Will anything ever be done about neg equity??

[Working mam]

Hi wishes, it's very frustrating isn't it. All I want is to move house for a better way of life, commuting, nicer area for the kids etc. the banks don't seem to understand its a logical and cost effective measure for them to facilitate this. Well, they do but say their hands are tied by regulation. It's not like I'm looking for any favours, if I had no NE or was a ftb I would get the mortgage no problem, they just won't let me move the NE with me.

 

[terrontress]

We already have a situation where older generations who bought their houses in the 90s and earlier have nice homes, no negative equity.

In the next few years we will see Ireland's fortunes start to reverse with a general uplift in the global economy being reflected.

The same mistakes will not be made again so the younger generations will start to buy houses again but nowhere near the prices that those in negative equity now have paid as the mistakes have been made and lessons learnt.

So there will be an older age profile with no issues, a younger age profile with no issues but a middle-age profile where these issues will just be dragged along in perpituity.

The only thing we can hope for is the passage of time and chipping away at the capital.

 

[Working mam]

I can live with the NE element if I was just able to move. It wouldn't be so hard to swallow only for all of the bank bailouts are benefitting the wrong people. Innovation is just not in their vocabulary unfortunately.

 

[bacchus]

bought what was to be a starter house in 2006 at the height of the boom, and now have negative equity of approx €180k after we had the house valued last month. We would love to move house

What's the problem? Do you have difficulties with monthly replayment?

 

[flattea2]

Is the obvious answer not to rent out your current house and rent another in a place you like.

Then wait and see what the fall out will be with regards govt/ bank policy on negative equity.

That’s what we are doing.

 

[Jim2007]

I mean for those who bought in 2006 and now have huge NE then why cant the banks write down their some of the mortgage to reflect the current value of the house. It's totally unfair.

When you refer to the banks, you are in fact referring to the taxpayers of this country, since we now own the banks and any losses suffered by the banks will in some way have to be carried by the taxpayer! So what you are really saying is that your fellow citizens should be asked to carry the can for your financial mistakes...

Having a house in negative equity and being insolvent are two different things and while I would expect that the politicians might be able to sell the electorate on doing something about people who are insolvent, expecting them to be able to sell the idea of writing off NE is a bridge too far...

Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up! If we start compensating people who are in NE, where do we draw the line? What about the retirees who invested their pension savings in AIB/BOI or who ever, are not they just as entitled to compensation? Or the couple who were investing to cover the costs of sending their kids to college, Or the invalid who lost all her compensation package etc..... Unlike someone in NE, these people's losses have materialized and they are probably suffering more that most

I really can't see how any politician is going to convince people that they should take on the burden of other people's NE, while they are struggling to meet their own financial obligations...

 

[truthseeker]

Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up!

I expect that most people in NE didnt buy their homes as an 'investment', they bought them because it was all they could afford at the time. Now that people are stuck in unsuitable housing and unable to sell, there are social issues, like people not having children, or having less children (future tax payers to pay your pension) because they dont have the space. Or people unable to take better jobs because they cant move due to the NE.

Simpy dismissing it all as 'the whole issue of financial responsibility' is fine, but how do you propose to solve the problems that are arising as a result of this stasis?

 

[Working mam]

I've read and taken on board everyone's advice and agree the rent/rent seems to be the only option at this time. My concern though is that we could be forced onto investment property rates by the bank if they know it's no longer a ppr, also I'd have to pay income tax on the rental income, plus we would already have a shortfall in the rental income versus rent we would be paying on new property. It would be too costly for us I'm thinking, I need to look into all of the figures properly.
Also, for the point made about banks writing off NE and the taxpayer ending up paying, I thought since last week bank bailouts no longer count as sovereign debt and so is not a further drain on the taxpayer?
I personally do not think writing off everyone's NE is going to happen or is in fact the right thing to do, albeit it would be a massive burden removed, but the govt and banks do need to come up with ways of facilitating us to move. Personally we would love more children but have decided we cannot while we are stuck in this position and we are not alone.

 

[Working mam]

Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up! If we start compensating people who are in NE, where do we draw the line? What about the retirees who invested their pension savings in AIB/BOI or who ever, are not they just as entitled to compensation?

What about the Anglo bond holders!!!!

 

[Jim2007]

I expect that most people in NE didnt buy their homes as an 'investment', they bought them because it was all they could afford at the time. Now that people are stuck in unsuitable housing and unable to sell, there are social issues, like people not having children, or having less children (future tax payers to pay your pension) because they dont have the space. Or people unable to take better jobs because they cant move due to the NE.

All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!

Simply dismissing it all as 'the whole issue of financial responsibility' is fine, but how do you propose to solve the problems that are arising as a result of this stasis?

People have to change their attitudes - as we move to a more integrated Eurozone they will have to in any case. If people adapted a more Germanic approach to finances, we'd all be better off.

For example, last year my daughter had her first communion - total cost CHF25. That covered the cost of cleaning the white robe supplied by the church for the occasion plus the reception afterwards, when it was over everyone went home - no big splash.

 

[truthseeker]

All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!

Im not only talking about people bringing up children in 2 bedroom apartments. Im talking about people living in environments where there is no infrastructure and no schools. You can choose to dismiss it if you wish, but that does not mean that it is not a very real problem for thousands of people. Your attitude is very 'Im alright Jack'.

People have to change their attitudes - as we move to a more integrated Eurozone they will have to in any case. If people adapted a more Germanic approach to finances, we'd all be better off.

Oh please. It takes decades for cultural attitudes to change. Some of us dont wish to be German.

For example, last year my daughter had her first communion - total cost CHF25. That covered the cost of cleaning the white robe supplied by the church for the occasion plus the reception afterwards, when it was over everyone went home - no big splash.

