The boomtime apartment that still traps us
We are still trying to escape the bad decision we made in 2006 – but the bank says no
Ceire Sadlier at her apartment at Townsend Street, Dublin. Photograph: Eric Luke
On foot of an article I wrote for The Irish Times in October, “Airbnb helped me stop hating my negative equity apartment”, Indie Pics had contacted me about taking part in a documentary for RTÉ about the property crisis.
“Were you on the telly last night?” the woman at the till asked, before I could make my order.
“Yes. That’s mad that you recognised me.” I was amazed and embarrassed.
“I am so sorry about your situation. It’s really terrible,” she said.
“Ah, thanks. We’re doing okay in the grand scheme of things. It’s hard to complain when the person next to you is homeless.”
“Yeah, but I feel sorry for people like you. There are so many people in your situation and the pressure is . . . lots of people are taking their own lives under the pressure.”
She wouldn’t let me pay for my coffee and wished me the best for the future. I had been worried that when the programme went out, the audience would see us as whingers.
One hundred per cent trouble
We had bought a one-bed apartment in 2006 for €390,000 with a 100 per cent mortgage. Now a family of four, we cannot live there, and rent a house in Donnycarney for €1,650 a month.
Meeting the costs of owning the apartment on top of paying high rent elsewhere has been hard, because the income from long-term rental never covered the outgoings (mortgage, tax, insurance, management fees).
We were no longer left with just €20 on the weekends before pay days
We always prioritised our mortgage payments, to the detriment of our credit card, our credit union loan and help from our families. All we thought about was money. Buying anything, even the necessities, came with gnawing guilt.
Then we started doing Airbnb at our apartment, and as the months went on I began to notice that we were no longer left with just €20 on the weekends before pay days. We paid off loans and cut up the credit cards. The income from Airbnb was covering the costs of the apartment, and that was lovely.
Then the management company called an AGM. On the agenda was a proposal to ban short-term lets in the building. I tried to rally the troops – in a city centre apartment block of 80 apartments, nearly 10 of them were on Airbnb. Message after message came back: “I’m a renter and my landlord doesn’t know.”
When it came to the AGM, there were only three of us who were owners doing Airbnb in their apartments. The board spoke of concerns around security; noise pollution; litter issues – but without tangible examples from any of our apartments.
They waved around a letter from the Department of Housing and An Bord Pleanála and told us, “What you are doing is illegal”. The letter stated that, if the property is being used exclusively for short-term lets: “The letting company or property owner will now need to apply for planning permission to Dublin City Council for a material change of use of the apartment concerned . . . The continued operation of an apartment or residential unit without planning permission for such a material change of use should be considered unauthorised development and subject to enforcement proceedings by the relevant Planning Authority. ”
You would have to apply for planning permission, put a sign up outside your apartment and hope no one objected
I asked my neighbour, who had recently worked at An Bord Pleanála, what that actually meant – and was it being enforced? Yes, she told me. In fact, another friend of hers who was letting a self-contained unit at her house through Airbnb had received a warning letter from An Bord Pleanála after a neighbour complained about the comings and goings of strangers.
In practical terms, you would have to apply for planning permission, put a sign up outside your apartment and hope no one objected, she said. It was not impossible to get the planning permission, but probably expensive, admin-heavy – and what would the consequences be for mortgage rates and taxes?
I did have sympathies for residents of the block who felt uncomfortable with sharing common spaces with a stream of strangers. And we are cautious people who try to avoid trouble. We had been caught out before with new rules around property, when we got a €3,240 fine for not paying our (now redundant) NPPR tax, which we didn’t know about.
No more Airbnb
So we are going to stop doing Airbnb and go back to long-term rent. “Sure you’ll get loads for rental in that place,” people say. I rang an estate agent who said we’d get €1,400-€1,600 for the place, except . . .
“When was the last time you rented that long term?”
“The last tenant left in July 2015.”
“And how much were you getting?”
“Okay, so you know you can’t charge more than 4 per cent more than that, because of the new rules? Well, not unless it hasn’t been rented long term for more than two years, or unless you do some major work to it. Could you put in a new kitchen maybe? Then you could charge the current rate.”
There are so many caveats when it comes to owning a property you can’t live in; it really is a burden
It just added to the feeling of lack of information, lack of control, lack of choice. As a renter, knowing that our rent can’t go up by more than 4 per cent is great. But there are so many caveats when it comes to owning a property you can’t live in; it really is a burden.
While all this was going on, we had the apartment valued at €295,000, leaving us in just €20,000 negative equity. Our application for a negative-equity trade-down mortgage had been rejected 18 months previously, due to the then much larger negative equity and us being new to our jobs.
This time, the same very enthusiastic branch manager told us we were great candidates. Since our last application we had paid off loans, reduced outgoings and had less negative equity.
Okay, but I don’t want to go through the application process again if any of these things are red flags, I told her. We both work on fixed-term contracts, we have no savings and we still have two expensive children. Are any of these deal breakers?
Underwriter says no, was the answer we got in March
I fell for her gusto and went through the three-month process of applying, gathering documents, getting letters from employers, filling in forms and answering intrusive questions such as: why had I transferred €50 to my brother-in-law the previous month?
Underwriter says no, was the answer we got in March. We are not good candidates for a mortgage.
“The permanent jobs thing is the main concern. You’d be in a much stronger position if you had permanent jobs.”
Three-bed in the suburbs
There was a lot that was hard to swallow. We were asking for €260,000 to buy a three-bed in the distant suburbs – spending weekends exploring towns such as Rush and Bettystown. We weren’t asking for more money. I just wanted the bank to help us to move – we’d still be paying them the €312,000 we owe them because we’d be carrying over the negative equity.
We are nearly out of negative equity, which can only be a good thing, but the attractive thing about that type of mortgage is that you do not have to have a deposit. As soon as we reach parity, we need to have a 20 per cent deposit. And the chances of us saving €1,000 is a stretch, so €50,000 is laughable.
I cut her off when my voice got wobbly and I cried at our rented kitchen table because we had got caught up in the lovely idea of not having to be landlords; not dealing with landlords; of not being worried we would have to move; of owning a family home and giving our kids some stability; being able to paint a wall or get a new mattress or plant a garden.
It was quite a week, deciding to discontinue the Airbnb and taking the hit financially there – and then a no from the bank. All for a bad decision we made in 2006 and an apartment we don’t want to own.
A bit of relief
After a big cry I felt much better, and it was actually all a bit of a relief. The wait was over. The answer was definitive. We’ll just get on with it. We’ve survived the last 10 years.
Every week I hear about another family being told that the house they are renting is being sold
And we’re okay. The house we rent is nice apart from a useless heating system. In five years, we might be in a position to sell the apartment and use the profits as a deposit for somewhere else. I’ll be 40 then, but I can’t do much about that.
I just hope that our landlord doesn’t sell in the meantime. Every week I hear about another family in Donnycarney being told that the house they are renting is being sold – and there is nowhere to rent around here. We queued down the street to view the one we are in now. Having looked for three months and not being the chosen tenant at any, I practically pinned the estate agent against the fridge to convince him to pick me.
All those hours spent worrying about money, spent frustrated with irresponsible landlords, spent wondering if we’ll have to move again, spent regretting our apartment.
We’re lucky, really, I keep telling myself. No point worrying, no point whingeing. But when that woman in Virginia kindly said “I’m sorry you’re having a hard time”, it was soothing. It was just nice for someone to acknowledge that it’s a bit shit.
And the free coffee was lovely, too.