Category: Residential Property

Ground Rents in Ireland-the Essentials

ground-rent-law-ireland

Are you paying ground rent on a residential or commercial property?

What is ground rent?

Ground rent is rent paid on leases which are at least 99 years old.

Features of ground rent are

* Very low rent (ie not market rent)
* No rent reviews

They can apply to both residential and commercial leases.

The Landlord and Tenant Act 1967 gave the tenant the right to buy out the freehold.

I deal elsewhere on this site with the right to a new lease and in addition to the right to a new lease the tenant may have the right to buy the freehold.

The differences are that

1. the right to buy the freehold only applies to permanent buildings on the land (the right to a new lease applies to any building, not necessarily of a permanent nature)
2. there is an occupancy requirement re the new lease procedure; there is no occupancy requirement to buy out the freehold

Landlord and Tenant (ground rents ) act, 1978

This act changed the test to establish whether the tenant has the right to buy out the freehold.

Essentially it requires that in order to have the right to buy out the ground rent and acquire the freehold then the tenant must comply with all of section 9 of the act and one of the conditions of section 10.

Landlord and tenant (ground rents) act, 1978.

Yearly tenants

If the tenant is a yearly tenant then section 15 of the act sets out the conditions required to obtain the entitlement to buy the freehold.

Restrictions

Section 16 of the act sets out the restrictions to the entitlement to buy out the ground rent.

Procedure

There are 2 methods to buy out the ground rent and purchase the freehold

1. For a business premises-you must use the procedure under the 1967 act
2. For a residential premises you can use either the 1967 act or the 1978 act

Landlord and tenant (ground rents) act 1967.
Essentially there are various forms and notices to be served on the landlord and these forms can be accessed on www.landregistry.ie

If the lessor can not be found then you can make application to the County Registrar for the conveyance to be executed. Consult your solicitor to follow this procedure.

The 1978 act procedure, which applies only to residential premises, is called the Vesting Certificate procedure and these certificates are issued by Land Registry, even where the property is unregistered.

Price to buy out the ground rent and acquire the freehold

The price of the freehold is provided for in Landlord and Tenant act 1984 and makes provision for the use of an arbitrator to determine the price. The arbitrator will either be the County Registrar (1967 act) or the Registrar of titles in Land Registry (1978 act).

Generally the value will be approximately one eighth of the market price where the lease has expired.

Where the lease has not expired then Land Registry can advise as to what multiplier they are currently using. It will be approximately 8/10 times the annual rent for residential premises and 18/20 times the annual rent for commercial.

However if you find yourself in this situation it is prudent to engage the services of a professional valuer and your solicitor.

If you are paying ground rent and qualify to buy out the ground rent and acquire the freehold interest, then you would be well advised to do so.

For more information about ground rents check out the Property Registration Authority also.

7 Tips for Buying a House in Ireland

stamp-duty

Are you thinking of buying a house?

Buying a house, especially if it is your first purchase, can be stressful and intimidating.

However, in this piece I will give you 7 tips you need to be aware of, to ensure you reduce your stress levels and make a good purchase.

 1.Location-choose well

The location of your property is vital. You can change a lot of things about your house, but you will never change the location.

There is an old saying, a truism, in relation to property investment: the day you buy is the day you sell.

This means you should put yourself in a potential buyer’s shoes 5/10 years down the road, and look at the property from his perspective. That’s what he’ll be doing.

Now is the time for you to be prudent.

With this in mind my advice is to buy the worst house in the best area rather than the best house in a poor area.

You are not just buying your house as an investment, and your focus will be on getting the right place for you and your loved ones.

But circumstances change and you may need to move sooner than you think; if that’s the case you will be happy that you looked at your house purchase from both perspectives-as a home and as an investment-when choosing.

2.      Finances

Be careful with your budget and allow for all expenses and outlays, not just the purchase price. These will include

  • A valuation report
  • A structural survey
  • Stamp duty
  • Legal fees
  • Commissioner for oaths fees
  • Property Registration Authority (PRA) fees
  • Legal searches

3.      Negotiation

Don’t disclose all your cards when you are negotiating with the auctioneer, and don’t let him know what your budget is.

Also, consider offering a very specific figure rather than a round one. You will have more credibility when you tell the auctioneer that you are at your maximum, you are flat out with your budget, if you offer €193,200 rather than €195,000 or €200,000.

If you offer €195k or 200 k the auctioneer will assume, rightly or wrongly, that there is another bit in you.

If you tell him your budget is €190,000, and friends and family have chipped in and helped you out, your bid of €193,200 will be more credible as your very best shot, and will be more likely to be accepted.

4.      Structural Survey

Get a structural survey carried out on the house. This should be done by an architect or engineer or a suitably qualified professional, who has professional indemnity insurance.

Don’t believe that a well intentioned friend or relative who knows a little about diy can do this for you. The survey needs to be a professional evaluation with a comprehensive report produced.