Well arent you great? Im delighted for you. Now explain to me how you think the social problems due to negative equity should be addressed. And I mean real solutions, not - we should be more German.

 

[Oscaresque]

All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!.

Have you compared some of these European apartments to a lot of the ones built during the boom here? They are not exactly comparable in terms of size or quality. Certainly in my own experience with both anyway.

My second bedroom is 5 foot by 6 foot. I'd guess most rooms this size in your average European apartment are walk in wardrobes.

 

[Cailte]

Working Mam, I am in a similiar situation to yourself, difference being that we bought a money pit of a house that has nearly driven us to breakdowns trying to sort it out BUT...in a lovely location with great neighbours, great amenities and into work in about 30 minutes, so easy commuting. Our negative equity wouldnt be as much as yours but we would have difficulties trying to sell our house because of the condition it is in. A poster previous put it so well, we will be the middle aged generation stuck with negative equity and paying mortgages on houses that were huge mistakes and that we are stuck with.

Regarding children? My husband and I have decided not to have any at all, how sad is that. We are barely scraping by.

 

[Working mam]

Cailte that sounds like a bittersweet situation, house in the perfect location but due to struggling with the high mortgage you have decided not to have children. Have you engaged with the bank with a view to going interest only for a while? We too bought a house that needed to be gutted and we have put a lot of money into it, not that it helps the value but it may make it more 'saleable' if we can ever be in a position to put it on the market. We did a lot of the work ourselves and looked for cheap ways to improve the look of the house. I wish you the best of luck in the future

 

[Working mam]

Have you compared some of these European apartments to a lot of the ones built during the boom here? They are not exactly comparable in terms of size or quality. Certainly in my own experience with both anyway.

My second bedroom is 5 foot by 6 foot. I'd guess most rooms this size in your average European apartment are walk in wardrobes.

Good point, and it's also houses that have an issue with size, our 3rd bedroom is too small for a bed to fit in, we never considered it a problem as we thought we would be out of this house after our first child. The 2 kids will have to share a bedroom when the youngest is out of the cot. Not ideal but it means no more kids for us unless we want to go back to our parents era of loads of kids sharing a room!

 

[Cailte]

Thanks Working Mam for your kind words, we will figure something out, I had just wanted to let you know that you are by no means on your own with your situation. The worst part of it for me is the smugness of people who didnt buy when we did and their complete lack of understanding or sympathy for our situation. In fact I have sensed an air of 'good enough for you' from people (not family or friends, just 'people') if I have ever said even a little of our situation (that includes online as well, hence why I don't mention it, except in relation to your post).

I think, only in Ireland, would you get people happy to see you in trouble.

I wish I had some suggestions for you, Working Mam, particularly as you have already approached your bank already. Would it be worth going to your local TD? I haven't gone down that avenue myself but I know of people who were thinking of doing this, after similar refusals by their bank.

 

[Working mam]

Cailte you are absolutely right, I come across the same attitude from 'people', only people stuck in this position can appreciate the effect it has on you and how it hinders certain areas of your life. It's hard being stuck in a house that never feels like home, but I have to keep telling myself we could be a lot worse off, I see so many of my friends struggle financially and losing jobs and I know that is much worse than my 'problem'.
I did actually speak to a TD about this, but as positive as he was about the proposal I feel the TDs have no interest in getting involved. Probably part of the 'well I'm fine so why should I help you' brigade. I'm going to just give it more time and keep saving and hope for the best!

 

[terrontress]

Thanks Working Mam for your kind words, we will figure something out, I had just wanted to let you know that you are by no means on your own with your situation. The worst part of it for me is the smugness of people who didnt buy when we did and their complete lack of understanding or sympathy for our situation. In fact I have sensed an air of 'good enough for you' from people (not family or friends, just 'people') if I have ever said even a little of our situation (that includes online as well, hence why I don't mention it, except in relation to your post).

I think, only in Ireland, would you get people happy to see you in trouble.

I wish I had some suggestions for you, Working Mam, particularly as you have already approached your bank already. Would it be worth going to your local TD? I haven't gone down that avenue myself but I know of people who were thinking of doing this, after similar refusals by their bank.

I hear a lot of the younger generation, students and the like, complaining that they have to move away for work and I find myself thinking that at least they are not in debt. A spell away will be a great adventure, broaden their horizons. The world has never been easier to travel round and it's never been easier to communicate.

I'm envious of them.

 

[lff12]

You should never have bought in the awful area.

I bought in 2006, now the place is 60% devalued, its a nice area though, so its not the worst.

I don't think anything will happen to negative equity, it is as it is.

That is correct. Usually long term inflation gradually irons out negative equity which normally occurs when an economy has withstood a major shock, as we have.

The government did nothing to prevent people from profiting from price increases, so they can't really turn around now and rescue those who were unlucky enough to buy at the wrong end of the pyramid.

Give it time, your equity will gradually recover over time.

Can't help you with buying in an undesireable area though, my cousin insanely did the same, and is now at least 60% in neg equity. But his house is quite nice, despite the horrendous neighbourhood.

 

[terrontress]

That is correct. Usually long term inflation gradually irons out negative equity which normally occurs when an economy has withstood a major shock, as we have.

The government did nothing to prevent people from profiting from price increases, so they can't really turn around now and rescue those who were unlucky enough to buy at the wrong end of the pyramid.

Give it time, your equity will gradually recover over time.

Can't help you with buying in an undesireable area though, my cousin insanely did the same, and is now at least 60% in neg equity. But his house is quite nice, despite the horrendous neighbourhood.

Over what period do you believe the equity will recover, for example for those straddled with 60% NE in an awful neighbourhood.

For people shelling out €350k for a 3 bed in Ballyfermot, I don't think they are ever going to get that back unless the Euro devalues massively and we get high inflation.