You won't get a loan for a period house needing work these days, says ISABEL MORTON
YES, I ADMIT to being one of those sad and sorry people who is still caught in the 2006 property time warp. I’ve yet to get my head around 2010 property prices.
And rather like an old Italian woman, who knows the price of everything in lira and who still has to convert to euro on every occasion, I admit I still give a property its “real” price and then chop it in half to get today’s version. And, yes, it hurts every time I do it.
But there are times when I am truly startled by today’s prices and on one such occasion recently, while flicking through the estate agents’ websites, I came across “Stonevilla” at 297 North Circular Road.
Had someone made a mistake? How could this magnificent period country mansion be located plonk in the middle of Dublin city? And, at that asking price?
Stonevilla is, as it says on the tin, constructed of stone. It’s an elegant three-storey 19th century 220sq m (2,368sq ft) detached early Victorian villa, which sits on well over half an acre of garden in the middle of Phibsboro, Dublin 7. Lisney is asking €895,000 (down over two-thirds since it was first on the market in 2008 at €2.75m) and advises buyers that it “now requires modernisation and refurbishment”.
Sadly, unless perhaps rescued by a barrister wanting to live within an easy commute of the Four Courts, Stonevilla may be left to crumble, now that buyers are actively being discouraged from renovating these historic homes.
Securing a mortgage these days requires signing your life away, selling your soul and offering up your first-born child. But securing a mortgage for a second-hand or period house in need of full refurbishment is nigh on impossible. Of late, our banks and lending institutions have gone clean off the notion of financing any form of property renovation, extension or decoration, let alone the restoration of a Victorian mansion to its former glory.
Unlike the recent past, when banks facilitated the purchase of many a well-located period wreck and increased the mortgage to cover the cost of total renovation, including landscaping, state-of-the-art fixtures and fittings and designer furniture, with a few bob extra thrown in for good measure. These days, they will barely lend you the purchase price of the basic structure.
Estate agents report that properties needing refurbishment have become difficult to sell since banks are no longer lending customers money to carry out renovation work. Even small homes, which could be brought up-to-date for €50,000 or €60,000, are having difficulty finding a buyer as the new owner must find the cash themselves to carry out this renovation work.
Frank Conway of the Irish Mortgage Corporation reports that “banks now aim to be risk-averse, going after steady customers with steady jobs, buying steady properties”.
He went on to explain that lending institutions would far prefer to avoid “exotic” properties and stick to the average mass market three-bed semi. Older properties, which need renovation, are considered black holes which swallow up money and are, therefore, risky.
Banks admit that first-time buyer mortgages are top of their agenda and it appears that they are interested in very little else. But without financial investment, period properties will fall into disrepair and will become derelict within a very short space of time.
Having lost many historic buildings through ignorance and lack of funding throughout the years, we must, surely, have learnt our lesson by now and must never let it happen again.
Lending restrictions mean that second-hand properties in need of full renovation will not be bought by anyone, unless they have a cash reserve set aside to cover the work required or are prepared to live in their undecorated home and renovate room by room, as their cash flow permits.
Banks are equally reticent about lending to those who want to convert the attic or the garage, extend the kitchen or just renovate their existing home. Conway confirms the banks’ reluctance to lend for home improvements: “It’s difficult as you’d need a very strong case. They will do it in some cases where the loan-to-values are lower, then they might do some top-up business on the customer’s existing mortgage, but it’s all very tight these days.”
Having last spoken with a carpenter/small builder in January, when he was delighted to have two jobs which would keep him going for the next eight months, he phoned me again recently looking for work.
Apparently, both of the extension and renovation jobs he had lined up had been shelved because the banks had changed their minds and were no longer going to lend his clients money for home improvements.
Is it any wonder, then, that I am reluctant to leave my 2006 time warp? At least in those days we valued older properties and invested in their preservation and renovation. Indeed, was that not the era when the great and the good were clambering to live in restored period grandeur?
How times have changed.
