Simon Ball, writing in today’s Irish Independent gives a timely warning to those PAYE people who have moved out of their homes and have their property rented out to a third party.  The resulting rental income may be chargeable for income tax, even though the individual considers him or herself a standard PAYE worker.  A lot of individuals are not fully aware of this and their obligation to file a tax return before 31st October.  It is essential that people in this situation keep enough money aside from their rental income to cover the tax that may be due. Preliminary tax may also be due for the following year.  Failure to file a tax return on time can lead to additional surcharges and interest.

At SCK Group we can advise you on allowable expenses in relation to an investment property.  We can complete your rental accounts and can file a tax return for you.  If we let and manage your property, we will complete your rental accounts or file your tax return for FREE.

Many people are having an exceptionally difficult time, in relation to reduced income and job losses with a knock on effect on family life, as reported by Isabel Morton in The Irish Times.  Isabel suggests that we go through our contacts in our mobile phones, where we will be horrified at just how many people we know that have been and continue to be badly affected by the recession (or depression!). 

Among our clients, we have experienced this also and consider those of us who are healthy and whose families are healthy, to be fortunate as many people have been decimated financially only to suffer the further hardship of ill-health among themselves or family members.  Our latest newsletter gives some useful advice on Positive Thinking. Read it on http://www.sckgroup.ie/html/news. 

Phone contacts list tells stories of woes, writes ISABEL MORTON 

BORED WHILE sitting in Gatwick airport last Thursday evening, waiting for my delayed flight home, I started going through the names in my mobile phone and was surprised, as I stopped to think about each person and what I knew of their individual circumstances.

Many of those friends, family and work contacts, had of late, experienced fairly dramatic changes to their lives. No doubt, there were a lot more, whose problems I was not privy to, who were currently planning whatever exit routes they could. What struck me was how widespread and varied the problems were and how disruptive this “depression” is for almost everyone. Without a working banking system and the availability of credit, everyday life has become disconcertingly uncertain, unstable and for many, unsustainable.

Property can neither be bought nor sold with any vestige of normality and the knock-on affect that this economic stagnation is having on people’s everyday lives, is dramatic.

Add a few nasty extras into the already unpalatable mix, such as higher taxes, lower salaries, unemployment and the general malaise and suddenly family life is being seriously affected.

As I looked around the departures lounge, I wondered how many were forced into spending most of their week in London, away from their homes and families. Im finding it tiring enough myself, and my trips are short and infrequent.

Scrolling through my contact list, I came across a number of people who, up until relatively recently, had jobs at home but were now thankful to have a job anywhere, regardless of the commute.

There is one couple, whose “good life” I sometimes envied, as they live in a delightful but rather remote part of the country. Their circumstances have now changed, as one has to commute for work, leaving the other with their children and trying desperately to sell their beautiful home, at whatever price they can get for it. So far, they are not having any luck, as it fits into neither the category of farmhouse or holiday home.

Another family name came up on my screen. They eventually managed to sell their home and now live in a rented house in Dublin but are separated for most of the week as he works in England.

Then I came across a fair number, mostly those in the area of construction and property, who have long since given up hope of any revival and have scattered to far flung places in search of work.

One, whose husband is a civil engineer working in the Middle East admitted, the last time we met, that now their lives were so different, they found it hard to communicate. She felt resentful of him, away from the children and the everyday problems while he was resentful of her, being home with family and friends. But at least they could pay their bills and keep their heads above water.

A surprising number of people with families of all ages, have, over the last year or so, sold their homes and moved into rented accommodation. The further I went down through my list, the more people I realised I knew, who were no longer homeowners.

I was then reminded of a few more, whose properties had been sitting on the market for so long now that I’d actually forgotten about them. And despite having lowered their prices, changed their estate agents and increased their viewing figures, offers were still not forthcoming.

I came across some people, who have adult children (and in some cases, grandchildren) who have emigrated. Some are even managing the rental of those properties, now in negative equity, which their children have left behind.

And I’d forgotten about neighbours, who planned on downsizing, only for three of their four children to move back home, one with a toddler in tow, as she has separated from her partner and can no longer bear to live with him (they’ve not yet managed to sell their home).

