From €25,000 to €1.45m: another distressed auction…

AUCTIONS: There’s interest from around the world in next’s week’s big sale

DUBLIN’S Shelbourne Hotel is expected to be packed again next Thursday for the second auction of distressed properties to be offered to the highest bidders by auctioneers Allsop/Space.

Most of the 87 residential and commercial properties are being sold by financial institutions and receivers. They include 59 houses and apartments, mainly in Dublin, Cork and Waterford, but also in counties ranging from Laois to Donegal. Apartments already rented have been of particular interest to many people who have checked out the online sales catalogue prepared by the Allsop/Space partnership.

The site has already had more than 60,000 hits, a figure that is expected to grow to over 100,000 by next Thursday. Just over 14 per cent of the enquiries have come from Ireland but there has been almost an equal level of hits from interested parties in the UK, USA, France, Australia, Spain Canada and Germany.

The organisers report a high level of interest in the event following the first sale in April this year when all but one of the 82 lots of apartments and houses sold under the hammer. The lowest priced house on this occasion, a three-bedroom terraced property at Headfort Grove in Kells, Co Meath, has a reserve of €25,000.

However, the highlight of the auction is likely to be the sale of a large Victorian redbrick on Ailesbury Road in Ballsbridge, Dublin 4. The end-of-terrace house has a reserve of €1.45 million even though many properties on the road changed hands at over €10 million during the property boom. Number 35 is in need of considerable refurbishment.

Many of the Dublin houses going for sale are priced between €200,000 and €300,000. One example is a four-bed semi at 249 Upper Kilmacud Road, Stillorgan, with a reserve of €275,000.

Also on the southside there are two partially-ompleted semi-detached houses on Killiney Hill Road with a guide of €200,000 for both. One of them is a three-bed, the other a two-bed.

In Dublin 15, the agents have set a guide price of €97,000 for a modern three-storey, four-bedroom house at 13 The Boulevard, Tyrrellstown. Another three-bed home with a marginally higher guide of €102,500 is located at 1 Stepaside Villas, Stepaside.

In Dublin 4, a four-bedroom Georgian house standing two-storeys over basement at 61 Haddington Road, comes with a guide price of €395,000.

In the city centre there is likely to be considerable interest in a tiny terraced house at 25a John Dillon Street, Christchurch, where the reserve is a mere €55,000. It has a floor area of only 27sq m (290sq ft). Anyone looking for a cheap apartment may well take a look at a two-bed unit in Castleforbes Square, off Mayor Street,in the docklands where the guide is €142,000.

Buyers in the market for income-producing residential properties in Dublin are likely to consider a two-bed penthouse in Smithfield Market. The current rent is €14,400, and the selling guide is only €175,000. At Linden Square in Blackrock, a three-bed apartment producing a rent of €15,600 could be knocked down at €222,000. Couples looking for a weekend or retirement home outside of the city might consider a four-bedroom Victorian country house on 2.5 acres at Camolin, Co Wexford. It has a guide of only €250,000.

Investors seeking commercial properties will have a choice of 18, including a string of pharmacies, a betting shop and three pubs. One of the bars, in Portumna, Co Galway, may be picked up for as little as €50,000 (less than what bar licenses were selling for over the past 20 years) and another one in Waterford for €185,000. The best located of the three is The Pint bar at Eden Quay in Dublin city centre which is rented at €78,000 per annum. It has a guide price of €485,000.

Report by JACK FAGAN – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Is your money safe in Euros if the Greeks default?

A big fat Greek default is on the cards and the Lehman’s style spillover might have a dire domino effect on Ireland and the euro.

People are worried about Argentina-style hyperinflation making their money worthless or a government smash and grab on their precious savings if everything falls apart. What to do to protect money is the hot topic of the hour.

“This is being discussed at the board tables of business, charities, you name it,” says Niamh Cahill of Irishdeposits.ie. “The deposit rate of interest has been very much relegated as the most important concern, what’s important now is safety.”

So, if the worst came to the worst, what might happen?

