62 replies on “Interest-only mortgages in Ireland”
I have only scanned the paper but would certainly question the one point made in the conclusion.
Referring to original interest-only loans the report concludes;
“A second concern is the age-profile of these borrowers: a significant number will be at retirement age when the loans are due to switch to P&I. Thus, at a time when most people are switching to a reduced income, repayments on their debt will increase significantly.
One mitigating factor is that there is scope for house price appreciation before this happens. The average age of these borrowers is 52; taking a 13-year horizon, and an average LTV of 150 per cent, house prices would need to increase at an average annual rate of 3.2 per cent. For comparison, the average annual nominal house price increase from 1950 to 2013 was 7.6 per cent.”
House price increases should not be viewed as a potential mitigating factor in any problems that we have. On what basis is their “scope” for house price increase? Who is to benefit from such scope and who loses.
The paper profiles excellent data and analysis. It would be a pity if its value were diminished by suggesting a potential mitigating factor that would cause significant damage to the economy, as well as once again forcing up the price of houses at the expense of the younger generation.
It is very doubtful if wages will rise by the 3.2% per annum referred to over the next 13 years. So is it being suggested that the loan problems of banks and BTL borrowers will be relieved by extracting a greater % of workers income to pay for increased house prices!!
We need to take a broader perspective on this issue.
Why are banks being so lenient on BTL interest only landlords in arrears? It is mentioned most of this type of loans were Dublin based between 2005-2008 on trackers.
There are virtually no empty lettings in Dublin, rental income is on the rise and interest rates are at historic lows which means the income from rent exceeds the payments as they fall due.
Why are banks not demanding (through the courts) rents be paid directly to them if the landlord refuses to keep up with payments?
@ Joseph Ryan – Oh the innocence!
Sadly the government’s and CB’s preference (and hope) is that this nasty arrears issue can be disappeared via price rises. Who pays? Why, younger people of course. They can pay a greater % of their income for properties, so that older generations who made a complete balls of the economy can escape the consequences of their gluttony. The Irish Property machine runs on young flesh, and it hasn’t gone away, you know. The banks will write the mortgages for the overpriced property, and away we go again. As a plan it is not much to look at, but it is their plan.
We are entering a very interesting time in Ireland. Despite the talk of recovery (genuine or not) we have attempted to have a massive property crash free of repossessions. It would be a hell of a trick to pull off. Look at these stats from the CB for BTLs taken into possession:
Piddling figures, and it shows the banks have zero interest in taking possession of BTLs. At this rate, it would take nigh on 45 YEARS for the banks to take possession of ONLY the > 720 days arrears BTL segment (the fastest growing arrears category as it happens)
Whatever the reason, we have banks who cannot or will not act like banks. They say they are appointing rent receivers, and I’m sure they are, but at what level? How many BTL landlords have properties over 3/4/5 years in arrears at this stage? We don’t know because the CB won’t produce the figures. Why do the CB produce figures for “proceedings issued” in respect of PDHs but NOT for BTLs? Is it embarrassment that it would prove that banks are not making any serious effort to manage their BTL book? What is the true scale of the problem here? Could it sink a bank?
Six years post-bust we still have negligible levels of repossessions, we have 20% P.A. price rises in Dublin. We have 66,000 BTL mortgages in arrears in Ireland, along with 212,000 PDH mortgages in arrears.
There are only 26,000 properties for sale in Ireland. As my son might say: “FFS”.
Who is steering this ship?
In 2006 I called the Central Bank to get data on interest-only mortgages. They had none despite the common knowledge that these deals were the fuel of the investment property business.
In 2005 BusinessWeek magazine had a detailed feature on the surge in popularity of such mortgages in several big US cities.
Some 75% of Bank of Ireland investment customers had availed of the bank’s ten-year interest-only mortgage, according to Olive Moran, Bank of Ireland mortgages manager in 2006.
“It’s very attractive as it enables investors to defer capital repayments for the first ten years,” Moran told the Sunday Business Post. “They can then spread the capital repayments over the remaining period of up to 15 years. Alternatively, if they have access to a lump sum from a personal pension policy, they can use these funds to repay the outstanding capital.”
“In 2006 I called the Central Bank to get data on interest-only mortgages. They had none despite the common knowledge that these deals were the fuel of the investment property business.”
Had none or had none to give you?
Sam Maguire
No data
@ eamonn moran
The BTL situation is curious.
According to the Central Bank research 70% of BTL mortgages that have been in arrears for 90 days or over, are funded by tracker mortgages.
ECB interest rates fell from 4.25% in July 2008 to 0.15% in June 2013.
At end Q1 2014, a total of 39,361 (27% of total) BTL accounts were in arrears.
The CB said last month: the outstanding balance on BTL mortgage accounts in arrears of more than 90 days was €8.8 billion at end-March, equivalent to 29.9 per cent of the total outstanding balance on all BTL mortgage accounts.
The number of BTL accounts that were in arrears of more than 180 days was 27,161 at end-March 2014, reflecting a quarter-on-quarter increase of 3.1 per cent. However, the most pronounced increase was seen among accounts in arrears over 720 days. These now total 13,282 accounts or 9.2 per cent of the total stock of BTL mortgage accounts and 71 per cent of outstanding arrears. The outstanding balance on these accounts was €4.2 billion at end-March, equivalent to 14.4 per cent of the total outstanding balance on all BTL mortgage accounts.
More than 2 years in arrears and collecting rent every month?
@Poor Uncle Skeleton
Yes, I know that that taking a national view of the BTL mortgages is both innocent and naive. But if one wanted to ‘resolve’ the situation in the national interest, the solution is simple.
All BTLs in arrears of 180 days be compulsory sold by the banks to the State for current market value less say 10%, with all tenants remaining in situ (no vacant possession).
The banks would have to crystallise losses. So be it.
The State would probably get an overall rental yield of 4%-5% on rents. More in Dublin, while the cost of State funds is now less than 3%.
The sizable minority of BTL landlords gaming the system, through relatives living rent free or other means, would be found out and the rents would revert to the State. A considerable number of additional social housing units would become available following the shake-out of those gaming the system. The State would then be paying itself rather than paying private landlords (who in some cases at least pocket the money, so that neither bank nor State gets the benefit of the rent).
There would of course be the residual debt, (an existing loss now out in the open), and that would cause some difficulties to a minority landlord group. That is to be regretted, but it is a reality that needs to be faced. If the banks have to sing for the residual debt, so be it.
The above approach would have the benefit of the national interest being subverted to protect both the banks and a clearly politically influential minority.
That last sentence should read. Insert ‘no longer’
The above approach would have the benefit of the national interest no longer being subverted to protect both the banks and a clearly politically influential minority.
@ Michael
How many BTLs are holiday homes ? They went for stupid prices pre Lehman when the weather was sunny and never generated much rent. Wexford is full of them.
Table 5 (Age Profile at IO Period: BTL) is quite interesting. A bit difficult to interpret (I am not sure that I understand the full range of possible payment structures for these loans once they are outside the IO period). These BTLs are failed private pension investment assets – a fairly common occurrence with pension assets. But I suspect in an Irish context someone else will subsidize the lost value.
@PUS
“overpriced property”
Sorry to intrude with facts, but it is time to dispel the myth that house prices in Ireland are currently expensive.
As a result of the 2007-2013 fall, they are, in fact, now dirt cheap.
Lets look at the data:
Demographia (reported in Michael Hennigan’s FinFacts) gives the ratio of median house price to average household income in mostly English-speaking countries. These are the figures for Q3 2013:
Ireland 2.8
U. States 3.4
Canada 3.9
U. Kingdom 4.9
Australia 5.5
New Zealand 5.5
So, Ireland by far the most affordable.
Demographia also gives the same figures for cities. These are the figures for Q3 2013:
So, affordability in provincial Irish cities is by far the best in these islands. In fact, housing in Waterford, Galway, Cork, Limerick is ridiculously affordable compared with even provincial cities in Britain. Dublin is more expensive, but compared to cities of similar size even in the relatively depressed north of England, Wales and Scotland, housing is very affordable in Dublin – and almost twice as affordable as cities in the more prosperous south of England.
The Demographia survey was reported in Finfacts, but you’ll look in vain for any reporting of it in the Irish media.
That’s one source of data – lets look at others.
LSL Property Services gives a figure for the average house price in England + Wales of £268,637 – that’s about 330,000 euros at today’s exchange rate.
Now compare that with figures in the recent Daft survey:
It gives a national figure for Ireland of 177,000 euros in Q1 2014.
So, as of now both Demographia and Daft indicate that the average house price in Ireland is little more than half that in Britain (as reported by LSL Property Services).
Daft also gives figures for provincial cities and counties in Ireland:
Cavan County 108,644 euros
Waterford City 108,900 euros
Donegal County 113,585 euros
Mayo County 119,641 euros
Wexford County 129,207 euros
Galway County 131,219 euros
Dublin around 240,000 euros when averaged across the different parts of Dublin
So, both Demographia and Daft agree that:
(a) house prices in provincial Ireland are currently ridiculously low compared with other places, barely one-third the England + Wales average
(b) house prices in Dublin are currently more expensive than in provincial Ireland, but still cheap compared with Britain, Australia and New Zealand and very cheap compared with the cities in the south of England.
As for other countries, data isn’t widely available. As this site has lots of posters from abroad, maybe some of them could post what house prices are where they live. I’ll be surprised if there is a single one that comes even close to the figures for provincial Ireland and surprised if there is a single one from a large/capital city that is lower than Dublin.
