Home Economics: answering your property questions
Advice from our property expert on buy-to-let mortgages and on the usefulness of energy apps.
Question: I'm looking for a buy-to-let mortgage to supplement an inheritance with which I'm buying an apartment. The cheapest rate currently available is 4.5pc, which I find shocking. The bank is also forcing me to pay twice for the legal fees which I understand is a new rule for loans over €75,000 as a third solicitor must be used to check the other two (mine and the bank's work), paid for by the purchaser, which is adding around €1,500 to the price. Is there anything I can do?
Sinead replies: You're not doing too badly! You can pay a lot more for BTL loans, and the 4.5pc tells me that it's less than 50pc loan to value. Upwards of 5.5pc isn't unusual. Banks treat these as riskier options than residential mortgages, and with 18pc of them in arrears, you can see why.
Brendan Burgess of askaboutmoney.com says it's unlikely rates will reduce. "The more fundamental question is whether it's worth investing in property at all - I don't think that the yields justify it once all the other high current costs are taken into account. If you have a mortgage on your home, paying that off may be a better investment, especially if it's not a tracker. Make sure you take in all the other costs before committing. These include, but are not limited to, letting fees, insurance, legal fees, tax, registration with the PRTB, repairs and maintenance etc."
On the legal question, it is correct that once the matter is deemed a commercial transaction that bank, vendor and buyer each require their own solicitor. You pay for the bank's and your own.
It is a law society regulation that the extra opinion is deemed to be a requirement in non residential transactions.
This is because many of these turned out to be bogus during the boom and the legal compensation fund and the banks lost out.
Question: I'm considering getting a remote heating thermostat installed for my mother who can be forgetful about switching on the heating. Although I'm in contact with her daily, I often call around to find her cold and would like a way of controlling the temperature myself. What options are available? Are they expensive and will she need a new boiler?
Sinead replies: Energy apps are great; I can be a bit forgetful too and I have one myself, so it's nice to be able to switch them on while on the way home from work and have the house toasty when you get there.
Many elderly people need some heating even during the summer, so being able to manage the temperature, hot water and on/off timings can be a great help. If you're controlling it, you can ensure it's on at the right time and she doesn't have to think about it.
Electric Ireland's 'Climote' or 'Nest' products and 'Hive' by Bord Gais both do the job. A thermostat needs to be fitted in a temperate part of the house (e.g. the hall) to replace the existing one.
There is usually a second fitting at the boiler. They allow you to set up a schedule for heating, which can easily be changed, with a 'booster' for instant heat, all controlled from a downloadable App. They work with most heating systems and you won't need a new boiler.
They are not cheap, at €299 for the Climote (there is also an annual charge of around €36) and the Hive is €299 also - for €349 they'll add a boiler service. From time to time there are special offers for new customers, so do check that out.
You don't need to be a customer of either to buy and the price includes installation which will take about one hour. Both companies claim they save money on heating bills during the year.
The Ryan review
The howls of protest at Ulster Bank’s decision to sell off a bundle of distressed loans on the open market are hard to bear (yes, I’m talking to you David Hall!).
These include around 900 buy-to-lets and residential properties which are in such a severe state that many haven’t had a cent paid on them in three years — so they leave the bank in an invidious position. Ulster Bank and its parent, RBS, were bailed out by the British taxpayer, not the Irish, and has held off far too long in crystallising and securitising its debt.
What is it supposed to do? Wait five years? Ten? The truth is that it doesn’t have to be a ‘vulture’ fund who buys the loans. The Irish Government could, and rehouse homeless families (or indeed, keep those living there). Even if they are sold to an equity firm, the chances of indebted mortgagees doing a deal have suddenly become brighter.
Ulster won’t take a hit from individual customers, but it’ll be taking a massive haircut from the eventual buyer. Then, home owners can do a side deal, as happened with Pepper when it took over GE Money’s loans. If it’s paying say 30c in the euro, it only needs to recoup 50c/€ to make a killing. If families can offer that (and many do), then happy days.
Michael Noonan could have been a bit subtler about vultures being good for the ecology — picking over the bones of carcasses — but it’s disingenuous to think a foreign bank should remain concerned about a homeless problem created by our Government.