“It could be one of two things,” says Cahill. “The Government could say ‘as of tomorrow we’re going to devalue all deposits and loans on the balance sheets of banks in Ireland’. Or else they could say ‘we’re going to devalue all euros originating from Ireland’. That would be a logistical nightmare, but it’s possible.

“More recently, with the sovereign debt issue in Europe escalating again thanks to Greece, people ask: ‘Well I have diversified and my euros are in foreign banks in Ireland, but are they still safe if anything happens to the euro?’ I think in general they feel that they probably wouldn’t be.”

There are two risk concerns investment clients are asking about, according to financial adviser Vincent Digby of Impartial. “First there is the credit risk — what happens if Ireland defaults or restructures debt. What would the impact be on personal deposits or company deposits or money? Could the bank put a levy on it, or could the bank impose controls where you couldn’t access your funds?

“Second is the currency risk — what happens in the unlikely event of us being kicked out of the euro or choosing to leave the euro?”

How any exit would play out is the sixty-four million dollar (or rather multi-billion euro) question.

“The expectation,” says Brian Culliton of Trusted Advisor Group, “is that the new Irish currency would depreciate significantly against the euro if it continued to exist, or depreciate against the harder euro economies’ currencies such as Germany’s in the event of a total break-up. Ireland exiting while the euro continued to exist is thought to be extremely unlikely. It is more likely that there would be a complete break-up,” he says.

“The theory is that the Irish Government would impose exchange controls to prevent a rush of assets out of the country. This is speculation and it’s not clear that this would actually happen.

“But if that were the case, the follow-through would be: Irish deposits in Irish banks would most likely be re-denominated in punts, with no translational benefits if the new currency depreciates. It’s not at all clear that this would happen, but it would follow on from an imposition of exchange controls.

“By the same logic, holders of euro deposits in non-Irish banks based in Ireland are unlikely to benefit as the accounts would be redenominated in punts, with no translational benefits.”

So if the worst of all worsts occurs, your savings here are exposed. However, moving your money offshore to a foreign currency account comes with a whole shooting match of other risks.

Foreign A/C THE pros

“If you have debts in another currency, such as a sterling mortgage for example,” says Digby, “then a devaluation of the euro and its changing into say the punt would mean your debt would go up by the extent of the devaluation. So in that case you do really have to look at doing something to hedge that risk.”

Equally if you’re receiving or making rental payments outside the eurozone a local currency account may makes sense.

“Also for someone who is either intending to live abroad or who spends a significant portion of the year out of the country, in that case their Irish ‘punts’ abroad would be worth less and this will have a real impact on their purchasing power,” Digby says.

If you have business interests outside the eurozone it may also have solid advantages.

Foreign A/C THE CONs

The biggest problem is that you — literally — become a currency speculator.

“You have to be clearly aware that the currency could move against you by 15 or 20 per cent,” says Digby. “If someone’s living in Ireland and spending euros, they’re going to have to convert back at some stage. People need to know that the principal amount could be a lot less when they do.”

Niamh Cahill agrees. “Over US trillion is traded every day in the world and in excess of 90 per cent of that is speculation linked to trade. If you’re trying to make an informed bet around whether a currency will get stronger or weaker you haven’t a hope in hell.”

The euro breaking up or our being kicked out of the eurozone is “still a long shot” says Digby. “Even if that comes to pass, if you’re based in Ireland and all your assets and your liabilities are based in Ireland, you’ll be broadly insulated from a devaluation.

“If it were to happen you can only imagine that import prices would go up dramatically and therefore inflation would be higher and yes, over time, your spending power would be eroded, but it’s more of a longer term drift impact than an immediate problem.”

A foreign account means you’ll be missing out on higher interest yields at home. “The interest rates would be nowhere near as attractive compared to the deposit rates in the Irish banks,” says Digby.

If you open a bank account outside the EU, you also end up paying at the marginal rate of tax (nearly twice the rate of DIRT) and there are likely to be embedded costs and charges attached as well.

