Property Investors Protection

Are you in negative equity?

Good Financial Housekeeping

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What about that old pension?

By the time we hit 40, most of us have been in several jobs. Often we were in company pension schemes for just a few years but never did anything about those pensions when we left.

One of the options when leaving a job is to leave your pension fund there with a view to perhaps reassessing the options when settled in the new job. Usually this means not really thinking about the old pension scheme for decades – or until a recession hits and suddenly every Euro becomes important. The options will usually be:-

1. Continue to leave the fund where it is, or

2. Transfer to your current company pension scheme, or

3. Transfer to a Buy-out Bond.

Deciding which is the best option is not straightforward, nor is it easy to get the required information from the trustees/former employer/life assurance company. You need to find out what kind of funds you are invested in, how those funds have performed relative to other funds and you need to find out about fund management charges and any covert charges. In my experience there is little or no attention given to the interests of ex-staff members in a pension scheme, so it is a bad idea to do nothing. Make sure your investment risk is spread over several suitable funds in accordance with your own risk profile, regularly review your choice of funds (at least twice yearly) with your broker and use the life assurance company’s online facilities in between reviews to keep an eye on what’s happening. It’s all part of good financial housekeeping. 

Good Financial Housekeeping

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Struggling to pay your mortgage?

Forget about approx 15% unemployment in Ireland, bank bailouts, rising interests rates, higher taxes, IMF/ECB, Ireland’s reduced rating with Moodys, Standard & Poors etc. Why? Because these issues are outside your control and it won’t help your own circumstances.

Are you struggling to keep up with your mortgage payments and perhaps other loan commitments? Maybe you are already have mortgage arrears?

Would you like us to take away the stress of having to deal with your creditors?

 We will help you to establish some reasonable objectives and formulate a plan with manageable payments to your creditors.

If interested, email for further information.

Good Financial Housekeeping – Offering help

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Last out switch off the lights

Goodbye Permanent TSB!  The €4 billion recapitalisation now required per today’s stress testing announcements means the nationalisation of Irish Life and Permanent.

We will now be left with 2 banking groups, AIB and BOI, both owned by the State. This seems like a bad day for Ireland, but if it finally means the end of it all, then today represents a new start.

The government decisions of 30th September 2008 to extend the bank guarantees and to save Anglo Irish Bank Corp have proven to be catastrophic.

PTSB has been ruining its residential property investors for the last year by forcing them into giving up their tracker rates.  The bank did not care that the result would be the firesale of properties nor that lives would be ruined. Ironically we the taxpayers of Ireland will now save Irish Life and Permanent in their hour of trouble. Not much evidence of good financial housekeeping over the last 10 years.

The next 10 years are going to be rough but hopefully the measures being taken will be worthwhile for the future of our country.  

The Loan Arranger

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Recession is bad for your health

Life assurance companies in Ireland are saying that there has been a significant increase in death claims in 2010 and in those death claims caused by suicide. Furthermore there appears to be a definite link between stress and depression related illnesses and those occupations most affected by the recession.

+ 10% increase in life assurance death claims in Ireland in 2010

+ 10% increase in the amount paid out as a result of suicide in 2010

+ 55% increase in income protection claims in 2010 which related to psychiatric conditions, including depression.

There has always been a need to secure the family’s finances against ill-health and premature death.  Dropping life assurance and income protection plans is a particularly bad strategy strategy during a recession. There may be ways to preserve the level of protection at a reduced cost.

The Loan Arranger

Good Financial Housekeeping

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Enda Kenny to go MAD

When Ronald Reagan was US President and the Cold War was reaching its denouement we were worried that we would all end up fried in a nuclear war. However, there was one posture left to both sides, and it was summarised as MAD- Mutually Assured Destruction. You press the button, we press the button and there’s nothing to fight over.
Ireland Inc has reached that stage regarding its level of debts. Time for Enda Kenny to go into a dark room in Brussels, look Sarkozy and Merkel in the eye, and say we are about to press the button (sovereign default). This would destroy Project Europe and the glue that ties it together, the Euro. If we default, Greece, Portugal and probably Spain would follow…
All of this will come to a head in the next couple of days.
My bet is on a mutually beneficial fudge.
First Cheltenham, then the rugby, then the good weather followed by a cut in our repayments….Yes, I’ll take a bit of that please.

God help us but Jedward are worth a punt for the Eurovision as well.

Written by: Conall O’Morain,

Now we’re making progress – Good Financial Housekeeping

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PermanentTSB Rips off RIP Customers

PermanentTSB has a lot of residential investment property (r.i.p.) mortgage customers on tracker rates with interest only. In a cynical attempt to remove tracker rates the lender is now contacting every customer who has been with the bank for 5 or more years on interest only and offering a simple choice –  give up your  tracker rate and pay a higher variable rate, or no more interest only!  Such mortgages were taken out on the understanding that the interest only would be for the full term, although the lender had the right to review this.  With low rents, increased taxes and massive negative equity on most portfolios, many customers are going to be in trouble within months. And this is even before considering what interest rate rises are coming from Europe. PTSB accepts that customers may not be able to make full repayments, but will automatically take away the tracker rate on the entire mortgage if there is even a slight shortfall on the capital repayment. There was no warning in the original mortgage offers about losing the tracker rate. PTSB also knows that there is no hope of moving to a different lender as most residential investment properties are in serious negative equity and ther are now only 2 other lenders which will even consider low loan to value RIP mortgages . Valuations are down 60% since 2006 , so people  in their mid-40’s or older who had 70% loan to value portfolios for their retirement will never even break even. It is disgusting that PTSB is taking advantage of consumers already struggling and adding to their misery. The additional interest charge for these customers is initially 1%, but even that is a temporary discount relative to the full variable rates. Having worked in the mortgage and financial services industry for 20 years, I would be slow to ever recommend PTSB to any of my clients after this.  The Financial Regulator prevents mortgage lenders taking away a customer’s tracker mortgage rate, but for some reason this only applies where the property is the consumer’s family home. Whilst this is an important and recent safeguard, it should have been extended to residential investment property mortgage holders. 

