living at home

GreeBo

Andrew Duffy wrote:

In two years time a similar apartment in a building next door is 650,000 (4% increase each year) and by that stage I do have 65,000 for a deposit.

Except I dont think this is looking at the full picture.
Yeah the average house price goes up by 4% but this means that the 250k one in the outskirts of Clonsilla doesnt increase whereas the 650k one in Ranelagh goes up by 10%.
Relying on a 4% across the board increase is crazy and not supported by history.

GreeBo

I bought a house for security (amongst other reasons)
I take comfort in the fact that in, say 20 years time, no matter whats goes wrong in my life I will have somewhere to live. Everything else may be crud but I have a home to go to and could live on pension/dole for the rest of my days.
If I was renting, chances are the I wouldnt be saving anything as a nest egg, a house is saving no matter how you look at it. Renting is not. You dont come out with anything at the end of a life of renting.

MorningStar

Andrew Duffy wrote:

As I mentioned, surveys since the SSIA scheme started have found that very few holders intend to reinvest in any way. Of course, a survey is not a perfect prediction.

I heard the exact opposite and even heard economists arguing that people were lying in the survey and are likely to buy hoildays,cars and the like. AS you say they aren't perfect but look at this way if you plan on using on a deposit do you really think nobody else will be thinking the same? I would say there are a few first time buyers thinking the same too.

Andrew Duffy wrote:

More-or-less. Obviously I would like a trophy home on Shrewsbury road but it's not realistic. The type of property I want is affordable for a couple with moderately high incomes so long as the initial deposit and stamp duty can be met.

THe type of property you are talking about is not a moderately high income first time buyer house. IMHO it's the top.

Andrew Duffy wrote:

I see second-hand starter properties sitting on the market due to the staggering numbers of competing properties being built new. I'm not prepared to live in an area I don't like for any length of time, and I'm not prepared to be stuck in a chain while the property I want is sold to someone else.

Where? A house on my road sold in a week and everything local has sold within a month or two. The higher you go up the property ladder it is expected that you will be in some chain. You might be right about losing a property or two but the money saved would be small (10k max IMO)

Andrew Duffy wrote:

Besides, if you look at history you won't find an example of a boom that was created by a sustained and massive growth in prosperity and inward migration like ours.

Try the US for a property history lesson. Property advise for home investment always says it is advisable to buy a property with a few exceptions. Unless you think there will be a price plumet we aren't in those sistuations where renting is the best option. The intrest rate is fixed at the momet and unlikely to change to borrow money is cheap.

Andrew Duffy wrote:

Well, barring a change in my employment situation which would mean as many problems with a debt of 300K as 600k, I'll be able to afford a new-build apartment of the type I'd be happy with in two years. So why would I buy a small property? I'd have to live in it for about three years before selling would be worthwhile, and since the price of the property I'd like would also have increased the overall effect on mortgage repayments would be small. I would also have used up my first time buyer status which is worth 1.5% of the price of a property under 635K - this could well wipe out any remaining gain.

First off you would be in a better situtaion if you owned a house,had a mortgage and unemployed than without a house ,mortgage and unemployed. THe small property is not to live in but to rent! If your rent is so low it doesn't matter you ccan easily afford a mortgage with the additional rental income. You could sell it before you go to buy the other property so no chain. As there are two of you put the house in one name which means the other name can be used for first time buyer rules. Could have changed but it was common to do this.
You are cumilate risks rather than reducing them the pay off may be better but that the way gambling works. The normal way of doing things is to have the low risk high return, you could be taking the low risk avenue to get the same result as a high risk.
Do you ever watch the property programs where the people don't listen to the presenter/expert? The expert is normally proved to be right this is because they no what they are doing . If you can afford 50k expense you can buy this advise for 1k. You wouldn't expect them to know how to write code but you assume you can understand the property market better than them even though you have never been in it!

Imposter

Morningstar,

Do you not think that the property market in Ireland is artificially high? What happens if developers continue to produce new units in the same numbers for the next 5-10 years? Do you think prices can stay as high as they are?