@ Gregory Connor
Is it not high risk to invest your pension in one asset class in one country. The essence of proper pension investment is to spread your risk over many asset classes and countries etc etc.
Is it not fairly safe to assume that those who took out IO mortgages from the start wished to avail of the various tax incentives which allowed them to offset the interest against rental income, principally Section 23? Or, as the Revenue Commissioner’s information leaflet puts it; “Relief for expenditure incurred can be set against the rent received from that property and other Irish rental income so that the amount of a person’s taxable income is reduced.” Indeed, the CB report makes reference – page 2 Section 3 – to the open goal this presented (for small businesses in particular).
Just as a quick preliminary down payment on JtO asking for data on house prices.
Here it is unusual to calculate this in yearly incomes, or a price for a house of unspecified size / quality
The Price in Dresden is around 2000 Euro per square meter,
larger 50 k inhabitants cities in Southern Germany 3 – 4000.
Munich in a good location more than 10 000
With the exception of a few hotspots like Munich, prices are not rising substantially faster than inflation, so far. People are careful.
outside of larger cities, you can get 20 year old stuff for about 800 Euro per square meter
average household income in Ireland and Germany should be pretty comparable
Pension funds are supposed to be from savings. If you borrow large principal to make geared investments (particularly in one sector in one country) then regardless of whether you imagined the investment gains would provide a pension or pension fund, what you are actually doing is running a personal hedge fund.
The Central Bank has been curiously tolerant of these now zombie hedge funds, while the assets they squirreled away are often in short supply to ready buyers. Odd.
@JohnTheOffTopicist
I don’t think your thoughts on the perceived value of Irish property are particularly relevant in this thread. I don’t agree Dublin prices are remotely good value, something large property investors seem to have copped on to in recent months. Any young family looking to buy a home in a Dublin suburb is looking at getting fleeced for the next 30+ years. But sure it’s grand – isn’t it the same everywhere? For a large part of the working family population the sensible thing to do would be for the parents to “split up”, one take the kids and get rent supplement and the other continue to work. Now that would pay off.
This report of the blindingly obvious from the CB is just another reminder that we haven’t tackled arrears and arrears-in-waiting in this country at all. The bankers have dribble on their chins.
There are 48,596 mortgages over 2 years in arrears in the country (many of them over 3 or even 4 years at this stage). If even 1/10th are in Dublin they should be repossessed and offered to market, meaning the number of Dublin properties for sale would more than double.
Instead we’ll have more extend-and-pretend-for-the-bankers-friend.
2 Years behind on a couple of mortgages? No problem!
Pocketing the rent from them all the while? No problem!
Some other eejit will pick up the tab for you, one way or the other.
@JTO and Michael Hennigan
Average Dublin house price 240k and 3.7 ratio means the average household income in Dublin is 65k?? really?
De Banks!
Ownership without Control.
Citizenry on the hook of The Financial System & supine powerless.
Nuff said.
@JTO
re: House prices: Definitely overpriced property
Your statistics are misleading and completely out of date as far as Dublin house prices are concerned.
“Dublin around 240,000 euros when averaged across the different parts of Dublin”
Not a chance. Maybe in Q3 2013, but since that time Dublin house prices have increased by about 25%, with Q2 2014 showing huge increases. Properties are selling from 20%-25% over the guide price.
Secondly you fail to mention the following from the Demographia report;
“Historically, the Median Multiple has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices having generally been from 2.0 to 3.0 times median household incomes.”
Demographia also notes the following for the different multiples of median income;
Affordable < or = 3
Moderately unaffordable 3.1 to 4.0
Seriously unaffordable 4.1 to 5.0
Severely unaffordable 5.1 and over.
Based on the figures you quote for Dublin Q3, 2013 of 3.7, the 25% increase since then would put Dublin at approx 4.5 times; well into the seriously unaffordable category.
This is country that had the biggest house bust and bank bust in recent history, and where many of the BTLs landlords are not paying for their assets.
I cannot of course verify that Dublin prices have gone up 25% since Q3, 2014, but my recent engagement with that market would in fact indicate that the price rise is higher than 25%.
So, I do accept your thesis that Dublin house prices are "dirt cheap".
They are not and neither are house prices in most major cities. That is one of the major lessons of the Demographia survey.
Irish government policy of 'we need house prices to rise another little bit' is nothing more than an indirect shout of support for the banks and an attempt to instill a feel good factor in the middle class, in order to stop the vote hemorrhage to Sinn Fein.
[With thanks to yourself and Finfacts for bringing that survey to my attention].
@Gregory Connor
You are correct in calling many of these BTLs "failed private pension investment assets".
The failure to deal with them seems to be incomprehensible to everybody, except the people responsible for dealing with them; and they in turn will not give a reason for not dealing with them.
Janet Tavakoli had a great letter in the FT a while back . Very pertinent to the Irish property market too and the state of BTL repos
“Since the September 2008 crisis, scandals have rocked every systemically important financial product, highlighting the enormity of manipulation. Until we reform our captured regulatory system, exact fair compensation for bank subsidies, oust corrupt politicians, and prosecute control fraud at financial institutions large and small, we will suffer global systemic risk wrought by our broken financial system”.
@ stephen kinsella
Idea for an article??
“the most pronounced increase was seen among accounts in arrears over 720 days. These now total 13,282 accounts or 9.2 per cent of the total stock of BTL mortgage accounts and 71 per cent of outstanding arrears. The outstanding balance on these accounts was €4.2 billion at end-March,”
This is a massive story nobody is telling.
Lets say the average rent on theses 13,282 accounts was €1000. This is a massive 13 million per month that mainly state run banks are allowing landlords to use for reasons other than paying their mortgages on BTL’s even though they collecting the rent.
There is really no great mystery with regard to what is happening. The political forces – across all the established political parties – that drove the system of property tax incentives are the same as are now slowing any dramatic steps to right the situation that has resulted, relying instead on a general recovery in the market; a point actually conceded by the CB paper.
For a background good holiday read, “Fragile by Design” could hardly be bettered!
I want to point folks also to their methodology to define “affordability”
and how that is impacted by what the Fed did with QE, massaging the whole yield curve, therefore mortgages of various durations, and subsequently the house prices, which are overvalued due to this by 20 % in the US, therefore giving US folks a false impression of their wealth and incite them to spending.
This mechanism is described in detail in their FRB/US model, for which they recently published the whole simulation “eview” setup , with all the recent calibrations.
provides numbers for my Dresden, resolved by size, type, quality, locations,
buying & renting
I have those numbers, with typically quarterly resolution, since 15 years, for dynamic, long term analysis : – )
You have to do your homework in investing : – )
@eamon
They are not all rented out, some, note, some are left empty – and not just for a few months – even in very decent areas. I know of several that have been empty for years while real and fake ‘negotiations’ and ‘discussions’ have taken place with banks. Meanwhile there is a shortage of stock on the market.
I’m surprised nobody has ever previously brought up the BLT arrears figures in the comments nobody reads on this sight.
fyi
Latest Epistle from The Disciple of Ordoliberalism
Don’t suppose there is much hope that we will witness the emergence of a European CENTRAL Bank in the near future?
@Minister Kelly
Intergalactic text from Blind Biddy [on a cycling tour of the Rings of Saturn with Seven_of_9]
Thank you!
@Commissioner Hogan
Don’t forget your Fig Leaf!
The report fails to recognise all the threats to Buy to Let properties.
It states
“This type of product is particularly vulnerable to house price falls and changes in rental yields.6” (page 2 LHS, 2nd Para)
Of course it very politely forgets to mention the fact that rental properties are unviable due to the hostile policy of the Revenue Commissioners i.e. Taxation on a loss.
They also fail to mention the increasing number of charges which are NOT tax deductable from rental income, again pushing landlords further into a loss.
They also politely decline to mention the real risk to any investment (in Ireland) which could be present after the GE in 2016 by an extreme marxism populist Govt.
We could not have the CB criticising Govt policy which is implemented by the R.C. now could we?
For those who either can’t understand or don’t understand what Taxation on a loss is… In effect what it means is you make a loss of 1000 euro over the financial year… the Revenue will say you made a 1000 euro profit, and now pay up the money.
The reason why little or no movement on BTL properties which are in arrears is crystal clear to me, even if 1/2 of Ireland cannot figure it out.
The economic model for rental properties is broken. It does not matter who the landlord is… either Landlord A, Landlord B or Landlord C.
If you remove a property from Landlord A due to arrears… and give the property to Landlord B… it will only be a matter of time before the property has to be given to Landlord C due to the arrears of Landlord B.
Another analogy is a broken car… no matter how many times you change the owner…. the car will still remain broken until it is fixed. So it is with property.
Banks understand this…. that is why they have not bothered to repossess properties from Landlords. Coz it will crystalise losses which then have to be covered…. and sure what is the point…. because the new landlord will fall into arrears same as the first.
@Prudent Hans
… as you are into ‘homework’ –
You might provide a brief paragraph on the signficance of The Bremen Town Musicians to any analysis of macro in the EZ.
Don’t see that there is a “conspiracy” per se. It’s not so much that the Irish Govt is, as a matter of affirmative policy, limiting supply and thereby driving up prices, particularly in Dublin. It’s just more of kick-the-can, where losses aren’t recognized to allow the balance sheets of the Irish banks continue to recover, with limited supply driving higher prices being an “unintended consequence” which just happens to favor the most indebted……often BTL landlords…..plus the Govt itself of course in terms of the short term (political) need /not for further recap of the Irish banks (those EU stress tests continue in the background of course).