Digby feels overall money here is well protected. “The €100,000 deposit guarantee scheme was issued under EU directives, and I would be very comfortable to say that would be paid in full if it was ever needed. As it’s €100,000 per person, per institution, if you’ve more than €100,000 you can simply diversify across the credit institutions.”

Products

Most Ireland-based financial institutions offer foreign currency accounts.

Friends First’s Insight Currency Fund is looked after by fund managers Alder Capital. The HSBC has an offshore savings account, as does Investec. The mainstream banks (Bank of Ireland, AIB, National Irish Bank, Permanent TSB and Ulster Bank) all have non-euro accounts.

Most are bog-standard deposit accounts in the foreign currency of your choice. “At any rate, the same principles apply in a structured product, in terms of currency risk” says Niamh Cahill.

“The statistics around speculation and foreign exchange are still the same, whether you’re in a structured product or not.

“You need to drill right down and understand what you’re getting: ask is there a guarantee, and if it is a tracker-type product.”

Alternatives

“There are a wide range of other options to hedge the credit risk,” says Vincent Digby. “We help people open deposit accounts in Deutsche Bank in Germany, there are also German bonds, and other money assets.

The interest rates on a German deposit account will not pay you anything like the yield you can expect at home. “It’s for security, it’s where people say: ‘I want to know in 12 months that my money is safe where it is.’ If Ireland leaves the euro and you have German bonds or a German bank deposit account, they’ll either stay in euros or, if the eurozone breaks up entirely, they’ll go back into Deutschmarks — and under most people’s thinking should appreciate considerably.

“That might be a more appropriate way of managing the currency risk for people who are looking for capital preservation.

Cahill advises spreading risk. “Diversify between a number of banks whether it’s in Ireland or outside. For a very big portfolio, say €10m, that could include putting some into foreign currency, but you don’t want someone taking their life savings and just lobbing it into sterling.

“There is no perfect hedge,” says Culliton, “but, the following are worth consideration.

“Buy German, Swedish, Danish, Swiss or Norwegian bonds (that is, strong non-Eeuro, or strong euro government bonds). The downside to this is that you will be lending your money to these governments for not much more than 3 per cent a year, but this would seem like a pretty attractive deal in the event of a eurozone break-up.

“The simplest, though not the most effective hedge in the event of penalties, is investing in unit-linked funds which hold non-Irish assets.”

Buying precious metals like gold is another, though that comes with its own risks, given the talk of a gold/silver bubble.

Overall, keep a sense of proportion, advises Culliton. “No matter how persuasive the narrative backing up a particular investment thesis, investors should not base investment strategy around narrow predictions, that may have a 10 or 20 per cent chance of occurring. Don’t build your investment strategy around one possible outcome. Consider all possibilities.”

Article by Roisin Burke – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Ireland left to count the true cost of euro dream…

An exclusionary venture that values banks ahead of ordinary people – this is not what we signed up for.

JUST THREE years ago we were being bamboozled into voting for the Lisbon Treaty, the then latest stage in the creation of a wondrous European project that would consolidate peace on the continent and promote yet further wealth creation.

It would also give Europe a voice in world affairs corresponding to its financial clout, give greater administrative cohesion to the decision-making processes in the union and incorporate the industries of war (defence industries) into the corporate structure of the union.

The Lisbon Treaty had arisen from the refusal of the French and Dutch electorates to approve a draft European constitution. The new treaty was devised to give effect to the purpose of the draft constitution, while avoiding the tiresome ordeal of obtaining electoral approval anywhere, except Ireland. The Irish electorate, at first, ungallantly baulked at approving this new enhancement of the euro project, as the French and Dutch had done, but then in trepidation, reversed itself in the second vote.

Prior to the temporary Irish blip in 2008, the EU appeared to many to be a momentous achievement: a political and economic union, involving 27 nations, across a Continent which had been ravaged by wars and strife for millennia. A union inspired by the zeitgeist of our age: free markets, deregulation, privatisations, “reforms” of labour markets, the neutralisation of trade unions that for so long had “held back” the forces of progress. Along with the construction of a foreign and security policy that was intended to give “muscle” to that union.

