Personal Insolvency: The rules of engagement
Solving Ireland's mortgage arrears crisis is a key priority for the consumers involved, the banks, the regulator and the government. There's no disputing the importance for the broader economy of solving this problem, but reaching consensus on an appropriate solution is a bit trickier.
One of the issues in the debate on mortgage arrears and how to address the problem has been the distinction between those who simply can't pay and those who won't pay. Banks have raised concerns about the idea of "strategic default", whereby people who could pay their mortgage don't in the hope of getting some of it written off.
One senior banker said that the concept of strategic default was "alive and well". Another banking source said that debt forgiveness was wholly unfair for the taxpayer, and fraught with moral hazard.
"How can you make the arbitrary decision to write down the debt of one person but not another. Who decides?" the banker said.
However, brokers and lobby groups say that the vast majority of those in debt are trying to engage with their banks and reach a solution, and some experts maintain that an element of debt forgiveness will be inevitable. With a range of new routes out of debt now available via the new personal insolvency regime, there's now an added incentive for banks to strike a deal with customers in arrears.
While these helicopter view debates on policy continue in the upper echelons of the banks, Central Bank and corridors of power, what's the real situation for people coping with the day to day reality of mortgage arrears? If yours is one of the thousands of families affected by mortgage arrears, you might feel overwhelmed but remember, you do have options.
What steps should I take?
First things first: even if you want to ignore the problem, don't. Engaging with your bank is a vital step towards finding a solution. A failure to engage with the bank means you are afforded less protection, so there's a carrot there to pick up the phone.
The Central Bank's code of conduct on mortgage arrears, which is currently being reviewed, requires lenders to establish a mortgage arrears resolution process (Marp) and use it when dealing with arrears and pre-arrears customers.
The Marp has five stages: effective communication; gathering financial information; assessment of the borrower's situation; finding a solution to the problem; and an appeal option for borrowers unhappy with the outcome of the process.
What do I have to do?
The Marp system requires borrowers to fill in a really detailed form called a standard financial statement. This gives the lender an overview of your financial situation and is used as the basis for negotiating a solution. However, be prepared to wait a while for a response.
A Money Advice and Budgeting Service (MABS) report published last week revealed that many borrowers were waiting in excess of two months to receive responses to correspondence submitted to lenders. "Some serious action is needed here," said Michael Culloty, national development officer for social policy and communications with MABS. "People are stuck in a holding pattern with no resolution, often coming under severe pressure from their creditors, particularly their unsecured creditors."
What will the bank do to help me?
Unfortunately there's no clear-cut menu of solutions. There are lots of buzz words floating about: forbearance here, restructuring there.
But, for the indebted borrower, it's not simply a case of looking at their situation, looking at a list of possible solutions and picking one. Instead, banks will adjudge each situation individually. This bespoke "case-by-case" approach is best because there's no one size fits all solution, according to lenders.
However, this lack of clarity on exactly what options are available can make it confusing for borrowers who are trying to get to grips with their next move.
What type of solution is my bank likely to offer me?
In the initial assault on mortgage arrears, banks stook to the traditional menu of forbearance options. These were typically short-term solutions, such as a period of interest-only repayments, an extension of the mortgage term or, in some cases, a payment moratorium. With mortgage arrears skyrocketing over the last couple of years, it quickly became apparent that more creative, longer-term solutions were needed and last year banks introduced pilot schemes to test a range of longer-term solutions. These include things such as split mortgages, negative equity trade-downs, mortgage-to-rent schemes and in some cases, the voluntary sale of the property.
Wait a second - how do those solutions work?
A split mortgage involves a portion of the outstanding loan being parked for a number of years to give struggling borrowers some breathing space, while a trade-down mortgage sees borrowers selling their negative equity home and purchasing a new property at a lower price. However, there's not a totally consistent range of solutions on offer across the market, as options will differ from one lender to the next. For example, some banks charge interest on the so-called warehoused portion of the split mortgage, and others do not.
Will my mortgage be written down?
Anecdotally, there's a sense that some banks are doing deals in situations where there is no chance of the loan being sustainable, but the official line from most lenders remains that debts will not be written off. However, if a person goes down the personal insolvency route, a proportion of their debts could be written off, subject to lots of terms and conditions. But, remember, to be eligible for a debt deal via the new insolvency regime, you must prove that you have already engaged with your bank to try to find a solution.
Do the banks have to offer a solution to a struggling borrower?
Last month the government and the Central Bank unveiled a new plan that puts the squeeze on banks to agree workable solutions with indebted borrowers. The Central Bank has told the banks that 50 per cent of customers whose mortgages are in arrears must be offered sustainable solutions before the year is out. Otherwise, the bank faces hefty capital penalties. However, the decision on what constitutes a sustainable solution rests with the bank. So your bank could offer you a solution but not one you necessarily like the look of.
How do I decide if it's a good deal?
For homeowners struggling to weigh up whether the solution being proposed to them by their lender is a good deal, there's an advisory service available. Borrowers in distress have access to a free independent professional consultation with an accountant who can talk them through the implications of what the lender has put on the table. The lender pays the €250 fee to the accountant on the borrower's behalf.
However, broker groups have questioned whether accountants are the best people to be providing this service.
What do I do if I decide it's not a good deal?
If you have engaged with your lender and exhausted the MARP system but find yourself at an impasse, the next step is to consider the new personal insolvency regime.
"It is intended that all arrangements entered into between a lender and a borrower should be sustainable," said a Central Bank spokesman. "However, should a borrower be co-operating with its mortgage lender for at least six months and have not been able to agree an alternative repayment arrangement or if the mortgage lender is unwilling to enter into an alternative repayment arrangement, at this stage, the borrower may wish to seek an arrangement with the Insolvency Service."
Is my home likely to be repossessed?
Repossessions are likely to become more frequent now that a recent legislative tweak has closed a loophole that had prevented lenders from pushing the button in relation to this issue.
"Repossessions will rise from current levels," the Central Bank spokesman said. "However, where borrowers are cooperating they can expect that repossession will be the last resort and will only be used in cases where there is no valid sustainable long term solution due to the mortgage being unsustainable based on all income measures."
What about a buy-to-let mortgage?
If you have an investment property, and have fallen behind with your mortgage, your case will not fall under the remit of the code of conduct on mortgage arrears. This code deals with arrears in relation to a person's family home, not buy-to-let properties.
However, new targets for lenders in relation to the number of sustainable solutions they reach each quarter includes buy-to-let investors in arrears. So if you are a buy-to-let investor with a mortgage problem, the first step on what could be a long road out of debt is to engage with your bank.