The problem though is that the global environment is already changing, driven by the US (as per AEP’s article in the UK’s Telegraph a few days ago). The US Fed is now very clearly signaling well in advance that it is changing it position, with $ interest rates to rise becoming more likely sooner rather than later….and be ready or else (at all levels). Problem of course is that Ireland’s short term “game” is in danger of getting caught out, albeit the currently “subsidized” Elites (including BTL landlords) are being “fortified” more than others.
Everyone failed over the last years to get the timeframe correct. Living in the here and now is for most people. Longer term planning hasn’t been practicably or politically possible, either at personal or Govt levels. The current uneven uplift in some sectors masks the bigger picture of stagnation (at least). The overall picture remains though that leverage is worse than it was during the crisis, almost everywhere. So interest rate rises will have a much larger impact when they arrive (2015 /2016 beginning is likely). The NTMA has done a good job of extending the maturity profile of Ireland’s sovereign debt, and that will help at one level. However, not at the non-sovereign levels (particularly personal and Irish bank debt /equity levels).
The current Irish establishment is therefore behind and at the mercy)of the global economic curve, just as it is behind the political curve (e.g. local rise of SF, rise of non-fed EU forces, etc). As a result, the risk of “uglier” times by definition has actually increased, while Irish Govt (but also EU govt) ability to control the outcome(s) diminishes. Increasingly a “crap shoot” scenario, subject to and increasingly vulnerable to external shocks.
They (the Establishment) had better get it right or that “social revolution” risk will emerge and materialize. Interesting to see the near-panic tone in Ireland of the likes of Stephen Collins’ Sunday Independent article…….From afar, the overall social tone appears to be very clearly rising to reflect this overall economic, social and political background.
It ain’t over yet. Far from it.
That said, it is interesting too to see the Irish newspaper articles on the departure of foreign (and Irish) senior managers e.g. Elderfield, Meuller, etc…but also John Moran, senior Irish (and foreign) central bank staff, etc. Plus the appointment again of Insiders e.g. unscrupulous appointment of semi state /quango board members by Hogan, etc…the latter was recently “castigated” by my elderly, but historically pro-Establishment, mother living in Cork…unlikely ever to vote SF but appalled by those politicians she (and her friends) traditionally voted for……Captures the point in another light.
The Political Establishment is (consciously /unconsciously?) moving to protect itself /the status quo. While still behind the curve, the internal political “threats” are real and are being felt increasingly in “real time”. The official response(s) are currently more by way of “osmosis” at present rather than as a consequence of conscious decision in my view. Others may argue otherwise. However, social cohesion is slipping is all I can observe (and conclude). Not “conspiracy” in my view…but the momentum of those unintended consequences is increasing.
Lastly for now, is anyone there noticing inflation? Or deflation?
Here is the US, there is a real disconnect between official inflation figures and what the ordinary person is seeing on the ground, mainly due to the way official inflation rates are calculated. Health insurance, house insurance, car insurance….rising 20% pa or more in the last year (or two). 10-20% food inflation at the supermarket is now openly discussed, by almost everyone. Energy, gas, education, etc….All visibly ramping up, annually. “Bad inflation” as one article put it recently, taking money out of the consumer’s bank account.
The only area not inflating is labour remuneration. Stagnant at best. Beyond that, if one reads enough blogs re what ordinary Americans are saying, the message re jobs is clear…Official stats are a croc. Increasing jobs are temp, while job losses are of the more permanent and higher paying varieties. Not everywhere e.g. in Texas, there are shortages in various areas. However, overall the picture remains very difficult despite the spin.
What are people experiencing in Ireland (beyond house price increases)? Is it inflation (as an extension of what’s happening in the UK I presume) or deflation (as being reported for much of Europe)?
@ Paul W et al
This WSJ article sums up the situation as viewed by Weidmann.
He seems not to notice the contradiction inherent in his remarks i.e. that if deflation is a risk he should be more open to bond purchases. There is no sign of this contradiction being resolved cf. this analysis of his actions in Die Welt.
4 years ago I made a comparison with a friend in the US for food prices, based on a list I made for comparison between US and Germany in 2003
Aldi / Lidl / discounter price (in Euro for the specified size), now also available in Ireland and UK, as I heard:
Lidl EU
item EU unit EU price
Milk liter 0.69
Tomatoes kg 0.99
toast 500 g 0.55
Butter 250 g 0.99
Chicken, frozen kg 2.35
beer, simple liter 0.57
rice kg 0.85
flour kg 0.35
baguette (60 cm length) 0.65
ham, simple kg 6
coffee 500 g 2.65
noodles kg 0.98
pork kg 4.98
egg piece 0.099
cheese kg 5.73
mozarella kg 4.4
joghurt kg 0.98
no name Cola liter 0.26
O-Juice (100 %) liter 0.95
Sugar kg 0.85
Vodka liter 7.13
schocolade kg 3.9
spices kg 13.8
cigarettes pack of 19 5
gasoline liter 1.55
electricity €/kWh 0.29
cleaner every 14d ca 3 hours 36
Computer 400
ground meat kg 4.58
canned tomatoes 425 ml 0.39
canned champignon 314 ml 0.49
would be interesting to get those numbers for your places. That doesnt take more than 10 min in the store and 5 min to type it here
For Germany I get a mean inflation of 2.02% over the last 4 years, and a median of 2.6%
Comparative price level indices 2009, EU27=100
Of which: Food and non-alcoholic beverages Bread and cereals Meat Milk, cheese and eggs Alcoholic beverages Tobacco
looks to me, that both Ireland and UK are basically adjusting to the central european average, as it should in a barrier free market
@ sporthog.
That sounded like a rather bizarre call for pity for the Rentier classes in Ireland.
@ Paul W
The deliberate destruction of official measurement methods around inflation and employment in the US has been happening for a long time using methods like Substatution and Hedonics.
We are way behind in Europe and even further in Ireland but we are catching up.
This year we brought in 2 measure to increase GDP.
The first was to add SIN industries to the figures and the second was to measure R and D as investment rather than an expense.
We are also moving as much of the national debt as possible off balance sheet in order to allow us meet the targets for debt to GDP ratios set out by the Troika.
An obvious sham but one everyone seems happy to go along with.
I have yet to hear calls from economists to reduce the debt sustainability ratios as a result. How can the level of debt to GDP, where it is sustainable still be 120% when we have just doctored the GDP figures?
Carry on, nothing to see here.
Using numbers to lie about the reality is not a wasted exercise.
If the media are constantly reporting a return to growth even though people do not feel it themselves they still seem to get a more positive outlook for the future. The confidence fairy is making a huge comeback at the moment.
To me it looks like Paul W’s contributions were stuck for a day, and mine now for a whole work days period. This is not very conducive for discussion.
@ Sportshog
How about taking the property of landlord A,B or C and have the state or owner occupier own it. The accumulation of property like commodities should be discouraged. Otherwise you get the current worldwide craze of cash flooding the market making residential property expensive for those who actually live in it. Making families more insecure in their accommodation dampens their spending and likelihood of having a(nother) child aka consumer/tax payer. Making it not only inequitable but economically Stupid. In turn leading to the death of centre right parties as their wont be enough property owners left to vote for them.
@ Paul W,
Indeed good points…. well made.
I believe that those people who are more highly qualified should earn more than those who are less qualified.
However the cost of living in Ireland is not low. The Revenue Commissioners enforce some draconian measures against the people, i.e. taxes are high… and other taxes i.e. duty on alcohol are also very high.
I don’t know how people who have lower qualifications only (i.e. Leaving Cert) are going to survive in the future. People with 3rd level qualifications are finding it hard enough as it is… but for those with only school leaver qualifications… it just does not bear thinking about.
Since this blog seems to be dormant while its owners bask in the sunshine (or scurry around the archive), I’ve no other place to put this joint interview with Thomas Piketty and David Graeber:
Recent article about how long to get a non paying tenant out of a rental property…… approx 18 months before eviction proceedings can take place.
Of course during this time… the tenant pays nothing… and the landlord pays full costs.
The PRTB is about as much use as a chocolate fire guard. Justice delayed is Justice denied.
Private Property Investors beware!!
CSO Stats published today show that in June property prices were +2.9%
Nationally apartments +3.8%, Dublin apartments +6.1%! The latter number was discretely omitted from the language of the report, for fear of spooking us all.
Is there a problem with this website? Or is everyone on vacation?
As regards this not being a credit fueled bubble (as per ENda Kenny, Prof. Honohan, etc), surely it is being funded indirectly by credit…..deposits with banks are being used to inflate the property market in Dublin. At institutional /bank level, they have been ultimately replaced by EU, IMF and some market debt funding to Irish banks. As long as this funding continues, there is potential for the property bubble to continue. However, any external shock could deflate things very quickly. Again, it appears that the Irish taxpayer (via the banks /sovereign) is taking this risk, albeit indirectly “once removed”.
eamonn moran, paul W
Substitution and hedonic adjustment are actually necessary, because consumption preferences constantly change.
The price of horseshoes is today not relevant for the unwashed masses any more, but the price for your cellphone subscription became : – )
But there is potential for mischief, and I would still be interested if people could pick up the discounter prices I was asking for.
Francis
Unlikely that I will be in a grocery store soon! I wonder anyway whether such a comparison is valid. The High value of the euro has been absorbing inflation ($ energy costs, etc). Also attributable overhead costs impact of course and are not the same….