Opposition to that project was perceived as suspect: borne of xenophobia or ultra-left infantilism. It could not be because of concern with the reversal of democracy that the project entailed by marginalising electorates from any direct say in its design and ethos. Nor of any apprehension about the injection of crude neo-liberalism into the veins of the union, nor general trepidation over the fanaticism of zealots hell-bent on this grand endeavour, whatever the consequences to the people they so noisily purported to care about.

It is different now.

The device at the core of the European project, the euro itself, has proved calamitous. The euro involved the creation of a European Central Bank which, at German insistence, was given immunity from any form of democratic control, however indirect. It was also given control over one of the key regulators of economies: the supply of money and of interest rates, with a brief to control inflation.

The ECB managed interest rate policy to the benefit primarily of Germany and to the detriment primarily of Ireland. The ECB made it clear it would not countenance a member state allowing a bank to collapse, which was what partially inspired the bank guarantee here, although not its scope.

The ECB has insisted on member states absorbing the losses of its banks, even though the losses were in part the responsibility of agents in other member states. And along with the EU Commission and the IMF, it has imposed programmes of austerity on Greece, Portugal and Ireland, ravaging still further the lives of the poorest people of those countries.

The new institutional structure of the EU, which was one of the key points of the Lisbon Treaty, has failed to deal with Europe’s debt crisis, a crisis caused in large part by the EU itself. The new presidency of the European Council has been a joke, a joke made all the more bizarre by the recent row between Herman Van Rompuy, the president of the European Council and José Manuel Barroso, the president of the European Commission, over the sharing of executive jets.

The creation of a new position of high representative for foreign affairs and security policy to co-ordinate foreign and security policy has been another failure – the EU has been entirely wrong-footed by the revolts on its doorstep against squalid Arab dictatorships with whom it played footsie for decades.

Those revolts have undermined another central plank of the union, the free movement of labour and have added further force to a menacing plank, that of fortress Europe. Italian and French responses to the flow of immigrants from North Africa in the midst of the recent uprising there have included demands for border controls and a tightening of immigration policies. In several countries there has been a rise of extreme-right parties – in Sweden, Finland, Denmark, France, the Netherlands and the UK – all of them xenophobic.

For Ireland, the crisis has not been just transformative of the society brought about by the Celtic Tiger, it has also been transformative of our relations with the EU. Initially, we were the supplicants, pleading for favours via the Common Agriculture Policy, structural funds, regional policy. Then the model students, obedient and so appreciative.

Now, one of the problem children, truculent and resentful. And perhaps a little sceptical of a venture that is inherently contemptuous of “ordinary” citizens of the union, exclusionary and instilled with an ethos we should never have signed up to.

Article by VINCENT BROWNE – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Some Dublin rents among highest in EU despite decline…

The relatively high rents for Dublin prime office and retail accommodation are highlighted by the latest Knight Frank summer survey of European rents and yields.

Dublin’s prime shopping centre rents, at €3,750 per sqm per year, are the second-most expensive of the 25 cities surveyed and surpassed only by London’s West End, where rents average €5,556 per sqm.

Parisian rents, at €2,000 per sqm, are little over half those in Dublin. Dublin shopping centre rents are the only ones to show declines.

Keiron Diamond, director at Knight Frank Ireland, points out that many distressed tenants have secured rent reductions or other forms of deals with landlords, some of whom, however, are reluctant to publicly acknowledge rent cuts.

The values of Dublin shopping centres have declined and this is also reflected in the yields, which at 7.75pc, shows the values are the fourth cheapest in Europe.

Some might argue that the high yields reflect the withdrawal of investors from the Irish market but that yields are therefore difficult to verify due to the lack of transactions.

Competitive

Others can point to a similar CBRE survey last year, before the upward-only rent review became a government promise, which also showed a very low ranking in the European yields league for prime Dublin retail.

