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

DataDude

schmittel wrote: »

If I’m reading that correctly the idea is to have smaller mortgage rather than more expensive house?

If that’s the case I’d Do it thus:, drawdown a mortgage for x, (contract without early repayment penalties etc) buy house, borrow y from family, repay y off mortgage or switch to new mortgage for x - y.

If think if you start introducing low interest family loans pre drawdown, somebody somewhere might raise an eyebrow, even for no good reason.

Yes precisely.

We did consider your early repayment option alright, but the the only thing is by far the best value mortgage for us does not allow early repayment without penalty. Paying the penalty or going with one of the worse value lenders which allow early repayment would take most of the financial benefit out of having a part of the mortgage at a lower rate.

I did consider just waiting out the 3 year fixed period and switch like you have outlined...but I assume at point of switching all the same potential issues would crop up around "where did your equity come from?".

awec

I would think the bank would want an explanation on where the money for the difference is coming from.

DataDude

awec wrote: »

I would think the bank would want an explanation on where the money for the difference is coming from.

For sure, and there's nothing dodgy going on here so I would be more than happy to explain to them. Family member getting 0% on deposit. Me paying 2.2% on mortgage. Loan at 1% between us works all round.

From the banks perspective it shouldn't make a difference really, if anything it would be lower risk, especially if the inter family loan did not have any claim against the property and they retained that 100% which we would agree to. But I guess they might just have a standard policy to avoid such an agreement because it's non-standard.

hometruths

DataDude wrote: »

Yes precisely.

We did consider your early repayment option alright, but the the only thing is by far the best value mortgage for us does not allow early repayment without penalty. Paying the penalty or going with one of the worse value lenders which allow early repayment would take most of the financial benefit out of having a part of the mortgage at a lower rate.

I did consider just waiting out the 3 year fixed period and switch like you have outlined...but I assume at point of switching all the same potential issues would crop up around "where did your equity come from?".

I would guess a bank looking at getting a new mortgage client from a switcher with solid 3 year payment record, and solid LTV would be far less interested in the detail of this boost in equity in the property than new mortgage business for an FTB who basically has a boost in his deposit.

Essentially the same thing but optics are different in three years time.

awec

DataDude wrote: »

For sure, and there's nothing dodgy going on here so I would be more than happy to explain to them. Family member getting 0% on deposit. Me paying 2.2% on mortgage. Loan at 1% between us works all round.

From the banks perspective it shouldn't make a difference really, if anything it would be lower risk, especially if the inter family loan did not have any claim against the property and they retained that 100% which we would agree to. But I guess they might just have a standard policy to avoid such an agreement because it's non-standard.

Banks generally have no issues with loans on top of your mortgage once it doesn't impact affordability, but I think they may be somewhat concerned about the peculiarities of what you'd be doing and they may think that not all is what it seems.

To be honest, I don't think you have anything to lose from asking the bank. As you've said, you're not trying to hide it.

Cyrus

DataDude wrote: »

For sure, and there's nothing dodgy going on here so I would be more than happy to explain to them. Family member getting 0% on deposit. Me paying 2.2% on mortgage. Loan at 1% between us works all round.

From the banks perspective it shouldn't make a difference really, if anything it would be lower risk, especially if the inter family loan did not have any claim against the property and they retained that 100% which we would agree to. But I guess they might just have a standard policy to avoid such an agreement because it's non-standard.

it depends on how large the amount is but what i would be inclined to do is take a large mortgage (with cashback) on a short fixed period, at the end of the fixed period partially redeem the mortgage with the loan from the family member and then switch to avant for the lowest fixed rate.

that way you get the one decent benefit of a large mortgage which is cash back and you still end up with the best rate a year later with the smaller mortgage.

the bank you are switching to at that point may ask, they may not, but regardless i cant see how its an issue for them. Especially if you would have qualified for the larger amount in the first place.

fliball123

jill_valentine wrote: »

If the majority of properties being bought are bought by couples, but the biggest cohort of homeless people are single adults, what does that tell you?

