Avoiding problems

How to avoid making mistakes

The problems associated with buying property abroad have been highlighted in the last decade or so, during which the property market in many countries has gone from boom to bust and back.

Avoiding problems

However, although the pitfalls must never be ignored, buying property in Ireland needn’t be a gamble. There are hundreds of thousands of Irish homeowners – in fact a higher percentage of Irish people own their own homes than the inhabitants of any other European Union (EU) country – and the vast majority are happy with their purchases and encountered few or no problems when buying their homes. This should be borne in mind when you hear or read horror stories concerning foreign buyers in Ireland (not that you will hear many).

The possible dangers have been highlighted not in order to discourage you, but simply to ensure that you go into a purchase with your eyes open and to help you avoid problems (‘forewarned is forearmed’).

Legal Advice

It cannot be emphasised too strongly that anyone planning to buy property in Ireland must take expert, independent legal advice. Never sign anything, or pay any money, until you have sought advice from a solicitor who’s experienced in Irish property law. If you aren’t prepared to do this, you shouldn’t even think about buying property in Ireland! Most people purchasing property in Ireland obtain legal advice only after having paid a deposit and some take none at all.

Trying to cut corners to save on legal costs is foolhardy in the extreme when tens or hundreds of thousands of pounds are at stake. You will find that the relatively small price (in comparison with the cost of a home) of obtaining legal advice is excellent value, if only for the peace of mind it affords. However, be careful who you engage, as some solicitors are part of the problem rather than the solution! Don’t pick a solicitor at random, but hire one who has been highly recommended by someone you can trust.

Employing Professionals

There are professionals in all areas of Ireland, and a number of expatriate professionals (e.g. architects and surveyors) also practise there. However, don’t assume that because you’re dealing with a fellow countryman that he’ll offer you a better deal or do a better job than an Irishman (the contrary is often true).

You should always check the credentials of all professionals you employ, whatever their nationality. Note that it’s never wise to rely solely on advice proffered by those with a financial interest in selling you a property, such as a developer or real estate agent, although their advice may be excellent and totally unbiased. You should also avoid ‘cowboy’ agents and anyone who does property deals on the side (such as someone you meet in a bar or restaurant), as dealing with them often leads to heartache.

Problems

Among the myriad problems that can be experienced by buyers are properties bought without a legal title, properties built illegally without planning permission, properties sold that are subject to embargoes, properties sold with forged deeds, properties with missing infrastructure, builders or developers going bust; developers’ loans being undischarged after completion, undischarged mortgages from the previous owner, intermediaries disappearing with the seller’s proceeds, overcharging by vendors (particularly when selling to foreigners), properties sold to more than one buyer, and even properties sold that don’t exist!

On the other hand, buyers must also accept their share of the blame. It isn’t uncommon for buyers to ‘leave their brains behind at the airport’ and some do incredibly irresponsible things, such as literally handing over bags full of cash to agents or owners without any security. It’s hardly surprising that they’re sometimes defrauded! However, it should be noted that Ireland is one of the safest countries in Europe in which to buy property.

Mistakes

Common mistakes made by buyers in Ireland include buying in the wrong area (rent first!), buying a home that’s unsaleable, buying a property for renovation and grossly underestimating the restoration costs, not having a full survey done on an old property, not taking legal advice, buying a property for business (e.g. to convert to self-catering accommodation) and being over-optimistic about the income, and taking on too large a mortgage.

It’s possible when buying a property directly from the vendor that he will suggest you pay part of the price with an ‘under the table’ cash payment, thus lowering the price declared to the tax authorities and reducing the vendor’s capital gains tax liability. You’ll also save money on taxes and fees, but will have a higher capital gains tax bill when you sell. If you’re selling a property and the buyer refuses to make the ‘illicit’ payment after the contract has been signed, you have no legal redress! You should steer well clear of this practice, which is, of course, strictly illegal. Checks must be carried out both before signing a contract and before signing the deed of sale. Note that disputes over property deals can take years to resolve in the Irish courts, and you may never receive satisfaction.

Subrogation

One of the Irish laws that property buyers should be aware of is the law of subrogation, whereby property debts, including mortgages, service and management charges, remain with a property and are inherited by the buyer. This is an open invitation to dishonest sellers to ‘cut and run’. It’s possible to check whether there are any outstanding debts on a property and this should be done by your solicitor a few days before completion. If annual bills for services or management charges have already been paid, they’re usually divided between the vendor and buyer according to how much of the year is left.

Buying Off Plan

Many problems can arise when buying off plan, i.e. unbuilt properties, or a property on an unfinished development. A ‘finished’ property is a property where the building is complete in every detail (as confirmed by an architect), all communal services have been completed, and all infrastructure is in place such as roads, parking areas, external lighting, landscaping, water and waste, electricity and telephone services. A builder is supposed to provide buyers purchasing off plan in stage payments with an insurance policy or banker’s ‘termination’ guarantee, which protects them against the builder going broke before construction is completed. Make sure that your builder offers such a guarantee.

Take Your Time

Many people have had their fingers burnt by rushing into property deals without proper care and consideration. It’s all too easy to fall in love with the attractions of a home in Ireland and to sign a contract without giving it sufficient thought. If you aren’t absolutely certain, don’t allow yourself to be rushed into making a hasty decision, e.g. by fears of an imminent price rise or of losing the property to another buyer who has ‘made an offer’.

Although many people dream of buying a holiday or retirement home in Ireland, it’s vital to do your homework thoroughly and avoid the ‘dream sellers’ (often fellow countrymen), who will happily prey on your ignorance and tell you anything in order to sell you a home.