The surveyor should also give you a good indication whether further investigation is required to check for pyrite, and should check the boundaries of the property vis a vis what is registered with the Property Registration Authority.

5.      Planning Investigation

You should consider carrying out your own research in relation to planning. You can attend at the local authority’s planning office and have a formal search carried out. This will show any applications made in respect of the property.

These applications, if granted, should correspond with the planning documentation provided with the title documents as part of the legal process.

In addition, there should be certificates of compliance from an architect/engineer in respect of each development.

You should also consider speaking to residents in the area to check whether there are any adverse developments planned for the area, for example a proposed dump nearby.

6.      Lender’s Requirements

Before completion your solicitor will seek the loan funds from your lender, assuming you are borrowing.

You can be very frustrated if the sale does not complete on time due to something simple, which is your responsibility, not being in place for the bank-for example a signed direct debit mandate, a life assurance policy, and property insurance on the property you are buying.

7.      Solicitor

Choose your solicitor wisely, and don’t just go for the cheapest quotation you get. One of the biggest causes of the stress associated with buying a house is the uncertainty from your perspective, and not knowing what is going on at each stage of the process.

So, a solicitor who communicates with you promptly and is easy to reach will help reduce the stress and uncertainty.

Good luck!

The Multi Unit Development (MUD) Act, 2011-the Essentials

 

mud-act-2011

They’ve been doing it in Europe for years.

But apartment living is a relatively recent phenomenon in Ireland.

The Multi Unit Developments Act, 2011 came into effect on 1st April, 2011 and applies to multi unit developments with shared facilities and services.

A multi unit development under the act has not less than 5 apartments and the Act applies to housing estates too which has an Ownership Management Company (OMC) taking responsibility for common areas.

The OMC (Owners’ Management Company)

The OMC is a company set up to own and be responsible for the common areas of the development once it is completed. It also looks after the estates services such as lighting, cutting green areas, landscaping, cleaning, waste management, and insurance. It would generally appoint a managing agent to carry out this work on a daily basis but would have statutory obligations to file returns with the companies registration office.

Each property owner is a member of the OMC and has one vote. Any member is eligible to become a director of the OMC and a members’ meeting must be held every year to discuss the accounts, service charge for the coming year, and other matters which arise such as a sinking fund for repairs.

The managing agent is obliged to register and be licensed with the Property Services Regulatory Authority.

The Multi Unit Developments Act, 2011

The Act deals with 4 broad areas:

  1. The transfer of ownership of the common areas by the developer to the OMC by 30th September, 2011. The OMC must allow the developer access to finish the development, where applicable, and the developer must indemnify the OMC against any claims during completion of the development.

The OMC should have independent legal advice to ensure compliance with its statutory duties.

  1. The obligations placed on the developer for the completion of the development stage of the estate and the extinguishment of the developer’s beneficial interest. The developer makes a statutory declaration stating that his beneficial and legal interest has merged and transferred to the OMC.

The developer would also hand over documents such as technical documents, service test records, title deeds, specifications etc.

  1. The MUD Act, 2011 provides new mechanisms for the resolution of disputes and allows the OMC to represent the owners as a collective body in the Circuit Court. Prior to this property owners had to take action on an individual basis. Mediation is strongly encouraged as a dispute resolution mechanism.

If an OMC has been struck off the Companies Register an application for reinstatement can be brought within 6 years. It used to be only 1 year.

  1. The MUD Act, 2011 provides new regulations for service charges, sinking funds, governance and reporting and imposes greater, added responsibilities on the Board of Directors of the OMC. These responsibilities would include a greater obligation to consult with and report to the property owners.

The Act also include obligations in respect of repairs and maintenance and maintaining a sinking fund for the upkeep of the development eg the roofs of apartment blocks.

Service Charges

The MUD Act, 2011 provides that every property owner must pay service charges. The developer is responsible for service charges of unsold units.

Service charges can be pursued through the Courts as a straightforward debt collection task.

Sinking Funds

All multi unit developments must maintain a sinking fund for refurbishment, maintenance of a non-recurring nature, improvement.

Sinking fund monies must be kept separate from the service charge monies in a separate account to ensure that the money is only spent in appropriate ways, and not for ongoing maintenance.

One Vote

Each property owner has one vote.

House Rules

The OMC can draw up house rules for the development, provided they are fair and reasonable, and agreed by the owners.

Summary for buyers of apartments

The benefits of the MUD Act, 2011 for purchasers of apartments, therefore, include:

  • Improved protection and dispute resolution
  • Transfers control of the development from the developer to the OMC
  • Equal voting rights
  • Compulsory transfer of the common areas from the developer
  • Reporting about service charges and sinking funds and how they are calculated
  • A real say in the running of the development by the property owners.

Warning: Why You Need a Structural Survey When Buying Your House

structural-survey

Yes, you’re excited.

But there is no excuse for making this stupid mistake when you are buying a property.

One of the most important things you need to do is to have a structural survey of the property carried out.

And when I say “structural survey” I mean a proper survey by an engineer or surveyor who has professional indemnity insurance.