Wednesday, April 17, 2013
Property - Property & Construction News - Personal Insolvency: The rules of engagement
Tuesday, April 16, 2013
Dualla farm sells after auction
At an auction held in P F Quirke & Co Ltd offices in Clonmel today. 16/04/2013, a 57acre farm at Caherbaun, Dualla sold after being withdrawn at auction.
The farm (here) is a57 acre Residential property with an attractive 2-storey house. The land is top-quality with a southerly aspect and good road frontage. It has a SFP c.€16,500. There is a well-laid out Internal road system, with well-fenced paddocks with water to all.
Sheds include a 4 span 30ft Haybarn, with slatted floor; 4 span 20ft Haybarn with 4 span 18ft lean-to; 5 span X 16ft slatted feed passage; 4 span lean-to cubicle house; 4 span 24ft enclosed Haybarn with 4 span lean-to. There is a range of out offices including 9 calving pens, store and workshop 45ft x 30ft with mass concrete walls and factory cladding. Silage slab and effluent tank. The dwelling was recently refurbished with 2 Rec rooms, K/LR, 3 Beds and bathroom. It has Dual Central Heating. Alarm and Double Glazing.
There were 16 interested parties in the room and 3 bidders, all local.
The farm opened at €400,000 and progressed to €560,000 when it was withdrawn. 3 hours of discussions with the highest bidder resulted in a sale at a substantially higher figure. P F Quirke said that the negotiations were tough, but that in the end, all sides were happy to finalise a deal.
#END
Wednesday, March 27, 2013
26acre holding sold near Killenaule
Yesterday, March 26th, 2013, at the P F Quirke & Co Ltd offices in Clonmel, we offered 26 acres, all in tillage for sale at Cattaganstown, Killenaule, Co Tipperary.
The land is under a crop of Oats and in great condition. It is all in one field, has good road frontage to a tertiary road, close to the Fethard/Killenaule road. It is approx. 4km from Moyglass, 4km from Killenaule and 8km from Fethard. While elevated, it is productive land and has been ploughed annually for some time.
There were 9 parties at the auction and 3 active bidders.
The property was withdrawn at €182,500 and sold subsequently to the highest bidder at an increased figure.
Monday, February 11, 2013
Councils may pursue householders for levies unpaid by developers - The Irish Times - Mon, Feb 11, 2013
TIM O'BRIEN
Local authorities are examining development schemes to see if almost €300 million in unpaid levies can be passed on to householders.
The move follows the revelation that Wicklow County Council is pursuing homeowners near Avoca for sums of up to €4,800 after the developer failed to pay.
While the move has caused distress to householders, many of whom question the validity of the move, Wicklow County Council has proven successful at recouping outstanding levies.
A recent audit by chief planner Des O’Brien revealed 98 per cent of all levies due in the last 10 years had been paid, leaving an outstanding amount of €2.5million.
Yesterday Mr O’Brien said the council was pursuing householders and developers for the outstanding contributions.
Levies imposed as a condition of planning permission are generally required to be paid before construction work begins, or at least on a phased basis, with a significant up-front payment.
Wicklow council used to inspect each site to ascertain if construction had begun but in recent times had adopted a more cost-effective approach using Google Earth and other searches.
The council’s press agent yesterday issued a statement saying development levies were “a charge on the property itself, not on an individual or a developer”, and there was was “an obligation to pay these contributions”.
The Department of Environment said the question of levies was a matter for the planning authority itself.
But a spokesman noted it did not believe Wicklow was “first off the block in this regard”.
Dublin City Council said its policy was not to pursue householders but it was pursuing developers for outstanding levies.
Other councils including Fingal and Dún Laoghaire-Rathdown said they were unable to be definitive about their approaches to the issue but they were doubtful if the charges were passed on to householders in the event of default by developers.
Cork City Council was owed €9.2 million in development levies as of January 1st, 2012. Fine Gael councillor Jim Corr said the city council, like many others, was watching what was happening in Wicklow “with interest”.
Since the Planning and Development Act 2000, which overhauled development contributions, such funding has become increasingly important to local authorities.
Contributions are mostly levied for use of roads, water and waste services, among others.
McDonald's to pay €300,000 in Temple Bar - The Irish Times - Wed, Feb 06, 2013
JACK FAGAN
Fast-food chain McDonald’s is to pay a rent of about €300,000 for a new restaurant to open shortly in Dublin’s Temple Bar. The multiple has begun fitting out the former Frankie’s steak house and bar at Temple Bar Square which is owned by the restaurant group, Fitzers Holdings Ltd.
Agreement on the new rent comes only weeks before McDonald’s expects to secure a substantial reduction on the €1.15 million rent it is paying for its Grafton Street branch. The outcome will be closely watched by other traders on the street also hoping to have their rents reduced.
The controversial decision by An Bord Pleanála overruling objections by Dublin City Council, Temple Bar Cultural Trust and An Taisce took the property market by surprise because of the number of fast- food outlets already operating in Temple Bar. An Taisce has contended that the decision will reinforce negative perceptions of Temple Bar as a “drinking/fast-food quarter”.
One of the conditions of the planning permission is that the restaurant cannot trade between midnight and 7.30am, unlike the McDonald’s branch on Grafton Street which is free to open 24 hours a day.
The Temple Bar permission was granted for an initial period of three years in order to allow a reassessment of the development on the “character and dignity of the area”.
McDonald’s plans to use the entire 228sq m (2,454sq ft) on the ground floor as a restaurant and takeaway and a further 198 sq m (2,131 sq ft) at first-floor level as restaurant space. Both the basement and the top floor will be used for ancillary services. The two upper floors of the 1880s period building have been in residential use up to now.
Simon Cooper of Savills handled the lease and rent negotiations for Fitzers Holdings while Jack Devlin of O Buachalla advised McDonald’s.
Scarcity value
McDonald’s has been looking for a 50 per cent reduction on its Grafton Street rent following the ending of its 35-year lease on the former Hospitals Trust headquarters. It is entitled to a new lease at open market value.
However, the owners of the 1,858sq m (20,000sq ft) building, Royal London mutual life and pension fund, were expected to seek premiums of at least 30 per cent on the rent to take account of the scarcity value of having a round-the-clock food business on the city’s premier high street. Both sides expect to reach agreement in the coming weeks.
REIT legislation could be start of new era in Irish property - The Irish Times - Wed, Feb 06, 2013
Bill Nowlan
“A REIT is a tax efficient way to enjoy the benefits of owning investment properties without the hassles of being a landlord” is the most succinct definition to emerge from the first REITs conference organised by the REITs Forum a week or so ago.
The capacity crowd of 487 was twice initial expectations and from the quality of the presentations and the level of interest, it was clear the property gene is alive and well not only in the Irish DNA but also in the 10 per cent overseas participants at the conference.