I looked around at those waiting patiently to board: the usual bunch of grey-suited men with laptops and small overnight bags; a group of four cheerful English women in their 60s, laughing about which one’s eyesight and nerves were best suited to driving around Ireland’s tourist spots; a mother and her teenage daughter analysing the pros and cons of various British universities and the usual mix of others.

I took a phone call from a friend and mentioned how I was entertaining myself as I waited for my flight. She suggested that I was either exaggerating or knew an unfortunate bunch of people.

An hour and a half later she texted back. She’d just gone through her own contact list and was surprised at her findings.

Try it yourself. You’ll be amazed and probably horrified.

---

In these difficult times. it’s important for families to budget properly and to cut down on unnecessary expenses.  John Lowe gives some tips in the Sunday Business Post.

Tips to hang onto family cash
05 June 2011 

1. Plan

It is crucial to complete a household budget as your first exercise. First, work out exactly what you are spending each month and, from this, determine initially how much disposable – and, if applicable, surplus – income you have.

That is what is left after tax, and after you pay your rent or mortgage, household bills, food, petrol and ‘spending money’.

If your expenditure exceeds your income, you then have two choices – cut costs or earn more.

Remember to ask yourself: do you really need to buy that product or service and, if you do, is there a cheaper or better alternative?

2. Cut your banking and insurance bills

Overdrafts, especially those exceeding the limits, should be a no-no. Also, try to avoid arrangement fees, high interest rates and referral fees.

Surcharges, which are additional interest charges applied for exceeding overdraft limits, can be up to another 12 per cent annually, and unpaid fees all take their toll on your disposable income.

Credit card costs are similar – try and use your credit card like a charge card and pay it all off when the payment is due.

But be wary of using your credit card to take out cash, as you can be charge up to 26 per cent from the time you withdraw.

You should also shop around for the best mortgage and loan deals, not to mention insurance premiums – life, health, buildings and contents, travel and even your car.

Always compare quotes from your insurer with other options available in the market, or seek advice from an independent authorised adviser.

3. Find the right savings accounts

The most important decision about savings can be summed up in one word: start.

By planning to save, you are setting immediate goals – for holidays, an attic conversion, the new plasma 3D screen television you want or even funding Christmas presents for the children.

Save small, but save often, whether in a bank’s regular saver account, the post office or your local credit union.

Ensure your deposit-taker is regulated.

The Financial Regulator’s deposit protection scheme covers you for up to €100,000.Then it is a simple matter of finding the best rate. Remember the mantra: better in your pocket than theirs. So what’s the best regular saver account currently?

You can save between €100 and €1,000 per month for 12 months and receive 4 per cent interest from both EBS’s family regular saver account and Ulster Bank’s Special Interest deposit account.

4. Cut down your household bills

When you analyse your household bills, you will find you may have left the lights on for too long, or not used the washing machine on the night-time rate or had the central heating blazing while you were away for the weekend.

Choose the most appropriate utility plan for your needs and take advantage of the deals created by competition in the sector.

Travel bills can also be cut easily. Buy discounted or tax friendly bus passes, get the best rates on tolls by using www.tolltag.ie, or try a bicycle over time; not only is it cheaper, but better for you physically. If planning a holiday, hold out for last-minute deals.

Across all areas of spending, you will find ways to reduce your overheads. Always adhere to the Money Doctor mantra – stop spending and, if you must spend, ensure you are getting the best value.

5. Look for bargains

* Take advantage of special in-store offers – for instance, SuperValu is delivering real savings to parents with a baby and toddler event, including value-for-money offers on all things baby until June 18.

*Use coupons and discount

vouchers. * Go online and use discount websites – www.fatcheese.ie and www.onoffer.ie to name but two.

* Have fun for free: take the family to the town library, art gallery, museum or park.

*Generic and bulk buying – especially for family purchases, like nappies and baby food.

* Clothes: buy tough-wearing items and remember your family and friends will appreciate the clothes once your baby’s grown out of them.

There is no shame in hand medowns.

* Food: portion control is key. Follow healthy eating guidelines.

Portions of mashed potato or rice should be the size of a computer mouse.

For cheese, you should eat a golf ball-sized portion, while vegetables should take up over half your plate.

