City Living: MBU - marriage break-up - is fuelling housing demand. Edel Morgan reports
A new survey has found that a relatively new entity is helping fuel demand for two and three-bedroom properties. The divorcee is now a significant contender for the kind of property once mainly sought after by first-time buyers and young families.
The survey of 45 nationwide offices by Real Estate Alliance found that divorcees and separated people now account for 11 per cent of property sales - more than doubling in the past five years. It found that the highest percentage of divorced and separated buyers was in the greater Dublin area with figures ranging between 15 per cent and 20 per cent.
In Kerry and Mayo the number of divorced and separated housebuyers dropped to 5 per cent of all properties sold, while in Sligo, Ennis and Kilkenny figures are around 8-10 per cent.
The survey reveals that slightly more men than women - although no figure is provided - buy property after a divorce or separation, as women are more likely to be the ones to stay in the family home. However, in the majority of cases the couple sell their house, forcing them to downsize to buy two smaller properties.
The most sought-after properties are two-bedroom apartments and townhouses and three-bed terraced and semi-detached houses.
Urban areas are favoured over anywhere too isolated or rural. Divorced or separated women tend to look for properties that are in good condition with little external maintenance.
It's not a complete survey and Real Estate Alliance declined to disclose a full breakdown of its nationwide figures saying it would be "unfair" to individual members. Although it has four branches in Cork, two in Wexford, Leitrim and Carlow, as well as branches in Roscommon, Longford, Cavan, Monaghan, none of these counties are mentioned in the survey figures.
The geographical spread of members is uneven with eight branches in Dublin, four in Cork, Kildare and Meath, two in Kerry and one member in many counties including Wicklow, Westmeath and Waterford. It has no members in Laois, Galway, Offaly or Donegal.
It appears the information provided by individual agents is largely anecdotal. Real Estate Alliance's PR person said that while buyers "were often not required to disclose information" about their marital status, the survey findings are "based on the experience of members . . . Often they would be privy to such information."
So it appears the survey is unscientific, based on sketchy information and spread over an uneven geographical area.
Sherry FitzGerald's research department last year recorded a figure of 2 per cent of divorcees and separated people selling property. One would imagine many of these sales would lead on to the ex-partners buying a smaller property each - leaving Real Estate Alliance's 11 per cent figure looking a little high.
The Department of the Environment and Local Government issues annual figures detailing the marital status of borrowers. Last year widowed, separated and divorced people accounted for an average of 5.7 per cent - an actual drop on the previous year of 0.1 per cent and of 4.2 per cent on 1999 figures.
These days it's common for both married partners to be income earners, so more family homes are being put on the market after a divorce or separation agreement because there isn't a dependent spouse. Where one ex-partner - usually the dependent spouse - stays on in the family home it may be that the family home isn't valuable enough to raise funds for each to buy alternative properties.
If both are financially independent or own other properties, the court might decide that the interest of one ex-partner in the family home should be transferred to the other, sometimes with or without the liability for the mortgage.
In most cases, particularly if there are children involved, a court may try to maintain continuity and the family home will not be disposed of. In this case no capital gains tax is payable provided it is established as the principal residence of both ex-partners.
If the family home is in joint names, both ex-partners must authorise the solicitor in charge of the sale to undertake the transaction. If not, then the ex-partner in whose name the house is registered must give his or her consent to this authority.
In Britain, which has the highest rate of marriage failure in Europe with around 114,500 divorces a year, the divorce mortgage has been introduced by a mortgage broker, Charcol, and the Bank of Scotland. This is aimed at divorcees who are dependent on their former spouse for income.
The mortgage treats maintenance payments like salary payments and features include payment holidays . Most banks refuse to treat maintenance payments as salary believing they are less reliable than money from an employer.
Only a solicitor's letter is required to confirm maintenance - most banks will accept only a court order. So are we likely to see the introduction of the divorce mortgage in this country?
"Probably not for some time," said a Dublin mortgage broker. "The Charcol divorce mortgage is the only one in Britain, which has a long history of divorce, so it might take us some time to catch up."
