Home ownership ... why?


#62

I am open to correction on this but I am pretty sure you can go to a foreign bank if they are in the EU , I think the bank would still have to pass the credit worthiness of the Irish central banks tests etc (may be a standard throughout the EU). In reality though you would probably find it difficult to actually get said foreign bank to sign off on the loan, especially at the rates they are offering elsewhere in Europe.


#63

We are being ridden by our banks and the EU talk of free movement is nonsense in the sense that our banks have a virtual monopoly on this island.


#64

I believe there is no actual rule to say you can’t.

The single EU model is stunted by each countries rules, regulations and self interests. Can’t see it changing, great idea in theory but a little hairy in practice.

I think our rates are higher because we are a bunch of mugs. Everything in this country is pitched toward large developers and the very upper echelons. The middle just get squeezed more and more, sonetimes you think, why bother?

I am glad we purchased our home, because it is a HOME now. I never felt at home in rented accommodation, it was always just short term. Plus, as mentioned, something to leave the childer.


#65

There are financial instruments outside of what you describe where the ECB effectively buy bank bonds at a preferential rates to give lenders cheap access to funds. We will bore the ass out of the thread if we keep this up so…


#66

As far as I know a foreign bank would have to apply for an Irish banking licence to enter the Irish loan market. Some have done so. KBC and Rabo who since left. The licence effectively sets them to the standards and regulations of the Central Bank of Ireland who would audit them.


#68

Odd questions, some showing their age. I’m up to my town halls in debt, but we’re making the mortgage payments after re-negotiation back in the early parts of this decade. However, what we’re paying now, since the arrival of the bleeders (children), and in the decent house we are now, the rents in this area are above and beyond what we could afford now. So there is a lot of sense in actually buying. In Japan, you’re considered wealthy if you inherit a mortgage. We may actually be going that way, and at least our kids may inherit something to get a foothold in life.

As for inheritance? It’s the greatest! I inherited a love for the Mun and the Dubs. Stuck to my mind, skin and bones like glue!


#69

Correct the ECB can buy bonds which they have been doing through QE however for the bank to fund itself vs it’s loan book it would have to have it’s funding done at that lower rate in full vs it’s entire loan book which it likely cannot do. I am just making the point that it is not as easy as saying headline rate the ECB or larger European banks lend at vs the irish banks lending rate is the only factor as I outlined above. Arguably part of the reason why Ireland actually had such a fall with the economic crash was the cheap and easy availability of funds prior to the crash leading to too much readily available credit and flippant lending so a correction to a higher rate relative to other countries could be a good thing long term in terms of risk coverage.

To the question of home ownership vs renting though it does seem to be an Anglo Saxon culture of ownership vs renting in other European countries where home ownership is much lower per capita thank it is in Ireland and the uk. I personally like the idea of home ownership vs renting as previous posters have said above paying rent goes to a black hole as you never see any return on investment whearas with a mortgage at least the payments are going towards eventually owning an asset which you can pass on etc. I suppose the issue in Ireland currently is availability of affordable and desireable housing which is pushing up house prices beyond what the ordinary person can afford(or at least finds it extremely difficult to do so) and you are seeing many people caught in a ‘rental trap’ where they cannot get enough cash to even start looking at buying a home.


#70

Another big issue at the moment with high property values is the kids being left houses can’t actually afford to keep them due to the massive tax bill, payable not long after mammy or daddy’s funeral.


#71

Sorry mate but that’s nonsense imo. Inheritance taxes are too high but there is no situation where it costs too much.


#72

Far from there being no situation like this, it is extremely common.
For example, last surviving parent dies, leaves house worth €1m (to make calcs easy) to child. Child is already to pin of collar paying his own €1400 per month mortgage, €1200 per month crèche etc.
No way the child can fork out (or raise a loan for) 330k tax bill.
Thousands of situations like that.


#73

Sell the house - realise €1m??? Bill is not 33% on inheritance either - no tax on first €310,000.


#74

But a lot of parents think the house itself is being passed on. Unless minted, the children have no choice but to sell. Passing on a house is one of the reasons some people argue for buying above renting. I was just trying to point out (maybe badly) that the tax implications are often misunderstood by the aging parent.


#75

I’ve been through this - they get you even when you’re dead. Valuation is important - but that said the children of a parent leaving a property worth €1m will never ever be worse off.


#76

Fair enough. Thankfully I’ve yet to experience it. But I still think it isn’t nonsense to say many people are forced to sell inherited property because of the tax bill. Unless all the articles I’ve read on the topic have been written by Spewin


#77

I don’t disagree that people may have to sell inherited property - just that they are not worse off in general. I absolutely think thresholds are too high as are acquisitions taxes.


#78

Kevo14, this DUB09 fella talks sense (on this occasion :yum:) Yes you are hit with a hefty tax bill if you are left a mansion!!! But, lets face it, how many €1m houses will be passed on to family in comparison to more affordable houses that will incur less tax. Similarly, how many houses will be passed on to one individual as opposed to being divided among the children, thus reducing / eliminating the inheritance tax.

Ownership, for me, is a clear winner, mainly for avoiding the fear of not being able to live on a pension while having to pay rent!!