NEWSbeat
How big is your mortgage? COURT
If you look at your mortgage and borrowings and worry a little, how do you think this Irishman sleeps at night?
Brian O’Donnell is a high flying Irish lawyer who established a property company, Vico Capital, with his wife Mary Pat, in 2005. Over the four years they have built an impressive portfolio of buildings in Ireland, the UK, Sweden and the USA. Among these is Sanctuary Buildings in London, which Vico bought in 2006 for £170million. The building is let on a long lease to the Crown. Other London assets include the Canary Wharf offices of Morgan Stanley and Credit Suisse. The couple’s spending spree continued and Vico now has borrowings on property of an eye watering £700 million. Now, although their portfolio is
RESEARCH Housing markets key says OECD
Poorly managed housing markets played
a key role in triggering the global financial crisis and may be slowing the recovery says a new study by the Organisation for Economic Co-operation and Development (OECD). Housing and the Economy,
Policies for Renovation says that reforms to financial sector regulation, taxation, land-use, rental market rules and the provision of social housing will improve both the real estate sector and spill-over to the economy as a whole. “OECD countries have seen
the damage caused by badly designed policies through their effects on housing markets,” said OECD Secretary-General Angel Gurria. “As we search for new sources of growth, as we seek to restore trust in our financial sectors, as we try to green our economies, policies related to housing can have a huge impact on our future.” The OECD says that easy
credit, deregulation and innovation in mortgage markets – coupled with inadequate supervisory frameworks – contributed to the sub-prime crisis.
12 FEBRUARY 2011 PROPERTYdrum
The report, a chapter in the OECD’s forthcoming Going for Growth publication, suggests that future innovations in mortgage markets must be coupled with tighter regulatory oversight and stronger regulations. The United Kingdom was among nine OECD countries showing the largest increases in real housing prices – more than 90 per cent – over the 1980-2008 period. The report says that the UK still has scope for updating the current property tax base, to better reflect market values. One suggestion is that Stamp Duty could be abolished. Nicholas Leeming,
Commercial Director at Zoopla said, “The property sector needs to encourage first-time buyers and the abolition of stamp duty would certainly help to achieve this. However imposing a tax across the board to cover the loss of stamp duty revenues is not the best policy. Instead of abolishing stamp duty, an increase in the thresholds would provide an incentive for first-time buyers without the need for an all embracing tax that would affect everyone.
Lenders aren’t going to provide incentives to revive the market so it’s up to the government to step in.” David
Newnes of LSL property
services, said, “Stamp duty only becomes
a barrier to first time buyers when they purchase properties over the stamp duty threshold. Most don’t get over the threshold but, because they have smaller deposits, they are kept off the ladder by tight lending criteria. This is the real problem. If the Government is serious about kick-starting demand for housing among first-time buyers, it needs to find ways of ensuring that publicly owned lenders start lending to people without large sums of cash in their pockets. “Swapping a single payment
tax for one that continues indefinitely will have an adverse effect on prices. Buyers can’t be hoodwinked by a short-term saving that is so clearly a poisoned chalice. An ongoing tax on property would put the brakes on demand even further.”
valued at €1.1billion and their debt is not believed to be breaching any covenants, nor is it in Ireland’s National Asset Management Agency (Nama, the state
organisation managing the Irish bank’s worst debts) the state- backed Bank of Ireland has begun legal proceedings in Dublin against the O’Donnells, claiming it is owed €70m on separate Irish assets owned by the couple. It is seeking the sale of Sanctuary Buildings in order to pay the debts, which it alleges are in default. The couple claim Bank of Ireland has no legal right to demand the sale of the building because it is only a junior lender, providing £26.7m. The case has caused further
Bank of Ireland seeks sale of top London property
controversy because Mr O’Donnell’s law firm, Brian O’Donnell and Partners is an adviser to Nama. The Sunday Times ranked the
pair at 178 in its 2009 Rich List and estimated their net wealth, after borrowings at €46m.
TAxATiOn
No ‘bubble’ as SDLT rises for £1m+ homes
From April 6 2011, those buying
properties worth £1 million or more will see the
amount they pay in Stamp Duty rise from four per cent to five per cent, but research from Investec Specialist Private Bank (‘Investec’) amongst estate agents, property developers and mortgage brokers specialising in this market reveals that 52 per cent expect this to have no impact on prices. Some 45 per cent expect prices to fall slightly as a result of this, but none of those interviewed believe there will be a sharp fall as a result of this rise in stamp duty. Similarly, 55 per cent believe that the decision to raise Capital Gains Tax from 18 per cent to 28 per cent last year for higher rate
The high-end market appears to be quite robust
taxpayers has had no impact on prices in the high end property market. However, 41 per cent think they have fallen slightly as a result; only three per cent think that this change has resulted in a significant fall in prices. Jack Jones of Investec said, “The high-end property market appears to be quite robust to adverse changes in tax. This is probably because the market is still seen as being very attractive, with opportunities for both British and non UK buyers. The sector is very different to any other residential property market, and this is demonstrated in its recent strong show of resilience.” Investec’s research reveals that
only 41 per cent of estate agents, property developers and brokers specialising in the million pound property market are less optimistic now about it than they were before the credit crunch. One in three (34 per cent) are actually now more optimistic. This helps explain why one in four (75 per cent) don’t believe that a ‘bubble’ is developing in the million pound plus residential property market.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68