24 Jan Buying Property in Ireland: Everything You Need to Know
Posted at 12:58h
in Bridging Finance News, Bridging Loans, Development Finance, Development Finance News, Republic of Ireland
The Benefits of Buying Property in Ireland
For those looking for a holiday home or a picturesque place to retire, there are plenty of well built and spacious properties available in the Irish countryside. Such properties can usually be acquired at a fraction of the cost of a comparable property in the UK.
There are 6 times fewer people in Ireland than there are in the UK, which means that there’s much more space to go around. It’s far easier to find a property with a decent sized garden or land in Ireland, and in most cases, you’ll be guaranteed to have somewhere to park!
In the cities, demand for property, particularly in Dublin, is high, as many workers from London’s financial sector are looking to make the Irish capital their new home. This makes buying property in Dublin an attractive investment opportunity for 2019.
There’s also little need to worry about Brexit for those relocating to Ireland from the UK. There are long-held agreements in place that will allow for free movement between the two countries post-Brexit. Healthcare and education will also remain unaffected.
The Irish Property Market
Economists have predicted that the demand for Irish housing is likely to increase post-Brexit.
Professor Kieran Mcquinn (ESRI’s Head of Economics) has pointed out that the political climate following Brexit is likely to encourage large numbers of financial workers to relocate to Dublin from London, which could have a significant impact on the demand for housing in the capital.
In November 2018, at the joint committee for Housing Planning and Local Government, Dr Tom Healy highlighted that for many Europeans looking to relocate, Ireland will become a more desirable destination, as he put it: “they are more likely now, other things being equal, to move to the Republic of Ireland.”
Irish economist David McWilliams has stressed that after March 29th 2019, Ireland will also be a far more attractive option for the thousands of international corporations that want an English-speaking, low-tax EU base. This will create more jobs and greater career opportunities in Ireland, which will attract more people to the country and increase the housing demand.
Experts have also predicted that many Irish expats living in Britain will likely return to Ireland in 2019.
Irish house prices are supposedly heading for a “soft landing”. This means that house prices are likely to continue to increase for the next 3 years, with supply and demand expected to even out sometime in 2021.
According to the experts, an 8% increase in property prices is forecast for 2019, which is likely to fall slightly to 7% in 2020, and to 6% in 2021. With Brexit fast approaching, however, the future of the country’s economy and the housing market in Ireland remains unclear.
Bridging Loans and Short-Term Finance
Commercial bridging loans are a great way of funding your project while you position yourself to execute your exit strategy. Property developers can take advantage of bridging finance to secure a site or property in need of development or refurbishment.
Investors can also use a bridging loan to secure the purchase of land, regardless of whether planning permission is granted.
Residential bridging loans allow homeowners to move into a new property without having to wait for the sale of their current property to be finalised.
In both cases, bridging loans are usually available for up to a maximum of 24 months (3 to 18 months is the norm), which is plenty of time to carry out repairs or upgrades or to complete the sale of an existing property.
Expats in Ireland
In the last few years, Ireland has become somewhat of a success story in Europe.
Expats are drawn to Ireland because it has one of the world’s highest standards of living, and the country is also experiencing rapid economic growth. In fact, According to the European Commission, Ireland is currently the fastest growing economy in the whole of the EU.
Marry that with the picturesque scenery and the charm of the Irish people and you have yourself a very attractive prospect for anyone looking to relocate.
The population density is also a draw; only 5 million people live in Ireland – that’s roughly half the number of people in New York City. In Ireland, beautiful scenic nature walks are always a short trip away. For some expats then, Ireland offers a more relaxed and stress-free lifestyle with plenty of room to breathe.
Those looking for career opportunities will be pleased to learn that Ireland is host to several multinational companies (Google and Facebook have a significant presence in Ireland, for example) that actively recruit skilled expats across a wide range of industries including finance, IT, healthcare, and construction.
Because the opportunities are so great, the job market can be quite competitive, so expats should be prepared for that. Also, the cost of living, particularly in Dublin, can be a little high.
Education and healthcare in Ireland are both excellent. Public schools are free to everyone (including foreign children) and many expats choose to take advantage of Ireland’s high standard of education, rather than shelling out on expensive private schools.
It seems that the stereotypes of Irish friendliness are true. A recent survey ranked Ireland 23rd out of 65 countries for the welcome that foreigners experience. In fact, 70% of expats say they feel at home in Ireland and many of them have found it easy to make friends. Two-thirds of expats are also happy with their jobs.
While English is not the first language in Ireland, it is the most widely spoken and the lack of language barrier is something that many expats find appealing. It’s not surprising then, that the majority of expats in Ireland come from other English speaking countries like the UK, America, and South Africa.
