Another advantage of buying a resale property is that you can see exactly what you’re getting for your money and will save on the cost of installing such things as telephone lines and connections to services. When buying a resale property in a development, you should ask the neighbours about any problems, planned developments and anything else that may affect your enjoyment of the property. Most residents are usually happy to tell you (unless of course they’re trying to sell you their own property!)
If you want a property with abundant charm and character, a building for renovation or conversion, outbuildings or a large plot of land, you must usually buy an old property. Note, however, that old country homes such as farmhouses may be harder to find and you’ll need to go to small local auctioneers rather than large national companies. Some old homes lack basic services such as electricity, a reliable water supply and sanitation. Because purchase prices are often low, many foreign buyers are deceived into believing that they’re getting a wonderful bargain, without fully investigating renovation and modernisation costs.
Occasionally, owners advertise their properties directly in a local paper or by simply putting a ‘for sale’ sign in the window. But, although you can save money by buying directly from an owner, particularly when he’s forced to sell, you should always employ a solicitor to carry out the necessary checks. If you’re unsure of the value of a property, you should obtain a professional valuation.
Leasehold Properties
In Ireland, as in the UK, properties with common elements (whether buildings, amenities or land) shared with other properties are usually sold on a leasehold rather than freehold basis. Owners of leasehold properties not only own their homes, but also own a share of the common elements of a building or development, including foyers, hallways, passages, lifts, patios, gardens, roads, and leisure and sports facilities (such as a gymnasium or tennis court). This means that you’ll become part of a management company responsible for the insurance and upkeep of the common elements of the property.
Note that being part of a management company is usually to your advantage, in that you have some control over expenditure on the property, rather than it being determined ad hoc by an absentee landlord. When buying a leasehold property, however, you should check whether the company has a healthy reserve or ‘sink fund’ and whether any major expenditure (e.g. a new roof) is imminent. Otherwise, you could find yourself being asked for several thousand pounds shortly after moving in. When you come to sell your apartment, you hand over a share transfer form that transfers your membership of the management company to the buyer.
When considering buying a leasehold property, the first thing you should do is ascertain the length of the lease, i.e. how many years it has left to run. If it’s a new apartment, this may be as many as 9,999 years, in which case you needn’t worry too much about outliving your lease! However, if there are only, say, 80 years left, you should take into account that, if you re-sell the property in 10 or 20 years, it may be difficult to find a buyer (note that a lease cannot be extended). On the other hand, once the lease expires, the lessee acquires the right to purchase the freehold, in which case a short lease may be attractive (although this right applies only to owner-occupiers, not to investors).
Note that Landlord and Tenant legislation introduced in 1978 made it illegal to purchase a freehold property and resell part of it on a leasehold basis.
Advantages
The advantages of owning a leasehold property may include increased security (all new apartments must be fitted with full fire alarm systems and most have individual intercom-controlled access), a range of communal facilities, community living with frequent social contacts and the companionship of close neighbours, no garden maintenance, and fewer of the responsibilities of home ownership.
Disadvantages
The disadvantages of leasehold properties can include excessively high management fees (owners may have no control over increases), restrictive rules and regulations, a confining living and social environment and possible lack of privacy, noisy neighbours (particularly if neighbouring properties are rented to holidaymakers), limited living and storage space, expensive parking (or insufficient off-road parking), and acrimonious management meetings.
Research
Before buying a leasehold property, you should ask current owners a few questions – e.g. do they like living there; what are the fees and restrictions; how noisy are other residents; are the recreational facilities easy to access; would they buy there again (why or why not); and, most importantly, is the management company solvent and well run? You may also wish to check on your prospective neighbours and, if you’re planning to buy an apartment above the ground floor, whether the building has a lift. Upper floor apartments may offer more security than ground floor apartments; those that have other apartments above and below them are generally noisier than ground or top floor apartments.
Cost
The recent fashion for apartment living in Ireland has caused prices to soar, and most apartments now cost more than similar size houses with extensive grounds.
Management Fees
Owners of leasehold properties usually need to pay management fees for the upkeep of communal areas and for communal services. Charges are usually billed annually and are calculated according to each owner’s share of the development or apartment building, rather than whether they’re temporary or permanent residents. Shares may be calculated according to the size of properties, e.g. the owners of ten equal size properties would each pay 10 per cent of management fees.
Fees vary enormously depending on the quality of the development, the extent of the grounds, the facilities provided, and the age and condition of the property. If the fee is very low, you should check whether it actually includes all management costs or whether you’re liable to be stung for extra charges for any major repairs that need to be done. If you’re buying an apartment from a previous owner, always ask to see a copy of the management charges for previous years.