housing action plan, they definitely referenced tacking vacancies and the causes of it including that caused by fair deal fees.
It's a myth to say that probate only applies to large houses , every house I went to see in Marino, 2-3 beds were probate sales.

Part of the issue with empty family homes is the emotional attachment, some family members (non-owners/executors) may wish to sell the fair deal homes but the emotional cost over rides the financial consideration, similar to why probate sales fall through, logic fails in the face of family.

Even with probate houses being available the fact that most houses are priced at a two income level excludes those 'potential' homebuyers who are economically homeless, and those who can afford to buy can also afford to rent. Adding to that is the pressure on landlords, to act as social housing providers,won't encourage them into the buy-to-let space.

intheclouds

4ensic15 wrote: »

That logic is thoroughly flawed. If there are an average of x no. of houses lying idle because of delays in the probate office and the waiting time halves, that is the equivalent of building 50% of X number of houses. Whatever type of house they are is irrelevant. Once they come on the market they most likely will be bought by trader uppers. This will free up starter houses. Reducing void periods in housing as some local authorities have done is the equivalent of building. It is much less costly and far better for the environment.
A lot of probates do not involve occupied houses but those that do should be dealt with in priority.

Even if you think it's flawed (which I don't agree with), you STILL only clear the backlog and you're back to square 1. Some percentage of 7000 probate homes are not going to resolve the nationwide supply problem. Plenty of those will be passed to family members and never sold.

Many multiples of this and ongoing supply are needed to sort out the housing problem.

4ensic15

intheclouds wrote: »

Even if you think it's flawed (which I don't agree with), you STILL only clear the backlog and you're back to square 1. Some percentage of 7000 probate homes are not going to resolve the nationwide supply problem. Plenty of those will be passed to family members and never sold.

Many multiples of this and ongoing supply are needed to sort out the housing problem.

Just because a solution is not a complete solution does not mean it shouldn't be done. It is a contribution to the solution which has the advantage of being less costly to implement and environmentally sound. Your criticism is based entirely on solving the problem by having more building. It makes no sense to be constructing new houses when there are vacant houses already in being.

December2012

Take on more probate office staff and keep them on. Simples!

4ensic15

December2012 wrote: »

Take on more probate office staff and keep them on. Simples!

Taking on more staff is not always the ideal solution. Better use of IT, staff training, simplification of legislation and procedures can all be used to reduce processing times.

The_Conductor

Glass fused light wrote: »

I am objecting to the implication in the word 'ploy', that bit of tax law was introduced to protect and facilitate for people who have no legaly recognised relationship and for people who's housing needs were provided for by family as a matter of necessity, not as a wealth transfer scheme.

I hear what you're saying- and indeed the whole purpose of the scheme was precisely for the scenarios you've detailed- however, the irrefutable fact is that numerous people are managing to use the rule as a manner to get around inheritance tax thresholds etc.

That said- no matter how you construct schemes such as this- there will always be a cohort out there who will meld schemes to suit their purposes- indeed- there are entire industries built around advising people how to do just that..........

Shortening probate may get houses back into the supply chain more quickly- however, when you factor into the equation the fact that the properties subject to probate are very often occupied, and the fact that its not actually increasing the overall supply- other than reducing vacancy periods on a small subset of pre-existing property- while it would be nice and helpful for some people- as a measure to tackle our shortage of housing- it will be sorely lacking............

Glass fused light

The_Conductor wrote: »

I hear what you're saying- and indeed the whole purpose of the scheme was precisely for the scenarios you've detailed- however, the irrefutable fact is that numerous people are managing to use the rule as a manner to get around inheritance tax thresholds etc.

That said- no matter how you construct schemes such as this- there will always be a cohort out there who will meld schemes to suit their purposes- indeed- there are entire industries built around advising people how to do just that..........

Shortening probate may get houses back into the supply chain more quickly- however, when you factor into the equation the fact that the properties subject to probate are very often occupied, and the fact that its not actually increasing the overall supply- other than reducing vacancy periods on a small subset of pre-existing property- while it would be nice and helpful for some people- as a measure to tackle our shortage of housing- it will be sorely lacking............

Its perverse in its own way and ironic but the tax advantage has to be equitable and applicable to all in order to protect those who need it. I think we would both agree that those who can afford tax structuring are unlikely to suffer unduly in any housing shortage, they will have the resources and the professional help to achieve their 'dream' house if not in in their 'dream' location.

I suspect that when the probate housing stock was analysed or even sold, those who can currently afford to rent waiting to buy will be facilitated but that the basic housing shortage will remain for those who can't get a deposit to rent, never mind thinking about getting a deposit to buy. Landlords who buy any remaining stock will facilitate those who can afford a rent deposit, but economic homeless will remain while letting at the lower end of the market is seen as a high risk low return business.

It seems to be the norm to have long delays in public service delivery in Ireland.

The Govermnment needs to get a grip on this. Its either lack of staff, inefficiency or poor managemnet or all three, but whatever the reason, its hurting the country.

4ensic15

Glass fused light wrote: »

I suspect that when the probate housing stock was analysed or even sold, those who can currently afford to rent waiting to buy will be facilitated but that the basic housing shortage will remain for those who can't get a deposit to rent, never mind thinking about getting a deposit to buy. Landlords who buy any remaining stock will facilitate those who can afford a rent deposit, but economic homeless will remain while letting at the lower end of the market is seen as a high risk low return business.

