Family home and 3 buy-to-lets - going for a PIA

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what I said (again) was that he did not invest his money into a pension.
he invested time, effort and money in to properties which he thought were going to be his pension. Section 23's and section 27's were a government incentive to get people to invest in property for their future needs. As an aside it created employment and taxes for the government, but I gather from what the OP wrote his reason for investing was for his pension - he had no other pension. Banks would not have given all the money needed ( 100% loan ) plus lend the cost of stamp duty plus solicitors fees plus outfitting etc, so I think it probably fair to say the OP did invest something in what he intended to be his "pension."
I think everyone, esp with the benefit of hindsight, realises it was a bad decision, he should not had done so, but he is where he is, and he can reduce his loses if he goes to Newry for a year. That way he can be debt free in a year, from what I understand. If he does not go, he will owe at least 140,000 net this time next year / next Autumn, from what I understand, but please correct me if I'm wrong.

In Oct 2014, would you prefer to be worth nothing and owe nothing, or to own nothing and owe 140 on a house in negative equity? Ben Dunne was on the radio recently and his advice was for people in this situation to seriously consider going to Newry for the year....he said he would if he was in that situation.
 
Hi honest,

you make the same few points a few times.

Firstly - The Irish government was encouraging everyone to invest in property (and by extension, I am assuming, you are attempting to imply that therefore the OPs responsibility for his actions is diminished and that the government is partially to blame for him becoming insolvent)
... You invested in the Irish property market, which as you said was logical at the time, and it was even encouraged by the government through section 23 / section 27 tax incentives...



Given the OP says that three of the properties were purchased as PPRs I don't think you can apply these incentives so decidedly in this particular case. The other investment property is in Bulgaria, again unlikely to be a section 23 investment. The OP has made no mention of these incentives so you are assuming that was the thinking.

Secondly - that the OP should leave for another jurisdiction to escape the consequences of his actions
... Go to Newry or Wales or wherever in the UK. Its a better governed country and the madness that went on here did not happen there, at least to the same extent. You can come back in a years time debt free.





Again this is an assumption (predicated on them establishing COMI and getting bankruptcy), and in the case of Newry, it is not backed up by what has been said on other threads on AAM. The judge in NI is reluctant to proceed with bankruptcy cases involving people from the republic.

Furthermore, given the volume of media coverage there has been on UK bankruptcy it is highly likely the OP has considered it. The OP may have reasons for wanting to remain in Ireland probably relating to children, family support and income. Newry is not a panacea.

Also I am curious as to the basis of your assertion that the UK is "better governed". What grounds have you for such a comparison? A more lenient bankruptcy regime is hardly sufficient grounds for such a statement. Having spent quite a bit of time there I wouldn't be so quick to assume the grass is greener.

The third point you make is that the fact the OP paid off some of his loans is relevant to the discussion and justifies tagging a speculative, leveraged investment in a single asset class (property) as pension. You also appear to have some sympathy for his railing against the completely irrelevant public sector pensions.


Fair enough, he paid down some of his debt - I don't think a single poster has claimed otherwise, but the over-riding theme to the OPs approach was not to build a pension but to borrow one and hope the markets played into it, thus avoiding the slog of a slow and difficult build up on the basis of earnings over time. The size of his debt far outweighs any payment he has made into it. You say "he had no other pension" - but fundamentally that was a choice, not an imposition.
 
I nearly think this should be locked...... Broke guy hasn't come back on and I can see why.... It has turned it to a bit of a bashing and don't really think its
Called for.
 
+1. The OP still doesn't get that buying 4 houses in your twenties on nothing but the hope of capital appreciation is madness. It makes me realise that our next bubble is only as far away as the relaxation of credit restrictions (which thankfully won't be any time soon).
 
I nearly think this should be locked...... Broke guy hasn't come back on and I can see why.... It has turned it to a bit of a bashing and don't really think its
Called for.

Of course you're right, people should only be told what they want to hear! That's what got the OP into the mess in the first place - yeah you're great keep putting all your savings into property, sure what could go wrong?

The OP wants to have his cake and eat it, get rid of the "investment" properties at no further cost to him (but passing it on to the taxpayer is fine) and keep his really big home (rather than moving from it to a smaller house) but also wants the mortgage on his PPR reduced to something in line with it's current value because property was only a one-way bet?

So if everyone in the country got the same deal where do you think that would leave us?
 
