Buy to Let Purchases

Buying a property to let can be a monetary generator and landlords will need to know all about the the business model like in any business.

Here are a dozen hints to help you if you are in the market for a Buy to let purchase:

1 It is probable a person will be offered only 75% to 80% loan against the property at most. Other costs, such as, stamp duty, legal fees will arise and the property will evidently need to be ready to market so to speak.

2. It is not prudent, in our view, to offer your own family home as collateral for your purchase.

3. What will stamp duty, fees and any refurburbishment actually cost?

Stamp duty on houses/apartments is 1% up to €1,000,000 and 2% above that. New Builds are different in that the VAT element is deducted, so on a new house costing €500,000, the stamp duty will be €4405.

Legal fees are usually 1% of the value of the property although most firms charge less especially for first time buyers.

Refurbishment costs obviously vary but if the apartment/house needs a good makeover, it could be approximately €10-€15,000 for decoration, new carpets, kitchen units, etc. One can claim these expenses back from the revenue.

4. If the price permits, a two-bedroom apartment/ house is easy to let. Working from home is here to stay and the second bedroom can easily turn into an office.

5. In general, it is better not to buy the property in a company name. Leave it in your own name/s as there is a likely double tax treatment on a sale if a company holds the property.

6. You can recoup the 13.5% VAT element if you buy a brand-new build, but you must register for VAT first. You will receive a lump sum by way of refund, but you must charge VAT on all rent due to you and this is less than ideal.

7. Check out if the management company is an active enterprise. Are there arrears due for service charges? How solid is the sinking fund reserve i.e. the contingency fund held by the management company. More importantly, are there any large expenses for roof or fire safety repairs that have to be faced up to and soon? Numerous apartment purchasers have been issued fire repair invoices for €20-€30,000 and more over the last few years.

It is worthwhile to check with the managing agent or management company, best of all, talk to an existing owner in the block. Usually, such owners awill discuss any issues or problems which end up anyway being shared or paid for by all the owners.

9. Try obtaining a parking space in your purchase. You may need it someday and even if you have not got a car, you could rent it out to another owner in the block.

10. Remember you as owner have to pay the service charge, income tax and LPT while the tenant pays for gas and ESB etc. Rents can go up and down while income tax can stubbornly remain the same. Rents are high right now but most buy to let owners will be taxed on the rental income at 50% or more as this includes the USC charged on all unearned income.

11. Use an agent to let out the apartment for you but, if possible, try managing the ongoing repairs and other issues yourself. An agent will deal with prospective tenants for you.

12. The apartment may look quite pristine but do please use an architect/surveyor to check it out for you and give you a report. He/she will check the balcony and roof too and advise on any damp issues or other problems within the apartment, which will inevitably end up being the

If a person requires legal assistance on a property sale/purchase matter from property solicitors, we can be contacted on  (052) 612 1999 or (01) 546 1121.