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Republic of Ireland Repossession Crisis Getting Worse

As a Chartered Accountant I am said to be biased but when it comes to numbers but they are a great indicator of how healthy, or otherwise, the state of play matters can be. Take for example your own bank balance it is often referred to as being healthy or not depending on the level of funds you hold.

Numbers as an indicator could not be more applicable when it comes to that of the property market. All financial commentators have watched with interest how the property market has moved or reacted over the last eight years since the global economic crisis took hold, particularly locally where the rise and fall was significant.

Whether it comes to the volume of sales, the levels at which transactions are taking place, the movement in prices or at its worst – the number of properties that are being repossessed from distressed borrowers.

The Central Bank of Ireland has released a recent report that the banks in the Republic of Ireland have been seizing more than three homes every day…far from healthy reading for distressed borrowers.

The report revealed that in the last three months of last year 340 houses were repossessed by lenders after owners were forced by the courts (162 of them) to hand back the keys or they simply gave up (178 given up voluntarily or abandoned). Our view is the number is set to increase with the vulture funds not looking to exit their holdings.

The figures only reflect the number of times a bank has moved on someone's main home, with other records showing 199 houses or apartments classed as investments or buy-to-lets were taken over by lenders in the same period.

At GDP Equity Experts, we believe where there is a problem there is a solution, and repossession should always be a last resort for lenders to take with un-cooperative borrowers. GDP promote “mediation, not litigation” and by banks and borrowers working together to resolve matters, the best returns for both parties are always achieved.

More worryingly, in the Central Bank report it stated that 117,052 mortgages were in arrears at the end of last year, including 88,292 properties which were people's main homes and 28,760 investments which had run into debt. The total of these mortgages meant that the banks are owed a total of €23.7 billion on those houses and apartments.

What is clear having read this report, legacy debt is still a major issue in the Republic of Ireland, and that is no different to that here in the North. The fact is there can be no true economic recovery until the debt hangover is dealt with so that banks and borrowers may move forward.

Our strong advice is if you are experiencing financial difficulty and if your home and/or your investment property is at risk of being repossessed keep in direct dialogue with your lender. Always seek early advice from regulated professionals who are experienced and trained to help obtain a solution with the lender that is best for you.

Darwin AllenComment