John Moran, secretary general of the Department of Finance, spoke about his ambitions to make Ireland a base for international REITs in much the same way as Dublin is now an international centre for aircraft leasing. John Mulcahy of Nama spoke about the potential role of the agency and its borrowers in providing a significant supply of quality property for REITs.
The CEO of EPRA (European Public Real Estate Association) Philip Charls described the various indices in place to benchmark investment performance of REITs against each other and also equities and bonds.
He pointed out that over the past five years REITs have significantly outperformed income yield on equities and bonds around the globe. He also noted the average market capitalisation of REITs in Europe was more than €1 billion with one of 14 billion (Unibail).
There was much focus on the minimum size of the first Irish REIT and the potential size of the Irish market. The conclusion from Alan Carter, specialist REIT analyst with Investec in London, was that it would be difficult to attract international interest at a level below €250 million.
According to EPRA, the potential in the Irish market could reach €5 billion within five years, supporting earlier estimates from NCB of a potential market in three to five years north of €2.5 billion.
So how do we get from here to there? The first thing is the legislation which should be enacted by early April in the Finance Act. Then there will be the work by the Stock Exchange in preparing listing rules. After that it is over to the market to make it all happen.
In Ireland, with the exception of Nama there are probably only one or two existing property businesses that could get to the minimum €250 million threshold, so the assembly of portfolios to reach this size will be the first challenge.
The second challenge will be in attracting international investors to Irish REITs. This will be the measure of success or failure in the long term. Ireland now has had virtually no long-term international investors in property. The property bubble was financed almost exclusively by Irish banking balance sheets with borrowings – national and international.
Property ownership is essentially an equity play and in the noughties we lost that plot. Before then and now again, Ireland has had to rely almost entirely on local equity in its property industry. Historically this mainly came from high net worth individuals or from the pension funds and financial institutions. This is unlike most European countries where international equity owns investment property – for example more than 50 per cent of the buildings in London City are owned by non-UK investors. In Dublin the factor would have been less than 1 per cent.
Hopefully this conference and the emerging REIT legislation will signal the start of a new era in Irish property that brings us into the world property investment scene. But we will have to play by international rules. Rating agencies such as EPRA will be reporting on the level of performance and quality of governance on a totally objective basis and not on the basis of local rules which were open to abuse.
Tuesday, February 5, 2013
Council rates to be cut as reform leads to savings - Independent.ie
STRUGGLING Irish retailers can expect cuts in commercial rates of up to 5pc next year as multi-million-euro savings from local government reforms are delivered.
Finance Minister Michael Noonan has said that council mergers and abolitions will go ahead to deliver greater cost-efficiency and value for money for taxpayers.
His vow came despite several town councils putting funds aside for a potential legal challenge to their abolition.
"There has been a total change in the way local government is to be run. In Limerick, for instance, we have merged (the) city and county councils. There are huge benefits to the public when you reduce the cost base by doing things like that," Mr Noonan told the Irish Independent.
"For instance, the commercial rate in Limerick has been cut by 5pc – it is the biggest cut in the country. It just would not be possible to do that if we hadn't put the two local authorities together."
Mr Noonan said the benefits for the taxpayer and retailers will be apparent from next year.
"I think that there will be more cuts in the commercial rate next year because the full savings have not yet been realised. There are a whole series of organisations around the country which are being merged to make them more efficient and more cost-effective."
Under the 'Putting People First' initiative, Environment Minister Phil Hogan plans to achieve cost savings of €420m through the abolition of town councils and mergers of other councils.
- Ralph Riegel
House completions fall to lowest level since records began - Independent.ie
THE number of new homes being built has plummeted to its lowest level since records began more than 40 years ago.
The vast majority of the 8,488 homes built last year were one-off stand-alone houses, new figures reveal.
Just 2,333 of those erected in 2012 were in housing estates, reflecting the overabundance of houses already completed and lying idle – many of them in ghost estates.
New figures from the Department of the Environment also show that just under 1,000 apartments were finished in 2012. This total represents just 5pc of the 20,000 which were completed during 2006.
The decline of the industry is in stark contrast with the situation in 2006 when almost 100,000 homes were built.
The 8,488 homes built in 2012 was the smallest number since 1970 – when a total of 13,887 houses were put up.
The virtual collapse of the home construction sector is playing a large role in the current wave of emigration of young tradespeople, particularly to Canada, Australia and New Zealand.
Commenting on the figures, Construction Industry Federation (CIF) director general Tom Parlon said 2012 was a very difficult year for the Irish house- building industry.
Unsustainable
"Previously, the lowest level had been the 13,887 units that were built in 1970 when the records began, but the total for 2011 dropped below that mark, and 2012 has seen a further fall in completions," he said.
Mr Parlon said that house building reached unsustainable levels during the boom years. But the industry had now gone through six successive years of decline.
"Unfortunately, it looks like we will see another slight reduction in house building in 2013," he added. "Overall the low commencement rate for 2012 has led us to forecast another drop in housing units built during the coming year."
The CIF director general said there were positive indicators, including increased demand for homes in urban areas.
"The banks have also promised to increase the level of mortgages during the coming 12 months."
The 2012 home completion figures are also a 19pc fall on homes built the previous year.
The statistics illustrate how some counties which saw massive increase in new homes during the property boom have seen construction fall to a trickle.
The largest percentage drops in house completions in 2012 compared with the previous year were in Galway City (56pc drop), Kilkenny (46pc drop), Fingal (45pc drop), Tipperary (41pc drop), Carlow (39pc drop) and Mayo (38pc drop).
- Treacy Hogan Environment Correspondent
Substandard bedsits are made illegal - The Irish Times - Sat, Feb 02, 2013
Laws that came into force yesterday will remove the most substandard bedsit accommodation from the rental market, housing charity Threshold said.
The standards that private rented property must meet are laid out in the Housing (Standards for Rented Housing) Regulations 2008 and 2009. All the provisions applied to new tenancies in properties let for the first time since February 1st, 2009. Since yesterday, all tenancies are required to comply with all provisions.
Threshold said this would see the end of traditional bedsit accommodation and improve requirements for private rented accommodation.
Chief executive Bob Jordan said the regulations would serve to remove the “bottom layer” or the most substandard accommodation in the country. He acknowledged they involved costs for landlords but said the new rules had been flagged four years ago.
The main concern was that local authorities would carry out inspections to make sure people were not living in substandard conditions.
Some of the most vulnerable people in the country were living in bedsits, which provided very basic accommodation with no shower or bathroom and no central heating, Mr Jordan said. “This accommodation does not comply with modern standards,” he said.
Threshold expected that where landlords were found not to be in compliance with regulations, the relevant local authority would take action and take them to court if necessary.
The number of bedsits has declined from about 9,000 in 2006 to about 5,000 in 2011.