*Water is free, and far better for your children and you, than any soft drink – and tap water at that.

http://bit.ly/kZ5Bzz

At SCK Group we specialise in payroll for UK companies operating a subsidiary in Ireland.  In general, the responsibility for processing PAYE, PRSI, USC deductions falls on the UK employer.  However, if the UK employer does not process Irish PAYE payments, the responsibility falls on the subsidiary in Ireland.  There are some exceptions, which must be Revenue approved in advance, i.e. if the number of days worked by the employee(s) in Ireland falls below certain limits. But in general if a company does not process PAYE etc for it’s employees in Ireland, it exposes the subsidiary company here to the risk of interest payments and penalites for late payments.

For further information please contact our payroll department. 

Tel:       0035312910800

Email: paula@sckgroup.ie

AIB is to launch a €22 million venture capital fund for investment in early-stage companies, as part of its commitment under the government’s bank recapitalisaton strategy, according to last Sunday’s Business Post newspaper.

http://bit.ly/hhx6Fz

For many years, we have been advising our clients to ‘over-pay’ their mortgage if they can. With deposit interest rates low and condsidering DIRT, it made more sense to clear down debt rather than increase savings. This is still the case, but with most entrepreneurs and individuals in survival mode, not many will be able to pay more. However, it still makes sense if you can afford to do so. Last week we saw the first increase in ECB interest rates for some time, how many more increases will follow? If nothing else, paying extra on your mortgage each month now, will prepare you for the increased repayment in the months to come, and you will be reducing your debt. For tips on how to keep your mortgage costs down, see the article in last Sunday’s Business Post

http://bit.ly/fHyAnq

Apartment Owners and Service Charges (Irish Times)

Cash-strapped apartment owners are not paying service charges resulting in a fall in maintenance standards at many developments

WHILE REPORTS of home repossessions and negative equity are a constant reminder of the mess we are in, relatively little attention has been paid to new findings which show that there has been a fairly serious fall-off in maintenance standards at many of Dublin’s apartment enclaves.

“The service charges are too high”; “the bins haven’t been collected for weeks”; “the lift is not working”; “security staff have been withdrawn from the site” – these are some of the problems causing frustration and annoyance to apartment owners and their tenants. The reason for the reduced level of services is not – for once – the ineptitude of the management companies but the ever increasing number of owners failing to pay their service charges.

A recent survey by the Society of Chartered Surveyors and the Irish Property Managers Association has shown that half the property managers who responded estimated that up to 20 per cent of owners had not paid up in the past year. The remainder put the number of defaulters at between 20 and 40 per cent.

Not surprisingly, apartment blocks built in the past five years are worst affected because a high proportion of the units was bought by investors who are now in negative equity. As well as having to cope with an increased number of void periods, these owners have had to settle for rents up to 25 per cent lower than in the boom times.

With mortgage rates certain to rise later this year, the situation can only deteriorate further. A combination of all these factors, plus the fact that the rental market is over- supplied in many areas and that there is every likelihood that increased property taxes are on the way, could mean that the residential investment market will remain dormant for a considerable time to come.

The second group falling behind with their service charges are – wait for it – developers who built the apartment blocks and opted to cauterise their losses by fitting out unsold apartments and putting them on the letting market. Never mind the fact that by offering entire blocks for rent almost at any cost to ingratiate themselves with their Nama bosses they have frequently undermined their very own clients who often paid them over the odds for the apartments. A reduced cash flow since Nama started calling the shots has meant that for many developers the service charges are well down the list of priorities. The reduced funding has meant that cleaning, maintenance and security have either been reduced or dropped in many developments.

However, the largest property managers, Wyse, who handle apartments in up to 200 different locations, say by and large they have managed to avoid maintenance cutbacks by persuading service providers to reduce their charges. “However, with up to 30 per cent of service charges remaining unpaid, mainly in newish apartment blocks, we are finding it increasingly difficult to meet our obligations,” says managing director Ben Gough.

Many of the other property managers have already cut back on services because of the shortfall in funding and the possibility that the number of defaulters could increase further if the economy continues to deteriorate.