One form of “substitution” happening in Ireland appears to be official or market funding for banks versus loss of deposits for banks a people put their cash into property. Indirect credit fueled property bubble in Dublin. As long as the banks can borrow somewhere to replace the spent deposits, the property bubble could run a long way. Saying that it is a cash fueled bubble is simply wrong (so govt, Patrick Honohan, etc statements to that effect are simplistic. I essence, the risk is again being socialized (assuming the banks will continue to be propped up). Would take an external shock to derail…interest rate rises, gel-political or other
Paul W,
I am aware that this list looks utterly stupid at first glance.
Especially for many, when I have just spoken out against some simple constant 20-item lists, without subsitution and hedonics : – )
And I voluntarily add, that I am all for it, that the US Fed targets PCE ex food and energy, basically eleminating the whole list : – )
But the list is actually the outcome of many discussions I had in Germany about the undestroyable conviction of many Germans, that the Euro was hiding real inflation, endless discussions of German expats in the US arguing wildly different numbers for what the exchange rate for their wages should be.
It takes into account, that for many goods you can not define some standard quality (hair cutter, lawyer, )
And that a relevant exchange rate does actually dependent significantly on your basket of goods bought (US 1.08 Euro per Dollar, OECD 0.88, German 0.72 in 2009, financial markets more like 0.80)
The list has helped me repeatedly to convince people that their own convictions might be optical delusions.
@Sporthog
“Of course during this time… the tenant pays nothing… and the landlord pays full costs.”
What evidence do you have for the latter claim (that the landlord pays full costs)? Said hypothetical landlord may well not be servicing his mortgage at all on any of the properties he owns. Such rent as he collects is all pure gravy.
Welcome to the world of moral hazard.
@Sporthog @Ernie
I wonder how many thousand tenants are 18 months in arrears? Would it be anything like the 80,000 mortgages over 2 years in arrears?
Those poor auld landlords have it fierce rough, the whole world against them.
@ Ernie,
Whether the Landlord physically hands over money every month or not is immaterial.
The fact is that the landlord is on the hook, the landlord carries the responsibility. With missed payments.. interest and penalties begin to add up.
If you seriously believe…… that a property owner (either landlord or residential owner) can miss payments for 18 months on utilities + service charges + LPT+ PRTB fees+ monthly bank mortgage repayments and nothing will happen, no legal consequences or financial repercussions.
Then why don’t you try it yourself? Just try it Ernie…. stop paying all the charges which are attached to your private dwelling for 18 months.
Let us know in 12 months time how you are getting on.
Please, Sporthog. We all know that deals will be and are being done and that a good many landlords stand to benefit from being in arrears. Few are likely to be “on the hook” for much of anything. FG and FF look after their own… One need only observe how the gov’t are doing everything in their power to reflate the property bubble to know whose interests are uppermost in their mind at all times (hint: it’s not those forced to rent).
Also, and obviously, the landlord gets to keep possession of “his” property, whether or not he’s making payments on it, until the market “recovers” and secure in the knowledge that the gov’t is doing everything in its powers to make that happen (on the backs of the young, renters, immigrants, et al.).
@ Ernie,
What a wonderful world you describe……
Landlords don’t have to pay back anything… all they have to do is wait and a better deal will be cut by the bank / Revenue Commissioners / PRTB / Utility companies etc
Tenants don’t have to pay back anything either…. they can live rent free for 18 months and then move on to the next unsuspecting landlord.
Ireland truly is a utopia…. free gravy all round, except for the banks of course.
They obviously have a bottomless pit of money and will continue to support this utopia.
@Sporthog
You’re missing my point: it makes no sense to decry the moral hazard of a small number of tenants who may get away with living rent-free if you’re not also willing to decry the moral hazard of a much much larger number of property owners who are thus far getting away with not servicing mortgages owed to state-subsidised banks while still collecting rent.
I believe both situations ought to be stopped. You, as a vested interest, are apparently only outraged by the former. What you don’t realise is that this hypocrisy undercuts the illusory moral high ground you think you occupy.
I see my postings are turning up “haphazardly” via the moderator.
David McWilliams takes up the deposit substitution theme:
Or is it simply double-entry? As the deposits are used (to purchase property) reducing banks /NAMA/etc liabilities, the purchased assets also come off the banks /NAMA /etc assets? Deleverage or indirect debt substitution?
@ Ernie Ball,
Ah… yes…. the old Irish ‘balance argument’. That guy over there is getting away with it… so why can’t I?
I doubt if you have ever carried the responsibility of being a landlord, and operating under “taxation on a loss”.
Because if you did you would not be equating apples and oranges. No matter how many times it is explained to you… Landlords provide a service to society, but it is clear you see them as getting a free ride on the gravy train. From your comments above… it is clear you think this free gravy train will continue forever.
“We all know that deals will be and are being done and that a good many landlords stand to benefit from being in arrears. Few are likely to be “on the hook” for much of anything.”
And just how do you know this???? Are you a judge… can you divine the future?
It is you who is under an illusion if you think this ‘much much larger number of landlords’ are going to get away with their financial arrears forever. Eventually they will have their assets removed and court judgements made against them, particularly as property has risen a certain amount in the last 12 months.
It is entirely possible that these properties will be sold for private owners, hence further reducing the pool of rented properties available.
They won’t get away with their financial arrears forever. They don’t have to. Rather, they will retain possession without any fear of foreclosure while the government gooses property prices (through NAMA and other means). Once the price has risen high enough, they are then able to unload “their” property, pay back all the arrears and what is owing on the mortgage and come out smelling like roses, having benefitted from the rental income throughout.
Your argument seems to be: these people are getting away with something (please ignore that much larger class of which I am a member who are getting away with much worse). Not very convincing.
Ernie,
I’m afraid you are mistaken about my point. That article was not written by me… it was written by Charlie Weston. If you have issues with it.. take it up with him. Coincidentally I see Loraine Courtney has a article today about her own situation with rent.
The topic of this thread is the interest only mortgages in Ireland. These types of mortgage are mainly aimed at investors for the rental market in Ireland.
Ireland requires rental properties for students, temporary workers, etc etc etc.
A supply of rental properties is vital for any society to function well. I’m sure you know that.
If you have in place
1) Penal taxation measures,
2) A costly ineffective dispute resolution system.
3) A populist marxist Govt waiting in the wings at 2016.
4) A hostile media which derides / ridicules landlords.
Then it is inevitable that investors will be discouraged. The supply of rental properties will eventually decrease, possibly driving up rental rates.
Let me make a suggestion to you. Would you place 300K on a 2 bedroom apartment which rents for 1300 a month? Lets do some basic maths first.
This is for a property which has no mortgage.
Income 1300 x 12 = 15,600.
Annual Costs / year = 4,000.
Profit / year = 11,600
Taxation = 3000 to 5800.
Actual profit realized = 5800 to 8600 euro, depending on your taxation situation.
Lets take the higher profit figure…8.6K…. that is a yield of 2.86%.
So what person in their right mind… would invest 300K for a annual yield of 2.86% when there is very real risks present?
In comparison have a look at dividend stocks….. some stocks are paying a dividend of 12 to 14% annually, some even more…
If you compound the dividend… dividend paid in stock rather than cash… your yield could rise even more.
I must here offer a public apology for my failure to recognise the quiet heroism of the landlord class, selflessly providing shelter for students, temporary workers and more.
It is hard not to feel sorry for these heroes when their one-way bets yield only 2.86% rather than the usual bags of money. But things are looking up! Government has their back! Rents are going sky-high and surely with just a bit more effort, we can get those yields up to what our betters truly deserve. The alternative is just too horrible to contemplate: imagine a world in which the supply of rental properties “dries up” and simply vanishes for want of these selfless men and women and, horrors, rental rates go up! Anything but that!
Ernie,
You just put a smile on my snout 🙂
All right….. sarcasm aside…. how would you change things?
What changes would you implement RIGHT NOW in the rental market, would you nationalize all rental properties?
What would be a rental rate acceptable to you? 600 / month or less?
What tax treatment of rental income would be acceptable?
For a non paying tenant what time limit would you put on the resolution process?
62 replies on “Interest-only mortgages in Ireland”
I have only scanned the paper but would certainly question the one point made in the conclusion.
Referring to original interest-only loans the report concludes;
“A second concern is the age-profile of these borrowers: a significant number will be at retirement age when the loans are due to switch to P&I. Thus, at a time when most people are switching to a reduced income, repayments on their debt will increase significantly.
One mitigating factor is that there is scope for house price appreciation before this happens. The average age of these borrowers is 52; taking a 13-year horizon, and an average LTV of 150 per cent, house prices would need to increase at an average annual rate of 3.2 per cent. For comparison, the average annual nominal house price increase from 1950 to 2013 was 7.6 per cent.”
House price increases should not be viewed as a potential mitigating factor in any problems that we have. On what basis is their “scope” for house price increase? Who is to benefit from such scope and who loses.
The paper profiles excellent data and analysis. It would be a pity if its value were diminished by suggesting a potential mitigating factor that would cause significant damage to the economy, as well as once again forcing up the price of houses at the expense of the younger generation.
It is very doubtful if wages will rise by the 3.2% per annum referred to over the next 13 years. So is it being suggested that the loan problems of banks and BTL borrowers will be relieved by extracting a greater % of workers income to pay for increased house prices!!
We need to take a broader perspective on this issue.
Why are banks being so lenient on BTL interest only landlords in arrears? It is mentioned most of this type of loans were Dublin based between 2005-2008 on trackers.
There are virtually no empty lettings in Dublin, rental income is on the rise and interest rates are at historic lows which means the income from rent exceeds the payments as they fall due.
