Sunday 16 December 2018

Home economics: Sinead Ryan answers your property questions


Mortgage arrears
Mortgage arrears

I got into mortgage arrears of €15,000 with my bank due to unemployment. I am now on a much lower salary and separated, resulting in child support payments. I've completed financial statements for the bank, rented out a room in order to make up the money for the mortgage and I resumed full payments more than a year ago. However, it is still proceeding with a possession order despite 82pc equity, insisting I can afford another €150 a month to pay off the arrears, which I cannot (this has crashed my credit rating). I want them to extend the mortgage term (there are eight years left) but the bank has refused. Does the judge have the power to instruct my bank to extend the term in order to recoup the arrears?

A. Niall Bass specialises in handling possession order cases for Cosgrove Gaynard Solicitors. He says: "It is important that, if the bank has issued a Civil Bill seeking possession, you enter an appearance to the proceedings, yourself, or by instructing a solicitor to act on your behalf. This is particularly advisable if you wish to contest the bank's application.

"The next step is to file a replying affidavit, which should set out the reasons that you have to contest the mortgage provider's claim. You should also set out what your affordability is, and outline the efforts that you have made to keep up with the repayments and reduce the arrears.

The court is not entitled to involve itself in the decision-making process of the mortgage provider, in relation to how much it lends, and what repayments it will accept. The court's role is simply to decide whether or not the mortgage provider is entitled to the repossession order that it is seeking, on the basis of the case that it has put to the court. As such, it cannot order the mortgage provider to extend the term of the loan. If you can show the court that you are making your best efforts to clear the arrears that have accrued, and also making payments towards the repayments, this will go some way towards the court not making an order for repossession.

If the court does make an order for repossession, then it is advisable to seek a stay on the execution of the order, to allow you time to get your affairs in order, and also seek a stay pending the appeal of the order, if you do wish to appeal within the strict timeframes permitted."

Q. Could you clarify would I be subject to capital gains tax if I sell my property as I used it as my business address (but never saw clients there) though I did claim 20pc tax reductions on utility and phone bills.

A. Principal Private Residence (PPR) tax relief exempts the gain made by an individual on the disposal of his/her dwelling house from capital gains tax (CGT). For full relief to apply, the dwelling house must have been occupied by the individual as his/her principal private residence throughout his/her period of ownership of the house.

So it can be relieved in full only if it is used as a residence in full. If part of the house has been converted into a home office, potentially the tax relief could be limited, and particular care should be taken in this respect when claiming business expenses related to working from home, says Barry Flanagan of

"Various different expenses can be claimed but there are some that may prompt unwanted attention from Revenue. The key issue is to avoid a situation where Revenue may deem there to have been a 'Change of Use' from residential to business, thus sacrificing a portion of the PPR relief. For example, if part of a house is used exclusively as a doctor's surgery, then a change of use has occurred.

However, in general, claiming a reasonable portion of utilities such as electricity and heating bills will not be deemed to be a change of use.

A portion of phone costs can also be claimed, or the full cost if a dedicated "business only" line has been installed.

Revenue notes that "if part of the house is being used for such (business) purposes but not exclusively so, apportionment does not arise. For example, if a room was used as an office during the day and as a study room for children at night, apportionment would not be required'. So your case should not affect the availability of PPR."

The Ryan Review

RaboDirect billed itself as Ireland's "straight-talking" online bank, and it has certainly engaged in straight-talking for its 90,000 or so customers with deposit accounts, telling them it's shutting up shop in May and to find a new home for their cash before then.

The reasoning is that it no longer needs deposits in Ireland to fund lending activities. Given its paltry interest rates, this message was being heard loud and clear already.

The Dutch bank is simply the latest in a long line, however, after Danske, Nationwide UK (Ireland) and Bank of Scotland Ireland.

The cull may not be over, however.

Ulster Bank, although back in the black was hived off from owner RBS, even though it has started to repay its £15bn bailout. It has always denied it intends leaving Ireland but the departure of boss Gerry Mallon less than 18 months after taking up his post doesn't look good. On the plus side, it has just introduced a great four-year fixed mortgage rate.

New entrants are slim on the ground. Those, like Pepper, come with a specific market in mind. While interest rates start at 3.25pc, that's preferred for the higher equity home-owners. Rates rise to 5.05pc for those who need maximum cash. Ouch.

Indo Property

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