In contrast, Knight Frank’s European Market Indicators report shows Dublin retail warehousing rents, at €100 per sqm, are among the cheapest in Europe and ranked 20th in the league, while prime yields for these properties at 8.25pc are the second-highest in Europe.

Dublin’s office and logistical rents are more competitive than shops and this competitiveness should help attract job-creating inward investment.

Dublin prime office rents, at €376 per sqm, are the ninth-most expensive of the 25 cities surveyed, just ahead of Munich, Amsterdam and Edinburgh.

Prices for those buying Dublin offices are among the cheapest, with a yield of 7.25pc ranked the 20th in the league.

In the industrial sector, Dublin rents, at €75 per sqm, are close to mid-table at 11th-most expensive.

The survey shows that prime rents across all of Dublin’s four key property sectors are declining, while yields across all sectors are increasing.

In the three months since the previous report, rental growth has been observed in a number of key European markets.

However, there has been little movement in prime yields.

Report by Donal Buckley Commercial Property Editor – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Second-home owners have two days to pay €200 council charge or face fine…

OWNERS of more than 300,000 holiday homes and residential investment properties have until Thursday to cough up €200 to their local authority or face fines.

If the levy is not paid by June 30, owners risk penalties of €20 a month.

The charge has raised almost €160m for local authorities nationwide since it was introduced in 2009. Last year, €66m was collected for 318,889 properties, down slightly on the 2009 figure of €68.2m on more than 322,000 properties.

Those who are unable to pay the charge should contact their local authority to see if they can come to an arrangement to pay by instalments, said tax expert Cathal Maxwell of paylesstax.ie.

Mr Maxwell added that there was a major squeeze being put on people with investment properties as lenders tried to force them off interest-only mortgage deals, invoking clauses in contracts to review the mortgage. This can mean monthly repayments tripling if investors have to pay interest and the capital.

And next year’s new household charges from the Department of the Environment will also apply to second homes and investment properties and could mean total charges of up to €500 a year, Mr Maxwell said.

The €200 charge on second homes applies to all properties in Ireland other than a person’s residence.

Owners became liable for this year’s payment, known as the non-principal private residence (NPPR) charge, on March 31. However, they have until June 30 to pay and escape a surcharge. Anyone who fails to pay faces court proceedings, while the onus is on the owners to establish whether they are liable for the tax.

Report by Charlie Weston – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Property auction disaster shows prices still falling…

IRELAND’S first discounted property auction proved a disaster yesterday, with just two of the 63 properties on offer being sold.

Only two separate plots of land sold for a total of €95,000 at the auction in a Cork hotel, despite the fact that over €10m worth of houses and properties were on offer.

Those same properties were worth almost €30m just five years ago. But yesterday potential bidders felt the prices were still too high.

Analysts grimly warned last night that it was proof the Irish market had still to reach rock bottom — with potential buyers convinced that prices will fall back further.

Yesterday’s auction was the first to involve discounted Irish properties. These are cut-price holdings being sold by private owners or developers eager to dispose of assets.

Ireland’s first distressed-property auction took place in Dublin last April when €14.8m worth of deals were struck. Distressed property involves land or buildings being sold off at the direction of the National Asset Management Agency (NAMA) or court-appointed receivers.

A total of 65 discounted properties were listed by GMAC Auctioneers yesterday. One was sold before the auction and another was withdrawn from offer before the bidding began.

But 61 of the 63 properties offered had to be withdrawn by auctioneer Tom McCarthy after failing to reach their reserve price.

Almost 30 did not attract a single bid.

Post-auction negotiations were ongoing in relation to three properties last night.

In one case yesterday, a 1.75-acre site in Borris-in-Ossory in Co Laois attracted a single bid of just €4,000.

The two lots that were sold both involved plots in rural areas.

In Dun Chaoin, Dingle, Co Kerry, a one-acre field — with startling views of the Blasket Islands — sold for €26,000, €1,000 above the reserve price.

