Tuesday 12 November 2019

Home economics: Sinead Ryan answers your property questions

Rabobank’s head office in the Dutch city of Utrecht
Rabobank’s head office in the Dutch city of Utrecht
Sinead Ryan

Sinead Ryan

I recently received a letter from Rabo Bank telling me that they are closing my account. They have given me options to move my savings, but I am worried — are they in trouble? I have €600,000 from the sale of my house spread across four banks on the advice of my son, who said this was safer while I am waiting on a house to be built. Some €240,000 of it is in Rabo in a fixed-term account until the end of this year. Where can I get the best return now and how can I keep it secure?

A. You have several questions here, but my first answer to you is not to worry.

Rabo Bank is not in any trouble, but they are leaving the Irish market in an orderly wind-down. They have proved very popular with customers as they initially offered attractive interest rates, but these have been pared back, to really being no better or worse than the others.

Given this is short-term money, you really shouldn’t concern yourself with a ‘return’. Money on cash deposit is not earning anything of note, so the banks you are using should be viewed as minding, rather than investing, vehicles.

The second concern you have is over its safety. There certainly would have been a brief time when leaving no more than €100,000 in any one account was a good idea; but that was when some banks may have been in danger of going under.

In Ireland currently, there is no such risk. So, as long as your money is in one of the main retail banks, credit union or a State instrument (such as An Post), don’t worry. 

However, to be specific, the Deposit Guarantee Scheme (DGS), which your son may have been referencing, ensures that up to €100,000 is covered in any one account should things go awry. Foreign banks in EU member states (e.g. KBC, Ulster Bank) are also covered, and all in turn, by the ECB.

I won’t tell you what to do, but that reassurance should be sufficient. If you really feel more comfortable spreading your deposits around, then certainly do, but don’t feel any urgency or pressure to do this.

Q. We have paid off our mortgage, to our great relief. To our shock the bank has refused to keep the deeds for us in storage. Is there another that will hold them — and how do I know they will be secure and what would it cost?

A. All Irish banks have stopped providing safe-keeping services over the last number of years. It was simply business that wasn’t worthwhile for them.

In their stead, private vaults have begun taking over this business and while it is important that property deeds are secure, these days it isn’t the end of the world if they are lost, although it is messy and time-consuming to replace them.

Seamus Fahy of Merrion Vaults (merrionvaults.ie, tel: 01-254 7900) in Dublin says: “As banks prefer their customers banking online, the withdrawal of the safe-keeping service is a consequence.

“Many of our customers use our service for storing important paperwork such as wills, passports, title deeds, birth certificates, etc, and a standard safe deposit box is ideal for these  documents and costs €199 per year.

“Included in this price is insurance cover of €10,000 underwritten by Lloyds of London.”

I’m not sure where you live, but other options include Sentinel Vaults (sentinelvaults.ie) in

Dublin 4, which offers a similar service, as do others. You could also opt for simple storage facilities such as UStoreIt or Elephant units, but you would need to check if their insurance covers loss.

A small personal locker is priced at around €350 for the year but would be big enough to store many items.

The Ryan Review

As the fallout from the meeting between Storm Emma and the Beast from the East continues, invariably it is the cost of insurance claims that will be focussed upon.

Many insurers -notably FBD, which posted sterling results recently - have seen an upturn in profits after a torrid decade but extreme weather events can cause a setback on home and public liability books. Flooding in particular can wreak havoc, as many commercial and domestic owners will be finding out at renewal.

Some won't be re-quoted at all, others excluded for flood damage, and even more black-listed, unable to switch insurer for years. I live in an area which used to be prone to flooding (and experienced an extreme form some 18 years ago).

Flood alleviation works have meant we haven't seen so much as a large puddle since, but that hasn't ruled out some estates remaining uninsurable. This affects value and future sales.

The geo-mapping system used by insurers is imprecise and disordered but they'll still use it to justify refusing cover to home-owners. So why has the Government not taken the lead from the UK and set up a flood reinsurer? 'Flood Re' is not for profit, owned and managed by the insurance industry, paid for with a £10.50 levy on policies and overseen by the UK government. It provides affordable cover to those otherwise unable to access it.

Michael Noonan, in 2016, said it would be too expensive here and wouldn't work, but the Government will be shelling out millions anyway in aid and flood works in the months to follow to those who don't have insurance. Why not simply pay for the insurance instead?

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