Personnally, I can't see how prices can stay as high as they are when it takes a huge deposit plus too good incomes to service a mortgage for a typical 3-bed house in some relatively remote town or suburb. Any slight raise in interest rates (ok it doesn't look too likely for a while), will have a serious effect on Irish people especially the large percentage that are maxed out, in the amount of debt they have, be that on a mortgage, a car, credit cards or whatever. Too many people seem to have an attitude in Ireland, that we can have what we want now and worry about how to pay for it later. I can't see how that is sustainable in the long term. This attitude, imo, also artificially props up property prices.

Alos, all these surveys or reports written/conducted by people with a vested interest (banks, auctioneers etc) have to be taken with a large portion of salt on the side.

Andrew Duffy

GreeBo wrote:

Yeah the average house price goes up by 4% but this means that the 250k one in the outskirts of Clonsilla doesnt increase whereas the 650k one in Ranelagh goes up by 10%.

There has been wuite rapid appreciation the price of second hand properties below the new 317,000 FTB stamp duty exemption. There is also appreciation in high-quality D4 and D6 period houses due to demand - that obviously concerns me. One are which hasn't seen much appreciation in the last year or two is high-quality apartments.

GreeBo wrote:

If I was renting, chances are the I wouldnt be saving anything as a nest egg, a house is saving no matter how you look at it. Renting is not. You dont come out with anything at the end of a life of renting.

I'm not advocating a life of renting - until we have rent control, that's not a good idea. I'm advocating ignoring the usual estate agent and pub bore line about the "property ladder" and preserving your quality of life by renting in areas you want to live in near your work until you can afford a house you want to live in near your work - thus minimizing the number of house moves and making your position more flexible during the most turbulent time of your life when you tend to change jobs or have children.

MorningStar wrote:

First off you would be in a better situtaion if you owned a house,had a mortgage and unemployed than without a house ,mortgage and unemployed.

What? If you can't sell the house the bank will repossess. Let's forget about the prospect of negative equity for now as it doesn't look likely.

MorningStar wrote:

As there are two of you put the house in one name which means the other name can be used for first time buyer rules. Could have changed but it was common to do this.

Not a hope. I won't have my wife fighting children or paying inheritance tax if I died, so the property will be owned by both of us - therefore, no first time buyer status if either party has bought before.

MorningStar wrote:

Do you ever watch the property programs where the people don't listen to the presenter/expert? The expert is normally proved to be right this is because they no what they are doing . If you can afford 50k expense you can buy this advise for 1k. You wouldn't expect them to know how to write code but you assume you can understand the property market better than them even though you have never been in it!

I value my quality of life now over the prospect of slightly higher mortgage payments in the future. That is the decision everyone makes, no matter what their aims or income.

GreeBo

Imposter wrote:

Morningstar,

Do you not think that the property market in Ireland is artificially high? What happens if developers continue to produce new units in the same numbers for the next 5-10 years? Do you think prices can stay as high as they are?

Not addressed to me, but I'll answer anyway as I have an opinion
I think the average is artifically high. What I mean by this is that there are houses in massives estates that are miles out, miles, like Navan or Drogheda that are being sold for crazy prices. €350k for a 3 bed semi in Drogheda is crazy money. However, if you want to live near Herbert park there are only a certain number of houses there and the old supply & demand rule will continue to raise the price of them.
If there is a "crash" it wont be an across the board one, it will be the houses that you just *know* dont make sense at those prices.
The top end will get a little soft also, but you will still be able to sell it.

DublinWriter

Imposter wrote:

Do you not think that the property market in Ireland is artificially high? What happens if developers continue to produce new units in the same numbers for the next 5-10 years? Do you think prices can stay as high as they are?

Yes. The population of Dublin is expected to double to 2 million by 2015. 2 effin million!

I equate it with London where the average commute is 30 miles, in Dublin it's 10 miles. We bitch about things here now, but believe me, it's going to get a whole lot worse.

To be honest, by the time we're old we'll need the equity of our houses as a pension/healthcare fund. State pension funds will be totally depleted and private pension funds won't be much better off.