The land does not have planning permission but the purchaser — a 35-year old from north Cork who did not want to be identified — said he was pleased with the deal.

“I wouldn’t say it was a bargain — I thought I might get it for less than €20,000.

“But I am buying it as a long-term investment — maybe for 10 to 15 years’ time. This was what I came here for today,” he said.

A local auctioneer said the price was a fair one for agricultural land in the area, which is close to the site where ‘Ryan’s Daughter’ was filmed in 1969.

“The crucial thing about the site is that it doesn’t have planning permission. If it had it would be a totally different thing,” said Anthony Mac Gearailt of Mac Gearailt and Associates Auctioneers in Dingle.

Mr Mac Gearailt, noting that planning permission was not easy to get, said an acre site without permission would easily have achieved €90,000 to €100,000 in Dun Chaoin at the height of the boom.

Yesterday locals in nearby Kruger’s pub in Dun Chaoin said the buyer had got “a bargain”.

The only other property sold was a 10-acre field in Tullig, Leap, Co Cork, which fetched €69,000 — €1,000 below the reserve — after the vendor agreed to allow it be sold.

The land, which is zoned for horticultural use, fetched less than the average value for agricultural property.

One prospective bidder said yesterday’s proceedings were “like watching a car crash in slow motion”.

Several bidders had travelled from Dublin, Laois, Limerick and Galway. Around 150 people attended the event, which began at noon at the Radisson Hotel in Little Island –but by 2pm there were just over 60 left.

Tom Considine said he returned home empty-handed because he felt that values would decline still further.

“I think there is an expectation that prices still have further to drop,” he said.

Francis Herlihy was interested in a property in Lusk, Co Dublin — but opted not to invest.

“I believe the reserve prices are just too high — it is as simple as that,” he said.

GMAC auctioneer Tom McCarthy admitted he was “very disappointed” with the outcome and said he believed the reluctance of prospective buyers was due to liquidity problems in the market.

“We had expected better. There is an appetite amongst vendors for this type of sale. But we will have to go back and review what happened today.

“It will give you an indication of the state of the market — it appears to be only people with cash that are in the market,” he said.

First-time buyers either don’t have the cash savings to make purchases — or find it exceptionally difficult to secure the required finance.

“I think liquidity is a huge issue — there were properties there that were for sale for less than their construction cost,” he said.

Report by Ralph Riegel – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Rock-bottom lots top the agenda in Cork…

A Cork agent is hoping to repeat the success of the Allsop/Space auction, putting 65 properties to auction tomorrow in Cork

A GLUT of houses selling at half their original price in Urlingford, a convent in Tipperary and a handful of island properties off the Cork and Kerry coast are hotly tipped to draw bidders to a auction of discounted property in Cork tomorrow.

The 65 properties going under the hammer at the Radisson Little Island at noon have attracted 40,000 hits to the auction website (macestateagents.ie) over the past three weeks. The auction is being run by Noel Forde and Tom McCarthy of Mac Estates and GMAC Properties of Bandon and Castletownbere.

Their initial aim had been to auction Cork properties, but since they announced plans for the auction they have attracted properties from Kildare, Kilkenny, Tipperary, Waterford, Kerry and Clare.

Inundated with offers from owners eager to offload property, auctioneer Noel Forde capped the listings to accommodate a second auction in September.

Inspired by huge interest in the country’s first discounted property auction held by Allsop and Space in Dublin in April, Mr Forde said tomorrow’s sale illustrates that the Irish love affair with property is far from over. “I think this is how property will sell in the future, the public auction will replace the private sale. It’s a better system for everyone, contracts close faster, the vendor gets paid quicker and the whole process is transparent for the purchaser,” he said.

The Dublin auction saw €14.8 million worth of deals struck in just six hours. Forde expects tomorrow’s sale to generate in the region of €10 million. However, his auction differs from the Allsop/Space model in that all the properties are being put up by individual owners rather than by banks and receivers. Allsop maintains that the only way such sales can work is if there is a large proportion of distressed property being off-loaded by financial institutions at rock bottom prices.

