Interesting article in the Sunday Times , Mark Keenan aside from the main gist of the article that the Law Reform Commission of Ireland (LRC) will publish it’s long-awaited suggestions on the regulation of management companies, states that, on paper, Developers such as Liam Carroll ramain the de facto owners of vast tracts of land in Dublin, even though they have ‘sold’ all their apartment, he points out that in the long run, the issue could become a massive timebomb, with many apartment blocks designed to last only 30 years , there are question marks over who will own the ‘fresh air’ rights when these buildings are no longer tenable and only one person or company owns the land they’re built on.
That would apply to MOST Dublin City Centre apartments built since the boom started down on the quays about 20 years ago.
There are some built to 40 year and 50 year build standards as well . Almost none are built to 99 years or more.
Just because something has a 30 year build standard does not mean it won’t last 50 …it depends on what its subjected to by its occupiers and of course by the traffic in central Dublin .
Some house to flat conversions I saw in London in the 1980s were at best 10 year jobbies, absolute cack.
So basically apartment buyers have been secretly been sold a 30 year lease. They’ll still be paying their mortgage when the builder has demolished their apartment.
I reality check here. How many people suspected as much. The apartments have been chucked together for as cheap as possible. I have mentioned numerous times on the pin that I can’t see the blocks lasting more than 15 years.
It all makes sense now.
15 years mm so what value would you place on a centrally located 2 bed apt Bertie?
I’ll tell you in 3 years.
But it does mean that after 30 years the places could be like those dingy run down 1970s apartments.
So it seems that while house prices in general were going up, it’s possible that new apartments were losing their gloss and effectively depreciating.
Another interesting article in today’s times is “Slump? Then I’m buying, and fast” an almost gleeful look by Siobhan Maguire at the people who are currently buying. It looks at one investor who is hoping to buy a four bed somewhere “in the west of Ireland”, and the owner has already knocked €70,000 off the asking price. But what is amazing is what this person says: “This is my third bid and I’ve been up against two other buyers, but I’ve managed to hang in there, watch the price fall and still keep my interest in the place known to the seller while outbidding the others.” How can the price fall if she is outbidding the others? Why don’t this woman and the other two buyers (if they’re not made up) look at some of the other 1000 4 beds for sale in Mayo, and 2000+ 4 beds for sale in Galway.
An equally strange comment is made by an apparent buyers agent who says “You have the creme de la creme of houses as a first-time buyer at the lower end of the market…A lot of these are young people who might not be willing to go into the market with the risk of interest rates rising, so it is an uncertain time for them. If they’ve done their home-work, however, it’s plain sailing and they can take their pick.” From tinkering with the New York times buy v rentcalculator, using 1131 as the average rent (source IPW and the average house price of 278521 (source PTSB/ERSI) and variable rate of 5.69%, 10% deposit, and no property tax (although this can be used to factor in managment fees for apartments), if rents are stagnant (0%) then even if house prices increase by 2% pa it is never better to buy than to rent. If rents are dropping by 2% p.a., house prices need to increase by 4% p.a. before buying is better than renting. I think it goes without saying that it is almost never better to buy when house prices are dropping (unless rents are extoritionate relative to purchase price, or if interest rates are close to 0%). Note that these are fairly simplistic calculations in that they don’t factor in inflation, stamp duty, repairs, particular circumstances, interest rates or significant decreases in rent. So how someone who claims to be acting in the best interests of buyers can advise them to sell with house prices (and rents) dropping is beyong me, particularly when they suggest that the people who are buying are doing their homework, whereas in fact it is only the people who are not doing their homework that are considering buying at the moment.
I’d be tempted to set up a business as a buying agent, advising virtually everybody who comes to me not to buy, but to wait for a few years, and charging €100 a pop. I’d make a mint.
It seems crazy that the underlying land can be owned by a third party and not by the owners of the apartments. That shouldnt be legal.
We’ll end up like England where one of the richest men in the UK is the Duke of Westminster who never worked a day in his life, and makes his billions from ground rents throughout London.
Surely if the apartments don’t come with a share of the freehold, they at least have a long lease (999 years?). And it’s up to the management company, in which they have some rights, to maintain the building and each tenant’s interest in it? Surely no solicitor would have let a client buy an apartment without nailing down these issues?
I’m not buying into the 30 year apartment life here.
We had a wooden shed installed in the school which with minimal maintenance lasted more than thirty years. Many pupils were bored to death within its wooden walls
Conclusion: there’s no difference between “owning” an apartment and renting an apartment.
Now imagine if we had proper tenancy legislation: nobody in their right mind would ever “buy” an apartment! It would make no financial sense whatsoever! (until yields are about 10-12%)