Home economics: Sinead Ryan answers your property questions
Q. My boyfriend and I bought our home three years ago and have a baby son. Although marriage isn't on the cards, I want to make sure we're secure if one of us dies. We have a mortgage protection and serious illness policy but also I'm worried about inheritance tax issues. Are there any implications?
A. The insurance issue is termed "insurable interest" in the industry. Unmarried people generally cannot benefit from taking out insurance on one another but having a house and child in common circumvents this for insurance.
Bob Quinn of themoneyadvisers.ie adds: "Cohabitants have no legal rights to their deceased partner's estate under the Succession Act and any are virtually eroded in the event of the deceased dying without a will.
"However, in this instance, you should qualify for 'family home relief' if you meet certain criteria: (a) you have occupied the house for three years prior to the date of inheritance; (b) you do not hold any interest in any other property; (c) you will continue to occupy the house as your sole residence for six years after the date of inheritance.
"On qualification, you have the legal right to apply for provision out of your deceased cohabitant's estate. However, there are no guarantees, and you are down the pecking order if there is a spouse or civil partner from a previous relationship.
"In the instance of death, you also have few entitlements to social welfare benefits and pension -scheme death benefits. Unless there are adequate (and properly structured) life assurance provisions in place, inheriting assets from your deceased partner may give rise to an unpleasant inheritance tax bill. Perhaps it's time to walk down the aisle."
Q. I am buying a house as a first-time buyer. It is currently rented out and the plan was I would live there and rent out the second room. There was a lot of delay before the sale by my bank and in between, the owner agreed a new lease with the existing tenants until the end of the year. He says I can still buy and they can stay until the lease is up, paying me instead of him. I am a bit annoyed by this, but willing to do it as long as I'm not stuck with them long term. How can I ensure this?
A. My gut instinct is to walk away from this purchase, to be honest, as it's always preferable to buy with vacant possession rather than inheriting a tenant not of your choosing.
But if you have your heart set on it then the best advice, according to Susan Cosgrove of Cosgrove Gaynard Solicitors is to have the current owner issue his tenants with a notice of termination immediately.
This is because under the Tenancies Act, tenants are entitled to a minimum period of notice to quit. Given the shortest possible time is 28 days (for less than six months tenancy) right up to 224 days (or over seven months), if they've been there more than eight years, it's important to get your ducks lined up now.
If you buy with them in situ, they still have the right to renew the lease and so it is not the case that they will automatically have to leave once the lease is up, despite the owner's assurances.
In any event, the Act does not apply to tenancies where tenants live with the owner however, in this case it is most likely that the lease is already registered with the RTB by the vendor and so does apply for now.
The Ryan Review
Permanent TSB produced a shock headline at the Oireachtas hearings on mortgage arrears when it claimed some of its customers hadn't made a repayment in seven years. Pressed by Sinn Féin's Pearse Doherty to produce the figures, it said it hadn't them to hand, but would produce them. To date, it still hasn't, the TD told me.
There was some scepticism at the remarks with even liberal commentators wondering why on earth the bank hadn't moved against such recalcitrants.
But Central Bank stats bear out that 44pc of loans in long term arrears (+720 days), are more than five years past their due date for repayments. Non-Performing Loans (NPLs) remain a significant, and are highly unusual in an EU context, the bane of bankers' lives and are unsustainable. And with taxpayers owning most of the banks affected, that means it's a problem for Joe Citizen too.
Society can't have it both ways: propping up free housing for someone who refuses to engage with their responsibilities, and giving out when banks flog off loan books of these terminal cases.
Sharon Donnery, the deputy governor of the Central Bank, highlighted its frustration at the situation. While 87pc of borrowers who have restructured loans (ie extended terms, rejigged repayments, warehoused debt), were sticking to them, showing that if both parties meet half way there can be accommodation, she added the long-term arrears (basket) cases are increasing to an alarming level. A total of 39pc had chosen not to engage with their lender at all and have no sustainable solution in place. Why, is a question for psychologists, but the What (the hell we should do about it), is a question for us all, not just the bankers and politicians, since it is other customers subventing this non-cooperation, with higher variable rates, charges and taxes. Just 2,722 repossession orders have been granted by courts on owner-occupied houses since 2009. No wonder there's no competition to enter the mortgage market from foreign banks.