This is a distortion of stats through a lens of survivor bias. I'm sure most properties will continue to be bought by couples when the entire single working population of the country have only a thousand affordable properties between them, and that figure includes stuff like this bright and airy 125k "detached house" in Oranmore:

https://www.myhome.ie/residential/brochure/dublin-road-oranmore-co-galway/4487638

Nobody but couples can buy. You would also easily find statistics about how surprisingly well deposit-equipped homebuyers are if you wanted, for the same reasons.

It tells me that the government has let down the country on building social housing.

Cyrus

jill_valentine wrote: »

If the majority of properties being bought are bought by couples, but the biggest cohort of homeless people are single adults, what does that tell you?

This is a distortion of stats through a lens of survivor bias. I'm sure most properties will continue to be bought by couples when the entire single working population of the country have only a thousand affordable properties between them, and that figure includes stuff like this bright and airy 125k "detached house" in Oranmore:

https://www.myhome.ie/residential/brochure/dublin-road-oranmore-co-galway/4487638

Nobody but couples can buy. You would also easily find statistics about how surprisingly well deposit-equipped homebuyers are if you wanted, for the same reasons.

out of interest and this is a genuine question, what should a single person on the median income be able to buy in your opinion, say in a major urban centre and rurally?

DataDude

Cyrus wrote: »

it depends on how large the amount is but what i would be inclined to do is take a large mortgage (with cashback) on a short fixed period, at the end of the fixed period partially redeem the mortgage with the loan from the family member and then switch to avant for the lowest fixed rate.

that way you get the one decent benefit of a large mortgage which is cash back and you still end up with the best rate a year later with the smaller mortgage.

the bank you are switching to at that point may ask, they may not, but regardless i cant see how its an issue for them. Especially if you would have qualified for the larger amount in the first place.

Thanks, the above plan re. cashback for short term fixed before moving to Avant is what we were planning to do regardless before the family member proposed the arrangement. We will proceed down this route and hopefully Avant are happy to accept the "extra equity" provided by family.

Mic 1972

PropQueries wrote: »

Well, given that there are only 2,948 properties currently for sale in Co. Dublin on MyHome.ie and DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city, I would hope they all realise who is most likely bidding against them.

And DCC is just one of 4 councils in Co. Dublin.

I would think having an idea of who the probable counter-bidder is would be a very important factor on when deciding on what to bid.

The numbers alone are evidence that the state is negotiating over properties not listed on Daft and MyHome.

Graham

PropQueries wrote: »

DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city, I would hope they all realise who is most likely bidding against them

Do you have a source for that PQ?

PropQueries

Graham wrote: »

Do you have a source for that PQ?

The figure was quoted in an Irish Independent article two weeks ago:

"Dublin City Council Fine Gael councillors have written to the Housing Minister urging him to scrap the shared equity scheme in the Government’s affordable housing plan."

"The letter also gives an example of how the €75m could be repurposed, as there are currently 4,000 homes within Dublin City Council which have been earmarked for affordable purchase or rental."

Link to article in Irish Independent here: https://www.independent.ie/news/risks-return-to-failed-housing-policies-of-the-celtic-tiger-era-housing-minister-urged-to-scrap-shared-equity-scheme-in-housing-plan-40119194.html

Graham

PropQueries wrote: »

The figure was quoted in an Irish Independent article two weeks ago

I don't see the part that suggests these will come from the private market or where "DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city".

jill_valentine

Cyrus wrote: »

out of interest and this is a genuine question, what should a single person on the median income be able to buy in your opinion, say in a major urban centre and rurally?

In a major urban centre, I believe it should be possible for a single median earner to purchase a one bedroom or studio flat within reasonable commuting distance of employment.

Rurally, that's probably a lot more variable, but honestly I think bang for buck kinda manages itself out there because the distance from services etc are the flipside of living in something standalone, with more space.

I recognise that single earners and units of that size are not an economically appealing market for most commercial developers, but on a social level there's clearly an urgent need for them. Social good is the government's lookout, it should be an obvious ambition to engineer circumstances where those units get built, rather than just... I don't know what the Gov idea is, hoping everyone on the homelessness list marries each other?