I don’t mean a well intentioned friend or relative who does a bit of building having a look and telling you, “yes, it looks fine”.

Don’t confuse a structural survey with the valuation report/survey which the lender will want carried out either.

Your surveyor needs to do two things at least:

  1. Give a professional opinion on the structural integrity of the building and flagging up any issues which might occur later; this would include any signs of further investigation being required to establish that there is no pyrite in the building
  2. Check that the property on the ground corresponds with the map of the property with the title deeds/on the Land Registry folio. In other words, that you are actually buying what you think you are buying.

Declaration of Identity

There is one further thing your surveyor should be able to do for you as part of his survey and this applies to one off rural properties only.

That is, provide a Declaration of Identity if necessary. This declaration that all of the necessary services-for example septic tank and water well- for the property are located within the boundaries of the property.

You don’t want to discover that your septic tank is located in a neighbouring field after you have moved in.

A surveyor’s report will probably cost you up to €500 plus VAT but you will get them done for cheaper.

It is money well spent however which can help you avoid a much more costly mistake which could come back to haunt you in later years.

Is Your Home Safe from Pyrite?

pyrite-damage

Pyrite in your property has the potential to break your heart and cause you catastrophic loss.

What is pyrite?

I’m not an engineer but my research has discovered that it is a common mineral that occurs in rocks.

In particular circumstances a chemical reaction, which creates expanding crystals within the material, can occur which causes the pyrite to swell causing the construction material in which the pyrite is present to expand, heave, crack and eventually crumble.

This problem occurs mostly in the floors of houses causing huge problems for the property owner rendering the home virtually unsalable until the problem is resolved.

Indications of Pyrite Damage

Some tell tale signs include:

  • Lifting of the floor slab resulting in cracking
  • Cracking of floor finishes and tiles
  • Doors catching on floors
  • Horizontal cracking externally at damp proof course level
  • Cracking on internal walls over doors
  • Cracking of ground floor stud partitions and cracking of plasterboards.

Most, but by no means all, of the houses in Ireland where you will find problems with pyrite are located in North Leinster and the Greater Dublin area including Meath, Offaly and Kildare.  The reason for this is the use of stone from quarries in this area which contain framboidal pyrite.

IS 398 published by the NSAI in 2013 aims to set new standards in relation to pyrite by providing protocols for testing and categorisation and setting out a methodology for remediation works.

IS 398 provides for 3 certificates in relation to the presence or absence of pyrite in the underfloor hardcore of a house:

  1. Green means it is pyrite free
  2. Amber means the hardcore is susceptible to limited or significant expansion and monitoring of the damage is required
  3. Red means you have a pyrite problem and the stone infill in the floor of the house will have to be removed and replaced. This involves the removal of the floor slab, insulation and damp proof membrane. The replacement stone and remedial works should also be certified in accordance with IS 398.

Buying Your New Home

When buying  a house you should make sure to have a structural survey carried out first. Then, your engineer should be able to advise you whether further investigation is necessary to ascertain the position in relation to pyrite.

You may have to insist that you are provided with a report from an accredited laboratory confirming that the property is pyrite free before proceeding with your purchase, especially if the house is in one of the areas where pyrite is a problem.

This will involve the taking of core samples from the floor of the house and a delay of about 3 or 4 weeks as much of the testing is carried out in laboratories in the UK. But it is strongly advisable if your engineer tells you that further investigation is necessary.

If in any doubt, discuss this with both your engineer and solicitor because the consequences of buying a property with a pyrite problem are very serious.

The Pyrite Remediation Scheme

The aim of the Pyrite Remediation Scheme is to procure the remediation of certain dwellings with damage caused by pyritic heave of hardcore under floor slabs.

The Housing Agency is responsible for the testing of dwellings and the implementation of the remediation process. They will engage all necessary construction professionals, advisors and contractors to carry out the remediation of dwellings which are included in the Scheme.

 Conditions for eligibility to the pyrite remediation scheme

  1. Dwellings must be located within the administrative areas of Dún Laoghaire-Rathdown, Fingal, Kildare, Meath, Offaly or South Dublin County Councils; or Dublin City Council.
  2. Dwellings must have been constructed and completed between 1st January 1997 and 12th December 2013;
  3. Dwellings must have been assessed, tested and certified as having a damage condition rating of 2 and it must be verified that damage is attributable to pyrite heave;
  4. An application can only be made in respect of one dwelling and the dwelling must have been purchased before 12th December 2013;
  5. The applicant must be able to show, to the satisfaction of the PRB, that he/she does not have available to him or her any practicable option, other than under the Scheme or the use of his or her own resources, to remediate or secure the remediation of the dwelling.

What costs does the Scheme cover?

  • The sampling, testing and damage verification;
  • The preparation of the specification of remediation works in accordance with I.S. 398-2: 2013;
  • The management of the tender process and implementation of the remediation works;
  • The remediation of the dwelling as per specification and schedule to the required standard;
  • The monitoring and inspection of works, snagging and final certification.

