This article first appeared in the Business Post on 1 March 2020.
Buying property is one of life’s more daunting experiences. William Donovan, Solicitor with HOMS Assist provides practical easy to follow advice to navigate you through a smooth purchase.
Here are some tips for each of the stages of buying a house:
Ensure that this is the right property for you.
Whether or not you buy a house is ultimately your decision, but we advise you to look at the bigger picture. This is your home, so take a long-term view of the property. Consider the following:
Check your Budget and what you can afford - You will need to have enough savings to raise the deposit, which is normally 10 % of the over-all purchase price. In a sale by private treaty, the estate agent will seek confirmation of your financial status to afford the purchase and may insist on proof of funding. It is wise to attend a reputable mortgage broker who will provide guidance on the process involved for seeking loan approval.
- Help to Buy Scheme - If buying a new build from an estate agent, check whether you will qualify for the Help To Buy [HTB] Scheme. The HTB Scheme was introduced in 2016 as an aid to first-time property buyers of new properties and those who wish to build their own home, while also acting as a stimulus for new housing construction. It is due to finish on December 31, 2021. Effectively, the incentive works by granting the first time buyer a rebate of income tax (and in some cases Deposit Interest Retention Tax) paid over the previous four years to help to fund the deposit. This is only available to first time buyers and this may assist in paying a portion of the deposit. The HTB Scheme is not available for the purchase of a second-hand house.
- What about schools? Remember that your children are eligible for schools within the church parish of your address: This may not coincide with the townland or address of the property.
- Is the property covered by HomeBond structural defect protection or some other equivalent of same. This provides comfort in relation to a new build. If building a new house, it is imperative that you engage an engineer to inspect the property at all critical stages, including the laying of the foundations.
- What size mortgage will you need to buy the property? How much are the repayments? Will the rent you can expect to generate cover the mortgage repayments?
- Is it a managed estate? Is there a service charge? How much is it? What is covered by the charge (e.g., refuse collection)? Is there a good sinking fund in existence to cover on-going maintenance into the future.
- What is the property’s BER (Building Energy Rating)?
Answer these questions honestly to frame a long-term view of property ownership and determine whether the property is good value.
Talk to a specialist property solicitor
It is important to contact your solicitor at an early stage to ensure the purchase of residential property can proceed as smoothly as possible. Once you have agreed to purchase the property, at auction or by a real estate agent, you should then engage your solicitor. At this point, we will provide you with a quotation of our fees and all outlays such as stamp duty or registration fees, VAT, search fees and expert fees. If arranging to purchase at auction, you can contact us before you agree the purchase and we can facilitate your bid with you. We will have you sign an authority so that we can act on your behalf throughout the transaction.
Pay the Booking Deposit
The next stage in the buying process is to place a booking deposit with the sales agent. The auctioneer holds this sum of money until the sale is completed to indicate that the particular property is reserved for you to purchase.
Note: The booking deposit does not oblige you to purchase the property until you have signed contracts with your solicitors and the vendor has countersigned them.
Arrange Loan Approval
Loan approval is something you should be looking at once your booking deposit is accepted, and your solicitor has the draft purchase contracts. request your Bank to forward the loan pack directly to your solicitor.
Receive Contracts for Sale
After you have paid the booking deposit, the vendor’s solicitor will send your solicitor the draft purchase contracts. We will examine and negotiate the special conditions where necessary on your behalf and investigate the title in full. If the vendor has a debt, charge or mortgage on the house, we will seek the redemption figures to ensure the purchase price will clear of outstanding debt. We will examine details regarding planning and development, NPPR, LPT, Household Charge and services to the property. We will insist upon production of the BER Certificate and Advisory Report.
Arrange a survey
We will recommend you retain an expert to survey the property, and to have a structural report carried out and the boundary map checked so that there are no hidden surprises! Caveat Emptor Applies (Let the Buyer be ware).
Once we have both the title documents and your lender’s letter of offer and loan pack, we will arrange a convenient time for you to come into the office and sign the purchase contract and all the relevant mortgage documentation. At this appointment, we will:
- explain relevant details about the title and ownership of the property
- confirm the purchase price.
- ask you to confirm the property, its dimensions, and its location on an official title map
- let you examine the specification (new builds), if you have not already seen it
- inform you about the management company and its service charge and terms/obligations of membership, if applicable
- discuss the closing date (the date on which you will receive the keys)
- advise you on the terms of the mortgage loan offer to ensure that the offer is in order and that you know the terms. We will also confirm the timeframe within which you must accept the letter offer for it to remain valid
- present the contracts and the loan documents for signing and accept a balance deposit from you.
After the contracts are countersigned by the vendor and exchanged, the contract is binding on both parties at the price and closing date agreed. The closing date is usually 2-4 weeks from the date of exchange of the contracts but this time period varies from transaction to transaction.
After Signing the Contracts
We will from then raise all enquiries we might have in respect of the title and identity of the property. The purchase deed, drafted by the purchaser’s solicitor, will be signed by both parties and retained for the closing date.
Your solicitor will now work with your bank to ensure that the loan funds are in place for the agreed closing date. This is your opportunity to arrange the final items required by your lending, including:
- Mortgage Protection: An insurance policy that covers the full mortgage repayment in the event of your death.
- Property Structural Insurance/Fire Cover: Your lender will require you to insure the property for the cost of rebuilding it, so that if the property is destroyed by one of the risks covered in the policy, the costs of reconstruction is covered.
We will tell you how much of the purchase price you have left to pay, including the mortgage funds you are borrowing from the bank and costs such as stamp duty and registration fees. The current rates of stamp duty for purchases of residential property in Ireland are 1% of the purchase price of the property up to €1 million and 2% of the portion of the purchase price above €1m.
Receiving Your Keys
The day has finally arrived: The balance of the purchase price is transferred, your solicitor conducts the final checks, and, once everything is in order, the seller receives the purchase price and you receive the keys. The property is now yours! But our work continues…
Your solicitor will arrange payment of government stamp duty and register the property in your name in the central government registry, including the registration of the mortgage, where applicable. After the property is registered, you will be informed, and the deeds will be sent to your lender for the duration of the mortgage. Cash buyers are entitled to keep the deeds in a safe place.
HOMS Assist is long established legal practice [50 years in existence since January 2020] with offices in Dublin, Limerick, and Cork. We have significant experience in residential property transactions including sales, purchases and title registrations.