Home economics: Answering your property questions
Sinead Ryan answers your property questions
Q. I've had enough as a landlord. I haven't been able to meet the mortgage payments on my buy-to-let with the rent I'm charging for the last year and, as I'm in a rent-freeze zone, I can't now increase it. I'm already topping it up by €150 per month, and that's without maintenance costs. My tenant is terrific, but I'm trying to decide whether to cut and run. I'm paying 4.7pc interest and have 15 years left before I retire; I think I'm just out of negative equity, judging by prices on the road but certainly won't make a profit. I'd appreciate advice.
A. It is certainly more difficult to turn a buck than it used to be. I'm reading from your email that you are not a 'professional' landlord, rather one who bought a house as a one-off investment, or perhaps as alternative pension funding.
That puts you in the majority, but measures such as rent controls and legislation on leases have made life more difficult. Whether it's better for the tenant is also a matter on which the jury is out.
There's no magic formula. I think you need to drill down your numbers and gather more facts than supposition. For instance, generally speaking if you had your money on deposit, you'd be earning less than 1pc p.a. (less DIRT at 39pc). If you were breaking even on the property, I'd say leave well enough alone; you're not in arrears (unlike some 18pc of landlords) and leave the capital to accumulate. But you're not. Topping the 'investment' up to the tune of €1,800 p.a. along with spends on maintenance etc makes this a clear loss. And while 4.7pc is above average in interest rates, it's not unusual for buy-to-lets.
Rather than guess the house value, get in a valuer and do it properly. Then spend a bit of money sitting down with a broker or accountant to assess the black and white of it. This is a business, after all. The numbers, spread over one, five and 15 years, should make your decision for you. Should you sell, there may be a capital gains tax implication, but if you have not profited, this should not trouble you.
Q. We would like to help our daughter buy her first home, but we have three other children and don't wish to show preference. Our family home will be split four ways when we pass on. How can we give her money now (we have around €40,000 to spare) so that this is not affected? Would a loan be best (although we wouldn't ask her to repay it any time soon) or can it just be deducted from her eventual inheritance?
A. It's good to plan ahead. There's nothing wrong with advancing an inheritance, but there are certain ramifications you should take into account, as Cara Walsh of Mullany Walsh Maxwells Solicitors advises:
"Your daughter is very fortunate that you are able to help her this way. Yours is a very common dilemma and there are a number of options open to you.
"You can certainly give your daughter a loan. You can provide a long repayment period and agree that it is to be deducted from her inheritance if you die before she repays it in full.
"For the sake of clarity, what is agreed should be put in writing, even if it is only a letter signed by you and her. If she is getting a mortgage, her lender may require the payment to be a gift rather than a loan. Again, this is fine and there are no immediate tax implications, so if you can afford to do this, you can agree with your daughter - and indeed any of your children - that any such gift is an advance on their inheritance. If you do so, it will be essential to visit your solicitor to update your will to ensure that it clearly states this.
"Finally, I find that if you are open with your children now about your intentions, it will reassure them that you intend to treat them all equally and will help to avoid any potential resentment or suspicion on their part in the future."
The Ryan Review
SOME 130,000 properties are owned by local authorities across nearly 6,000 housing estates. Eighty-seven per cent of them are traditional houses, mainly three-beds, with an average age of 33 years. Exactly 4,202 are vacant, 2,250 for more than 12 months. Given there are more than 100,000 on the housing waiting list - many holed up in hotels at taxpayer's expense - it is a ludicrous mismatch, even in the eternally dysfunctional world of Irish housing.
Their age and style makes these properties among the most expensive to upkeep, a fact which the council watchdog, the National Oversight and Audit Commission (NOAC), pointedly referenced when it announced that many were being left derelict on vacancy, rather than being made ready for a new family. Its view was that some dwellings were deliberately left vacant for long periods to make it easier to get central Government funding.
In other words, let's leave them boarded up, ugly and shameful, and perhaps the bigwigs in Dublin will be embarrassed enough to send cash to sort it out. What exactly did local people vote for their councillors for - if not to attend to local matters?
A sum of €24m has been allocated for this year for upgrading units under what is called the Voids Programme. Every town has these vacant premises. Surely it is not beyond the wit of man (even local county councillors) to bang heads together?