The listings for the Cork auction include two detached homes on Valentia Island in Co Kerry which, with 1,000 hits each, have generated plenty of interest. Lot number 17 is a three-bedroom architect-designed dormer bungalow with unobstructed sea views over to the Blasket Islands, and has a maximum reserve of €254,000.

A second four-bedroom property reserved at €230,000 in the village of Knightstown on the island is proving popular among prospective buyers and should sell for well in excess of the reserve, Mr Forde said.

“These are attracting a huge amount of attention from domestic buyers and from abroad. Like the two properties on Bere Island, they are well priced and these are the kind of properties I would expect to sell for well over the reserve,” he added.

Three renovated cottages in Kilkee and Kilrush in Co Clare have captured interest, going under the hammer with a maximum reserve of €80,000 each, down from €200,000 in 2006.

A detached cottage in Lusk, Co Dublin, five minutes from the train station and close to the airport, is reserved at €155,000 and comes with a planning option to demolish the house for a newbuild.

A nine-bedroom former Convent of Mercy on 2.31 acres of zoned land in Borris-in-Ossory, Co Laois, is guiding at €200,000 and has become a prime location thanks to planning approval for a €460 million Las Vegas-style leisure facility in Two-Mile-Borris.

A developer keen to offload homes in what Forde describes as fully-finished, mature estates at Togher Way and Togher Crescent in Urlingford, Co Kilkenny, has added 14 homes to the bill.

The reserves for these homes– a mix including a single-storey two-bed up to a detached five-bed –range from €75,000 to €185.000. The original prices averaged around €345,000. “This is not a ghost estate, the houses are incredible homes, ready to walk into,” Forde said.

The mass auction trend has sparked a new venture by a Dublin firm that aims to bring bidders together to lower survey costs. Rival bidders can pay anything up to €500 for a pre-auction survey of a property. Hammer.ie is offering a shared cost with refunded payments the more a survey is downloaded.

Report by LOUISE ROSENGRAVE – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Finding new ways to solve the personal debt crisis

Many homeowners have trouble making monthly repayments but there are ways to ease the burden…

WITH about 86,000 homeowners now struggling to repay their mortgage, and four times more debtors seeking free legal advice than did in 2007, Ireland is in the midst of a personal debt crisis.

We need solutions, and we need them quickly. What could they be?

Write off mortgages

A homeowner who is battling to repay a massive mortgage should be allowed to write off some of their loan, according to Michael Dowling, spokesman for the Independent Mortgage Advisers’ Federation. This should make their mortgage more affordable and prevent them from either having to sell their home at a lower price than they paid for it — or having it repossessed.

“We need long-term solutions,” said Dowling. “No one should be asked to leave their family home. But to make the debt-forgiveness solution palatable to other homeowners who are managing to repay their mortgage, a homeowner who has some of their debt written off should lose part of the ownership of their home. Their shareholding in the property might be reduced to 80 or 90 per cent, for example. Otherwise, people who can afford to repay their mortgage might say ‘Well I may as well stop paying my mortgage and get my debt written off’.”

After a bank writes off some of a householder’s mortgage, the homeowner should be given an incentive to meet the repayments on their new mortgage. “The homeowner could win back some of the property portion they lost if they continue to meet their mortgage repayments as required over the next five or 10 years,” said Dowling.

Cap mortgage repayments

With 441,000 people on the dole, many of those who took on mortgages during the boom years have either lost their jobs, or have a spouse or partner who is out of work.

Dowling believes that mortgage repayments should be limited to a portion of a borrower’s current income. “If someone has lost their job — or has taken out a mortgage with someone who is out of work — the repayments should be capped to a percentage of their income,” he says. “This will give them time to work themselves out of the difficulties they’re in. Repayments could be capped by extending the term of the mortgage — or allowing the borrower to repay only the interest on the loan.”

Improve state support for struggling homeowners

If you are struggling to repay your mortgage, you may qualify for the mortgage interest supplement — a state scheme designed to ensure that your income after paying the interest on your mortgage does not fall below a minimum level.