I've got a private Eagle Star pension which I started 8 years ago, and to be honest I'd have more money now if I shoved my contributions in all that time under the matress.

The lesson is, if you're in Dublin, buy now. Somewhere. Anywhere!

MorningStar

Andrew Duffy wrote:

What? If you can't sell the house the bank will repossess. Let's forget about the prospect of negative equity for now as it doesn't look likely.

Not a hope. I won't have my wife fighting children or paying inheritance tax if I died, so the property will be owned by both of us - therefore, no first time buyer status if either party has bought before.

Repossesion is rarely a reality here and if you make so much money it's not a risk anyway. Having your toe in the property pool lets you keep up if there is a sudden change. It is just simple risk management. Negative qquity is a possibility but is a market when the SSIAs are about to be released that won't happen for a while yet.

You obviousily don't know what the rules are about inheritance. The family home is exempt and I am pretty sure your spouse pays nothing either way. You could be throwing away first time buyer option for nothing. On new appartment builds isn't there a stamp duty exemption anyway (once under a certain sq footage)?

You have mentioned a few things at this point that seem to indicate you don't know all the options. I am not an expert by any means but I have bought and sold a few properties and mange other family members property in the rental market.

Imposter wrote:

Do you not think that the property market in Ireland is artificially high? What happens if developers continue to produce new units in the same numbers for the next 5-10 years? Do you think prices can stay as high as they are?

IMHO the market is not artificially high. Look at the construction costs of property at the moment. Even with a plot of land in Dublin a self build doesn't instantly gaurentee a profit at the moment. That to me indicates the price isn't so bad. The reason for the sudden increases in prices is a little complex but it is basically the youngest population in Europe got older and instead of emigrating they stayed because there was work. They need places to live so demand for housing increased so price went up. Demand is still oustripping supply. If you are waiting for prices to drop you need a lot of people to disappear and loose their jobs. Not sure but I think you will find that over the next 5 years it looks like housing supply will be slowing. THe market will change in about 15 years to a city living style where people won't want to commute or own a car. That will mean the bigger older houses will be transformed into seperate apparetment and sold seperately. Look to London to see what happened to all the red brick viictorian streets. The same will happen here but it will be to houses that were built in the 50s-80s. As marriages/relationships won't last people will need single dwelling homes.
Overall irish property prices were low for a long time and thay started playing catch up. What was once a first time buyers home is now a second purchase. Price may slow but they won't drop. Demand for properties close to dublin actually increases as the people spent time commuting long distances. How many people do you know who want a property but can't afford it? AS I mentioned before I waited to buy as I though a drop was possible and it cost me. Friends who waited now can't compete agiainst me as I have 50% equity after 5 years on my home. I couldn't afford to buy my first home if I was starting from scratch and I can take a 50% drop in the market with out loosing a penny. It is unlikely but it it also means I can take most rises without a problem while people outside the market can't. Next year you say for certain prices will go up due to SSIA. I know couples who have both parents on each side are doing SSIA to buy a house. In total that is 6 SSIA and about right for a biggish mortage. That is still only a 10% return and property did better in 5 years. Mind you they will have a hefty deposit

*Page*

i live at home to help my parents out!

pay rent go thirds on bills ect! it makes life easier on them! plus they have the security of having someone in the house if they want to go away on holidays.

Andrew Duffy

You obviousily don't know what the rules are about inheritance. The family home is exempt and I am pretty sure your spouse pays nothing either way. You could be throwing away first time buyer option for nothing. On new appartment builds isn't there a stamp duty exemption anyway (once under a certain sq footage)?

I know exactly what the rules are, so try not to be so arrogant. The surviving spouse automatically inherits the deceased's share in the family home only if it is held in joint tenancy. If the property is held tenancy in common or the surviving spouse has no interest in it, it's up to the courts to decide if the death is intestate or the will is contested.

You have mentioned a few things at this point that seem to indicate you don't know all the options. I am not an expert by any means but I have bought and sold a few properties and mange other family members property in the rental market.