In addition, the following costs incurred by the applicant may be recovered under the Scheme:

  1. The vouched cost (including VAT) of procuring the initial Building Condition Assessment from a competent person, subject to an overall maximum limit of €500, provided the dwelling is approved for inclusion in the Scheme following the Verification Process;
  2. The vouched costs for the temporary removal, storage and return of furniture, household appliances and effects in order to facilitate the remediation, subject to an upper limit of €2,500 (including VAT);
  3. The vouched costs for alternative accommodation of the household in order to facilitate the remediation, subject to an upper limit of €3,000 (including VAT);
  4. Where a scheme participant satisfies the Housing Agency in advance that suitable rental accommodation cannot be obtained for €3,000 or less, the storage and accommodation expenses may be combined, but is subject to an overall limit of €5,500 (including VAT).

Operation of the Pyrite Remediation Scheme

The Pyrite  Remediation Scheme will operate as follows:

  1. The property owner makes an online application to the Pyrite Resolution Board, provided the property meets the criteria.  The PRB has prepared a guide to help homeowners to form a reliable opinion as to whether their dwelling has the relevant damage in accordance with the Irish Standard: Information Leaflet for Home Owners.
  1. The Assessment, Verification and Recommendation Process, which is undertaken by the Housing Agency, will establish that the damage recorded in the Building Condition Assessment is attributable to pyritic heave. This may involve inspection of the dwelling and the testing of the hardcore material in accordance with I.S 398:2013 Part 1.
  1. The PRB will consider this recommendation and will notify the applicant of the decision to:
  1. include the dwelling in the Scheme, or
  2. exclude the dwelling from the Scheme.

A decision to exclude a dwelling from the Scheme may be appealed.

  1. The Scheme Participant is issued a copy of the “Guide for Scheme Participants”, which explains what is involved in the remediation process and what is required of Scheme Participants during the process. The guide also provides information to the Scheme Participant on other aspects of the Scheme, such as the programming of Remedial Works, the Homeowner’s Agreement, the process for recouping expenses, etc. In addition, there is a section answering Frequently Asked Questions from Scheme Participants.
  1. The Housing Agency assigns a Project Manager to each project.
  1. Following a tendering process, the Housing Agency will appoint an Engineer from a Framework Panel to prepare a remedial works plan and specification for the remediation of the dwelling.
  1. On completion, the works will be certified in accordance with I.S. 398-2: 2013. The Project Manager or Engineer will inform the Scheme Participant of completion of the work and that the dwelling can be reoccupied. Claims for the payment of vouched costs (storage/accommodation) incurred by the Scheme Participant, which satisfy the conditions of the Scheme, will be approved for payment when the works are completed and certified.

The relevant legislation is the Pyrite Resolution Act, 2013.

The Pyrite Resolution Board only accepts online applications.

The Family Home and Property Transactions-The Essentials

family-home

The Family Home Protection Act, 1976 prevents one spouse, in whose sole name the family home was vested, from dealing with the property without the knowledge and/or consent of the non-owning spouse.

There is no differentiation between husband or wife and section 3(1) Family Home Protection Act, 1976 states:

3.—(1) Where a spouse, without the prior consent in writing of the other spouse, purports to convey any interest in the family home to any person except the other spouse, then, subject to subsections (2) and (3) and section 4, the purported conveyance shall be void.
(2) Subsection (1) does not apply to a conveyance if it is made by a spouse in pursuance of an enforceable agreement made before the marriage of the spouses.
(3) No conveyance shall be void by reason only of subsection (1)—
(a) if it is made to a purchaser for full value,
(b) if it is made, by a person other than the spouse making the purported conveyance referred to in subsection (1), to a purchaser for value, or
(c) if its validity depends on the validity of a conveyance in respect of which any of the conditions mentioned in subsection (2) or paragraph (a) or (b) is satisfied.
(4) If any question arises in any proceedings as to whether a conveyance is valid by reason of subsection (2) or (3), the burden of proving that validity shall be on the person alleging it.
(5) In subsection (3), “full value” means such value as amounts or approximates to the value of that for which it is given.
(6) In this section, “purchaser” means a grantee, lessee, assignee, mortgagee, chargeant or other person who in good faith acquires an estate or interest in property.
(7) For the purposes of this section, section 3 of the Conveyancing Act, 1882, shall be read as if the words “as such” wherever they appear in paragraph (ii) of subsection (1) of that section were omitted.

So, the prior written consent of any non-owning spouse must be obtained prior to any conveyance of the family home since 1976. (Note: ‘conveyance’ includes mortgage)

However, section 54 of the Family Law Act, 1995 imposes a six year time limit within which proceedings must be taken by the non-owning spouse to have a conveyance declared void:

Proceedings shall not be instituted to have a conveyance declared void by reason only of subsection (1) after the expiration of 6 years from the date of the conveyance.