Poor maintenance means that owners of apartments who pay up can take as big a hit as those who do not. Once maintenance and repairs are reduced or suspended, the overall apartment block suffers, leading to a depreciation in values. When an apartment scheme is allowed to deteriorate – and there are any number of examples – it is a difficult thing to reverse.

http://bit.ly/eawtOS

Owner-occupiers, Landlords and Tenants of Aras Na Cluaine, Yellow Meadows, Clondalkin are concerned following recent newspaper articles re High Court Proceedings against the Developer in relation to issues raised by the fire officer.

At SCK Group we have been liaising with Aras Na Cluaine Management Company Ltd to ensure that the issues are satisfactorily resolved.

Below are relevant links

http://bit.ly/foImfN

http://bit.ly/ehd4Lw

Below some mortgage information from yesterday’s Sunday Business Post.  Good news for those with Tracker Mortgages!

With lenders likely to hike interest rates, mortgage-holders and first-time buyers need to look at what options would suit them best

One of the big stories in the news last week was that Permanent TSB, Ireland’s biggest mortgage-lenders, was to raise its standard variable rate (SVR) by 1 per cent, bringing it up to 5.19 per cent.

That move was followed by the news that Ulster Bank planned to increase its mortgage rates for SVR customers by half a point, from 3.85 per cent to 4.35 per cent, from March 1.

It is likely that such moves will be followed by other mortgage lenders, as they try to repair their balance sheets.

For someone with a standard variable rate mortgage of €300,000 with 25 years to go, a rise of 1 per cent would add around €170 per month to their monthly repayments.

If you have a mortgage or are considering getting one, what should you be doing in light of this latest rate rises?

Tracker variable rates

If you are on a tracker variable rate, your lender cannot raise your interest rate above a margin agreed in your original loan offer, so last week’s speculation about lenders hiking rates doesn’t apply to you.

Your interest rate will rise only if the European Central Bank (ECB) decides to increase rates across the eurozone.

Following last Thursday’s ECB governing council meeting, the ECB base rate remains unchanged at 1 per cent, which it has been at for 21 months, though rising inflation in the eurozone has raised concerns that rates may be increased later this year.

But for a domestic mortgage customer, tracker variable rates still represent far better value and offer greater security than standard variable, so I’d be reluctant to recommend that anyone switch from a tracker, especially as tracker variable rates are no longer available.

If you give up a tracker, it’s highly unlikely that you’ll ever get it back, so hang onto it.

Fixed rates

If you’re on a standard variable rate, you may want to consider fixing your interest rate.

Ask your lender what its current fixed rate offerings are. If any of the fixed rates is less than or very close to your current standard variable rate, this would be an opportunity to fix.

Be aware that fixed rates are inflexible and charge penalties if you redeem your mortgage during the fixed period.

Consider switching

Contrary to popular opinion, some lenders are still happy to take on ‘switcher’ business, or people moving their mortgage from one lender to another.

Typically, your mortgage balance would need to be no more than 80 per cent of the current value of your home to qualify for a switch.

Some lenders, such as ICS, will accept switches only where the mortgage is below 50 per cent of value.

Others, such as AIB, won’t accept switcher business at all. Switching lenders does cost money: you will pay your own legal costs and for valuation of the property.

So before switching, you need to establish that the improvement in rates and reduction in repayments justifies the cost.

For example, if you have €300,000 on your mortgage with 25 years left and your own lender offers you a five-year fixed rate of 5.75 per cent, your monthly repayments would be €1,887 per month for the next five years.

If you switched to a lender offering a five-year fixed rate of 4.8 per cent, your repayments for the next five years would be €1,719 per month, a saving of €168 per month.

Over the five-year fixed period, you would save over €10,000 in repayments. Your legal and valuation costs for switching should be €1,200 or €1,300, so, in this example, it would make a lot of sense to switch.

This is the sort of exercise you or your adviser need to do before considering switching lenders.

Subsidised switching

KBC Homeloans is offering to pay €1,000 towards the cost of switching your mortgage to it and will also refinance other debt, within limits.

If you switch away from KBC within five years, it will clawback this €1,000.

While this is obviously an attractive offer, you still need to compare rates for your particular mortgage to make sure that it represents value for you. Compare other lenders’ rates and repayments with those of your own lender and KBC.