Best of luck to you. I have chosen to use equity in a company to raise finance rather than equity in property; if my equity sells it will outpace any property market anywhere in the world. If not, I'm not worried.

DublinWriter

*Page* wrote:

i live at home to help my parents out!

Maybe you should just go the whole hog and apply for the carers allowance?

To be honest, anyone still holding out for the property market in this country to fall should basically just emigrate to La-La land. Bite the bullet, buy now. Trust me, it's not going to get any easier.

DublinWriter

Andrew Duffy wrote:

or the surviving spouse has no interest in it, it's up to the courts to decide if the death is intestate or the will is contested.

Even if the couple are separated/divorved, I do believe the Inheritance Act still takes precidence. That's why most seperation agreements/contracts have a clause that the Interitance Act will waivered in favour of the beneficories named in a will.

MorningStar

Andrew Duffy wrote:

I know exactly what the rules are, so try not to be so arrogant. The surviving spouse automatically inherits the deceased's share in the family home only if it is held in joint tenancy. If the property is held tenancy in common or the surviving spouse has no interest in it, it's up to the courts to decide if the death is intestate or the will is contested.

It could be arrogant fair enough. It is a little less arrogant than knowing the property market without ever been in it. There is already somebody who thinks you haven't got your facts right either. I have been involved in inheritence so my experience makes me think that you could be wrong. As you would have joint mortgage, life insurance and you are married I think you will avoid inheritence tax.

Andrew Duffy wrote:

Best of luck to you. I have chosen to use equity in a company to raise finance rather than equity in property; if my equity sells it will outpace any property market anywhere in the world. If not, I'm not worried.

If you have never spoken to an expert on this I strongly suggest you do. If you have and they agree with you I stand corrrected. Your compnay could have the greatest concept in the world and the best coding but not many software products have a monopoly and many small software compnaies are destroyed not bought up.
You have obviously got a better picture of your situation and could be in the middle of a buyout. You are taking a non traditional route which is normally seen as a risky route. Your situation could give you an unusual chance but it is a wise man who learns from other peoples' mistakes.
Good luck to you as you start off I have already started out and would have appreciated the advise.

Andrew Duffy

joint mortgage

= joint ownership = no first time buyer status if either party has bought before.

Try these links out to see why you should jointly own your home with your spouse:

http://www.oasis.gov.ie/relationships/marriage/inheritance_marriage.html
http://www.oasis.gov.ie/death/legal_issues_following_a_death/deceaseds_estate.html

... I must admit to my mistake about inheritance tax, which does not apply to a surviving spouse, but does apply to children:

http://www.oasis.gov.ie/death/taxation_issues/capital_aquisit_tax.html

Andrew Duffy

You have obviously got a better picture of your situation

Funnily enough, I do. Isn't that odd?

MorningStar

Andrew Duffy wrote:

= joint ownership = no first time buyer status if either party has bought before.

Your links mean nothing , joint mortgage does not not mean joint ownership. If you are relying on the internet for your information and understanding there is a huge flaw the person reading the information. (not you personally)
Check the legal situation using somebody who understands the law and how it is applied. Both you and your wife would have to die your child/children would need to net over €315k (net) each before tax kicks in and tax is only at 20%. The situation can be addressed via trust funds if need be. If you are so extremely afraid of all your assets going to the state you can have a will drawn up to avoid certain issues. You have indicated you are unaware of this so if what I say sounds like arrogance I can't help it you need advise because you don't know how it works.
If you are happy you knew all this and more great but you don't appear to have all your facts right from what you have said. Buying a home is probably the single largest purchase of your life. You have been given advise on how maybe to minimise that purchase risk and expense. You have mentioned a plan that is generally extremely risky. They don't have to be mutually exclusive. It has never been an attack on you just friendly advise from somebody experienced in the area. I would hate to see anybody loose €50k they don't need to or completely lose a chance at the home they want. You seem to read this as an attack. You don't appear know how people who deal in property work and you will have to compete against them when you buy your home. Reading the paper and a few internet sites doesn't make you an expert on all possibilities. Watch some of those property programs like the "Property Ladder" and you see normal people think they know better than the experts and be wrong, always wanted to talk to them myself and now I feel I have

Andrew Duffy

joint mortgage does not not mean joint ownership

Yes it does. A bank will not lend to one person based upon the income of two. Also, in the case of a mortgage secured entirely upon a single property it would be extremely unusual if the drawers were not also the owners of the property. The first-time buyer's stamp duty exemption applies only when all interested parties in the transaction have had no previous interest in a property - if you think there's a way to avoid that then you should seek better advise.