Groups such as the Irish Property Owners’ Association oppose the new regulations and say many landlords cannot afford to renovate their properties or get loans to upgrade them.
'Quick-fire sales' are not always that fast to process - Independent.ie
Buyer perceptions that a receivership sale may be a 'quick-fire sale' can prove unfounded. Because many receivership properties are sold through auctions this gives the impression that such distressed property sales are processed in just a few weeks. In fact, a lot of expertise and preparatory work is required to ensure the sale process works efficiently.
It is for this reason banks are increasingly turning to fixed-charge receivers to handle the disposal of problem properties.
Usually such fixed-charge receivers are chartered surveyers with property expertise, rather than chartered accountants with business and finance expertise, who usually handle company receiverships.
A fixed-charge receiver is appointed only for property issues such as commercial and residential buildings or land. They will not take control of an existing/trading business as this traditional corporate receiverships is still very much for accountants.
The number of fixed-charge receiverships has increased over the past two years as financial institutions in Ireland have become aware of the benefits of the process once a borrower has defaulted on the terms of their mortgage.
While a fixed-charge receiver is appointed by a financial institution, nevertheless they have to act as the agent for the borrower. This means that the receiver has a duty of care to both parties and the ultimate goal is to maximise the level of return, thus reducing the level of debt which is of benefit to the lender and the borrower.
Given the severe downturn in the property market, the financial institutions are concentrating on protecting the value of their loan books, the predominant value of the loan books being the bricks and mortar.
Neil Bannon, who acts as a fixed-charge receiver for a number of the financial institutions, noted that all receiverships are a process but the reason for the process is generally caused by property related matters.
Paddy O' Connor, a senior member of Bannon's receivership team, believes that "proprieties in receivership tend to have complicated issues that require property expertise in order to provide a solution. These complicated issues or 'barriers to sale' generally include issues which property surveyors deal with on a day-to-day basis." Such issues include legal title, lease restructuring, rent abatements/arrears, rates arrears, over-holding, compliance etc.
It is a quick and cost-effective way to deal with the process as the fixed-charge receiver has the necessary property expertise to deal with the problematic properties.
Neil Bannon, who is the only Irish-based fixed-charge receiver recognised as a registered property receiver under the joint scheme run by the Insolvency Practitioners Association and the Royal Institution of Chartered Surveyors, stated that "the clear advantage of a fixed-charge receiver is the property experience and market knowledge brought to the process. A fixed-charge receiver's core skill is identifying the optimum value for real estate and the establishment and implementation of a strategy to extract this value".
It is also important for purchasers to be aware that certain difficulties may arise from receivership sales. There may be a potential gap in information on the property's history prior to the receiver's appointment.
Gaps in items such as VAT history, land/property registration, planning compliance etc. may cause difficulty for a purchaser.
Consequently, receiver sales tend to be slower than private market sales.
Ireland leads in housing affordability - The Irish Times - Thu, Jan 31, 2013
Housing affordability has improved more in Ireland than in any developed country in the English-speaking world, an international report has found.
The ninth annual Demographia International Housing Affordability survey found house prices in Ireland are now on average 3.2 times gross annual incomes, making Ireland and the US (3.1) the most affordable of seven countries surveyed.
The survey has been tracking house prices in Australia, Canada, China (Hong Kong), Ireland, New Zealand, the UK and the US over the last nine years.
The survey is confined to English-speaking countries that have similar patterns of home ownership and excludes European countries where home ownership is historically lower.
It defines affordability as a situation where house prices are three times gross annual income before tax, or less.
The only cities with a population of more than one million to meet the criteria were all in the US. There were 20 such cities, most of which have been badly affected by deindustrialisation, including Detroit, Cincinnati, Cleveland and Indianapolis.
After Edmonton in Canada, Dublin was the most affordable of the major metropolises. House prices peaked at six times the average salary in Dublin in 2006; they have now dropped to 3.6 times the average salary.
Up until the late 1980s and early 1990s, house prices were a multiple of between two and three times’ average salaries in all the markets surveyed, before deteriorating in the years after that.
The survey says the principal reason for house inflation has been the curtailment in the supply of development land.
It also maintains there is a consistent pattern in all countries where there has been a tendency by vested interests to “cheer on” house-price inflation, as if houses were a “commodity like gold” instead of a basic necessity.
The cheapest city in Ireland relative to income is Waterford (2.5), followed by Limerick (3.1), Galway (3.2) and Cork (3.4).
In the last quarter of 2007, at the height of the property boom, house prices in Ireland were a multiple of 4.7 times the average gross salary.
By contrast Australia, the most popular destination of the current crop of Irish emigrants, has some of the most unaffordable urban housing. It uses just 0.04 per cent of its land area for housing.
The average house in Sydney costs 8.3 times the average salary, in Melbourne it’s 7.5 times salary, in Adelaide it’s 6.5 and in Perth it’s 5.6. The average home in a major Australian city costs 6.5 times the average salary.
New Zealand’s only major metropolis, Auckland, is also classified as being severely unaffordable, with house prices 6.7 times the average salary.
London is the fifth-most-unaffordable city surveyed, with house prices a multiple of 7.5 times gross salaries.
The UK has no major market where house prices are less than four times the average gross salary.
Thursday, January 31, 2013
€29.8bn home equity withdrawn | Irish Examiner
Houseowners withdrew €29.8bn of housing equity between the third quarter of 2002 and the first quarter of 2009, according to a report released by the Central Bank today.
By John Walsh, Business CorrespondentThis level of equity withdrawal was unprecedented in this country by historical standards. It was also extremely large by international standards.Homeowner equity withdrawal is common in economies that experience sharp rises in house prices.
This was driven by three factors in Ireland over that period, according to the Central Bank.
“There was a significant increase in the propensity for existing homeowners to take out top-up loans during this period; second, the combined effect of large numbers of transactions and booming house prices meant that sellers in the final link of a property-transaction chain, ie those not purchasing another property, withdrew substantial equity upon selling; and third, relative to equity withdrawals, the rate of equity injections declined due to a fall in deposits from first-time buyers and a decline in the rate of amortisation.
“The latter was driven by the increased prevalence of interest-only loans and significantly longer loan-terms. The dramatic collapse in the Irish property market means that all of these factors have been reversed, moving the household sector from one of net equity withdrawal to net equity injection,” said the Central Bank.
The study covers the period from 1978 to 2012. From the late seventies to the early noughties, Irish homeowners for the most part paid down mortgage debt. However, from 2002 onwards, this country experienced one of the biggest housing bubbles in any western economy. But since 2008, there has been roughly a 60% fall in house prices.
The Central Bank notes that over the past five years homeowners have reverted to paying down debt, including mortgage debt.
