Buying property in Ireland: A comprehensive overview

Considering buying property in Ireland? With rent prices continuing to rise all over the country, purchasing a property is becoming more and more appealing to those who can afford to do so. Not sure how to get started? Read below for an overview on all the considerations you must take into account.

Whether you’re looking to purchase a primary residence, a vacation home, or virtually any property in Ireland, there is a lot to take into consideration. Things like location, average cost, securing a mortgage, additional fees, must all be taken into consideration when making this important life decision. Seems like a lot of research is ahead, right? Well you wouldn’t be wrong. That’s why Babylon has assembled this overview on purchasing property in Ireland. Read more for all the essential information!

How are properties sold

For sale by private treaty:

Most property sold in Ireland is sold by private treaty. This means that the sale of a property is agreed at a price negotiated directly between the estate agent and the buyer. If several people are interested in the property, the estate agent will facilitate a bid based on ‘best and final offers’. Bear in mind, however, that private treaty sales are not subject to offer alone. In some cases where an offer is subject to the sale of another property, a lower offer from a first-time buyer or an individual who can buy unconditionally may be accepted instead. Remember that no offer is final until documentation has been signed, and buying via private treaty tends to be a lengthy process.

For sale by public auction:

As with any auction, buying a property via auction is a reasonably fast affair, with campaigns typically lasting three weeks, closing typically lasting four to six weeks, and sale completion typically being finalised in less than three months. It is important to go into an auction with a firm budget in mind so as to not over bid. This is especially important to consider because if you do not have the funds to complete your purchase, your deposit will be forfeited.

For sale by discreet selling

For sale by discreet selling, or ‘off market selling’, is a method of selling where the property’s sale is only made known to estate agents whose clients are pre-qualified to purchase the property. These sales make up only a small portion of residential and home sales in Ireland.

Things to consider when buying property in Ireland

Budget

As you very well know, establishing a budget is essential when considering buying a property in Ireland. As of writing, the average cost of a home in Ireland is €230,000. Where you buy a property in Ireland is essential in planning your budget. For example, 40% of Ireland’s population live in the Greater Dublin area, therefore property is more expensive with the average home priced at €428,500 as of September 2019.

• Moving to Ireland: How to apply for an Irish visa and the stamp system

In contrast, the average cost of a home in Longford is €137,000 as of September the same year. Location, both which area of Ireland and whereabouts in said area, is everything when considering property purchase. Things like transport links and commuting to work should be taken into consideration.

Additional Fees:

Cost of your new property is not the only thing to consider however, there are other fees involved in purchasing property that must be taken into account. These fees are explained below.

Booking deposit

A booking deposit is paid to the estate agent of the seller as a sign that you are serious about buying the property. Booking deposits can vary and are sometimes a fixed amount or a small percentage of the cost of your property. Typically, the booking deposit is 5% of the purchase price of the property. The booking deposit is fully refundable at any point before signing the contract, no explanation necessary. This deposit is not legally binding and payment does not ensure the sale will go through.

Stamp duty

Stamp duty is the tax required by the Irish Government for changing the documents to the deed of property ownership. This is essential for all properties, even if it is newly constructed. The amount of this stamp is based on the type of property you buy and how much you pay for it. For residential property it is calculated at 1% of the selling price of any property up to €1 million. Any property bought above 1m will ecrue a 2%  stamp duty. Note: stamp duty is not a part of your mortgage and must be saved separately. This fee will be calculated by your solicitor and will be paid to the Revenue Commissioners. For any non-residential properties, the stamp duty is fixed at a single rate of 2% for all properties regardless of price. If you are buying empty property in order to build on it, stamp duty will be charged based on the type [residential or commercial] property you build and the rate associated with it.

Structural survey

While a structural survey is not required to purchase a house, it is highly recommended, particularly for older properties. This is to highlight any repairs the property may need which could affect the purchase price. Be sure that the person surveying your property is covered by professional indemnity insurance so that any unreported defects on your property are covered. Some survey reports cost more than others. Price of a survey varies. It is based on the size, age, and location of the property, as well as the type of building, and whether modifications have been made or extensions have been added. When hiring someone to survey your property, check that they are a ‘registered building surveyor’ who is qualified to carry out property inspections per the Building Control Act of 2007. This will ensure your surveyor has the legal requirements to carry out a comprehensive inspection. A negative report does not mean that the sale cannot be made, merely it ensures that when you sign your contract you are doing so with full knowledge of the cost of repairs.

Property valuation report

This report is a way of determining the value of a property through appraisal based on location, amenities, structural condition, and recent sales of similar local properties. This report is usually carried out by your mortgage provider to ensure that you are paying a fair price.The valuation report costs approximately €150.

Title of your property and Land Registry/Registry of Deeds

The ‘title’ of your property are the documents that show you own the property and guarantees that no one else can try and claim it. There are two types of registry titles in Ireland: Land Registry title and Registry of Deeds title. The former provides a state-guaranteed title to the property. The latter records the existence of deeds and conveyances affecting the property.  Your solicitor will know which registration is relevant to your property and is responsible for registering your property under your name. Depending on the price of your property, registration can cost €400 – €800 depending on the cost of your property. This fee is paid in addition to the purchase price of your property. If your home has not been registered before, i.e. newly constructed houses, this price can be reduced to as little as €130 in some cases.

Mortgage Fee

Your solicitor will also have to register your bank’s interest in your property. This costs €175 on top of the other fees. If you are a cash buyer, this fee does not apply.

Solicitors fees

Hiring a solicitor is legally required when buying property in Ireland. A solicitor works on your behalf to handle all legal formalities involved in buying property in ireland. They take care of title/planning, due diligence, negotiating the terms of your contract, completing the transaction involved with paying your stamp duty, transfer of ownership, as well as registration of ownership after the purchase is finalised.

If you are buying a structure larger than a house, apartments, condominiums, etc., your solicitor will also advise you on management structures as well. Rates of solicitors vary. Property buyers should be able to find fixed-rate conveyance fees around €700 plus VAT however it could cost as much as €1600 plus VAT.

Property tax

Annual Local Property Taxes are charged on all residential properties. Tax is based on the chargeable value of the property on the valuation date. For more information on Local Property Taxes, click here.

Mortgages

Unless you are a cash buyer, you have the funds necessary to purchase a property upfront without needing to loan money, you must secure a mortgage. The amount that your financial institution will lend you is limited by the Central Bank of Ireland based on either loan to income limits or loan to value limits. The former is a limit of 3.5 times your gross annual income, where the latter means that you must have a deposit of a certain amount before you secure a mortgage. Mortgage amounts also take into account whether you have purchased property in the past. For more information on mortgages in Ireland, click here.

EU/EEA vs. Non-EU/EEA status when buying property in Ireland

There are no restrictions on EU/EEA vs non-EU/EEA residents buying property in Ireland. Owning a property in Ireland does not entitle the owner to residency, this is still determined via visa and citizenship. Likewise, owning commercial property in Ireland does not entitle a non-resident to operate a business in it. Only EU nationals may operate a business and live in Ireland without restriction in the absence of a visa. For this, you must have permission from the minister for Justice and Equality and Law Reform.  All non-EU/EEA businesses must have at least one director who is a resident of Ireland in order for a business to operate on said property. The right of residence for each director however is subject to the individual’s circumstances.

There you have it guys! A comprehensive overview on buying property in Ireland!  Have you purchased property in Ireland? Comment your experience below!

Featured image: Mark Moz via Flickr