Make sure you factor in the legal and valuation costs of switching to another lender, the €1,000 subsidy if you go with KBC and the fact that staying with your existing lender incurs no costs at all.

If considering switching to KBC or any other lender, you need to qualify for the amount requested under the new lender’s criteria.

If, for example, you or your partner has lost a job since you first took out your mortgage, you may not qualify to switch.

Equally, if your repayment or banking history is less than pristine – eg late or missed repayments on your mortgage or other loans, or exceeding your overdraft on your current account – you may have difficulty getting a new lender to take you on.

Build up a war-chest

If you reduce your monthly repayments by choosing a fixed rate or switching to a different lender, don’t just let the saving be absorbed into your day-today spending.

Unless the saving is very large, you just won’t notice it after awhile.

Instead, set up a separate regular savings account, with a standing order paying the savings into it each month.

For example, if you manage to reduce your mortgage repayments by €150 per month, start a savings account for this €150.Then,when interest rates eventually rise, you’ll have a buffer to help you with the increased repayments.

Liam D Ferguson is principal of pension, life and mortgage broker Ferguson & Associates and www.FergA.com

ECB interest rates

At last Thursday’s European Central Bank (ECB) meeting, the bank’s governing council decided to leave the base interest rate unchanged yet again.

The base rate, which directly affects all tracker variable mortgage repayments and indirectly affects standard variable repayments, has been at a historic low of1 per cent for 21 months.

Jean-Claude Trichet, president of the ECB, said at last week’s meeting that inflation across the eurozone, which has been rising recently, warranted ‘‘very close monitoring’’, a hint that the bank could take action to dampen inflation by raising the interest rate.

On the other hand, he also said the current ECB rate remained ‘‘appropriate’’, a signal that a rate increase may be some time off yet.

At their meetings on the first Thursday of each month, ECB bosses detail their current feelings about the eurozone economy, as well as announcing the base rate. The speech is closely analysed by economists, bankers and anyone with an interest in the future of ECB interest rates, as it usually contains clues about what the bank plans to do over the coming months.

For example, in November 2005 Trichet said the bank was ready ‘‘to moderately augment the present level of interest rates in order to take into account the level of risks to price stability’’ and that it would ‘‘withdraw some of the accommodation which is in the present monetary policy stance’’. This was interpreted by many as a clear signal of the intention to raise interest rates. Rates duly went up in December 2005.

This year, inflation in some of the bigger eurozone countries is clearly a concern, as it could force the bank to raise rates.

However, last Thursday, Trichet referred to ‘‘short-term upward pressures’’ which could mean that the ECB considers the recent inflation rise as only temporary. He also said that ‘‘inflationary pressures over the medium and long term should remain contained’’.

Reading between the lines of last Thursday’s speech would suggest that the ECB is in no hurry to raise rates just yet

Many landlords will be relieved to read in today’s Irish Times of the Daft report which shows that Rent Costs have levelled out in Ireland.

THE COST of renting residential property in Ireland appears to be levelling out, according to a report by property website Daft.ie.

Rents fell by just over half a per cent last year compared to a 15 per cent drop in 2009 and 10 per cent in 2008. The largest drop, of over 7 per cent, was recorded in Leitrim, which also had the cheapest rentals in the country at an average of €467 a month.

Rents for Kerry dropped 7 per cent to an average of €617 and, while rents in Wicklow dropped by 3 per cent last year, it remained the most expensive place to rent outside the capital, with an average monthly charge of €922.

Dublin city centre saw the largest increase last year going up by almost 3 per cent. The average rent there was €1,134, but it did not top south Co Dublin where the average rent was the most expensive in the country at €1,303. It increased 2.2 per cent last year on 2009.

Rents in north Dublin city fell by more than 2 per cent to an average of €985.

Rents in Offaly were unchanged at an average of €604 a month and in Galway and Cork cities there was very little change, with average rents at €804 and €824, respectively.

The availability of properties also dropped; the total number available to rent nationwide fell from a high of over 23,000 in mid-2009 to less than 16,000 at the beginning of this month.

http://bit.ly/eHo4ly

Read the full Daft report on:

http://bit.ly/eAXLv