Friday 22 September 2017

Home Economics: answering your property questions

Mum's house is vacant
Mum's house is vacant
Sinead Ryan

Sinead Ryan

Personal Finance expert Sinead Ryan answers your property questions.

Q. I am behind on my mortgage payments to AIB, having only part paid for nearly two years as a result of other debts and a court mandated payment elsewhere. I told the bank I would get in a tenant to help with the arrears. They agreed to this, the tenant is now in place and I am back making full repayments. I completed all financial statements (SFSs) as required. I thought finally all was okay, but suddenly I received a summons to court from a solicitor for Pepper. I thought it was a mistake, but the bank have told me it's the 'process'. I'm shocked and upset. Do I need a solicitor (I can't afford one), and why are they doing this?

A. This must be very frustrating. Just as you're getting on top of things, you get the rug pulled from under you. I've been on to both AIB and David Hall of the Irish Mortgage Holders Association, who is appointed by the bank to assist customers in arrears.

AIB says that while it outsources arrears management to Pepper to "encourage engagement", the bank itself uses its own panel of solicitors for legal matters. They add it's not their policy to pursue debtors after an arrangement has been put in place, but where customers have significant levels of arrears, a 'test period' is applied to the account to ensure any long term solution offered is both affordable and sustainable. A two-year arrear problem would definitely put you into that basket, I'm afraid, and this is why Pepper are agreeing to ways to enhance your repayment capacity. The problem is that the legal process, separately, continues in tandem during this arrangement.

David Hall pulled no punches. "The reader needs to come and see our Personal Insolvency Practitioner (PIP) free of charge and tell AIB he's doing so. Don't worry about the court hearing, it will be adjourned automatically but you must turn up - you don't need a solicitor." The PIP will review your entire situation and handle all AIB correspondence from here on in.

Q. My mother has recently moved in with me and her house is vacant while we decide what to do with it. She may need nursing-home care and I don't want to sell it until we know this. I rang the insurance company to tell them, thinking I'd get a discount on the premium but, to my shock, they told me they were only prepared to cover it for fire and cancelled the policy. All my mum's things are there, although we have removed the valuables and now it's uninsured. What can I do?

A. I expect most people think, like you, if you remove the 'risk' items from the property, it should be cheaper to insure. Unfortunately, the opposite is the case, as you've found out. It actually increases the risk of leaking pipes not being found, a fire not being controlled or vandalism if a house is left vacant.

Deirdre McCarthy of insuremyhouse.ie explains: "If a property is unoccupied for more than 30 consecutive days, the only cover a standard insurer will offer is fire. You can take out an unoccupied policy from specialised insurers to cover fire only, liability and fire brigade charges, and you can add contents cover for an additional premium, but only for fire damage. One option, if you want cover for additional perils such as theft and water damage, is to arrange for a family member to live in the house until you decide whether it will be sold.

"You would need to disclose to your insurers that it's a family member living in the house and not the owner, but this way you can get cover other than fire only."

Another more permanent option, is to let it out. This will come with some costs, as you'll need to get it ready for occupation and your mum would need to be in agreement. Have a chat with a good letting agent who offers 'full service' for a couple of months' rent. They'll get it ready for you from top to bottom, and vet tenants. Tax will be payable on the rental income, however, and you will need to register with the Residential Tenancies Board (see www.rtb.ie for responsibilities).

The Ryan Review

Research from KBC confirms what we already know - "Large numbers of people are not in the right homes for their current life-cycle stage."

The Homebuyer Sentiment Survey quotes stats and figures to back up their study, which comes from the school of the blatantly obvious.

There are families with two kids squeezed into the one-bed apartments they bought so optimistically as singletons, now secured by a yoke of negative equity.

There are elderly widows rattling around in five-bedroom detached houses because they can't find anywhere suitable nearby to down-size to.

And there are those who have the mortgage to trade up from a town house to a semi-d, but can't get past the cash buyer who has hoovered up all the good stuff.

And then there's the first-time buyers - state sponsored and tax-payer funded, buying houses they may not be able to afford when interest rates rise (they only need a two per cent deposit in some cases once all the incentives and freebies are factored in). Unsurprisingly they make up 53pc of potential purchases with means and motive.

The pipeline of demand is getting longer. Only 49pc of people are 'entirely content' with their current housing circumstances. And 28pc are actively considering buying a home in the next two years - willing, but not able, it seems. The only light is that there's no evidence of a 'buyer frenzy', but plenty of buyer frustration.

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