Exceptions

There are four exceptions provided for in section 3(1) above:

  • Agreements made in contemplation of marriage
  • Conveyance to a bona fide purchaser for full value (the purchaser must act in good faith-this means that the purchaser must make proper and reasonable enquiries and inspections to ascertain the position. This means that a solicitor acting for a purchaser must carry out all necessary investigations to clarify the position concerning the family home. Failure to do so will leave his client open to a challenge from the non-owning spouse)
  • Conveyance of an interest by a person/body other than a spouse (eg mortgagee bank/lender)
  • Where a Court orders the sale of the home in a judicial separation.

What is a Family Home?

A family home is defined in section 2 Family Home Protection Act, 1976 is a dwelling in which a married couple ordinarily resides. However a family home also includes the former residence of a couple who are separated as well as the current home of a married couple.

It also includes a dwelling in which a spouse is residing having been forced to leave the family home by the other spouse.

2.—(1) In this Act “family home” means, primarily, a dwelling in which a married couple ordinarily reside. The expression comprises, in addition, a dwelling in which a spouse whose protection is in issue ordinarily resides or, if that spouse has left the other spouse, ordinarily resided before so leaving.
(2) In subsection (1) “dwelling” means—
(a) any building, or
(b) any structure, vehicle or vessel (whether mobile or not),
or part thereof, occupied as a separate dwelling and includes any garden or portion of ground attached to and usually occupied with the dwelling or otherwise required for the amenity or convenience of the dwelling.

Prior Written Consent

Where the property being sold is jointly owned by a married couple, no spousal consent is required to a conveyance.

The spousal consent must be prior to the purported conveyance and be in writing.

It is also important that the consent is informed-the spouse must know what he/she is consenting to.

The need for spousal consent can be dispensed with by a Court in certain circumstances (section 4(1), Family Home Protection Act, 1976)

4.—(1) Where the spouse whose consent is required under section 3 (1) omits or refuses to consent, the court may, subject to the provisions of this section, dispense with the consent.
(2) The court shall not dispense with the consent of a spouse unless the court considers that it is unreasonable for the spouse to withhold consent, taking into account all the circumstances, including—
(a) the respective needs and resources of the spouses and of the dependent children (if any) of the family, and
(b) in a case where the spouse whose consent is required is offered alternative accommodation, the suitability of that accommodation having regard to the respective degrees of security of tenure in the family home and in the alternative accommodation.
(3) Where the spouse whose consent is required under section 3 (1) has deserted and continues to desert the other spouse, the court shall dispense with the consent. For this purpose, desertion includes conduct on the part of the former spouse that results in the other spouse, with just cause, leaving and living separately and apart from him.
(4) Where the spouse whose consent is required under section 3 (1) is incapable of consenting by reason of unsoundness of mind or other mental disability or has not after reasonable inquiries been found, the court may give the consent on behalf of that spouse, if it appears to the court to be reasonable to do so.

Generally, this occurs where a spouse is unreasonably withholding consent.

The Family Home Protection Act, 1976, the Judicial Separation and Family Law Reform Act, 1989 and the Family Law (Divorce) Act, 1996  grant powers to Court to deal with the family home which it does by way of property adjustment orders and/or orders for the sale of the family home.

A Court also has power, pursuant to section 5, Family Home Protection Act, 1976 to make any order in relation to the property where it is of the view that the conduct of one spouse could lead to the loss of the family home.

Where a Court makes any property adjustment order in respect of the property in a divorce or judicial separation, the Registrar of the Court is obliged to register the order as a burden on the folio with Land Registry or in the Registry of Deeds.

Planning Considerations When Buying or Selling Property in Ireland

 

planning-permission

The first significant planning law in Ireland was the Local Government (Planning and Development) Act, 1963.

The next major piece of legislation dealing with development and planning was the Local Government (Planning and Development) Act, 2000 which consolidated Irish planning law by incorporating 9 planning and development acts passed since 1963.

The Local Government (Planning and Development) Act, 2000 was itself amended by the Planning and Development (Amendment) Act 2002 and the Planning and Development (Strategic Infrastructure) Act, 2003.

The Act at section 4(2) (a) provided for planning regulations, the main one now in force being the Planning and Development Regulations 2001.

Planning Register

Section 7 of the Local Government (Planning and Development) Act, 2000 provides for a planning register to be kept by a planning authority (section 2(1)). However there is no guarantee that the planning register is kept up to date by the authority as they may do so “as soon as may be”.

When a solicitor is acting for a purchaser of a property he/she should have a planning register search carried out before allowing his client sign the contract for sale.

Development

Development is defined in section 3(1) of the 2000 Act as:

3.—(1) In this Act, “development” means, except where the context otherwise requires, the carrying out of any works on, in, over or under land or the making of any material change in the use of any structures or other land.

So there are 2 separate parts to “development” as defined:

  1. Carrying out of works and
  2. Material change of use.

However unauthorised developments can only have taken place after 1st October, 1964.

