Considering Buying A Residential Property? 5 Tips To Prepare You For The Process

  1. Budget for All “Hidden Costs”

Many prospective purchasers know that they need to save for a deposit, secure a mortgage if needed, and pay legal fees but they are not aware of other costs associated with buying a house.  Ensuring that you have enough funds to pay for the following “hidden costs” will help make buying your new home that much easier:-

  • A Valuation Report (if mortgage needed)
  • Mortgage Protection Policy (if mortgage needed)
  • A structural survey
  • Home Insurance
  • Commissioner for oaths fees (generally between €30/€40)
  • Property tax (varies hugely depending on value of property)
  • Property Registration Authority fees (usually between €3000 and €700)
  • Removal fees
  • Stamp Duty (1% of the value of property up to €1m
  • Service Charges (vary hugely depending on property)
  • ESB, Bord Gais and UPC connection fees
  1. Have a “Loan in Principle”

Before you place offers on properties, secure a “loan in principle” from one or more lending institutions.

A “loan in principle” (an LIP”) (also called “mortgage in principle” or “agreement in principle”) is an agreement to lend based on an initial assessment of your circumstances, which includes your  income, outgoings and your credit score among other things.  Being offered a “loan in principle” forms part of the initial consultation phase of the mortgage application process.  Once your offer has been accepted, you could then complete the mortgage application process and a letter of offer could issue to you faster than had you not instigated the process at the outset.

Not only will you know the price range of properties you should be viewing but having an LIP could in theory make you a more attractive buyer and stand you apart from other prospective buyers during the bidding process.

Good to Know

At present in Ireland banks are restricted from lending more than 90% of the value of the property.

  1. Plan Your Negotiations

Once you have found your perfect property, you need to decide how to bid for it.

Firstly, before placing a bid, make sure that if contents are to be included in the sale, a list is agreed and that the vendor acknowledges that any offer you make is subject to a satisfactory structural survey having been carried out.

Some general tips for bidding and negotiating are:-

  • When first meeting the estate agent/seller, downplay the amount of money you have to spend as s/he will inevitably show you properties which are outside your initial quoted price range.
  • If you fall head over heels for a property, downplay your interest. Draw the attention of the estate agent to work that needs to be done and the estimated cost of same (obtain a quote from a contractor if necessary).
  • Maintain close surveillance of the property market and, in particular, be aware of how much properties in the area are selling for and how quickly. If they are moving very slowly and selling for below the asking price, you are in a better position to make a low offer.
  1. Beware of the “Buyer Beware” Principle

The “buyer beware” or “caveat emptor” principle operates to place the burden on a buyer to ensures that there are no defects in the property which would have been disclosed had a reasonable inspection been carried out and that the property meets his/her expectations.  It is for this reason that buyers must do the following before making an unconditional offer and/or signing a contract to buy any property:

  • Obtain, review and consider a structural survey of the property and ensure you are happy with same.
  • Ensure that the map of the property (which will be provided to you by your solicitor) corresponds with the boundaries as they appear “on the ground”.
  • Research the area surrounding the property and ascertain from the local planning authority whether or not there are plans to carry out large development, including road construction which might affect your enjoyment of the property.
  1. Choose your Solicitor wisely!

Once your offer has been accepted, the vendor’s solicitor will prepare draft contracts based on the heads of terms that have been agreed and will send them to your solicitor.

Your solicitor will raise queries and ensure that the vendor has proved or will be in a position to prove that “good marketable title” to the particular property is capable of being shown on the proposed date of completion.

The conveyancing process can seem complicated as it involves a number of steps.  It is therefore important that you choose a solicitor with whom you communicate well and who is easily approachable.

Solicitors’ fees vary greatly and the format of their estimated bill of costs and outlay do too.  For example, some may not include the cost of stamp duty or property registration fees in their initial quote whilst others (including Amorys) do – so make sure you are comparing “like with like” before making your decision.

Whilst every effort has been made to ensure the accuracy of the information contained in this article, it has been provided for information purposes only and is not intended to constitute legal advice. Amorys Solicitors is a boutique commercial and private client law firm in Sandyford, Dublin 18, Ireland.
For further information and advice in relation to “Buying A Residential Property Tips”, please contact Wendy Scales, partner, Amorys Solicitors wendy@amoryssolicitors.com, telephone 01 213 5940 or your usual contact at Amorys.