“A number of factors contribute to this current period of aggregate equity injection, including a reduction in the number of mortgage transactions, a tightening of credit conditions and the reduction by households of their financial liabilities.
“The main reason for the current low levels of equity withdrawal is the lack of housing market transactions, after a number of years of falling house prices, which in turn means fewer opportunities for sellers to realise housing equity. Irish households have suffered large declines in net worth as a result of the drop in valuations of their properties.
“This has also contributed towards households reducing aggregate equity withdrawals.”
In another paper released by the Central Bank today, it shows that in the second quarter of last year, non-financial corporations had the second highest debt levels relative to GDP in the EU. However, this masked two very distinct trends.
Multinationals based in Ireland have ramped up their debt over the past few years to reflect increased levels of activity.
But when this debt is measured against their balance sheets, the overall debt levels are below the EU average.
Irish-owned companies are heavily reliant on the domestic banking system for credit. Since the crash they have paid back roughly €10bn in bank loans.
House sales jump by 34pc as banks increase lending - Independent.ie
THE numbers of houses and apartments bought and sold last year rose sharply, in a further sign the market has stabilised.
The number of residential property transactions jumped by 34pc to 24,000, according to information on the new property price register.
And there has been a big rise in the numbers of mortgage-backed buyers snapping up properties at the Allsop Space auctions.
Now, just half of the properties are being purchased with cash.
Up until recently, eight out of 10 successful bidders were cash buyers, but now there is an even split between those buying with cash and those using mortgage funding.
Allsop Space director Robert Hoban said the surge in the numbers buying with a mortgage was evidence of greater lending activity by the banks.
And Allsop claims a large number of properties auctioned achieved higher prices than in private sales, according to statistics for the nine auctions held so far, and seen by the Irish Independent, show.
Mr Hoban said this was particularly the case with high-end properties.
He said a Northumberland Road property in Dublin had sold for €550,000 last summer. When it was auctioned by Allsop Space in October, it achieved €685,000.
Half of the 777 properties sold in the nine auctions so far were for people to live in, with around half bought by investors.
Some 13pc of buyers were based overseas, he said.
A total of five Allsop auctions are planned this year, with an expectation that there could be up to 200 lots in each one. This is double the average for each of the five auctions held last year.
There was disappointment earlier this week when the Central Statistics Office said property prices fell in December. This was despite rises in four of the previous six months.
A number of property commentators questioned the accuracy of the CSO figures, which do not include cash purchases.
But now it has emerged that there was a marked rise in the number of residential properties transacted across the entire market in 2012, data from the Property Price Register shows.
Rush
Some 24,249 properties were transacted in 2012, up 34pc from the previous year, according to an analysis of the register by NCB Stockbrokers' chief economist Philip O'Sullivan.
He said the big rise in the number of transactions was a sign that residential property prices had begun to stabilise.
Almost half of the houses and apartments transacted were in Dublin.
"While the strong finish to 2012 is likely to have been partly driven by a rush to avail of mortgage interest relief before its phasing out on December 31, the data shows a marked pick-up in transactions activity throughout the whole of last year, with every month recording gains of between 12pc and 53pc on an annual basis," Mr O'Sullivan said.
Discount retailers help absorb supply of outlets nationwide - Independent.ie
WHILE the retail property market performed relatively well in the second half of last year, vacancy levels can vary greatly, from as low as zero in a few Dublin shopping centres to as high as up to 35pc in one centre.
Nevertheless, Aoife Brennan, head of research at Lisney, is relatively optimistic. "There was an increase in the number of enquiries as well as lettings completed and we believe this trend will continue in 2013," she says.
Activity is generally focused on prime units. Terms remain in favour of tenants and flexibility is the key. Pop-up shops are a feature of the market and are being used by many landlords to counter vacancies.
Discount retailers continue to trade exceptionally well throughout the country and some, particularly the single price-point, variety stores such as EuroGiant and Dealz, remain in expansion mode. Other growing sectors include coffee houses and restaurants, many of which took new units in shopping centres and high streets around the country last year and will continue to do so in 2013.
Lettings to fashion retailers were limited in 2012 and this is likely to remain the case in the short term. An exception is the Bestseller Group, which opened new units around the country with brands such as Only, Vero Moda, Name It, Vila and Jack & Jones.
In Dublin city centre, the opening of Abercrombie & Fitch on College Green is positive for the Grafton Street/Temple Bar area and will act as a draw for this part of the city in 2013, particularly among younger consumers.
The banking sector will consolidate further this year with AIB, Bank of Ireland and Ulster Bank due to close branches. This follows the closure of the remaining National Irish Bank branches. These closures will provide opportunities for retailers seeking space. However, future rents for many of these buildings will depend on how conducive they are to conversion to retailing.
Retail vacancy for prime units around the country remained relatively stable, or improved slightly over the last 12 months.
Lisney tracks occupancy levels in Dublin and Cork and Ms Brennan says that Category 1 shopping streets in Dublin city centre saw overall vacancy level reach 11.9pc at the end of September. However, some less prime streets had vacancy rates of up to 24pc.
In those Dublin shopping centres with over 5,000 sqm, of space, the average vacancy rate was 15.7pc with individual centres ranging from zero vacancy up to 35pc. Two had even higher vacancy rates but that may be because they were earmarked for redevelopment.
In Cork it's a similar story. The overall city centre rate was 12.3pc at the end of 2012, however, some streets had rates in the high teens/early 20s and others were as low as 6pc.
"For both cities, we expect these levels to remain relatively stable this year with prime streets and shopping centres perhaps improving slightly," Ms Brennan adds.
She has calculated that the quantum of retail accommodation has remained relatively static in recent years and will not change in the short-term. The only new shopping centre space due on the market this year is an extension to Ballincollig Shopping Centre in Cork.
Currently, the average amount of shopping centre accommodation (i.e. excluding high street retail) per 1,000 of population in Ireland is 367 sqm. This is the sixth highest in Europe, where the average is 241 sqm.
Regrettably, there are examples where up to 1,000 sqm of space services 1,000 Irish people, noticeably in some towns where new centres were built after 2000. These areas continue to struggle and landlords are competing aggressively for tenants and entering into flexible lettings, many of which are on a turnover basis.
We expect the market to improve in 2013. While stores will continue to close, the number will be less. The trading environment should improve, which will lead to an increase in demand for stores. Discounters will continue to expand and drive the market.
With many overseas multiples opening up their websites to Irish consumers, 'bricks and clicks' will become a bigger part of the market and will lead to further erosion of physical shops' market share.
Monday, January 21, 2013
Land sold back to farmers at knockdown prices | Irish Examiner
By Tom Bill, ReutersLand in Ireland once earmarked for homes and offices is being sold at knockdown prices to farmers, sometimes the same farmers who made fortunes selling it in the boom years, as swathes of the country return to its agricultural roots.
