Buying Property in the Republic of Ireland

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An introduction to buying property in Ireland

Once you have decided to buy a property in Ireland, your first tasks will be to choose the region and what sort of home to buy.

Location! Location! and Location!

Before you start looking for your new Irish property, it's worth asking yourself a few basic questions, which should save you time and money in the long run:

• Do you prefer the town or country?
• Do you want to be inland or on the coast?
• Do you want to be isolated or in the thick of it? (Most people prefer to be within about an hour's travel time of a town.)
• How much outside space do you want?
• How close do you want to be to your neighbours?
• How close do you want to be to shops, bars and restaurants?
• Where's the nearest public transport, how often does it run, what time does it end?
• How far is the beach?
• How close are you to the nearest airport?
• How far is it to sports facilities, golf, tennis, swimming, and so on?
• How good are the local health and social services?
• Arts and entertainment - what's available in the area?
• Neighbours - what are they like and how often do you want to see them?

If you’re unsure where and what to buy, the best course of action is usually to rent for a period. The secret of successfully buying a home in Ireland (or anywhere else for that matter) is research, research and more research, preferably before you even set foot there.

You may be fortunate and buy the first Irish property you see without doing any homework and live happily ever after.

However, a successful purchase is much more likely if you thoroughly investigate the areas you’re interested in, compare the range of properties available and their prices and relative values, and study the procedure for buying property in Ireland.

For centuries, Ireland’s principal export was people, with the result that millions of people the world over can claim Irish ancestry. Now the tables are turning and many of these, as well as others without a drop of Irish blood in their veins, are being attracted to Ireland by its new-found prosperity. Whereas a few years ago the only foreign property buyers in Ireland were American ‘showbiz’ stars and business tycoons, Europeans now predominate, accounting for some 80 per cent of purchases in the early ’90s.

At first, the Germans and Dutch were the keenest buyers, but the recent decline of the Irish pound against sterling as well as easier and cheaper travel have brought the British back in force. They currently account for around 60 per cent of property buyers, other Europeans 15 per cent, and Americans around 10 per cent, while Irish émigrés constitute around 15 per cent of buyers.

Tourism in Ireland is also on the increase: the number of visitors to Ireland rose by an annual average of 12 per cent between 1994 and 1998, compared with a European average of around 3 per cent. In fact, Ireland is very much the place to be, whether temporarily or permanently.

Property in Ireland - The Buying Process

Most new builds offer very little if any scope for negotiation on the asking price of the property.   When buying a second hand property, there is generally some room for negotiation, though because the current market is so active, the chances of snapping up a property at below the asking price is slim. 

Despite agents setting prices 0.5 to 1.5% higher than the desired purchase price, haggling is a luxury that many buyers cannot afford.  More often than not, in the current climate, houses will achieve the asking price and sometimes a few thousand more than the asking price.

When making an offer, be sure that the terms of the offer are clearly understood by all parties. Some offers may be made subject to agreements such as additional work being carried out or furnishing being included in the sale. 
 Not being clear about the terms of the offer may result in additional expense along the way. An offer will usually be subject to a contract and a survey. If the survey reveals problems that you were not made aware you are free to revise or withdraw your offer. There is no binding obligation on either side until contracts are exchanged.

You may be asked to pay a booking deposit at this stage in the region of 2-3% of the property price. This is an indication that you are serious and is refundable in full if the sale does not proceed to exchange of contracts for any reason. Unfortunately, even at this stage the vendors are not obliged to sell to you at the agreed or any price. Despite placing a booking deposit, the vendors can still accept another offer or increase the price at will. This is known as gazumping and is a common practice in a buoyant property market.
At this point, you should instruct your solicitor to check the title to the property, any planning issues that affect the property and other details that may be relevant. At this point a mortgage lender will insist on a survey, usually by one of their approved surveyors. This survey, generally costs  €100 to €150 including VAT and is solely for benefit of the lending agency. 

It is important to realise that this survey is solely for the purpose of assuring the lender that the property is adequate security for the loan. It should not be relied on as an assurance that it is either worth what you are paying for it or that it is free of significant defects. This is a very superficial survey and buyers would be well advised, particularly with older properties, to commission a more detailed survey. This should point out any significant defects in the property and provide an estimate of what it might cost to correct them. 

On receipt of a satisfactory valuation report from the surveyor, the lending agency will write to buyer with a loan offer detailing how much they are prepared to lend on the property, over what term, the interest rate, the repayment terms and so on. 

Once the document are signed and returned to the lender along with signed direct debit mandate, evidence of a Buildings Insurance policy covering the property and evidence of Life Insurance covering the borrower, a date will be arranged with your a chosen solicitor to forward to him/her a cheque for the amount borrowed (the advance). 

The buyer’s solicitor will agree a date with the buyer and the vendor's solicitor for exchanging contracts. This will usually be done at the solicitor's office. At this stage, the solicitor should be entirely satisfied with the terms of the contract, including fairness of the contract, outstanding planning issues that might affect the property, the vendors title to the property and so on. 

Solicitors will generally set a date with the buyer and the vendor’s solicitor, upon which to complete the sale. At this point, the purchaser will also be required to pay the balance of the deposit, usually 10% of the purchase price, less any booking deposit that have already paid. Once contracts are exchanged, the agreement is binding on both parties and, if either party fails to complete the transaction, they can be held legally liable. Failure of the buyer to complete at this stage will result in the loss of the deposit paid. If the vendor fails to complete, the deposit will be returned and the buyers is entitled to sue the vendor for any losses incurred. 

On the completion date the appointed solicitor should have received the advance from the lending agency and the keys to the property. The balance of the purchase price will be paid. The solicitor will hand over the full purchase price to the vendor's solicitor and the transaction is complete!

Once a sale is completed, the purchaser's deeds, showing the new ownership details and mortgage details, if relevant, must be registered with either the Registry of Deeds or the Land Registry. Before this can happen, the deeds must be presented to the Revenue Commissioners who will determine how much, if any, stamp duty is due. Stamp duty is due when deeds are presented to the Revenue Commissioners after the closing of a sale.

However, the solicitor will calculate how much stamp duty is due and request this from the purchaser prior to the closing of the sale. Stamp duty is calculated as a percentage of the purchase price, between 3 and 9% depending on the value of the property [see table below]. Some buyers are exempt from stamp duty on transactions up to a certain value. The amount is paid to the Revenue Commissioners who place a stamp on the deeds. Without this stamp, the deeds cannot be registered. 

Buying Property in Ireland - Professional advice

Use qualified professionals to protect your interests and make the purchase of your new home a stress-free experience. Estate agents are a good source of advice. Only negotiate with ones that are officially registered and hold a licence. Ensure you have a good lawyer to deal with the endless stream of rules and regulations.