Impartial advice on buying, private development insurance, market price
Q I am seeking advice on buying a house, as we have come across some conflicting information and we are unsure as to where to get accurate, impartial advice.
My girlfriend and I are hoping to buy a family home in north Dublin. We currently live in a one-bed apartment. My girlfriend owns the apartment. It is in negative equity and on a tracker mortgage with PTSB. As the apartment is in negative equity we are reluctant to sell.
Our concerns relate to the implications of me and my girlfriend buying a house together. We have heard secondhand information and seen newspaper articles indicating we could lose our tracker mortgage with PTSB as it becomes a buy-to-let property. Should we apply solely for a mortgage in my name? (I would be a first-time buyer.) Would this divert any attention from PTSB as there would be only one name on the mortgage if we bought a house? We had joint approval with Bank of Ireland, but then we went solely in my name (Bank of Ireland also).
We have found it difficult to get any clarity on this matter (even from banks), and we are anxious as to the full implications this may have for us.
A This is a common problem. Borrowers are keen to retain their tracker mortgages but cannot indefinitely postpone important decisions about moving home (particularly where families have grown).
There are solutions. Bank of Ireland, for example, will allow negative equity to be carried over to a new property and the tracker balance to be transferred. The balance will stay on the tracker rate plus a surcharge of 1 per cent for five years, and then the balance converts to variable rate. This product is not available for transfer of tracker mortgages from another lender. All this depends, of course, on proving you can afford the total repayment of the existing balance and new loan. You will need to check if PTSB offers anything similar.
Some owners on tracker mortgages retain their tracker rate by letting the property and not telling their bank. We do not advise you to do this as it is almost always in contravention of a covenant in the mortgage deed.
Purchasing the house in your sole name may be the easiest solution. As in all cases of joint purchase, I would recommend that you both get independent legal advice. This is particularly important for you if you are contemplating taking on your girlfriend’s negative-equity burden.
Similarly, your girlfriend will need to get advice on the implications of contributing towards the mortgage repayment on a house bought solely in your name. It is probably unpalatable to consider now what would happen if you parted company in the future, but getting the ownership structure and other legal issues sorted now could save you lots of additional heartache and legal fees down the road.
Simon Stokes is Chairman of the residential property group of the Society of Chartered Surveyors Ireland (SCSI)
Q I live in a private development and my car got broken into. The management company said it was not covered under the insurance and in effect was nothing to do with them. The car park is at surface level and there are no gates. Is there anything I can do?
A The managing agent is correct in advising you that there was no recourse through the development’s insurances. Theft or damage to a vehicle is not covered by the block and public liability insurance policies held in the name of the owners’ management company. It is usually the case that all vehicles and contents are left at the owners risk in the development.
You don’t mention whether you reported the incident to the Garda or not. If you haven’t already done this you should do so as soon as possible. You should also check with the owners’ management company to see if there is CCTV footage that would assist the Garda.
Many developments have installed CCTV at a reasonable cost to residents. It is also possible for residents to log into the development’s CCTV system via smart phones or other internet enabled devices at no extra cost if the CCTV system is relatively new. This allows for the opportunity to download historical files off the digital video recorder which can then be forwarded to the Garda.
Criminals are less likely to enter a development where residents have instant access to the IP CCTV system as the cameras can be monitored in real time and the authorities alerted immediately of any suspicious activity. If theft becomes a regular occurrence in the development it should be raised at the next AGM.
It is also possible to involve the local community garda with the owners’ management company to improve the development’s security. Another affordable option is to install motion-sensor spotlights in dark areas of the development or at entry points to the complex. While these measures will not help your situation now, they could help prevent it from happening again in the future.
Paul Huberman is a member of the property and facilities management professional group of the SCSI
Q We are first-time buyers seeking to buy a home. However, we are confused because of the various reports we have read about house prices. Could you give us your opinion on what is happening in the market?
A A number of reports on the property market published recently point to a stabilisation in property prices in certain areas. The latest Central Statistics Office (CSO) House Price Index reports that property prices nationally rose 2.3 per cent in the year to July. It also states that prices in Dublin grew by 3.3 per cent in July and are 8 per cent higher than a year ago and that apartments in Dublin were 11.6 per cent higher in July of this year compared to July 2012.
Further to this report, the ESRI has suggested house prices will rise by an average of up to 7 per cent nationally and up to 10 per cent in Dublin this year. All of these figures suggest an improvement in the property market, but the improvement is largely region-dependent and there are a number of factors to consider.
Firstly, supply of property of a certain type and in certain areas is limited and this is having an effect on prices.
Secondly, the stabilisation and modest increases in prices are largely location-dependent. Homes in well-established suburbs with access to schools, employment, transport and other amenities are attracting buyers. The case is not the same for different types of property in less established areas.
Thirdly, while the number of mortgage drawdown’s and approvals has increased, the increase in the overall number of mortgage accounts in arrears for principal dwelling houses (PDHs), remains a concern. It is also important to remember that some of the statistics don’t count cash buyers, who make up a large proportion of the market.
While the CSO information is the most comprehensive property-price data available to both buyers and sellers, it does not give a definitive picture of the market at any one time. This is because the index excludes cash purchasers who make up a substantial proportion of the market. In addition, the mortgage draw downs on which the index is based, tend to lag the market by approximately three months.
My advice is to do your research and make your decision based on whether a home is right for your personal circumstances and needs rather than depending on what happens in the property market. While a possible stablisation and improvement in the market is welcome, it is perhaps too early to tell where it will end up.
Gerard O’Toole is chairman of the western region of the SCSI, scsi.ie