Irish lenders and Nama are cranking up the sale of land to farmers as they accept some locations are dead to developers, even at bargain prices.Land zoned for housing that sold for €1m per acre before the 2008 crash now fetches about €10,000 as farmland, or €50,000 as development land, according to Chris Smith, regional manager for rural properties at Gunne auctioneers.
“Development won’t come back for a generation in some parts of Ireland, and the banks and Nama aren’t willing to wait a generation,” he said.
Nama has sat on most of its property loans since 2008 in the hope values would improve but, against the backdrop of anaemic economic growth and turmoil among its eurozone trading partners, it will increase land sales at farmland prices over the next 12 to 18 months, according to a spokesperson.
It will also increasingly finance the demolition of half-built sites for reversion to farmland, the spokesperson added, declining to say what slice of its loans this represented. Discounts are likely to be huge.
“In 2006, five and a half acres of land with zoning for residential was sold for €3m in Co Meath. The same piece of land, plus a cottage on half an acre and another 20 acres, is about to come to the market for €200,000,” Mr Smith said.
Fortunately, farming is relatively buoyant in Ireland, and dairy farmers are bulking up operations in anticipation of the abolition of EU milk quotas in 2015. Farmland prices rose about 5% in 2012 and will probably do the same this year, and many farmers are now buying back land they sold in the boom.
Two farmers from Mallow paid about €2.25m last year to buy 180 acres of land from a developer who paid them €40m for it in 2004.
“It suited my pocket,” said one of the farmers, 76-year-old John Cronin. “I know quite a number of farmers that are looking out for land. There’s a great love for it.”
Spain will no doubt be taking note, as that country has just started cleansing its banking system of toxic property loans. Spain and Ireland suffered Europe’s worst property crash, with prices falling more than 50% in some areas.
Spain’s bad bank, known by the acronym SAREB, was set up at the end of last year to buy €90bn worth of discounted property assets from banks to sell off over 15 years.
It will struggle to find buyers for about two thirds of the assets as they relate to areas that cannot be developed or because demolishing what is there to start again is too costly.
About half of all development land in Spain will eventually revert to farmland at writedowns of 90% or 95% from the last peak in 2007
Buy-to-let investors will be allowed to file property tax as expense - Independent.ie
PROPERTY investors will be able to deduct the property tax from their rental income when filing a tax return.
The move could ease the burden on buy-to-let investors, many of whom are struggling to meet mortgage repayments.
The non-principal private residents (NPPR) and the household charge are not allowed as expenses when landlords are working out their profit as part of a tax return.
But Finance Minister Michael Noonan has confirmed the property tax may be treated differently. He said he intends to amend the new legislation to allow the tax to be treated as an expense for landlords.
"The Thornhill Group recommended that the local property tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.
"This is not provided for in the Finance (Local Property Tax) Act 2012 but it is the intention of the Government to introduce such a provision on a phased basis."
Legitimate
Mortgage adviser Karl Deeter said it made sense to allow landlords to expense the property tax as part of tax returns. This was in keeping with best practice internationally, he said, adding: "It is a legitimate expense."
Not to allow the tax as an expense would mean someone with mortgage interest of €10,000 and rental income of just €5,000 would end up paying property tax, despite having a negative rental income, he said.
About 150,000 mortgages were taken out to finance buy-to-lets, the Central Bank said. Some 51,000 of these mortgage accounts are in trouble, made up of 37,000 in some form of arrears and 14,300 which have had the monthly repayments reduced but are not in arrears.
These restructurings have had to be put in place despite the fact that most investor mortgages are interest only.
The pressure is coming on those seeking restructuring deals, with Bank of Ireland and subsidiary ICS Building Society asking those on cheap trackers to pay an additional 1pc in interest if they want a mortgage repayment modification.
Property market here offers 'best value in Europe' - Independent.ie
IRISH houses now offer some of the best value in Europe, according to the latest calculations from the 'Economist'.
The research finds that house prices, having fallen 50pc since 2007, are now 5pc below their long-term historical value when measured against disposable income per person.
The "house-price indicator" also compares the long-term ratio of prices against average rents. On this basis, prices are 1pc below the norm.
The indicator caused controversy during the housing boom, when it found a much bigger over-valuation in Irish house prices than estimates from the OECD and IMF.
Taxes
In the event, prices have fallen even further than the indicator suggested as rents tumbled and disposable income was hit by rising taxes.
Now, Irish prices seem more realistic than those in many EU countries. The biggest over-valuation among those surveyed was in France, where prices were a third higher than past relationships to disposable income would suggest.
More worrying is the 21pc over-valuation found in Spain, where banks and public finances are under pressure. This was despite a 24pc fall in prices since 2007 and a 9pc drop over the past 12 months.
The 'Economist' sees this posing more of a threat than the French figures. "Spain's bust reflects a massive oversupply of housing built in the construction boom and an unemployment rate that rose to 26.6pc in November," it says.
A shortage of houses in the UK may counter its 12pc theoretical over-valuation and prevent prices falling further from the 11pc decline seen since 2007, it says.
"It does not suffer from the glut of empty homes that has created ghost towns in Ireland and Spain. And, according to the Bank of England's latest credit-conditions survey, lenders are more willing to make mortgage finance available than at any time since the financial crisis."
The cheapest houses in the EU compared with past trends going back to 1975 are in Germany, where they are 17pc under-valued, having risen 9pc since 2007.
But this is small compared with the 36pc under-valuation in Japan.
The hottest market is in Canada, which had a major price bust in the 1980s. Its 34pc over-valuation just edges out that of the Netherlands. A 20pc price fall in the US leaves houses 20pc under-valued, the report finds.
Estate agents and financiers the biggest losers in wages decline - The Irish Times - Tell me about it:)
DAN O'BRIEN, Economics Editor
In the English-speaking world, few work-related issues have generated as much controversy as the stagnation of pay for low- and medium-income workers.
When adjusted for inflation, median incomes for the bottom 60 per cent of American households have not increased for more than three decades.
This extraordinary trend has led to talk of the death of the American dream and of a new gilded age in which the super-rich reap all or most of the benefits of economic growth.
Mercifully, Ireland – along with much of the rest of Europe – does not appear to have followed the lead of the United States when it comes to pay trends.
The Irish remuneration experience has been more influenced by the extraordinary rollercoaster of the boom-bubble-bust period than by slower-to-evolve structural changes taking place across the rich world.
From available figures, almost all employees in Ireland enjoyed big pay increases before the crash, while stagnation or mild declines in pretax earnings have characterised the post-crash period.
Great precision is impossible when discussing Irish pay trends, as the statistics are patchy.