However, although the pitfalls must never be ignored, buying property in Ireland needn’t be a gamble. There are hundreds of thousands of Irish homeowners – in fact a higher percentage of Irish people own their own homes than the inhabitants of any other European Union (EU) country – and the vast majority are happy with their purchases and encountered few or no problems when buying their homes. This should be borne in mind when you hear or read horror stories concerning foreign buyers in Ireland (not that you will hear many).

The possible dangers have been highlighted not in order to discourage you, but simply to ensure that you go into a purchase with your eyes open and to help you avoid problems (‘forewarned is forearmed’).

Legal Advice

It cannot be emphasised too strongly that anyone planning to buy property in Ireland must take expert, independent legal advice. Never sign anything, or pay any money, until you have sought advice from a solicitor who’s experienced in Irish property law. If you aren’t prepared to do this, you shouldn’t even think about buying property in Ireland! Most people purchasing property in Ireland obtain legal advice only after having paid a deposit and some take none at all.

Trying to cut corners to save on legal costs is foolhardy in the extreme when tens or hundreds of thousands of pounds are at stake. You will find that the relatively small price (in comparison with the cost of a home) of obtaining legal advice is excellent value, if only for the peace of mind it affords. However, be careful who you engage, as some solicitors are part of the problem rather than the solution! Don’t pick a solicitor at random, but hire one who has been highly recommended by someone you can trust.

Employing Professionals

There are professionals in all areas of Ireland, and a number of expatriate professionals (e.g. architects and surveyors) also practise there. However, don’t assume that because you’re dealing with a fellow countryman that he’ll offer you a better deal or do a better job than an Irishman (the contrary is often true).

You should always check the credentials of all professionals you employ, whatever their nationality. Note that it’s never wise to rely solely on advice proffered by those with a financial interest in selling you a property, such as a developer or real estate agent, although their advice may be excellent and totally unbiased. You should also avoid ‘cowboy’ agents and anyone who does property deals on the side (such as someone you meet in a bar or restaurant), as dealing with them often leads to heartache.

Problems

Among the myriad problems that can be experienced by buyers are properties bought without a legal title, properties built illegally without planning permission, properties sold that are subject to embargoes, properties sold with forged deeds, properties with missing infrastructure, builders or developers going bust; developers’ loans being undischarged after completion, undischarged mortgages from the previous owner, intermediaries disappearing with the seller’s proceeds, overcharging by vendors (particularly when selling to foreigners), properties sold to more than one buyer, and even properties sold that don’t exist!

On the other hand, buyers must also accept their share of the blame. It isn’t uncommon for buyers to ‘leave their brains behind at the airport’ and some do incredibly irresponsible things, such as literally handing over bags full of cash to agents or owners without any security. It’s hardly surprising that they’re sometimes defrauded! However, it should be noted that Ireland is one of the safest countries in Europe in which to buy property.

Mistakes

Common mistakes made by buyers in Ireland include buying in the wrong area (rent first!), buying a home that’s unsaleable, buying a property for renovation and grossly underestimating the restoration costs, not having a full survey done on an old property, not taking legal advice, buying a property for business (e.g. to convert to self-catering accommodation) and being over-optimistic about the income, and taking on too large a mortgage.

It’s possible when buying a property directly from the vendor that he will suggest you pay part of the price with an ‘under the table’ cash payment, thus lowering the price declared to the tax authorities and reducing the vendor’s capital gains tax liability. You’ll also save money on taxes and fees, but will have a higher capital gains tax bill when you sell. If you’re selling a property and the buyer refuses to make the ‘illicit’ payment after the contract has been signed, you have no legal redress! You should steer well clear of this practice, which is, of course, strictly illegal. Checks must be carried out both before signing a contract and before signing the deed of sale. Note that disputes over property deals can take years to resolve in the Irish courts, and you may never receive satisfaction.

Subrogation

One of the Irish laws that property buyers should be aware of is the law of subrogation, whereby property debts, including mortgages, service and management charges, remain with a property and are inherited by the buyer. This is an open invitation to dishonest sellers to ‘cut and run’. It’s possible to check whether there are any outstanding debts on a property and this should be done by your solicitor a few days before completion. If annual bills for services or management charges have already been paid, they’re usually divided between the vendor and buyer according to how much of the year is left.

Buying Off Plan

Many problems can arise when buying off plan, i.e. unbuilt properties, or a property on an unfinished development. A ‘finished’ property is a property where the building is complete in every detail (as confirmed by an architect), all communal services have been completed, and all infrastructure is in place such as roads, parking areas, external lighting, landscaping, water and waste, electricity and telephone services. A builder is supposed to provide buyers purchasing off plan in stage payments with an insurance policy or banker’s ‘termination’ guarantee, which protects them against the builder going broke before construction is completed. Make sure that your builder offers such a guarantee.

Take Your Time

Many people have had their fingers burnt by rushing into property deals without proper care and consideration. It’s all too easy to fall in love with the attractions of a home in Ireland and to sign a contract without giving it sufficient thought. If you aren’t absolutely certain, don’t allow yourself to be rushed into making a hasty decision, e.g. by fears of an imminent price rise or of losing the property to another buyer who has ‘made an offer’.

Although many people dream of buying a holiday or retirement home in Ireland, it’s vital to do your homework thoroughly and avoid the ‘dream sellers’ (often fellow countrymen), who will happily prey on your ignorance and tell you anything in order to sell you a home.

Further reading

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