Exempted Development

Exempted development is development where an applicant is exempt from the obligation to obtain planning permission which occurs in 3 circumstances:

  1. Where the development took place before 1st of October, 1964
  2. Where section 4 of Local Government (Planning and Development) Act, 2000 provides that certain types of development are exempt
  3. Where the Minister made regulations providing classes of development to be exempt, which he did under the Local Government (Planning and Development) Act, 2000 and the Local Government (Planning and Development) Act, 1963

One of the most important categories of exemption is contained in the 2000 Act and includes:

  1. a) where development consists of carrying out works which affect only the interior of the structure and
  2. b) works which does not materially affect the external appearance of the structure.

From a solicitor’s perspective, he/she should get an architect to furnish a Certificate or Declaration confirming that particular work is exempt and the grounds which bring the development under an exempt category.

Planning Permission

Planning permission is required for all development of land carried out since 1st October, 1964 and which is not exempted development or for the retention of unauthorised structures.

Part III of the Local Government (Planning and Development) Act, 2000 deals with planning permission, and sets out the procedure for applying for permission, time periods, notices, and gives the planning authority the power to impose conditions when granting permission.

The solicitor needs to read all conditions imposed in any planning permission and must ensure that any financial condition imposed has been complied with.

Enforcement

Part VIII of the Act provides for enforcement mechanisms including

  1. Criminal prosecution
  2. An enforcement notice under section 154/5 of the Act
  3. A planning injunction under section 160 of the Local Government (Planning and Development) Act, 1963.

Vital Questions

Critical questions to be answered in relation to the property are

  1. Has there been in relation to the property any development (including change of use or exempted development) within the meaning of the Planning Acts on or after the 1st October 1964.
  2. Evidence of Compliance with the financial conditions by way of letter/receipt from the Local Authority.
  3. Certificate/Opinion from an Architect/Engineer that the Permission/Approval relates to the property and that the development has been carried out in conformity with the Permission/Approval and with the Building Bye-Law Approval (if applicable) and that all conditions other than financial conditions have been complied with.

If there is formal confirmation from the local authority that the roads and services have been taken in charge, this is acceptable that the financial contributions and/or lodgement of bonds with the council has been complied with.

Exempted Development

Even where it is claimed that particular development is exempt a certificate or opinion from an architect/engineer should be obtained as every exemption has limitations placed on it.

Building Control Regulations

The Building Control Act, 1990 is the important Act here and provided for building regulations to be drawn up to ensure buildings were built in accordance with the best Code of Practice. The main provisions of this act came into force on 1st June, 1992.

A Certificate/Opinion of Compliance with building regulations from an architect/engineer is essential. There should be no reservations or exceptions in it.

Local Government (Multi-Storey Buildings) Act, 1988

This Act deals with buildings with 5 or more storeys and a basement is considered to be a storey.

The Building Regulations

The Building Control Act, 1990 and the Regulations made under it are “the Building Regulations”. Prior to the Building Regulations some, but not all, parts of the country had building bye-laws.

The Building Control Act, 1990 did away with the need to obtain bye-law approval from 1st June, 1992. If no notice was served before 1st December 1992 in respect of works carried out prior to 13th December 1989 the works are deemed to have been carried out in accordance with the bye-law.

From 1st June, 1992 the Building Regulations apply in relation to works carried out, and this includes alterations or extensions of existing buildings.

The Building Regulations set out a new system to regulate building practice in Ireland and to improve building standards.

In a similar way to the Planning Acts, the Building Control Act, 1990 provided that certain classes of development are exempt.

For all works and uses to which the Building Regulations apply a commencement notice must be submitted to the building control authority.

The Building Control Regulations 1997 provide for the need for a fire safety certificate to be obtained before work commences on a development. Domestic dwellings are exempt and there is a list of other exemptions also.

There is a limit of 5 years from completion of the works or change of use after which no enforcement notice may be served by the local planning authority.

General Condition 36-the Planning Warranty

General condition 36 of the standard Law Society contract of sale requires the production of a certificate or an opinion on compliance with planning and building regulations from an architect/engineer professionally qualified to so certify or opine.

It also provides a warranty to the purchaser that all developments on or to the property since 1st October, 1964 comply with all the requirements of the planning acts and building regulations/bye-laws. It also warrants that if a planning permission has been implemented then the vendor warrants that the conditions have been substantially complied with.

Because of the extensive nature of this warranty it is common for this condition to be deleted or varied by special condition. Non-disclosure of any problem re planning prior to signing of the contracts could lead to rescission of the contract and legal proceedings for damages.

Architect’s Certificates of Compliance

It is common practice to seek a certificate of compliance with planning permission and building regulations from an architect/engineer.

The certificate of compliance should

  1. Contain the qualifications of the person giving the certificate
  2. Confirm the means of knowledge
  3. Confirm that the planning permission relates to the development in sale
  4. Confirm that the design conforms with the Building Regulations
  5. Confirm that the development complies with the planning permission
  6. Not contain any qualifications or exceptions which are not generally acceptable
  7. Be dated and signed.