Ireland is also a very safe option for expats. In the 2017 global peace index, Ireland placed joint 10th (with Japan) out of a total of 163 countries. Most expats living in Ireland agree that it is a peaceful, safe, and welcoming place to live.
8 Legal Steps to Buying in Ireland
Step 1 – Settle on a Property
There are 3 questions you should ask yourself at this early stage.
- Is the Property Available for Sale?
It’s possible that you may find the perfect property that isn’t currently available for purchase. If this happens, you will need to find out who owns the property and whether or not they would be willing to sell. This can be done by checking the Land Registry.
- Is the Property Within Your Price Range?
Before you begin searching for your dream property in Ireland, you need to lock down your budget. Doing this in the early stages of the buying process can help save you time and money.
There are lots of ways to finance your purchase. You may have an existing property to sell, savings or investments that you can cash in, or you may decide to take out a mortgage, in which case you have the option of using a British or an Irish lender.
- Is the Property a Good Investment?
Researching the area in which the property is located, determining the proximity to towns, cities, and other relevant amenities, and checking whether there are any building or planning projects that may affect the value of the property (the building of a motorway for example) are all excellent ways of determining whether your chosen property is a good investment.
Step 2 – Consider How the Property is Being Sold
The majority of property sales are conducted privately. However, you may wish to take advantage of the potential savings that buying a property at auction can offer.
Buying property at auction can be a little daunting at first. It’s advisable to seek out legal advice prior to attending one or even to arrange for a solicitor to accompany you to the auction. You must also ensure that a survey has been carried out in advance.
Once the gavel goes down and the auctioneer shouts “sold!” you are legally required to pay the deposit in full and the remainder of the outstanding balance within one month. It’s therefore important to have any financing finalised before attending a property auction.
Step 3 – What’s the Title?
From a legal standpoint, it’s important to know which type of title is associated with your property. Researching this guarantees that no one else is going to come forward and say that they own the property.
There are two types of title in Ireland. The Land Registry title and the Registry of Deeds title.
Property owners registered in the Land Registry will have a numbered folio which they are legally required to present when selling. The document proves ownership and includes the owner’s details, a detailed description of the property, and a map called a file plan.
The other option for legal ownership documents is a Registry of Deeds title. This is sometimes known as an unregistered deed. With this type of title, once the sale is complete the purchase deed is logged with the registry.
Step 4 – Freehold or Leasehold?
Properties classed as freehold are free from restrictions and generally allow the owner of the property to do whatever they wish. If you buy a freehold property, it means that you own the property and the land outright.
Leasehold is a more restricted way of owning property. It’s usually associated with apartments and flats. If your property is leasehold, it means that you own the property (for a fixed period of time) but not the land.
This can make a difference when you’re getting a mortgage, as lenders typically prefer there to be at least 50 years remaining at the end of the mortgage term on leasehold properties.
Step 5 – Financing
The market for home lending in Ireland is very competitive at the moment, so buyers looking for a mortgage in Ireland should find that interest rates are low.
It’s a good idea to approach lenders as early as possible in the buying cycle so that you have a clear idea of available funds.
Make sure that you have gathered all of the relevant financial information including details of all income and expenditure that may be required to secure a mortgage.
Step 6 – Contracts
Once you have decided to go ahead with the purchase, it’s time to sign the contracts. According to Irish law, all contracts for the sale of land and property must be in writing.
Make sure that your solicitor has checked the necessary documents and title deeds before you sign. Upon signing you will be required to pay a non-refundable 10% deposit.
At this point, stamp duty should also be paid and details of the sale will be registered at either the Land Registry office or the Registry of Deeds.
Step 7 – Make Enquiries
The following enquiries should be made by your solicitor on the day of closing:
- A Land Registry search – This is done to establish ownership and to check whether there are any outstanding mortgages, rights of residence, or any other restrictions on the folio.
- A company search – The Company Registration Office should be asked to confirm that any companies involved in the sale are operational and fully registered.
Additional searches to be carried out include:
- A judgement search
- A bankruptcy search
- Sheriff and Revenue Sheriff searches
- Registry of Deeds searches
Step 8 – Cover Necessary Costs
Here is a list of extra costs involved with buying a property in Ireland that you will need to cover:
Stamp Duty – This will vary depending on the value of the property. It is usually 1% for residential properties.
Solicitors Fees – This can vary greatly depending on the solicitor you’re using. The market is quite competitive at the moment so it’s a good idea to shop around.
Surveyors Fees – This is an unavoidable cost that varies depending on the amount of work to be done.
Registration Fees – These are costs associated with the legal registration of the property with the appropriate body.
Property Insurance – It is the seller’s responsibility to have insurance on the property up until the date of closing. Therefore, from the closing date, as the new owner, you will be responsible for making sure the property is fully insured.