+1. The OP still doesn't get that buying 4 houses in your twenties on nothing but the hope of capital appreciation is madness.
I do not believe in bashing a fellow when he is down. In fairness to the OP, I gather he said he had a property and his partner had a property ; they met, and for whatever reason bought two more. In fairness to them, they seem to be modest properties, if the combined value of 3 of them is 170k. Would you prefer if he bought one big house in a good area, or a number of smaller properties which he went to the trouble of renting out, dealing with tenants, leases, breakages, repairs etc? He was never going to end up with a pension worth the 1.5 million he mentioned ( someone else who did not invest in property), or anything like that.

I think its unfair for you to say the OP "still doesn't get that buying 4 houses in your twenties on nothing but the hope of capital appreciation is madness". Did he even suggest he anticipated capital appreciation? He is down, in God knows what mental state, and I'm sure he realises his liabilities greatly exceed his assets ; I suggest you do not bash him.


The judge in NI is reluctant to proceed with bankruptcy cases involving people from the republic.
I do not know about that, I know someone who went to the north for bankruptcy no problem, but he had relations there and may have had some dealings there, I do not know. "Ivan" an idea people can go to Wales either, or to England like your man from westlife and get his debts wiped out.


So if everyone in the country got the same deal where do you think that would leave us?
in most other countries like the US and UK people can either hand back the keys or go bankrupt within a year. Where does that leave those countries?
 

A little research never hurt anyone, I picked up that tidbit from this website. Steve Thatcher who posts on here regularly has a key post thread on the best place to go bankrupt in the UK, this is the most recent post regarding NI
http://www.askaboutmoney.com/showpost.php?p=1348784&postcount=93

As I said, given how widely canvassed UK bankruptcy has been in the Irish media, it is highly likely the OP has investigated it already and decided that it is not appropriate for them. No harm in suggesting it once, but constantly handing it out as a panacea is unlikely to be be of much benefit or consolation to the OP.

in most other countries like the US and UK people can either hand back the keys or go bankrupt within a year. Where does that leave those countries?

Given that there are about 190 countries in the world (based on the number of UN members) you are rather cavalier with your use of "most countries" on the erroneous basis of only two.

And point of information - it is not correct to say "handing the keys back" - the bank never owned the property, the OP did not buy it off them.

There are non-recourse mortgages, where a bank cannot chase you for any outstanding balance and recourse mortgages. I think it is ten US states that allow non-recourse mortgages so even in the US for the most part, the debt remains with you when you surrender the property to the bank, voluntarily or involuntarily.
In the UK mortgages are generally recourse mortgages, same as here and in most of Europe - this means you still owe the balance outstanding even if you surrender your property (the security).
In all cases it can be wiped out by various bankruptcy and insolvency mechanisms but those are separate to you walking away from your property.

While I applaud your wish to defend the OP from those you see as bashing, handing them half thought out generalities is of more harm than good.

There are no quick fixes or easy solutions, but there are supports and options. Encouraging the OP to use them would be of far greater benefit.
 
he invested time, effort and money in to properties which he thought were going to be his pension.

He bought property A and lived in it. He paid a deposit to buy the property and he borrowed the mortgage. He repaid his mortgage while he lived there, this is the cost of having a roof over his head - not an investment into a pension.

His partner/wife did the same with property B. They then rented these out and bought property C, they paid a deposit and borrowed the rest for this.

This is their family home, the one where they live with their children, in the city where they work. In 7 years they have repaid 20k off the loan - or 283 Euro per month.

They will not "lose" this as they are living in the home, most people living in the home of their choice would do very well to have this luxury for 283 euro per month.

You do realise that most people have to pay to have the roof over their heads don't you?

but I gather from what the OP wrote his reason for investing was for his pension - he had no other pension.


You don't seem to understand the difference between investing and gambling.

Investing is when you can afford to lose the money you are using.

Gambling is when you can't.


Had he "invested" his money into a pension (as opposed to for a pension) he would have set by a little each month and put it into a specific pension fund, or a savings account or even prize bonds.

What he did, like so many others, was to borrow the money to buy property and hope that the rent would pay the mortgage, and then sell it for a huge amount of money a few years later.

The Section 23's (that you're so fond of) insured that the cost to the buyer was as little as possible and insured tax free rental income for years. Maintenance, refurbishment etc, all written off by this incentive.

You can't use these section 23's as some kind of defence and then ignore what they basically did.

He chose to take a gamble and unfortunately it didn't work out for him. The costs he incurred was minimal because the first two houses were not bought as BTL's - they were bought as homes.

