Reality bites: Gravy train runs off the tracks for paper millionaires

IT may come as a shock to ordinary taxpayers that the state is supporting couples and cash-broke developers with multiple properties, but the reality is many people doubled-up on house purchases and investments in the boom.

Property-rich people (on paper) are seeking help and money through debt and charity services in what was described as a “new phenomenon”, according to officials assisting them.

One community welfare officer who has administered such payments, summed it up. “These people have no cash. So you look to see if they have accessible assets and if they can prove they don’t, they have a claim. After all, you can’t eat bricks and mortar.”

Workers with the Money Advice and Budgeting Service (MABS) say some clients – often in denial – are coming to them for help with mounting debt problems and as many as six properties. The state-supported debt service does not facilitate mortgage payments but can advice asset-wealthy clients how to seek welfare claims and budget their means.

MABS Galway coordinator Marie Ward explained: “Through the Tiger economy you would have had mortgage brokers and banks releasing equity on one home to buy another and that happened right across the board from middle income groups to civil servants and teachers.

“They’d say ‘this is grand we’ll get our second property and sell it up when we hit 65’... When they arrive to us they’re looking for SWA [Supplementary Welfare Allowance].”

SWA applicants are generally granted payments while waiting for decisions on other welfare entitlements to be processed, like jobseeker’s allowance or benefit.

The family home or farm is not assessed as part of a means test for the payment. Other properties included as means must be “capable of investment or profitable use”.

SWA applicants with multiple properties claim they cannot sell them and their value is lower than the mortgage, thereby eliminating them as an ‘investment’ or ‘profitable use’.

Ms Ward said: “They can’t sell them now because there’s no market...

“These people are very distressed. They’re not sleeping, they’re not eating and thinking ‘am I going to keep the roof over my head, am I going to get another job... where do I go’.

“Sometimes I would refer them immediately to their doctor.”

The Galway MABS centre estimates between one in 15 or even as many one in 10 of its clients possibly have multiple properties.

“We have to sit down and do a budget with these people... I say to the couple ‘I want you to take that [budget plan] home, I want you to look at it and I want you to come back to me and say where you as a family are going to make the sacrifices’.

“The gravy train is over, this is reality. Some people coming to us are not ready for that. They could be suicidal.”

Kerry MABS coordinator Jerry Doyle said asset-rich clients were being advised to get legal help.

“We don’t have the services to deal with this. They’re trying to sell their houses and then become dependent on renting them, but there’s been huge drops [in incomes].”

The Society of the St Vincent De Paul said a big concern was struggling middle class families emerging as the “new poor”.

SVP vice president John Monaghan said there was “a certain stigma” for the middle class accessing services.

“We’ve certainly heard of people in parts of rural Ireland who built their own homes and they have now approached our regional offices [for help].”