If you are relying on the internet

Oasis is a government resource providing easily understood explanations of various laws affecting daily life. It's a lot easier to read than the various acts themselves; of course when it comes to writing a will or buying a propery, for example, a solicitor with relevant experience is required.

Both you and your wife would have to die your child/children would need to net over €315k (net) each before tax kicks in and tax is only at 20%

How hard is it for you to understand? If a surviving spouse is not the joint owner of any part of the deceased's estate, including the family home, the deceased's children or grandchildren can contest the will and be granted their legal share. If there is capital acquisitions tax to pay, the children will probably need to sell their interest to pay it; even if not they are likely to want to sell. I don't hold a rose-tinted view that children will not want to see one of their parents evisted from their home - money is too attractive.

If you are so extremely afraid of all your assets going to the state you can have a will drawn up to avoid certain issues.

Wills can be, and are, contested, usually on the basis of the writer not being of sound mind. While it's unlikely a judge will evict someone from their home, it is legally possible.

Watch some of those property programs like the "Property Ladder"

"Property Ladder" shows people who are taken in by the desire to restore and decorate a property for themselves and forget that they should be restoring and decorating it to make as much money as possible. Their exuberance is usually coupled with a complete inability to budget correctly. I don't see how it's relevant to me - I intend buying a house to live in when I can afford one I like and don't envisage selling in a short time. "Grand Designs" is probably more appropriate, although it lacks the buxom presenter.

MorningStar

Andrew Duffy wrote:

Yes it does. A bank will not lend to one person based upon the income of two. Also, in the case of a mortgage secured entirely upon a single property it would be extremely unusual if the drawers were not also the owners of the property...

I have doen this and so have my friends. A mortgage does not mean ownship for the purpose of tax. It may be unsual to your eyes but it is extremely common and any accountant worth their slt would suggest it. Don't belive me but have you spoken to an expert on this? (answer that one). THe second house is bought in the other persons name avail of the first time buyers stuff. And another big point is a new appartment can be exempt from stamp duty anyway! The second house bought is transfererd into both people's names 5 years later without any penalty.

Andrew Duffy wrote:

Oasis is a government resource providing easily understood explanations of various laws affecting daily life. It's a lot easier to read than the various acts themselves; of course when it comes to writing a will or buying a propery, for example, a solicitor with relevant experience is required.

Yes the government normally run around telling people when there are loop holes in the system! The explanations on oasis should not be used to base the biggest purcahse of your life.

Andrew Duffy wrote:

How hard is it for you to understand? If a surviving spouse is not the joint owner of any part of the deceased's estate, including the family home, the deceased's children or grandchildren can contest the will and be granted their legal share. If there is capital acquisitions tax to pay, the children will probably need to sell their interest to pay it; even if not they are likely to want to sell.

I understand what you are saying about how much money you hope to have later in your life. What you don't seem to get is I am talking about a shortish period of time (5 to a max of 10). Grandchildren wouldn't come into it. The simple maths issue is.
Without a property and you die
(cash owned)+ (assets)+(car)-(Loans)+ (?life insurance?)=inheritance
100+100+40-50+150=300
With property
(cash owned)+ (assets)+(car)-(Loans)+(home)+[(mortgage)-(mortgage protection)]+(life insurance)=inheritance
100+100+40-50+300+10+150=610

Even taking your belief that children can take the money they are only entitled to a third and your wife is up money. THe fact is the children need to be independent generaly that means 18 but can go up to 24 if in full time education. Do you have kids that are 18? Is you profile right at 26?