PropQueries

Graham wrote: »

I don't see the part that suggests these will come from the private market or where "DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city".

I had to google the definition of "earmarked":

earmark: "designate (funds or resources) for a particular purpose."

Maybe there's another definition?

Original quote:

"The letter also gives an example of how the €75m could be repurposed, as there are currently 4,000 homes within Dublin City Council which have been earmarked for affordable purchase or rental."

"currently" being the important term IMO

Graham

Mod Note

You've spent the last few days insisting DCC are actively negotiating with 4000 property owners and competing with every private purchaser. That article suggests neither.

Backup your claim or stop making it.

PropQueries

Graham wrote: »

Mod Note

You've spent the last few days insisting DCC are actively negotiating with 4000 property owners and competing with every private purchaser. That article suggests neither.

Backup your claim or stop making it.

The quote:

"The letter also gives an example of how the €75m could be repurposed, as there are currently 4,000 homes within Dublin City Council which have been earmarked for affordable purchase or rental."

"earmarked" means the funds have already been designated to specific properties, but DCC have not yet finalised the purchase i.e. currently in active negotiations.

"currently" means they have already identified these 4,000 properties and given that the sales have not yet been finalised, I assume the property seller will keep the property up for sale (and therefore hope to attract other bidders) until he gets a signed sale or lease agreement from DCC.

Why would the seller remove their property from the market just because DCC have expressed an interest? He/she will want the highest price possible and maybe someone else in the private market will place a higher bid than DCC.

To me, that means DCC is the counter-bidder on many of the less than c. 2,000 homes currently listed for sale in Dublin City on MyHome.ie

L1011

That does not mean they are actively in negotiations - and ignores that many of those are new builds that will never go on public sale. If that is the entire evidence basis you have, you have to stop making the claim. Do not make it again. Do not reply to this post.

HansKroenke

jill_valentine wrote: »

In a major urban centre, I believe it should be possible for a single median earner to purchase a one bedroom or studio flat within reasonable commuting distance of employment.

Rurally, that's probably a lot more variable, but honestly I think bang for buck kinda manages itself out there because the distance from services etc are the flipside of living in something standalone, with more space.

I recognise that single earners and units of that size are not an economically appealing market for most commercial developers, but on a social level there's clearly an urgent need for them. Social good is the government's lookout, it should be an obvious ambition to engineer circumstances where those units get built, rather than just... I don't know what the Gov idea is, hoping everyone on the homelessness list marries each other?

It should be possible for people to rent their own place on an affordable budget, let alone be able to purchase one, for all of the social benefits you refer to in your post. Looking at avaergae rents for one bedroom apartments in Dublin of 1600, I feel we should be targeting, based on today's average salaries, for rents of such dwellings to drop 30/40% at least.

Anecdotally, from my own experience in Ireland growing up and renting versus what I have experienced with Germans who grew up renting and moving out younger, living by themselves if they wanted to as they can afford it in Germany, Irish people take a lot longer to mature and settle down, have kids and gain that confidence one gains from living alone as an adult. Even without a huge amount of money there is a much higher quality of life as not a lot of cash is sucked up in property and therefore people seem to be less dependent on handouts so therefore they don't have the howiya class we have in Ireland. I think housing should be over supplied relative to demand and if that results in cost of housing dropping significantly, that is a positive thing. I do not think I am alone in this view, it just makes sense to me as I'm sure it does to others.

Pelezico

awec wrote: »

I would think the bank would want an explanation on where the money for the difference is coming from.

That is nonsense. Why would the bank seek an explanation for early repayment of a mortgage?

When interest rates were higher about a thousand years ago early payment was very good strategy.

Pelezico

Graham wrote: »

I don't see the part that suggests these will come from the private market or where "DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city".

I doubt there are 4000 sellers in Dublin right now. The stock on the market has quite simply collapsed.

I reckon it must be having a big impact on daft.ie and myhome profits. Total properties for sale nationwide circa 12000.