First, Ireland’s number crunchers don’t collect as much data as in many other countries. Second, the Central Statistics Office (CSO) has changed the way it gathers data on pay. As a result, there is no fully consistent series of numbers dating back beyond 2008 – the year bubble turned to bust and everything changed in the labour market.
Blue-collar pay
That noted, the remainder of this article will look at the available data on earnings pre-2008 and, separately, the new data series since then (in both cases the figures refer to before-tax average weekly earnings).
One set of numbers exists for earnings from 1996 to 2006 for industry, including the manufacturing sector. In the eight years to 2006, earnings rose at almost twice the rate of inflation to give the average worker in industry, in real terms, a rise in weekly pay of a third. This is in stark contrast to the US, where blue-collar pay rates hardly changed in real terms over the same period.
The standard explanation for the stagnation of lower incomes in the US is that demand has fallen for unskilled work, as American assembly-line workers have been replaced by robots and workers in low-wage economies.
As late as the early years of the Celtic Tiger, Ireland was, relative to the US, a low-wage economy and it attracted American companies which set up or expanded manufacturing operations. Although the likes of Dell have since relocated their assembly operations to lower-wage economies farther afield, Ireland still has an unusually high proportion of its workforce in manufacturing compared with west European peer countries. As this was in marked contrast to the US it is likely to go a long way towards explaining why Ireland did not experience the same sort of structural and sustained widening of income inequality as has been happening in the US.
Earnings from 1998 to 2008
Another batch of CSO data provides figures for weekly earnings in eight broad services groupings (excluding the public sector) from 1998 to 2008. Surprisingly, these figures show that those in information technology and research had the lowest increase in average weekly earnings, at just 6 per cent in real terms over the decade to 2008. By contrast, those employed in real estate enjoyed the biggest gains, with weekly earnings rising by more than half over the same period.
According to new figures, since 2008 estate agents and financiers (now grouped in one category by statisticians) have suffered the largest falls in earnings over the slump era. Between the beginning of 2008 and the third quarter of last year (the most recent numbers available) their weekly pretax pay packets shrank by about an eighth in real terms (they remain the second best paid category of worker).
The second biggest losers have been people in the arts and entertainment, and administrators in the public sector. Both have experienced an 8 per cent reduction over this period.
By far the biggest gainers have been in the education sector, where pay rose by 6 per cent over the same period of 3¾ years.
For most of the rest lucky enough to have a job, changes in pay – either up or down – have been small since the beginning of 2008. And if it is any consolation – as the accompanying chart illustrates – median pay rates in Ireland remain second only to Denmark in Europe.
Tuesday, January 15, 2013
Fiona O'Shea: Revenue to use strong-arm tactics in levying charge - Independent.ie
A property tax that is centrally collected is a misnomer, with the councils being the biggest losers, writes
Within the next couple of months almost two million homeowners will get a letter from the Revenue Commissioners with an indicative valuation of their home and an estimate of the local property tax due based on that valuation. Charged with collecting the property tax following the fiasco of the household charge, Revenue is leaving nothing to chance.
Not known for their expertise in the area of property valuation, it is expected that Revenue will get some assistance from the State's Valuation Office in estimating the value of every home in the country.
This would be no mean achievement. The Valuation Office, which services all government departments and state bodies, is reported to have taken 12 years to value residential property in just three local authority areas (Fingal, Dun Laoghaire-Rathdown and South Dublin). It's a far cry from three areas in 12 years to two million homes in under six months.
In a dysfunctional property market Revenue is set to depend on information from the Property Services Regulatory Authority's new register of residential property sales, first published in autumn 2012, with some support from CSO and ESRI surveys. This register is compiled from Revenue's own records of stamp duty paid, but only since the start of 2010. That information is going to be a bit patchy.
For example, I checked the property price register for Co Carlow for each of the years 2010, 2011 and 2012 and couldn't find a single transaction in the whole of the county for any one of the three years.
And even though Revenue seems confident about valuing our homes for us by March, it doesn't expect to have a full database of homes in the country until July.
They are understood to be expecting a huge fallout from the issue of the March letters because of the potential for error in matching names and addresses and of events such as deaths and emigration. It seems that they are planning to pour scarce resources into staffing helplines and dealing with the correspondence that these mistakes are bound to create.
Revenue is due to issue guidelines on how to value your property. But we already have a hint from the budget papers about what to expect. Guidelines issued with the papers say that where you accept Revenue's valuation, it will not challenge it, which seems highly sensible; or where certain procedures are followed, such as engaging the services of a competent valuer, they will not challenge that valuation. Music to the ears of the valuers' profession, I would think.
If you insist on valuing your home yourself Revenue may challenge your valuation. I'd be very surprised if it challenges many in the first year or two. It's going to have its hands full managing the administration of the tax. Payment will be the goal, along with improving on the household charge payment level.
If it should challenge your valuation, you should know that it has the power under new legislation to authorise someone to enter your home to value it. This is an incredible power – the only other circumstance where Revenue can enter your home is on foot of a search warrant in a criminal case.
Accepting Revenue's valuation means accepting its estimate of the tax due. If you don't either pay the estimate or replace it with a figure based on your own valuation, Revenue's estimate becomes due on July 1, 2013 .
According to Revenue, it will collect the amount due in the "normal ways" but the methods it is proposing to use: deduction at source, attachment of salaries and wages, etc, are far from normal collection measures.
These are at the extreme end of collection enforcement. Attachment means that Revenue can go to your employers and instruct them to deduct the tax from your salary without having to get a court order.
A provision in the 2011 Finance Act which allows Revenue to seize arrears of income tax from wages and salaries caused outrage in the Seanad. Senator Eugene Regan (Fine Gael) likened it to a police-state type provision and Indepen
dent Senator David Norris said it was a horrendous power to exercise against the citizen.
This is a power that Revenue is
now describing as normal and is planning to use as the first line of action in collecting unpaid property tax from PAYE workers.
The self-employed are not getting away too lightly either. If they don't pay the tax, Revenue will refuse to issue a tax clearance certificate, which is needed both for doing business with government and, in many cases, to carry on a business at all.
More sinister, however, is a suggestion that Revenue will make it part of your income tax return and that late payment of the property tax will result in a surcharge on income tax.
All of which makes the local property tax neither local nor a property tax. It is to be collected centrally by Revenue as if it was a tax on income with no input from local authorities (except a power in future years to vary the amount).
What is even weirder is that local authorities will have to pay the tax on social housing – if it really was a local tax, they would be paying it to themselves. As it is, they will have to apply scarce resources to handling the payment, presumably at the expense of badly needed local services.
Fiona O'Shea is a former principal officer for the Revenue Commissioners
Commerical property market to polarise - The Irish Times - Thu, Jan 10, 2013
The Irish commercial property market is likely to see greater polarisation in 2013, as demand rises for prime property in key locations, while secondary and provincial properties take longer to unwind.