Andrew Duffy wrote:

Wills can be, and are, contested, usually on the basis of the writer not being of sound mind. While it's unlikely a judge will evict someone from their home, it is legally possible.

Maybe you know more about this than me but my understanding is legal issues tend to arise due to a lack of will more than anything else. A will made by a young person (under 40) is not going to be contested easily on mental grounds unless there is a medical history. (are you mad? ) Plus as you have a spouse and your children are under 18 she gets everything even without a will. Again it's a short term plan so it would be bad luck if this happened during the time and you would be covered.

Andrew Duffy wrote:

"Property Ladder" shows people who are taken in by the desire to restore and decorate a property for themselves and forget that they should be restoring and decorating it to make as much money as possible... "Grand Designs" is probably more appropriate, although it lacks the buxom presenter.

Property Ladder is about how to maximise profit you (should) want to get the most desirable property for the least amount of money. As your goal is to be in the property market you should be trying to keep in line with it at least. THe show was originally about home owners increasing the value of their homes it is more developer lead now. Lack of knowledge is the persons first fall not the budget.Grand design is nothing like you at all unless you plan to build an entire appartment block to a specific design you want.

You seem to be multiplying risks out of stable proven ground while diminishing risk on other no traditional matters. You might think I am being really arrogant about this but I am not out to get you. Your current plan has you with the expectation of spending a possible €50k it makes sense to risk €1k to get specific expert advise to your situation rather than use your pieced together information. Risk equalisation is a basic premise and for your expert adive I would guess they will save you some money.

Andrew Duffy

Thanks for the advise; I have several siblings who have made multiple property transactions and it is their suburban starter houses that have really turned me off, even more so than my own suburban upbringing. One of the siblings is also an accoutant, so I have spoken to an expert of sorts. As for inheritance, suffice it to say that any property purchase will be in both names - possible loopholes or no. I suspect you aren't married? There aren't many women who'd contribute to repayments on something they don't own. The other way around is different, of course.
As for "Property Ladder", I have no interest in working the property market, so maximising profit is not a concern. While "Grand Designs" has covered one or two restorations, it's always about people creating the home they intend to live in for the rest of their lives.
I'll leave you the last word if you like - you know my position.

Edit: a point about FTB relief - this is the best description I've seen about it:

To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer.

The basis for this treatment is that, in such circumstances, the house is held for the person providing the monies used in the purchase of the house by way of a resulting trust presumed in favour of that person. This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.

In light of the current zeal with with the Revenue Commissioner's office is persuing tax evaders, how long do you think it will be before couples who have availed of FTB relief twice will be fined?

MorningStar

No I'm married and I have done as I suggested as have have other people I know. The marriage being a big protector on doing such transactions. Are you only 26?
I am not trying to suggest moving into the suburbs. I always suggested you rent the house out and not live there. The suggestion was to make your money work for you rather than assume everything will go right where you work. Have you worked out what the FTB would cost you if you lost it? In two years they may easily change the tax breaks for homes over the general first time buyer price bracket. I have heard it mentioned but to have it implemented in 2 years is unlikely. Watch out for the campaign promises too. As what would be seen as the higher end of the market you will be more likely a target for tax. Not many people will have sympathy for a first time buyer who can afford a €650k house.
Family advise is fine but may not be as neutral as needed and it also has the additional family relationship ties.
If you plan on doing a renevation yourself start studying now. As you don't own your own property I am guessing you don't do or have done DIY a lot? Even with hired help and experts you need to know what is being done for you and understand it. You can get yourself a good deal but it's a lot easier to get a bad deal. I am guessing you will want a fine finish so quotes can be way off as general repairs throw up big problems and better finishes throw up more on older houses. I own a georgian house so I know this all too well. Spent €20k on a new roof last year with the one benifit of an extra Velux window!
Very costly properties to run,repair and buy. Good luck with your plan I hope it works out.

MorningStar

On the main topic

http://news.bbc.co.uk/1/hi/business/4075536.stm

So it appears all those people living at home are causing damage to the parents. I see why people would want to stay at home to save but if the master plan is to stay there it seems a bit unfair.