ARE YOU A NON RESIDENT THINKING OF BUYING PROPERTY IN IRELAND? – HERE IS WHAT YOU NEED TO KNOW

  1. There are no restrictions on foreign nationals buying property in Ireland. This means that both EU/ EEA and non-EU/ non-EEA nationals can purchase property here without limitation.
  2. Owning residential property in Ireland does not entitle the owner to a right of residence here. Residence and/ or the right to remain in Ireland are treated separately to property ownership and depend on each individual’s personal circumstances. For further information please see Irish National and Immigration Service.
  3. Similarly, owning commercial property here does not generally  entitle a non-EEA national to operate a business out of that property – permission from the Minister for Justice Equality and Law Reform is required. Conversely EU/ EEA nationals may operate a business and reside in Ireland without restriction by virtue of the general principles of EU law.   A company, once it has one director that is resident in Ireland, may operate a business out of that property.  The right of residence of each director and employee will be treated according to each individual’s circumstance however.
  4. It is important to note that a tenant of a non-resident Landlord in Ireland is obliged under current tax legislation (section 1041 Taxes Consolidation Act 1997) to withhold 20% of the annual rent and pay same to the Revenue unless that non-resident landlord has appointed a ‘Collection Agent’ to be assessed for the tax on the rent from that particular rental property. A collection agent is usually an estate agent, accountant or solicitor but could be any person who is resident in Ireland.  Once a collection agent has been appointed a tenant will be entitled to pay the full amount of the rent to the Irish resident agent.  Appointing a collection agent is relatively straight forward and can be effected by completing an Income Tax Registration Form for Collection Agents and submitting it to Revenue.  First the Landlord will need to register his/her tax or PPS number for income tax.  The Collection Agent will then need to apply to the Department of Social Protection for a separate Personal Public Service or tax Number which will be linked to the landlord’s tax number in Ireland.  Once a Collection Agent has been acknowledged by Revenue as such, the tenant can pay the rent to the Collection Agent without deduction of tax.
  5. Stamp duty at 6% of the market value of commercial property transactions must be paid by a purchaser. Stamp duty on a residential property transaction is payable at 1% of the market value up to €1m and at 2% on the value in excess of this amount. In both cases stamp duty must be paid by a purchaser within 30 days of completion of the transaction. In order to file a stamp duty return a PPS or tax Number will be required which will take some time (currently up to 8 weeks) to issue from the Department of Social Protection if a purchaser does not have one already which could potentially delay completion of the transaction.  Individuals or companies who have never been resident or carried on business in Ireland are unlikely to have a PPS or a Tax Number and may therefore be subject to this delay.
  6. The conveyancing process in Ireland can generally be divided into three stages: negotiation stage (where solicitors are generally not involved); pre-contract stage (solicitors are involved) ; and completion (Solicitors are involved). The negotiation stage usually involves private individuals and/or their estate agents or representatives negotiating the sales price and “heads of terms”. In Ireland, the vast majority of the legal work is carried out by solicitors at “pre-contract stage” so that once a contract has been signed by both parties, it is usually possible to complete soon after that.  The length of time it takes to complete a purchase will however depend on each transaction and in particular whether the purchaser is buying with cash only or with both cash and the benefit of a mortgage.  All going well, it should be possible to complete the conveyancing transaction within 4 weeks of exchange of contracts.
  7. An annual charge (called “local property tax”) of up to 0.18% of the market value of a residential property in Ireland up to a value of €1m, and up to 0.23% on the balance of the MV over and above €1m must be paid to the Revenue on or before 10th January each year which is something that a prospective investor will need to bear in mind prior to purchasing on a ‘buy to let’ basis. The percentage rate may fluctuate.  Further details of the local property tax charge are available here.
  8. Rates are payable on commercial property to the local authority for the area in which the property is situated. The amount payable will depend on the size of the property and other factors.
  9. Service charges may be payable to a management company where the property, residential or commercial, is located within a serviced estate.
  10. Ireland has signed comprehensive double taxation agreements with 73 countries which generally speaking result in a non-resident landlord paying no more tax than they would in their own country of residence.

A non-resident individual or business looking to purchase property in Ireland can benefit from experienced property solicitors in a myriad of ways: from identifying the need to apply for a PPS or Tax Number at an early stage to drafting a Lease after the transaction has completed and advising him/her of the potential tax liabilities and obligations in respect of any rental income.  Experienced solicitors assist with ensuring a transaction proceeds quickly and seamlessly.

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Get Your Guide to Purchasing Residential Property

Amorys solicitors is a boutique private client and commercial law firm experienced in all aspects of a property transaction. For further information and advice in relation to “Are You A Non Resident Thinking Of Buying Property In Ireland?”, please contact Deirdre Farrell, partner, Amorys Solicitors deirdre@amoryssolicitors.com, telephone 01 213 5940 or your usual contact at Amorys

Whilst every effort has been made to ensure the accuracy of the information contained in this article, it has been provided for information purposes only and is not intended to constitute legal advice. Specific advice should be sought in each situation.

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