I fail to see what the relevance of this is. If speeding up probate brings houses on to the market and into occupation which would otherwise be lying idle it doesn't matter who actually occupies or buys them, how they are funded or the tax dodge they might or might not be pulling. What matters is that more people are housed than would otherwise be.

Glass fused light

4ensic15 wrote: »

 

Glass fused light wrote: »

I suspect that when the probate housing stock was analysed or even sold, those who can currently afford to rent waiting to buy will be facilitated but that the basic housing shortage will remain for those who can't get a deposit to rent, never mind thinking about getting a deposit to buy.  Landlords who buy any remaining stock will facilitate those who can afford a rent deposit, but economic homeless will remain while letting at the lower end of the market is seen as a high risk low return business.

I fail to see what the relevance of this is. If speeding up probate brings houses on to the market and into occupation which would otherwise be lying idle it doesn't matter who actually occupies or buys them, how they are funded or the tax dodge they might or might not be pulling. What matters is that more people are housed than would otherwise be.

The state acts as a safety net providing housing for anyone who presents as homeless ie those in emergency accommodation are housed but not in homes.

Housing is either self funded (including mortgage) or provided by the state by way of social housing, rent support, or emergency accommodation.  

Ranking who needs the housing stock
Buyers :
* People who are home owners trading up.
* People who are in sole rented accommodation who can afford to buy.
* People who are in shared rented accommodation who can afford to buy.
Renters:
* People who are in rented accommodation (sole and shared) and are self funding but can't afford to buy.
Economically Homeless:
* People who are in rent supported accommodation and are not self funding and can't afford to buy
* People who are in emergency accommodation and are not self funding and can't afford to rent or buy.

The state only provide for those who do not have the financial resources to provide housing for themselves, these people are economic homeless.  The state is, as a matter of policy not providing social housing, so rent support and emergency accommodation are offered.  

As the state is not building housing they source from Landlords.  Landlords run a business, and don't want to invest where there is a high risk that they wont make money, and won't invest where they will loose money.   But they can be ignored for the moment as they supply to self funders or the state.

So basic economics of supply and demand, there is a fixed housing stock and more potential consumers (Buyer, Renter and Economically Homeless), than houses available so prices will remain high, and there are going to be losers. In Ireland there are currently more potential consumers than housing stock hence the need to provide hotel-like accommodation.

The_Conductor wrote: »

Approximately 7,000 of them have property attached (snip)
In addition- of the 7,000 properties which end up in probate annually- a majority of them are inhabited- often by a spouse or a child- there is nothing to say that they will ever enter the general housing supply.

Even adding the full 7,000 units would not have a major impact on the market so no price drop. The ultimate losers will always be at the lower end of the market.  

Holiers wrote: »

 There are currently waiting times of at least 26 weeks for the probate office in Dublin assess probate applications. This is for the initial assessment and interview. I'm not sure about other offices across the country.

So if some one wants to go play with the CSO census numbers they can get good guesstimate of how many houses would be unoccupied and available for sale currently stuck in probate and then work out what proportion of them fall into the lower end of the market.  

So starting at the very top of the market, and two billion\millionaires are biding for the most expensive house on the market.  The richest one who can pay the most wins. Now the looser bids on the next most expensive house, and can afford to out bid the third richest person. 
And this cycle rolls down to the very bottom of the market.
As there are more houses than buyers, people at the lower end of the market don't have houses to buy, but also the biding wars have pushed house prices higher.

I am picking imo a very generous round number of 1000 probate units added to the lower end of the market.  Now even adding in the probate houses, there are still more buyers than houses so the price could fall a little but wont, and so still losers. 

The Economically homeless never have the opportunity to buy as they are relying on someone else to fund their accommodation.  The state are opting out of the market and will not be buying; probate or no probate.    That leaves the landlords entering into the low-end rental market, they aim to buy and supply at the market rate to the Renter and even the higher risk lower gain Rent Supported so their tenants are shuffling within the rented space, landlords won't enter into the market to supply housing for the emergency needs because that's too high a risk of loosing the initial investment.  The landlord has the option to buy and hold the probate units, but let's assume not. So the low end probate units are not attractive to the landlord and in a bidding war they pull out quicker than a Buyer.

Of the Buyers only the shared rented accommodation consume the probate units.   But with a wider availability the 'top tier' Renters have an opportunity to move to become Buyers of any remaining probate stock. Of these top tier Renters, those who share to save have the opportunity to build up the biggest fund and will out bid the sole Renter etc  IMO this where the majority of the est.1000 additional probate units will end up.

4ensic15

It is not necessary that there is an appreciable drop in prices or rents in any proposal at easing the housing shortage.
Say for example there are 2,000 houses unoccupied for 1 year as a result of probate delays. Say the delay is reduced to 6 months. That is the equivalent of building 1,000 houses. There will be consequential movement in the market as a result of these additional houses becoming available and occupied sooner than they otherwise would. It will bring relief to some people. Some people will get out of their starter home sooner and so making it available for someone else. Some people will give up their rented accommodation earlier, making it available ffor someone else.
It is much cheaper to do this than build 1,000 houses. It saves the countryside since less new ground has to be allocated to housing. It is win-win. The arguments here that it is not a complete or won't help some sector or other do not mean that it shouldn't be done.