Why are banks not demanding (through the courts) rents be paid directly to them if the landlord refuses to keep up with payments?
@ Joseph Ryan – Oh the innocence!
Sadly the government’s and CB’s preference (and hope) is that this nasty arrears issue can be disappeared via price rises. Who pays? Why, younger people of course. They can pay a greater % of their income for properties, so that older generations who made a complete balls of the economy can escape the consequences of their gluttony. The Irish Property machine runs on young flesh, and it hasn’t gone away, you know. The banks will write the mortgages for the overpriced property, and away we go again. As a plan it is not much to look at, but it is their plan.
We are entering a very interesting time in Ireland. Despite the talk of recovery (genuine or not) we have attempted to have a massive property crash free of repossessions. It would be a hell of a trick to pull off. Look at these stats from the CB for BTLs taken into possession:
2012 – Q3: 74
2012 – Q4: 88
2013 – Q1: 77
2013 – Q2: 75
2013 – Q3: 62
2013 – Q4: 69
2014 – Q1: 73
Piddling figures, and it shows the banks have zero interest in taking possession of BTLs. At this rate, it would take nigh on 45 YEARS for the banks to take possession of ONLY the > 720 days arrears BTL segment (the fastest growing arrears category as it happens)
Whatever the reason, we have banks who cannot or will not act like banks. They say they are appointing rent receivers, and I’m sure they are, but at what level? How many BTL landlords have properties over 3/4/5 years in arrears at this stage? We don’t know because the CB won’t produce the figures. Why do the CB produce figures for “proceedings issued” in respect of PDHs but NOT for BTLs? Is it embarrassment that it would prove that banks are not making any serious effort to manage their BTL book? What is the true scale of the problem here? Could it sink a bank?
Six years post-bust we still have negligible levels of repossessions, we have 20% P.A. price rises in Dublin. We have 66,000 BTL mortgages in arrears in Ireland, along with 212,000 PDH mortgages in arrears.
There are only 26,000 properties for sale in Ireland. As my son might say: “FFS”.
Who is steering this ship?
In 2006 I called the Central Bank to get data on interest-only mortgages. They had none despite the common knowledge that these deals were the fuel of the investment property business.
In 2005 BusinessWeek magazine had a detailed feature on the surge in popularity of such mortgages in several big US cities.
Some 75% of Bank of Ireland investment customers had availed of the bank’s ten-year interest-only mortgage, according to Olive Moran, Bank of Ireland mortgages manager in 2006.
“It’s very attractive as it enables investors to defer capital repayments for the first ten years,” Moran told the Sunday Business Post. “They can then spread the capital repayments over the remaining period of up to 15 years. Alternatively, if they have access to a lump sum from a personal pension policy, they can use these funds to repay the outstanding capital.”
“In 2006 I called the Central Bank to get data on interest-only mortgages. They had none despite the common knowledge that these deals were the fuel of the investment property business.”
Had none or had none to give you?
Sam Maguire
No data
@ eamonn moran
The BTL situation is curious.
According to the Central Bank research 70% of BTL mortgages that have been in arrears for 90 days or over, are funded by tracker mortgages.
ECB interest rates fell from 4.25% in July 2008 to 0.15% in June 2013.
At end Q1 2014, a total of 39,361 (27% of total) BTL accounts were in arrears.
The CB said last month: the outstanding balance on BTL mortgage accounts in arrears of more than 90 days was €8.8 billion at end-March, equivalent to 29.9 per cent of the total outstanding balance on all BTL mortgage accounts.
The number of BTL accounts that were in arrears of more than 180 days was 27,161 at end-March 2014, reflecting a quarter-on-quarter increase of 3.1 per cent. However, the most pronounced increase was seen among accounts in arrears over 720 days. These now total 13,282 accounts or 9.2 per cent of the total stock of BTL mortgage accounts and 71 per cent of outstanding arrears. The outstanding balance on these accounts was €4.2 billion at end-March, equivalent to 14.4 per cent of the total outstanding balance on all BTL mortgage accounts.
More than 2 years in arrears and collecting rent every month?
@Poor Uncle Skeleton
Yes, I know that that taking a national view of the BTL mortgages is both innocent and naive. But if one wanted to ‘resolve’ the situation in the national interest, the solution is simple.
All BTLs in arrears of 180 days be compulsory sold by the banks to the State for current market value less say 10%, with all tenants remaining in situ (no vacant possession).
The banks would have to crystallise losses. So be it.
The State would probably get an overall rental yield of 4%-5% on rents. More in Dublin, while the cost of State funds is now less than 3%.
The sizable minority of BTL landlords gaming the system, through relatives living rent free or other means, would be found out and the rents would revert to the State. A considerable number of additional social housing units would become available following the shake-out of those gaming the system. The State would then be paying itself rather than paying private landlords (who in some cases at least pocket the money, so that neither bank nor State gets the benefit of the rent).
There would of course be the residual debt, (an existing loss now out in the open), and that would cause some difficulties to a minority landlord group. That is to be regretted, but it is a reality that needs to be faced. If the banks have to sing for the residual debt, so be it.
The above approach would have the benefit of the national interest being subverted to protect both the banks and a clearly politically influential minority.
That last sentence should read. Insert ‘no longer’
The above approach would have the benefit of the national interest no longer being subverted to protect both the banks and a clearly politically influential minority.
@ Michael
How many BTLs are holiday homes ? They went for stupid prices pre Lehman when the weather was sunny and never generated much rent. Wexford is full of them.
Table 5 (Age Profile at IO Period: BTL) is quite interesting. A bit difficult to interpret (I am not sure that I understand the full range of possible payment structures for these loans once they are outside the IO period). These BTLs are failed private pension investment assets – a fairly common occurrence with pension assets. But I suspect in an Irish context someone else will subsidize the lost value.
@PUS
“overpriced property”
Sorry to intrude with facts, but it is time to dispel the myth that house prices in Ireland are currently expensive.
As a result of the 2007-2013 fall, they are, in fact, now dirt cheap.
Lets look at the data:
Demographia (reported in Michael Hennigan’s FinFacts) gives the ratio of median house price to average household income in mostly English-speaking countries. These are the figures for Q3 2013:
Ireland 2.8
U. States 3.4
Canada 3.9
U. Kingdom 4.9
Australia 5.5
New Zealand 5.5
So, Ireland by far the most affordable.
Demographia also gives the same figures for cities. These are the figures for Q3 2013:
Waterford 2.0
Galway 2.4
Cork 2.8
Limerick 2.9
Dublin 3.7
This compares UK cities:
Glasgow 4.2
Dundee 4.4
Edinburgh 4.6
Manchester 4.6
Perth 4.9 (note: Perth, Scotland)
Stoke 5.1
Liverpool 5.3
Aberdeen 5.4
Swansea 5.4
Cardiff 5.6
Swindon 6.5
Plymouth 7.0
London 7.3
Bournemouth 8.6
So, affordability in provincial Irish cities is by far the best in these islands. In fact, housing in Waterford, Galway, Cork, Limerick is ridiculously affordable compared with even provincial cities in Britain. Dublin is more expensive, but compared to cities of similar size even in the relatively depressed north of England, Wales and Scotland, housing is very affordable in Dublin – and almost twice as affordable as cities in the more prosperous south of England.
The Demographia survey was reported in Finfacts, but you’ll look in vain for any reporting of it in the Irish media.
That’s one source of data – lets look at others.
LSL Property Services gives a figure for the average house price in England + Wales of £268,637 – that’s about 330,000 euros at today’s exchange rate.
Now compare that with figures in the recent Daft survey:
It gives a national figure for Ireland of 177,000 euros in Q1 2014.
So, as of now both Demographia and Daft indicate that the average house price in Ireland is little more than half that in Britain (as reported by LSL Property Services).
Daft also gives figures for provincial cities and counties in Ireland:
Cavan County 108,644 euros
Waterford City 108,900 euros
Donegal County 113,585 euros
Mayo County 119,641 euros
Wexford County 129,207 euros
Galway County 131,219 euros
Dublin around 240,000 euros when averaged across the different parts of Dublin
So, both Demographia and Daft agree that:
(a) house prices in provincial Ireland are currently ridiculously low compared with other places, barely one-third the England + Wales average
(b) house prices in Dublin are currently more expensive than in provincial Ireland, but still cheap compared with Britain, Australia and New Zealand and very cheap compared with the cities in the south of England.
As for other countries, data isn’t widely available. As this site has lots of posters from abroad, maybe some of them could post what house prices are where they live. I’ll be surprised if there is a single one that comes even close to the figures for provincial Ireland and surprised if there is a single one from a large/capital city that is lower than Dublin.
@ Gregory Connor
Is it not high risk to invest your pension in one asset class in one country. The essence of proper pension investment is to spread your risk over many asset classes and countries etc etc.
Is it not fairly safe to assume that those who took out IO mortgages from the start wished to avail of the various tax incentives which allowed them to offset the interest against rental income, principally Section 23? Or, as the Revenue Commissioner’s information leaflet puts it; “Relief for expenditure incurred can be set against the rent received from that property and other Irish rental income so that the amount of a person’s taxable income is reduced.” Indeed, the CB report makes reference – page 2 Section 3 – to the open goal this presented (for small businesses in particular).
Just as a quick preliminary down payment on JtO asking for data on house prices.
Here it is unusual to calculate this in yearly incomes, or a price for a house of unspecified size / quality
The Price in Dresden is around 2000 Euro per square meter,
larger 50 k inhabitants cities in Southern Germany 3 – 4000.