Little wonder that two houses on my street went sale agreed in a few weeks.

Actually I also wonder what can kickstart the market.How do we get back to 25000 homes on sale?

Cyrus

Pelezico wrote: »

That is nonsense. Why would the bank seek an explanation for early repayment of a mortgage?

When interest rates were higher about a thousand years ago early payment was very good strategy.

It’s still a good strategy it’s a gteed 2-3 percent net return on your investment

Pelezico

Graham wrote: »

I don't see the part that suggests these will come from the private market or where "DCC have recently stated they're in active negotiations with c. 4,000 property owner in the city".

Cyrus wrote: »

It’s still a good strategy it’s a gteed 2-3 percent net return on your investment

It used to be 17%. Yes , I had a 17% mortgage and used to do small overpayments every month.

Timing belt

Villa05 wrote: »

The taxpayer provides essential services to these buildings like water, waste, transport services and infrastructure. Without these services the properties are worthless, its not unreasonable for business that benefit from these services and provision/maintenence of infrastructure to make a contribution to their cost like every other citizen

Do you agree that landlords pay for these services? If the answer is yes then I don't see where the issue with a REIT is as they have to distribute income to their investors who in turn pay tax.

If the REIT was to pay the tax then the investor would be paying tax twice by using a company or corporate vehicle.

Do you think individual Landlords should pay double the tax they are paying?

Timing belt

Pelezico wrote: »

That is nonsense. Why would the bank seek an explanation for early repayment of a mortgage?

To ensure that another loan was not taken out with the property being used as collateral.

Pelezico

Timing belt wrote: »

To ensure that another loan was not taken out with the property being used as collateral.

Nonsense. The deeds are with the bank and cannot be used as collateral.

Going in with loads of cash is a different matter but that would be the same for any transaction

Timing belt

Pelezico wrote: »

Nonsense. The deeds are with the bank and cannot be used as collateral.

Going in with loads of cash is a different matter but that would be the same for any transaction

After the 08 crash they found that multiple banks all had claims on the same property and none knew about the other claims and to enforce anything would be a legal nightmare..... So it is not rubbish.

If the bank know that you got 50k of a loan from a relative and 150k of a mortgage from them then they will be reluctant to lend to you because the relative could claim that he owns 25% house and argue in court for years and years.

hometruths

BPFI have published their latest housing market monitor, confirming the fall in individual BTL investors:

At the peak of the mortgage activity in 2006, BTL loans accounted for around 20% of total mortgage drawdowns compared to less than 1% in 2020. At the same time, there has been a marked increase in the role of non-household buyers which includes private companies, charitable organisations, and state institutions who now account for 23% of all market transactions, up from 3% in 2010.”

Also confirming the state as a major buyer as indicated by many posters on here.

Knowing the wasteful attitude of the councils, what worries me is that I suspect Graham might be correct - there was no such thing as active negotiations, they were just earmarked for purchase and paid whatever price the vendor asked.

Graham

schmittel wrote: »

there was no such thing as active negotiations, they were just earmarked for purchase and paid whatever price the vendor asked.

I understand a very significant chunk were not to be purchased at all, they are council owned sites earmarked for social/affordable housing.

JimmyVik

schmittel wrote: »

BPFI have published their latest housing market monitor, confirming the fall in individual BTL investors:



Also confirming the state as a major buyer as indicated by many posters on here.

Knowing the wasteful attitude of the councils, what worries me is that I suspect Graham might be correct - there was no such thing as active negotiations, they were just earmarked for purchase and paid whatever price the vendor asked.

When I was buying I was given a list by a friend who works in the council (in the department that procures private property for the council) of estates to avoid. The list included old estates that now or soon would have had 20% of the properties bought or rented by the council and, to my surprise, entire sections (up to half) of estates with new builds that were bought or agreed to be bought by the council even before they were built. And there were a lot of estates on that list.
The council have so many properties either bought or rented in many estates that they cannot actually buy or rent anymore in those estates. I think the term they used was "socially satisfied" for the estates like this. Basically means full to the brim of council rentals/ council owned.