In its outlook for 2013, commercial property consultant CBRE is bullish about the prospects for prime property, considering the weight of demand from a range of international investors for opportunities in the Irish market.
“The prospects for prime property are considerably better than secondary with increased polarisation likely to be a key trend in 2013,” said Marie Hunt, executive director and head of research at CBRE, adding that the sector is moving into a “recovery phase”.
According to CBRE, international investors will continue to focus their attention on prime office, retail and residential portfolio opportunities, primarily those in core locations in Dublin. This has the potential to generate some further yield compression in the office and retail sectors during 2013, despite the fact that short term rental growth projections remain relatively flat.
Domestic investors on the other hand will be the most dominant purchasers of secondary and provincial investments, some of which are likely to continue to experience “further outward yield shift” over the course of 2013 considering the likely depth of cash buyers.
CBRE also expects more loan sales activity in 2013, as banks continue to de-leverage their property holdings, while the disposal of some of the underlying securities that were sold by way of loan sales during 2012, might also be on the cards.
State taking landlords to court over registration - The Irish Times - Wed, Jan 09, 2013
The State body that regulates private rented accommodation is to take 22 landlords to court in the coming months over their failure to register with authorities.
Earlier this week the Private Residential Tenancies Board (PRTB) secured criminal convictions against two landlords who did not register tenancies despite repeated warnings. They were fined a total of more than €24,000.
Landlords are legally obliged to register all tenancies with the board. Since January 2011, the fee per tenancy has risen from €70 per accommodation unit to €90.
The board confirmed yesterday it is taking a further 22 landlords to court for failing to register tenancies with them.
Landlord made pay €18,000
Of the cases heard earlier this week at Dublin District Court, a landlord from Clonmel, Co Tipperary, was prosecuted for failing to register a total of three tenancies. He was fined €3,000 for each accommodation unit, while legal costs were also awarded against him, resulting in a total penalty of just over €18,000.
In another case, a Wexford landlord was convicted for failing to register a tenancy for a flat in Waterford. He was also fined €3,000 and legal costs were awarded against him, resulting in a penalty of just over €6,000.
Both landlords were receiving rent supplement payments from their tenants, a State-funded subsidy for tenants on welfare or low incomes who cannot afford to pay their full rental costs.
Last year the board issued more than 43,000 letters notifying landlords of their registration requirements.
Data shared
In recent years the Department of Social Protection has been sharing information with the PRTB on landlords in receipt of rent supplement, to help identify those who have failed to register with authorities. Two cases that came before the courts this week followed this data-sharing arrangement.
PRTB director Anne Marie Caulfield said: “Our access to the department’s rent supplement database has proved hugely beneficial.
“New software has enabled us to systematically track unregistered landlords whose tenants are in receipt of rent supplement payments.”
In the cases of the landlords prosecuted this week, she said the board had given the individuals several opportunities to comply with the legislation and register. “When they still failed to do so we moved to prosecute them,” she added.
Latest figures show that about 96,400 landlords received rent supplement payments during 2011. The average payment in respect of individual landlords was €5,220 per annum.
The size of payments for a small number of landlords suggests some accommodation owners received rent supplement in respect of between 50 and 120 properties.
Shoe shop Korky's loses eight-year battle against rising rents - Independent.ie
A well-known shoe shop has closed for the last time after an epic eight-year battle against 'upward-only rents'.
Korky's on Grafton Street in Dublin has shut with the loss of eight jobs, but outlets on Henry Street and the Ilac Centre in Dublin and in Cork city will remain open.
Korky's had been in business on Grafton Street since 1992.
Owner John Corcoran emerged as a national figure thanks to a high-profile campaign against upward-only rent reviews.
This included hanging banners from the Grafton Street building and winning support for the cause from Fine Gael and Labour in the run-up to the 2011 general election.
The campaign began when rent on the 900 sq ft Grafton Street shop shot up to €445,000 a year back in 2005, from €210,000 a year.
With 15 years remaining on the lease, Mr Corcoran could not hand back the keys without being left with a multi-million euro bill for future rent. At one point, he offered €300,000 to anyone who would take the lease off his hands, without success.
"There could never have been the commercial property bubble we had without the upward-only leases," Mr Corcoran said.
That's because property investors paid way over the odds for buildings based on a belief that rents would always rise and tenants in long-term contracts would always pay, he said.
The shutters were pulled down on the store for the last time after Mr Corcoran and landlord Canada Life agreed a deal freeing the company from its €445,000 a year lease early.
Details of the deal are confidential but it is understood that Canada Life agreed to break the lease eight years early.
Relief
This means the remaining Korky's shops will be unaffected by the closure.
Finally closing the shop was "a happy relief", Mr Corcoran said, comparing it to the death of an elderly relative who had been in terrible pain.
Until now Mr Corcoran has been forced to keep the store open even as it lost money, just to meet the rent bill.
Upward-only contracts have been illegal for new leases since 2009, in large measure thanks to Mr Corcoran's campaign.
Ironically, Korky's did not benefit, because the harsh leases have only been banned for new tenants.
During the 2011 general election, the campaign against upward-only rents for older leases was backed by both Fine Gael and the Labour.
Labour TDs, among them Pat Rabbitte, even campaigned with Mr Corcoran during the election.
After the election, however, the Coalition Government rowed back on its pledge to scrap the controversial leases after receiving legal advice that existing contracts could not be broken.
- Donal O'Donovan
Farmers' fears growing over state valuation of their homes - Independent.ie
FRESH fears have been expressed over how the country's 100,000 farmers are to assess the value of their homes for the property tax.
One farming organisation has written to the Revenue Commissioners outlining what it says is a need for a "realistic valuation" of farm dwellings that are located near a working farm.
The Irish Creamery Milk Suppliers' Association (ICMSA) says it is concerned at the announcement that Revenue would be providing an "indicative value" on every house so that it could establish how much property tax the owners should pay.
ICMSA taxation committee chairman Lorcan McCabe said it would be "next to impossible" to establish the value of houses in rural areas where there was little or no recent sales data available.
"Essentially, a farm dwelling will have restricted value arising from access issues and nuisance factors such as proximity to farm buildings that are considerable and Revenue must take these into account," Mr McCabe said.
He added that while owners would still be able to self-assess, the reality was that if they deviated from the estimate provided by Revenue, they faced the prospect of an audit.
Revenue will also have the power to deduct the tax from their single-farm payment.
Independent deputy Michael Healy-Rae is advising farmers to value their homes at the minimum rate.
He contends the value of a farmhouse, regardless of size or level of comfort, is worthless to anyone but the farmer when it is in the middle of a working farm.
- Majella O'Sullivan