If you have been or will be affected by PTSB’s latest tactic, please contact me.  I would like to help prevent blood in the streets if possible.

The Loan Arranger

Good Financial Housekeeping

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IPOA Reaction to Budget 2010

Landlords to Challenge Abolition of Section 23

The Irish Property Owners Association (IPOA) is set to challenge the Government‘s abolition of Section 23 Reliefs.  The Government brought in the incentives to encourage investment, and were successful but are now fleecing the people who purchased these properties.    It is unacceptable for anyone to change the terms of a contract after it has been signed and the monies paid, but for a Government to do so is bordering on Criminal.  

Property owners purchased Section 23 in good faith because of the section relief and now face bankruptcy and ruin.  It is outrageous and scandalous that the state encouraged the purchase of these properties and put the incentives in place and when they have been purchased these incentives have been withdrawn.  Stamp Duty was paid for these properties and they were more expensive that comparable ones because of the tax relief.  In some cases they were in areas that are difficult to let and only purchased because of the tax relief.   
Stephen Faughnan, Chairman of the Irish Property Owners Association stated that an “all-out effort will be made by the IPOA to Challenge this situation.  It must not be forgotten that section 23 and 27 incentives have been extremely valuable to the state in refurbishing and reinstating properties in cities and towns throughout the country caused by the Rent Control Acts of the 1930’s and 40’s.  Landlords put up money, most of which would have been borrowed to refurbish these and create good quality affordable accommodation for the people of Ireland.”   The measures introduced by the budget will cause dereliction in the future not alone in the older properties but in the newer unsold properties that stand as a monument of the lack of control on the incentives and of banks that capitalised on these incentives.    The landlords of Ireland must stand united and fight this attack on their livelihood.

Taken from the Irish Property Owners Association website December 2010

Comment:  The multi-million Euro bonus package paid to certain AIB staff was justified by the government on the basis that there were contractual obligations.  It would seem only fair that property investors would have their contractual terms honoured, especially as it was the Government which introduced these property incentive schemes.  The wealthier investors have already used up their Section 23 allowances so it’s the people with large borrowings that haven’t been able to use their allowances yet. It’s also unfair that the interest allowed against rental income was reduced in 2009 from 100% to 75%. How can the Government change the rules of their own incentive schemes? There will be a trust issue for any future schemes introduced by Government. For many landlords, rental income is their main source of income. It’s insulting that such income is described as “passive”, the result being that such income is non-pensionable.

Good Financial Housekeeping

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R.I.P. in Ireland

Ireland reportedly has 40,000 mortgages already in arrears (3 months or more). Anyone who bought or remortgaged property in the last 5 years is likely to be in negative equity and unemployment is back to the levels of the early 1980’s. 

From personal experience I know that a huge number of people bought residential investment properties (R.I.P.s), often several properties each after releasing equity and going again. With the 4 year National Recovery Plan hairshirt, NPPR tax, PRTB charges, 25% of the mortgage interest being disallowed from 2009, reduced rents and longer vacancies between lettings, the eventual rise in interest rates will cause carnage in Ireland.  Handing back the keys is not a useful option in Ireland as the debts do not go away.  Personal bankruptcy is effectively a life sentence, unlike in the UK. The expert group on mortgage arrears which has sat since February 2010 has only been asked to look at the principal private residence, a.k.a. the family home. The best they could come up with is a “deferred interest scheme” for homeowners in trouble. Any thoughts of a debt forgiveness scheme have been ruled out. We pay to rescue the banks which in turn will crush us without mercy. Nothing has been considered for the residential investment property investors who had hoped that property would be their pension.  The only consolation is that the problem is likely to be huge and there will be so many people in trouble at the same time that something will have to be done. It is unfortunate that there is no public discussion or planning on this matter, nor is there likely to be until this crisis “surprises” us.

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Pensions & the Government Four-Year Plan

 The full Recovery Plan document can be read on

 Private Pensions

The main proposals that impact on private pension provision are:

• All lump sums in excess of €200K will be taxed, probably from Budget Day.

• In 2011 the Earnings Cap will be reduced from €150K to €115K.

• Next year will also see the abolition of PRSI & Health Levy relief linked to pension contributions.

• The Standard Fund Threshold will also be reduced, details in the Budget.

• The maximum rate of relief for personal pension contributions remains the same for 2011 at 41%, but the following reduced relief rates are proposed:

Year    Rate

2012    34%

2013    27%

2014    20%

• There is no indication that the tax treatment of employer contributions will change.

• There is a very strong hint that the proposed auto enrolment scheme will never happen.

 Good Financial Housekeeping – Helping to make your income go further

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