The gamble started when people (not only the OP) discovered that the rents were no longer covering the mortgages, that demand had dropped, increased costs of properties and in many cases incomes lost and so on.

Please Honest try to respond to the actual points I'm making.

Thanks.
 
They are in negative equity to the tune of a six figure sum : they will be better off financially - not difficult as now I understand from what the OP wrote that his liabilities greatly exceed his assets - if they went to Britain ( like so many others ) and got this debt wiped off.


most people living in the home of their choice would do very well to have this luxury for 283 euro per month.
you forget he would have paid interest as well as paying off the capital amount. Living in the home - rightly - cost a lot more than 283 a month.


You do realise that most people have to pay to have the roof over their heads don't you?
of course, did I ever suggest otherwise? And I also think people should pay for their pension. It cannot come too easy and I think the OP may have expected it too easy.

You don't seem to understand the difference between investing and gambling.

Investing is when you can afford to lose the money you are using.

Gambling is when you can't.
a thin line at times. Investors in banks in cyprus lost money, as well as some investors in Irish banks in the past.

One dictionary definition of investing is "
1. the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value. "

Gambling is To bet on an uncertain outcome, as of a contest.b. To play a game of chance for stakes.
2. To take a risk in the hope of gaining an advantage or a benefit.
3. To engage in reckless or hazardous behavior: You are gambling with your health by continuing to smoke.




All pension funds include a percentage of their funds in property : do you think they are "gamblers"?

Of course, with the benefit of hindsight, its easy to see how foolish it was to "invest" in property in a poorly regulated, poorly planned and poorly governed economy, but it did not seem like that at the time, and for decades returns on property outpaced returns from many other types of investment, or at least kept up with inflation, unlike your prize bonds etc

What he did, like so many others, was to borrow the money to buy property and hope that the rent would pay the mortgage, and then sell it for a huge amount of money a few years later.
In fairness to the OP he did not mention he wanted to sell the property "a few years" after buying it. Definition of few: "Amounting to or consisting of a small number: one of my few bad habits.
2. Being more than one but indefinitely small in number: bowled a few strings."
Most people who bought property to rent out , or to have as their pension, done so as a long term thing. There were high transaction cost charged by the government eg stamp duty to discourage people holding property for only "a few" years. In fact, when the government decided it wanted people to invest in section 23 / 27 properties for their pensions / long term saving, they discouraged greatly the sale of such properties within ten years, by having a clawback of tax incentives within ten years if the property was sold.



The Section 23's (that you're so fond of) insured that the cost to the buyer was as little as possible and insured tax free rental income for years. Maintenance, refurbishment etc, all written off by this incentive.
I do not think "Maintenance, refurbishment etc, all written off by this incentive."...I think the property owner still had to pay this.


He chose to take a gamble and unfortunately it didn't work out for him.
It was a gamble, but unless you have a permanent and pensionable job many people have found their finances have been a gamble. He should have disregard the government property incentive and invested some of his savings for the future outside the country, perhaps through a pension fund ; or else got a job with a defined benefit pension. Not everyone can have a defined benefit pension worth the 1.5 million the OP gripes about, though.

The costs he incurred was minimal because the first two houses were not bought as BTL's - they were bought as homes.
.
I doubt the costs were "minimal"; they probably spent tens of thousands through deposits , stamp duty, solicitors fees, outfitting, leases, initial mortgage repayments, etc.

Anyway, I am fed up playing devils advocate, and there are questions only the OP can answer eg how much extra per month did he invest in the extra 2 properties etc. However he is where he is: I think judging from his posts he thinks the playing field is not level?


Please Honest try to respond to the actual points I'm making.
I think I have always responded to your actual points. Anyway I have tried to be fair, and to see all points of view. I do not believe in bashing people when they are down, especially if they are decent hard-working people ( and I have no reason to suspect otherwise) who acted in good faith but were possibly unlucky / foolish / misled or whatever. I am not posting on this thread any more and let the OP explain things if he wants.
 

Yes he did suggest that ... by talking at length about the negative equity on his PPR. His PPR is costing him no more than when he agreed to buy it, at a price which he presumably thought was fair value back then. He could have had a lower mortgage on the PPR at the time by selling up the other properties as most sane people would have done once upon a time. I've lots of sympathy for people who ended up in NE through no fault of their own. Sorry, I can't bring myself to feel the same for someone who has their disastrous investment decisions paid for by the taxpayer and then whinges that they're not getting a big enough write down.
 
Folks

As this has moved into a general letting off steam thread and as people have been speculating on house prices, I am closing the thread.
 
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