Munich in a good location more than 10 000
With the exception of a few hotspots like Munich, prices are not rising substantially faster than inflation, so far. People are careful.
outside of larger cities, you can get 20 year old stuff for about 800 Euro per square meter
2 (german) links:
http://www.spiegel.de/wirtschaft/unternehmen/immobilienpreise-welchen-staedten-die-immobilienblase-droht-a-980903.html
http://www.spiegel.de/wirtschaft/service/immobilienmarkt-wo-sich-der-hauskauf-noch-lohnt-a-981616.html
average household income in Ireland and Germany should be pretty comparable
Pension funds are supposed to be from savings. If you borrow large principal to make geared investments (particularly in one sector in one country) then regardless of whether you imagined the investment gains would provide a pension or pension fund, what you are actually doing is running a personal hedge fund.
The Central Bank has been curiously tolerant of these now zombie hedge funds, while the assets they squirreled away are often in short supply to ready buyers. Odd.
@JohnTheOffTopicist
I don’t think your thoughts on the perceived value of Irish property are particularly relevant in this thread. I don’t agree Dublin prices are remotely good value, something large property investors seem to have copped on to in recent months. Any young family looking to buy a home in a Dublin suburb is looking at getting fleeced for the next 30+ years. But sure it’s grand – isn’t it the same everywhere? For a large part of the working family population the sensible thing to do would be for the parents to “split up”, one take the kids and get rent supplement and the other continue to work. Now that would pay off.
This report of the blindingly obvious from the CB is just another reminder that we haven’t tackled arrears and arrears-in-waiting in this country at all. The bankers have dribble on their chins.
There are 48,596 mortgages over 2 years in arrears in the country (many of them over 3 or even 4 years at this stage). If even 1/10th are in Dublin they should be repossessed and offered to market, meaning the number of Dublin properties for sale would more than double.
Instead we’ll have more extend-and-pretend-for-the-bankers-friend.
2 Years behind on a couple of mortgages? No problem!
Pocketing the rent from them all the while? No problem!
Some other eejit will pick up the tab for you, one way or the other.
@JTO and Michael Hennigan
Average Dublin house price 240k and 3.7 ratio means the average household income in Dublin is 65k?? really?
De Banks!
Ownership without Control.
Citizenry on the hook of The Financial System & supine powerless.
Nuff said.
@JTO
re: House prices: Definitely overpriced property
Your statistics are misleading and completely out of date as far as Dublin house prices are concerned.
“Dublin around 240,000 euros when averaged across the different parts of Dublin”
Not a chance. Maybe in Q3 2013, but since that time Dublin house prices have increased by about 25%, with Q2 2014 showing huge increases. Properties are selling from 20%-25% over the guide price.
Secondly you fail to mention the following from the Demographia report;
“Historically, the Median Multiple has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices having generally been from 2.0 to 3.0 times median household incomes.”
Demographia also notes the following for the different multiples of median income;
Affordable < or = 3
Moderately unaffordable 3.1 to 4.0
Seriously unaffordable 4.1 to 5.0
Severely unaffordable 5.1 and over.
Based on the figures you quote for Dublin Q3, 2013 of 3.7, the 25% increase since then would put Dublin at approx 4.5 times; well into the seriously unaffordable category.
This is country that had the biggest house bust and bank bust in recent history, and where many of the BTLs landlords are not paying for their assets.
I cannot of course verify that Dublin prices have gone up 25% since Q3, 2014, but my recent engagement with that market would in fact indicate that the price rise is higher than 25%.
So, I do accept your thesis that Dublin house prices are "dirt cheap".
They are not and neither are house prices in most major cities. That is one of the major lessons of the Demographia survey.
Irish government policy of 'we need house prices to rise another little bit' is nothing more than an indirect shout of support for the banks and an attempt to instill a feel good factor in the middle class, in order to stop the vote hemorrhage to Sinn Fein.
[With thanks to yourself and Finfacts for bringing that survey to my attention].
@Gregory Connor
You are correct in calling many of these BTLs "failed private pension investment assets".
The failure to deal with them seems to be incomprehensible to everybody, except the people responsible for dealing with them; and they in turn will not give a reason for not dealing with them.
Janet Tavakoli had a great letter in the FT a while back . Very pertinent to the Irish property market too and the state of BTL repos
http://www.ft.com/cms/s/0/68273928-bf33-11e3-b924-00144feabdc0.html
“Since the September 2008 crisis, scandals have rocked every systemically important financial product, highlighting the enormity of manipulation. Until we reform our captured regulatory system, exact fair compensation for bank subsidies, oust corrupt politicians, and prosecute control fraud at financial institutions large and small, we will suffer global systemic risk wrought by our broken financial system”.
@ stephen kinsella
Idea for an article??
“the most pronounced increase was seen among accounts in arrears over 720 days. These now total 13,282 accounts or 9.2 per cent of the total stock of BTL mortgage accounts and 71 per cent of outstanding arrears. The outstanding balance on these accounts was €4.2 billion at end-March,”
This is a massive story nobody is telling.
Lets say the average rent on theses 13,282 accounts was €1000. This is a massive 13 million per month that mainly state run banks are allowing landlords to use for reasons other than paying their mortgages on BTL’s even though they collecting the rent.
There is really no great mystery with regard to what is happening. The political forces – across all the established political parties – that drove the system of property tax incentives are the same as are now slowing any dramatic steps to right the situation that has resulted, relying instead on a general recovery in the market; a point actually conceded by the CB paper.
For a background good holiday read, “Fragile by Design” could hardly be bettered!
http://press.princeton.edu/chapters/s10177.pdf
I see the question of JtO for international comparison as very relevant.
Here are the data for the US:
http://www.realtor.org/topics/housing-affordability-index/data
I want to point folks also to their methodology to define “affordability”
and how that is impacted by what the Fed did with QE, massaging the whole yield curve, therefore mortgages of various durations, and subsequently the house prices, which are overvalued due to this by 20 % in the US, therefore giving US folks a false impression of their wealth and incite them to spending.
This mechanism is described in detail in their FRB/US model, for which they recently published the whole simulation “eview” setup , with all the recent calibrations.
Just in case somebody is interested
http://www.sz-immo.de/service/preisuebersicht.asp
provides numbers for my Dresden, resolved by size, type, quality, locations,
buying & renting
I have those numbers, with typically quarterly resolution, since 15 years, for dynamic, long term analysis : – )
You have to do your homework in investing : – )
@eamon
They are not all rented out, some, note, some are left empty – and not just for a few months – even in very decent areas. I know of several that have been empty for years while real and fake ‘negotiations’ and ‘discussions’ have taken place with banks. Meanwhile there is a shortage of stock on the market.
I’m surprised nobody has ever previously brought up the BLT arrears figures in the comments nobody reads on this sight.
fyi
Latest Epistle from The Disciple of Ordoliberalism
http://www.irishtimes.com/business/economy/germany-urges-euro-zone-to-reform-not-rely-on-ecb-help-1.1870895
Don’t suppose there is much hope that we will witness the emergence of a European CENTRAL Bank in the near future?
@Minister Kelly
Intergalactic text from Blind Biddy [on a cycling tour of the Rings of Saturn with Seven_of_9]
Thank you!
@Commissioner Hogan
Don’t forget your Fig Leaf!
The report fails to recognise all the threats to Buy to Let properties.
It states
“This type of product is particularly vulnerable to house price falls and changes in rental yields.6” (page 2 LHS, 2nd Para)
Of course it very politely forgets to mention the fact that rental properties are unviable due to the hostile policy of the Revenue Commissioners i.e. Taxation on a loss.
They also fail to mention the increasing number of charges which are NOT tax deductable from rental income, again pushing landlords further into a loss.
They also politely decline to mention the real risk to any investment (in Ireland) which could be present after the GE in 2016 by an extreme marxism populist Govt.
We could not have the CB criticising Govt policy which is implemented by the R.C. now could we?
For those who either can’t understand or don’t understand what Taxation on a loss is… In effect what it means is you make a loss of 1000 euro over the financial year… the Revenue will say you made a 1000 euro profit, and now pay up the money.
The reason why little or no movement on BTL properties which are in arrears is crystal clear to me, even if 1/2 of Ireland cannot figure it out.
The economic model for rental properties is broken. It does not matter who the landlord is… either Landlord A, Landlord B or Landlord C.
If you remove a property from Landlord A due to arrears… and give the property to Landlord B… it will only be a matter of time before the property has to be given to Landlord C due to the arrears of Landlord B.
Another analogy is a broken car… no matter how many times you change the owner…. the car will still remain broken until it is fixed. So it is with property.
Banks understand this…. that is why they have not bothered to repossess properties from Landlords. Coz it will crystalise losses which then have to be covered…. and sure what is the point…. because the new landlord will fall into arrears same as the first.
@Prudent Hans
… as you are into ‘homework’ –
You might provide a brief paragraph on the signficance of The Bremen Town Musicians to any analysis of macro in the EZ.
Don’t see that there is a “conspiracy” per se. It’s not so much that the Irish Govt is, as a matter of affirmative policy, limiting supply and thereby driving up prices, particularly in Dublin. It’s just more of kick-the-can, where losses aren’t recognized to allow the balance sheets of the Irish banks continue to recover, with limited supply driving higher prices being an “unintended consequence” which just happens to favor the most indebted……often BTL landlords…..plus the Govt itself of course in terms of the short term (political) need /not for further recap of the Irish banks (those EU stress tests continue in the background of course).