However, many of those struggling with mortgages are not able to claim the supplement because the income threshold for the scheme is too high, according to Paul Joyce, a senior policy researcher with the Free Legal Advice Centres who was also on the debt review group appointed by the then government last year.

“The mortgage interest supplement is still very restrictive,” said Joyce. “The income threshold could be reduced.”

Reform THE bankruptcy lawS

Most debtors are dragged through the courts by those seeking to get back the money they’re owed.

Joyce believes that an out-of-court solution must be introduced for those struggling with debt. “Most debtors can’t afford the huge cost of going to court,” said Joyce. “A lot of these people don’t engage with the courts as they are seriously intimidated by the legal system, don’t have access to representation and feel the odds are stacked against them. But bankruptcy should still apply to high-end debt cases where assets have to be valued and so on.”

One such out-of-court solution could be a debt-settlement arrangement, similar to a system in Britain known as an Individual Voluntary Arrangement (See below).

“The debt-settlement arrangement should be enacted as soon as possible,” said Jim Stafford, managing partner of Dublin-based liquidator Friel Stafford. “This arrangement would be for debtors who ‘can pay’ at least some of their debt.

“Under the arrangement, the debtor and creditors would make a legally binding commitment in which the debtor would repay an agreed amount of personal debt to creditors over a period of up to five years. At the end of this period, the debt would be deemed to be repaid in full and the debtor would be able to make a ‘fresh start’ without having any damage to their personal credit rating.”

Stafford said that debt-settlement arrangements would only be available to people who acted in good faith and were honest about the assets they own.

“If they do not, the arrangement would automatically end and the debtor could be prosecuted,” said Stafford.

But some debtors need a more radical solution. Debt-relief orders, similar to those already in Britain, must be considered for people who have no income and no assets, according to Joyce.

“These orders may be needed for people in debt whose only source of income is social welfare,” said Joyce.

With debt-relief orders, creditors are not able to chase a debtor for unpaid debts. If the debtor’s financial circumstances have not improved a year after the order is issued, the debt is usually written off.

Article by Louise McBride – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Struggling families flock to care centre for meals…

ENTIRE families are going to homeless centres for their dinner every evening.

Before the recession, the Capuchin Day Centre for the homeless in Dublin would rarely have seen children coming through its doors — but now up to 10 families a day are coming coming in to get fed.

Many of the families are struggling to pay large mortgages taken out during the boom.

They are worried about losing their homes and literally do not have enough money to put bread on the table, says Brother Kevin Crowley, who runs the shelter.

He says that there are four times the amount of people arriving today compared with a few years ago.

Some of those now seeking help are professionals such as engineers and architects who would have been earning a very good wage during the boom years.

“It’s not just homeless people who come to us, its anyone who is in need. We are getting lots of families with children coming in,” he says. “Many of them have lost their jobs, and are on the verge of losing their homes. All that has increased in the past few years.”

Brother Crowley points out that before the recession hit, the centre would usually have about 100 people for dinner, but now more than 450 come to eat there each day.

Despair

The number of people collecting food parcels every Wednesday has increased from 400 to more than 1,000 in the same period.

“There are professional people — some architects and engineers — coming in who can’t pay their mortgages and are in despair.

“It’s really frightening for people,” Brother Crowley adds.

The Capuchin brother yesterday launched a charity cycle from Dublin to Mayo in aid of the well-known centre.

A group of 24 gardai and prison officers who completed the trip are due to arrive on their bikes in Belmullet, Co Mayo, this afternoon.

They broke the marathon 310km cycle with an overnight stop in Carrick-on-Shannon, Co Leitrim.

The Capuchin Day Centre’s running costs are €1.3m, of which €450,000 comes from the Government, with the remainder coming from fundraising events such as the cycle and charitable donations from the public.

For more details on the cycle challenge and how to donate to the centre see www.homeless.ie.

Report by Fergal Gallagher – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com