Certifiers may also be asked for a copy of their professional indemnity insurance to confirm the adequacy of same.

Be careful about the difference between a Notification of a Decision to Grant Permission/Approval and the actual planning permission which is the Notification of Grant of Permission/Approval.

Checklist for Planning Documentation

Here are 5 good things to check in relation to planning documentation:

  1. Is it a final grant and not just a notification of a decision to grant?
  2. Does it relate to the property you are buying?
  3. What is the expiry date of the permission? (A planning permission generally lasts for 5 years).
  4. Was the development carried out within the lifespan of the permission?
  5. Take a close look at the conditions of the permission, especially the financial conditions (if any).

The key questions to ask when buying are:

  1. Is there planning permission?
  2. Were building regulations or building bye-laws complied with?
  3. Is there an architect’s certificate confirming compliance with planning permission and building regulations/building bye-laws?

Stamp Duty Rates in Ireland-the Essentials

stamp-duty

Stamp duty is a tax on documents, not property. Most people’s experience with stamp duty will be in relation to a property purchase which leads them to believe that stamp duty is applied to property.

But it is actually a tax on the instrument which witnesses the property transaction and you will also see stamp duty applied to other instruments (legal documents) such as shares in companies.

The Stamp Duties Consolidation act 1999 governs this whole area and in that legislation, there is a Schedule 1 which sets out the heads of charge for stamp duty which stipulates that the stamp duty on a conveyance or transfer of property will range from 0% to 9%.

Each year the government in the Finance Act may change the rate of duty in various heads of charge but the duty will be calculated on an “ad valorem” (for value) rate.

Generally, stamp duty will be payable if the document/instrument is executed in Ireland or if the transaction relates to property in the State.

You used to have 30 days within which to stamp your document/instrument with the Revenue Commissioners; this is now 44 days and your solicitor can do the stamping online with the new online stamping service provided by the Revenue Commissioners called eStamping with the purchaser being the liable person for the duty.

A much-simplified stamp duty system was introduced in Ireland in 2010 with many of the exemptions and reliefs outlined above being abolished.

The stamp duty rates in Ireland are as follows:

Residential Property

Up to €1,000,000-the rate is 1%

Excess over €1,000,000-the rate is 2%

There are also reliefs in relation to transfers between spouses, civil partners, and cohabitants.

Transfers Between Spouses
Transfers between spouses are exempt from stamp duty.

Non Residential Property

The rate is 2%.

Stamp Duty on Leases

Stamp duty is payable on leases and is divided between any premium payable which is calculated at normal stamp duty rates and duty payable on the rent.

Residential and Non-Residential Property

The stamp duty on the premium or fine is the normal rate for residential or non residential as appropriate.

  • Lease for a term not exceeding 35 years or for any indefinite term-Rate: 1% of the average annual rent
  • Lease for a term exceeding 35 years but not exceeding 100 years-Rate: 6% of the average annual rent
  • Lease for a term exceeding 100 years-Rate 12% of the average annual rent

Stage Payment Mortgages and Self Building-What You Need to Know

self build houses

Are you building your house by direct labour or having it build by a building contractor?

If you are engaging the services of a building contractor you will need a building contract/agreement.

This will cost in the region of €500 plus vat but it may be the smartest investment you have ever made because it will protect you in the event that there are problems or disputes with the builder as the build progresses.

Planning Search

Regardless of whether you are building by direct labour or using a building contractor you should carry out a planning search in the local planning office before commencing. Alternatively you can have a search carried out by professional law searchers.

Things to look out for include

  • The zoning of your site
  • The zoning of the adjoining lands as you don’t want any unpleasant surprises down the road
  • Any plans for the area, for example road widening schemes, published by the council or other statutory authorities
  • Any compulsory purchase orders issued

Self Build Mortgages-Stage Payment Mortgages

Self build mortgages generally involve funds being released by your lender at various stages of the build.

This ensures that you draw down funds only when you need them and avoid paying interest on the entire loan from day 1-as the build progresses you draw down the funds in tranches.

You will need to be in touch with your solicitor to facilitate each tranche payment who will have given an undertaking to the lending institution to only release funds provided the bank’s criteria for release of funds are met. This will principally involve your engineer issuing a stage payment certificate.

This certificate will indicate to the lending institution what stage the build is at and the current value of the property to date.

Once your solicitor is in receipt of the stage payment certificate he/she will then make the request to the lending institution for drawdown of the sum indicated by the engineer to bring the build to the next stage.

Our fee for the administration of the stage payments mortgage, certification of title with the lending institution and registration of the mortgage with Land Registry is competitive. Contact us now for a quotation.

Building By Direct Labour

Many houses in Ireland are being built by direct labour in circumstances where a couple may have been given a site by family.

What is set out above is only some of the issues you need to consider when going this route. You will need a solicitor to protect your interests and advise fully on all aspects of your self build.