The problem though is that the global environment is already changing, driven by the US (as per AEP’s article in the UK’s Telegraph a few days ago). The US Fed is now very clearly signaling well in advance that it is changing it position, with $ interest rates to rise becoming more likely sooner rather than later….and be ready or else (at all levels). Problem of course is that Ireland’s short term “game” is in danger of getting caught out, albeit the currently “subsidized” Elites (including BTL landlords) are being “fortified” more than others.
Everyone failed over the last years to get the timeframe correct. Living in the here and now is for most people. Longer term planning hasn’t been practicably or politically possible, either at personal or Govt levels. The current uneven uplift in some sectors masks the bigger picture of stagnation (at least). The overall picture remains though that leverage is worse than it was during the crisis, almost everywhere. So interest rate rises will have a much larger impact when they arrive (2015 /2016 beginning is likely). The NTMA has done a good job of extending the maturity profile of Ireland’s sovereign debt, and that will help at one level. However, not at the non-sovereign levels (particularly personal and Irish bank debt /equity levels).
The current Irish establishment is therefore behind and at the mercy)of the global economic curve, just as it is behind the political curve (e.g. local rise of SF, rise of non-fed EU forces, etc). As a result, the risk of “uglier” times by definition has actually increased, while Irish Govt (but also EU govt) ability to control the outcome(s) diminishes. Increasingly a “crap shoot” scenario, subject to and increasingly vulnerable to external shocks.
They (the Establishment) had better get it right or that “social revolution” risk will emerge and materialize. Interesting to see the near-panic tone in Ireland of the likes of Stephen Collins’ Sunday Independent article…….From afar, the overall social tone appears to be very clearly rising to reflect this overall economic, social and political background.
It ain’t over yet. Far from it.
That said, it is interesting too to see the Irish newspaper articles on the departure of foreign (and Irish) senior managers e.g. Elderfield, Meuller, etc…but also John Moran, senior Irish (and foreign) central bank staff, etc. Plus the appointment again of Insiders e.g. unscrupulous appointment of semi state /quango board members by Hogan, etc…the latter was recently “castigated” by my elderly, but historically pro-Establishment, mother living in Cork…unlikely ever to vote SF but appalled by those politicians she (and her friends) traditionally voted for……Captures the point in another light.
The Political Establishment is (consciously /unconsciously?) moving to protect itself /the status quo. While still behind the curve, the internal political “threats” are real and are being felt increasingly in “real time”. The official response(s) are currently more by way of “osmosis” at present rather than as a consequence of conscious decision in my view. Others may argue otherwise. However, social cohesion is slipping is all I can observe (and conclude). Not “conspiracy” in my view…but the momentum of those unintended consequences is increasing.
Lastly for now, is anyone there noticing inflation? Or deflation?
Here is the US, there is a real disconnect between official inflation figures and what the ordinary person is seeing on the ground, mainly due to the way official inflation rates are calculated. Health insurance, house insurance, car insurance….rising 20% pa or more in the last year (or two). 10-20% food inflation at the supermarket is now openly discussed, by almost everyone. Energy, gas, education, etc….All visibly ramping up, annually. “Bad inflation” as one article put it recently, taking money out of the consumer’s bank account.
The only area not inflating is labour remuneration. Stagnant at best. Beyond that, if one reads enough blogs re what ordinary Americans are saying, the message re jobs is clear…Official stats are a croc. Increasing jobs are temp, while job losses are of the more permanent and higher paying varieties. Not everywhere e.g. in Texas, there are shortages in various areas. However, overall the picture remains very difficult despite the spin.
What are people experiencing in Ireland (beyond house price increases)? Is it inflation (as an extension of what’s happening in the UK I presume) or deflation (as being reported for much of Europe)?
@ Paul W et al
This WSJ article sums up the situation as viewed by Weidmann.
http://online.wsj.com/articles/ecbs-weidmann-says-wont-put-off-rate-rise-due-to-public-finances-1405679468
He seems not to notice the contradiction inherent in his remarks i.e. that if deflation is a risk he should be more open to bond purchases. There is no sign of this contradiction being resolved cf. this analysis of his actions in Die Welt.
http://www.welt.de/wirtschaft/article129592824/Warum-Weidmann-ploetzlich-auf-Linie-der-EZB-ist.html
Paul W,
4 years ago I made a comparison with a friend in the US for food prices, based on a list I made for comparison between US and Germany in 2003
Aldi / Lidl / discounter price (in Euro for the specified size), now also available in Ireland and UK, as I heard:
Lidl EU
item EU unit EU price
Milk liter 0.69
Tomatoes kg 0.99
toast 500 g 0.55
Butter 250 g 0.99
Chicken, frozen kg 2.35
beer, simple liter 0.57
rice kg 0.85
flour kg 0.35
baguette (60 cm length) 0.65
ham, simple kg 6
coffee 500 g 2.65
noodles kg 0.98
pork kg 4.98
egg piece 0.099
cheese kg 5.73
mozarella kg 4.4
joghurt kg 0.98
no name Cola liter 0.26
O-Juice (100 %) liter 0.95
Sugar kg 0.85
Vodka liter 7.13
schocolade kg 3.9
spices kg 13.8
cigarettes pack of 19 5
gasoline liter 1.55
electricity €/kWh 0.29
cleaner every 14d ca 3 hours 36
Computer 400
ground meat kg 4.58
canned tomatoes 425 ml 0.39
canned champignon 314 ml 0.49
would be interesting to get those numbers for your places. That doesnt take more than 10 min in the store and 5 min to type it here
For Germany I get a mean inflation of 2.02% over the last 4 years, and a median of 2.6%
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-28062010-AP/EN/2-28062010-AP-EN.PDF
Comparative price level indices 2009, EU27=100
Of which: Food and non-alcoholic beverages Bread and cereals Meat Milk, cheese and eggs Alcoholic beverages Tobacco
France 110 113 122 104 95 133
Germany 111 110 126 92 91 119
Ireland 129 132 121 137 167 217
United Kingdom 97 84 102 95 117 166
looks to me, that both Ireland and UK are basically adjusting to the central european average, as it should in a barrier free market
@ sporthog.
That sounded like a rather bizarre call for pity for the Rentier classes in Ireland.
@ Paul W
The deliberate destruction of official measurement methods around inflation and employment in the US has been happening for a long time using methods like Substatution and Hedonics.
We are way behind in Europe and even further in Ireland but we are catching up.
This year we brought in 2 measure to increase GDP.
The first was to add SIN industries to the figures and the second was to measure R and D as investment rather than an expense.
We are also moving as much of the national debt as possible off balance sheet in order to allow us meet the targets for debt to GDP ratios set out by the Troika.
An obvious sham but one everyone seems happy to go along with.
I have yet to hear calls from economists to reduce the debt sustainability ratios as a result. How can the level of debt to GDP, where it is sustainable still be 120% when we have just doctored the GDP figures?
Carry on, nothing to see here.
Using numbers to lie about the reality is not a wasted exercise.
If the media are constantly reporting a return to growth even though people do not feel it themselves they still seem to get a more positive outlook for the future. The confidence fairy is making a huge comeback at the moment.
To me it looks like Paul W’s contributions were stuck for a day, and mine now for a whole work days period. This is not very conducive for discussion.
@ Sportshog
How about taking the property of landlord A,B or C and have the state or owner occupier own it. The accumulation of property like commodities should be discouraged. Otherwise you get the current worldwide craze of cash flooding the market making residential property expensive for those who actually live in it. Making families more insecure in their accommodation dampens their spending and likelihood of having a(nother) child aka consumer/tax payer. Making it not only inequitable but economically Stupid. In turn leading to the death of centre right parties as their wont be enough property owners left to vote for them.
@ Paul W,
Indeed good points…. well made.
I believe that those people who are more highly qualified should earn more than those who are less qualified.
However the cost of living in Ireland is not low. The Revenue Commissioners enforce some draconian measures against the people, i.e. taxes are high… and other taxes i.e. duty on alcohol are also very high.
I don’t know how people who have lower qualifications only (i.e. Leaving Cert) are going to survive in the future. People with 3rd level qualifications are finding it hard enough as it is… but for those with only school leaver qualifications… it just does not bear thinking about.
Photo of the Day …
http://www.irishtimes.com/sport/soccer/international/ireland-under-19-women-beat-sweden-to-reach-european-championship-semi-finals-1.1873725
Since this blog seems to be dormant while its owners bask in the sunshine (or scurry around the archive), I’ve no other place to put this joint interview with Thomas Piketty and David Graeber:
http://www.thebaffler.com/odds-and-ends/soak-the-rich
The French original can be found reprinted here: http://democratie-reelle-nimes.over-blog.com/article-un-dialogue-piketty-graeber-comment-sortir-de-la-dette-120443566.html
fyi -well worth reading …
http://www.nakedcapitalism.com/2014/07/ukraine-open-thread-links.html
Recent article about how long to get a non paying tenant out of a rental property…… approx 18 months before eviction proceedings can take place.
Of course during this time… the tenant pays nothing… and the landlord pays full costs.
The PRTB is about as much use as a chocolate fire guard. Justice delayed is Justice denied.
Private Property Investors beware!!
CSO Stats published today show that in June property prices were +2.9%
Nationally apartments +3.8%, Dublin apartments +6.1%! The latter number was discretely omitted from the language of the report, for fear of spooking us all.
http://www.cso.ie/en/releasesandpublications/er/rppi/residentialpropertypriceindexjune2014/#.U9DoOONdXOJ
Just found the link to the article..
