Thursday 19 April 2018

Struggling property investors forced to sell at loss

Charlie Weston Personal Finance Editor

THOUSANDS of people who bought property as an investment are being forced to sell up despite prices being at an all-time low.

Buy-to-let houses and apartments now represent almost a third of all property sales.

Executor sales and buyers trading up make up a falling share of property sales.

The figures from estate agency Sherry FitzGerald showed that distressed investors now make up the largest section of vendors in the housing market, accounting for 29pc of properties sold through the agency in the year to date.

Finance experts said this was because many investors were unable to carry the cost of having a second property as it was affecting their family finances.

Large numbers of investors are getting into arrears on their investments.

AIB said yesterday there had been a huge jump in the arrears among its buy-to-let customers.

Mortgages with a total value of €1.3bn were now in arrears of three months or more. This represents 16pc of its €7.8bn buy-to-let mortgage book -- up from 10pc in December.

Low rents and difficulties finding tenants mean many buy-to-let investors lost money on their properties, director of Irish Mortgage Brokers Karl Deeter said.

It is estimated that around 100,000 residential investment properties were bought during the housing boom.

Some of these were bought with no deposit, and interest-only deals.

Many of the buyers had little experience in property investment and were being forced to sell in a market where prices had dropped by 60pc, Sherry FitzGerald said.

Some lenders are putting property investors under pressure to start repaying capital as well as the interest, with investors who do not agree being threatened with losing their tracker mortgages under review clauses. Residential mortgages do not have such review clauses.

Investors on interest-only mortgages can find repayments rising by ¿600 a month when they switch to capital and interest payments.

Investors have also been hit by changes in mortgage interest and the second homes' tax, which costs €200 a year.

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