You may feel that you are incurring needless expense and have decided to self build because it appears a cheaper option than buying a house and you have been given a site by family or in laws.

But the reality is that the money you spend on legal fees will offer you the peace of mind and help avoid problems in relation to your property in the future.

Buying Residential Property-The Crucial Differences Between New and Second Hand

new-house-ireland

Buying a new house or apartment in the course of construction is significantly different from buying a second hand property. This piece will look at the major differences.

Here are the main differences:

  1. at contract stage when buying a new property there is usually only a site which will only be a fraction of the overall value of the transaction. A second hand property will be fully built and will have all the necessary services;
  2. when buying new, the vendor is usually a limited company. A private individual or couple are the typical sellers of a second hand house/apartment;
  3. the new property will be built in accordance with a building agreement and to certain agreed standards; the legal principle of “caveat emptor” (buyer beware) applies to a second hand property;
  4. there can be massive differences in the closing date of new versus second hand; second hand would be typically 4/5 weeks from the date of signing the contract.

The Contract for Sale and the Building Agreement

One of the key differences between buying new and second hand is there are 2 contracts when buying new:

  1. a building agreement in respect of the house/apartment to be built and
    2. a contract for the transfer of the site/agreement for transfer.

The building agreement is the most important contractual document when buying a new house/apartment. It sets out the obligations of both parties and the buyer is considered to be the “employer” and the builder the “contractor” in this agreement.

The Director of Consumer Affairs, at the urging of the Law Society, took a High Court action looking for an order to prohibit builders from using certain onerous and unfair terms and conditions. The High Court agreed to grant the order and made one which contains 15 unfair terms which are prohibited.

However builders can, if they choose, ignore the Order and use unfair terms.

The Building Agreement

The standard Building Agreement contains a covenant by the builder to build the property to a high standard and in accordance with the plans and specifications.

The purchaser should engage the services of an architect/building surveyor/engineer to assist with ensuring that the property is built according to the plans and specifications.

The payment clause in the building agreement will provide for 10% of the purchase price of the property to be paid on signing the contract. It used to provide for stage payments being payable at different stages of the build. These payments would only be allowed by the lender on production of an interim stage payment certificate by an architect/engineer confirming that the particular stage of building has been carried out.

Generally there were 3 stages:
1. At wall plate level
2. At roof level and
3. At the internal plastering stage.

However in 2007 the use of stage payments was done away with through agreement between the Government and construction industry representatives.

They can still apply though to one off houses since 2007.

General Conditions

The general conditions of the building agreement cover

  • Possession of the site clear and fit for human habitation
    • The materials to be used
    • Planning permissions and building regulations
    • Interest penalties being imposed for not closing on time
    • Insolvency of the contractor
    • Price variation
    • Insurance
    • Liability for defects
    • Limitations on the builder’s liability
    • The common law rights of the purchaser
    • The estate services
    • The completion date
    • Provision for arbitration in the event of dispute.

The Contract for Sale

The Contract for Sale (or Agreement for Transfer or Conveyance) will be the standard Law Society contract and provides for the transfer of the site on which the new house is built. (You can learn more about the contract for sale elsewhere on this site).

The most important thing to note is that it deals with the legal title to the site and the physical location, boundaries, and dimensions of the site.

The main parts of the contract will therefore contain:

  • The parties
    • The closing date
    • Purchase price (normally a fraction of the overall cost, often 25%)
    • The particulars and tenure of the property
    • Special conditions
    • General conditions of the standard Law Society contract.

Other critically important documents which will be required include:

  1. A booklet of title showing the vendor’s title
  2. Replies to objections and requisitions on title
  3. A section 72 declaration which will deal with deaths/voluntary dispositions on title within the last 12 years and with burdens which affect registered land, whether registered or not
  4. A declaration of identity confirming that the site and all easements and services are within the boundaries of the vendor’s folio/title
  5. An indemnity in respect of roads and services which provides that pending the taking in charge of the estate by the Council that the developer/builder will give an indemnity to maintain them; also that there is a right to reach the public highway from the property
  6. An indemnity in respect of footpaths, grass margins, and kerbs
  7. The deed of assurance of the site or a lease in the case of an apartment
  8. A family law declaration/certificate confirming the home is not a family home within the definition of the Family Home Protection Act, 1976.

Structural Defects

If any structural or physical defects become apparent after taking possession of your new house there are 3 avenues open to you:

  1. A claim to the National House Building Guarantee Company pursuant to the Homebond guarantee scheme or Premier Insurance
  2. a legal action against the builder based on the grounds of negligence of the builder (time limit of 6 years from when the defect became apparent for commencement of legal proceedings)
  3. a legal action against the builder based on breach of contract on the basis that he failed to comply with some term(s) of the building agreement.

Conclusion

As you can see, buying a new house or apartment is significantly different from buying a second hand property.

The building agreement is the biggest single difference and will almost certainly require your architect/engineer to certify that the property has been built in accordance with planning and building regulations and according to the plans and specifications.