Irish Independent.. 23rd July 2014… Charlie Weston.
http://www.independent.ie/irish-news/news/tenants-who-stop-paying-rent-can-live-free-for-18-months-30452306.html
Is there a problem with this website? Or is everyone on vacation?
As regards this not being a credit fueled bubble (as per ENda Kenny, Prof. Honohan, etc), surely it is being funded indirectly by credit…..deposits with banks are being used to inflate the property market in Dublin. At institutional /bank level, they have been ultimately replaced by EU, IMF and some market debt funding to Irish banks. As long as this funding continues, there is potential for the property bubble to continue. However, any external shock could deflate things very quickly. Again, it appears that the Irish taxpayer (via the banks /sovereign) is taking this risk, albeit indirectly “once removed”.
eamonn moran, paul W
Substitution and hedonic adjustment are actually necessary, because consumption preferences constantly change.
The price of horseshoes is today not relevant for the unwashed masses any more, but the price for your cellphone subscription became : – )
But there is potential for mischief, and I would still be interested if people could pick up the discounter prices I was asking for.
Francis
Unlikely that I will be in a grocery store soon! I wonder anyway whether such a comparison is valid. The High value of the euro has been absorbing inflation ($ energy costs, etc). Also attributable overhead costs impact of course and are not the same….
One form of “substitution” happening in Ireland appears to be official or market funding for banks versus loss of deposits for banks a people put their cash into property. Indirect credit fueled property bubble in Dublin. As long as the banks can borrow somewhere to replace the spent deposits, the property bubble could run a long way. Saying that it is a cash fueled bubble is simply wrong (so govt, Patrick Honohan, etc statements to that effect are simplistic. I essence, the risk is again being socialized (assuming the banks will continue to be propped up). Would take an external shock to derail…interest rate rises, gel-political or other
Paul W,
I am aware that this list looks utterly stupid at first glance.
Especially for many, when I have just spoken out against some simple constant 20-item lists, without subsitution and hedonics : – )
And I voluntarily add, that I am all for it, that the US Fed targets PCE ex food and energy, basically eleminating the whole list : – )
But the list is actually the outcome of many discussions I had in Germany about the undestroyable conviction of many Germans, that the Euro was hiding real inflation, endless discussions of German expats in the US arguing wildly different numbers for what the exchange rate for their wages should be.
It takes into account, that for many goods you can not define some standard quality (hair cutter, lawyer, )
And that a relevant exchange rate does actually dependent significantly on your basket of goods bought (US 1.08 Euro per Dollar, OECD 0.88, German 0.72 in 2009, financial markets more like 0.80)
The list has helped me repeatedly to convince people that their own convictions might be optical delusions.
@Sporthog
“Of course during this time… the tenant pays nothing… and the landlord pays full costs.”
What evidence do you have for the latter claim (that the landlord pays full costs)? Said hypothetical landlord may well not be servicing his mortgage at all on any of the properties he owns. Such rent as he collects is all pure gravy.
Welcome to the world of moral hazard.
@Sporthog @Ernie
I wonder how many thousand tenants are 18 months in arrears? Would it be anything like the 80,000 mortgages over 2 years in arrears?
Those poor auld landlords have it fierce rough, the whole world against them.
@ Ernie,
Whether the Landlord physically hands over money every month or not is immaterial.
The fact is that the landlord is on the hook, the landlord carries the responsibility. With missed payments.. interest and penalties begin to add up.
If you seriously believe…… that a property owner (either landlord or residential owner) can miss payments for 18 months on utilities + service charges + LPT+ PRTB fees+ monthly bank mortgage repayments and nothing will happen, no legal consequences or financial repercussions.
Then why don’t you try it yourself? Just try it Ernie…. stop paying all the charges which are attached to your private dwelling for 18 months.
Let us know in 12 months time how you are getting on.
Please, Sporthog. We all know that deals will be and are being done and that a good many landlords stand to benefit from being in arrears. Few are likely to be “on the hook” for much of anything. FG and FF look after their own… One need only observe how the gov’t are doing everything in their power to reflate the property bubble to know whose interests are uppermost in their mind at all times (hint: it’s not those forced to rent).
Also, and obviously, the landlord gets to keep possession of “his” property, whether or not he’s making payments on it, until the market “recovers” and secure in the knowledge that the gov’t is doing everything in its powers to make that happen (on the backs of the young, renters, immigrants, et al.).
@ Ernie,
What a wonderful world you describe……
Landlords don’t have to pay back anything… all they have to do is wait and a better deal will be cut by the bank / Revenue Commissioners / PRTB / Utility companies etc
Tenants don’t have to pay back anything either…. they can live rent free for 18 months and then move on to the next unsuspecting landlord.
Ireland truly is a utopia…. free gravy all round, except for the banks of course.
They obviously have a bottomless pit of money and will continue to support this utopia.
@Sporthog
You’re missing my point: it makes no sense to decry the moral hazard of a small number of tenants who may get away with living rent-free if you’re not also willing to decry the moral hazard of a much much larger number of property owners who are thus far getting away with not servicing mortgages owed to state-subsidised banks while still collecting rent.
I believe both situations ought to be stopped. You, as a vested interest, are apparently only outraged by the former. What you don’t realise is that this hypocrisy undercuts the illusory moral high ground you think you occupy.
I see my postings are turning up “haphazardly” via the moderator.
David McWilliams takes up the deposit substitution theme:
http://www.independent.ie/opinion/columnists/david-mcwilliams/beware-of-hedge-funds-bearing-gifts-the-easiest-way-to-rob-a-bank-is-to-run-one-30468837.html
Or is it simply double-entry? As the deposits are used (to purchase property) reducing banks /NAMA/etc liabilities, the purchased assets also come off the banks /NAMA /etc assets? Deleverage or indirect debt substitution?
@ Ernie Ball,
Ah… yes…. the old Irish ‘balance argument’. That guy over there is getting away with it… so why can’t I?
I doubt if you have ever carried the responsibility of being a landlord, and operating under “taxation on a loss”.
Because if you did you would not be equating apples and oranges. No matter how many times it is explained to you… Landlords provide a service to society, but it is clear you see them as getting a free ride on the gravy train. From your comments above… it is clear you think this free gravy train will continue forever.
“We all know that deals will be and are being done and that a good many landlords stand to benefit from being in arrears. Few are likely to be “on the hook” for much of anything.”
And just how do you know this???? Are you a judge… can you divine the future?
It is you who is under an illusion if you think this ‘much much larger number of landlords’ are going to get away with their financial arrears forever. Eventually they will have their assets removed and court judgements made against them, particularly as property has risen a certain amount in the last 12 months.
It is entirely possible that these properties will be sold for private owners, hence further reducing the pool of rented properties available.
They won’t get away with their financial arrears forever. They don’t have to. Rather, they will retain possession without any fear of foreclosure while the government gooses property prices (through NAMA and other means). Once the price has risen high enough, they are then able to unload “their” property, pay back all the arrears and what is owing on the mortgage and come out smelling like roses, having benefitted from the rental income throughout.
Your argument seems to be: these people are getting away with something (please ignore that much larger class of which I am a member who are getting away with much worse). Not very convincing.
Ernie,
I’m afraid you are mistaken about my point. That article was not written by me… it was written by Charlie Weston. If you have issues with it.. take it up with him. Coincidentally I see Loraine Courtney has a article today about her own situation with rent.
The topic of this thread is the interest only mortgages in Ireland. These types of mortgage are mainly aimed at investors for the rental market in Ireland.
Ireland requires rental properties for students, temporary workers, etc etc etc.
A supply of rental properties is vital for any society to function well. I’m sure you know that.
If you have in place
1) Penal taxation measures,
2) A costly ineffective dispute resolution system.
3) A populist marxist Govt waiting in the wings at 2016.
4) A hostile media which derides / ridicules landlords.
Then it is inevitable that investors will be discouraged. The supply of rental properties will eventually decrease, possibly driving up rental rates.
Let me make a suggestion to you. Would you place 300K on a 2 bedroom apartment which rents for 1300 a month? Lets do some basic maths first.
This is for a property which has no mortgage.
Income 1300 x 12 = 15,600.
Annual Costs / year = 4,000.
Profit / year = 11,600
Taxation = 3000 to 5800.
Actual profit realized = 5800 to 8600 euro, depending on your taxation situation.
Lets take the higher profit figure…8.6K…. that is a yield of 2.86%.
So what person in their right mind… would invest 300K for a annual yield of 2.86% when there is very real risks present?
In comparison have a look at dividend stocks….. some stocks are paying a dividend of 12 to 14% annually, some even more…
http://www.nasdaq.com/dividend-stocks/
If you compound the dividend… dividend paid in stock rather than cash… your yield could rise even more.
I must here offer a public apology for my failure to recognise the quiet heroism of the landlord class, selflessly providing shelter for students, temporary workers and more.
It is hard not to feel sorry for these heroes when their one-way bets yield only 2.86% rather than the usual bags of money. But things are looking up! Government has their back! Rents are going sky-high and surely with just a bit more effort, we can get those yields up to what our betters truly deserve. The alternative is just too horrible to contemplate: imagine a world in which the supply of rental properties “dries up” and simply vanishes for want of these selfless men and women and, horrors, rental rates go up! Anything but that!
Ernie,
You just put a smile on my snout 🙂
All right….. sarcasm aside…. how would you change things?
What changes would you implement RIGHT NOW in the rental market, would you nationalize all rental properties?
What would be a rental rate acceptable to you? 600 / month or less?
What tax treatment of rental income would be acceptable?
For a non paying tenant what time limit would you put on the resolution process?