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Buying property in Ireland: scams and pitfalls

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Everything you need to know is included in our Ireland Property Pack

Ireland's real estate market is a hotspot for foreign investors, driven by its robust tech industry and strong economic prospects.

However, as you might know already, this property market can be tricky, especially if you're not from around here. You might encounter unexpected issues and difficulties along the way.

Our group of property buyers and local associates have voiced multiple issues to us. We've listed them all in our Ireland Property Pack.

This article provides a brief overview of potential pitfalls that may arise during the property buying process in this country.

Is it safe or risky to invest in real estate in Ireland?

Overall, Ireland is a secure place to invest in property.

But there have been instances where certain areas, particularly in Dublin during the early 2000s, saw a surge in property prices due to speculation.

This speculative bubble burst in 2008, leading to significant financial distress for many who had bought at peak prices.

This is not to say that Dublin is a no-go, but rather an example of how even in regulated markets, external economic factors can influence property values. Thus, timing and location are pivotal.

Ireland’s legal system, when it comes to property, is robust. However, there's an aspect unique to Ireland: the concept of "good title."

Unlike some other nations, where land registry is the final word, in Ireland, tracing title deeds is imperative. There have been cases where missing deeds or unclear property boundaries led to lengthy legal battles. One must ensure that the property has a 'good title' with a clear chain of ownership.

The Irish Central Bank, post the 2008 crisis, implemented stringent lending rules. For non-residents, acquiring a mortgage in Ireland can be an uphill task. Banks typically require a heftier deposit, sometimes up to 50% of the property value.

Additionally, there’s the issue of stamp duty, which, although not exclusive to Ireland, can be substantial and varies based on property value.

Ireland's government has made commendable efforts to stabilize the real estate market, but some of their initiatives have drawn criticism.

For instance, the Rent Pressure Zones (RPZs), introduced to combat soaring rents, cap annual rent increases at 4%. While this offers protection to tenants, some property investors argue it hampers the profitability of rental properties.

Unique to Ireland post the financial crisis was the emergence of 'ghost estates' - housing developments started during the boom years and abandoned after the crash. Many were left unfinished, and while efforts have been made to address these, some still remain, particularly in rural areas.

A potential investor should be wary of incredibly low prices in regions with these estates, as they might indicate an oversupply and lower potential for price appreciation.

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Potential real estate buying mistakes in Ireland

"Title of Property" risk potential

One particular pitfall you should be aware of when buying residential property in Ireland, especially as a foreigner, relates to the "Title of Property" - specifically the distinction between Freehold and Leasehold titles, a concept deeply ingrained in Irish property law.

In Ireland, a Freehold title means you own the property outright, including the land it's on.

This is the more straightforward and common type of property ownership. However, a Leasehold title, which is more frequent in older properties or those in city centers like Dublin, means you own the property for a set period, often 99 years or more, but not the land it's on.

As a foreigner, you might not be familiar with the nuances of Leasehold ownership.

This can lead to unexpected issues, especially concerning the property's long-term value and the process of lease extension or renewal.

In some cases, the remaining term of the lease can significantly impact the property's value, and the process of extending a lease can be both costly and time-consuming.

The frequency of encountering a Leasehold property can vary depending on the location and age of the property you're interested in. In urban areas and historical parts of cities, it's more common.

You should thoroughly check the property's title and understand the implications of a Leasehold title.

The concept of "Pyrite Damage"

Another specific pitfall you should be aware of when buying a residential property in Ireland is the concept of "Pyrite Damage."

Pyrite, a mineral that can expand when exposed to moisture and oxygen, has been found in some building materials used in Irish homes, primarily those built during the housing boom from the late 1990s to the early 2000s.

The presence of pyrite can lead to significant structural damage over time, such as cracks in floors and walls.

This issue is particularly prevalent in certain areas around Dublin and in parts of Counties Meath, Kildare, and Offaly. As a foreigner, you may not be familiar with this issue, as it is quite specific to Ireland and has emerged predominantly in the last couple of decades.

To navigate this, you should ensure a property is thoroughly checked for pyrite damage or the potential for such damage. This involves getting a specific pyrite test done, which is different from a standard home inspection.

The frequency of encountering pyrite issues largely depends on the location and age of the property.

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The "Right of Way" issues

A unique and less commonly known pitfall when buying residential property in Ireland, particularly for foreigners, is understanding and dealing with "Right of Way" issues, specifically regarding "Easements."

In Ireland, easements can be informal and based on longstanding local practices, not just formal legal agreements. This is particularly relevant in rural areas or in older properties.

An easement is a right for someone else to use a part of your property for a specific purpose, such as a neighbor having the right to use a path across your land. In many Irish rural areas, these rights of way have been established by customary use over many years and may not be formally recorded.

For a foreigner, this might be a surprise, especially if coming from a country where property rights are more rigidly defined and recorded.

The issue here is that these easements might not be immediately apparent or documented when you purchase the property.

You might discover that neighbors or local farmers have rights crossing your land, which can lead to disputes or restrictions on how you can use your property.

Awareness of the "Planning Permission" risks

Another specific pitfall in the context of buying residential property in Ireland, particularly for foreigners, is dealing with the "Planning Permission" history of a property.

In Ireland, planning permission is required for most developments and alterations to properties. This can include extensions, conversions, and even some internal changes. The unique aspect in Ireland is the strict enforcement of these rules and the potential for historical non-compliance to impact new owners.

Sometimes, previous owners may have carried out works without the necessary planning permission or not in accordance with the granted permission.

As a foreign buyer, you might not be initially aware of these nuances or the history of alterations made to the property.

The frequency of encountering such issues can vary, but it's more common in older properties or those that have been visibly altered or extended. The consequence for you as the new owner could be significant.

You might be responsible for rectifying the unauthorized changes, which can be costly and time-consuming. In extreme cases, it might even involve demolishing the unauthorized works.

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"Bogus Renters" risks in vacant properties

A very specific and less known pitfall when buying residential property in Ireland, especially for a foreigner, involves the complexities surrounding "Bogus Renters" in vacant properties.

This issue is uniquely Irish, stemming from a combination of local property laws, housing shortages, and social issues.

In Ireland, particularly in urban areas like Dublin or Cork, there have been instances where vacant properties are occupied by bogus renters or squatters. These individuals may falsely claim tenancy rights or create sham rental agreements to pose as legitimate tenants. This can happen in properties that have been vacant for some time, which is not uncommon in cities with housing shortages.

As a foreigner, you might not be aware of the intricacies of Irish tenant protection laws, which are quite robust.

Evicting bogus renters can be a lengthy, complicated, and costly legal process, given the strong tenant rights in Ireland.

This can become a significant issue if you purchase a property with the intention of occupying it yourself or renovating it, only to find it unlawfully occupied.

The frequency of encountering this problem varies but is more prominent in urban areas and in properties that have been left vacant for extended periods. To mitigate this risk, it's crucial to ensure that the property is properly secured and monitored, especially if it's known to be vacant for a while.

Before purchasing, you should also conduct a thorough physical inspection of the property to confirm it's vacant and free from unlawful occupants.

Concept of "Ghost Estates"

A particularly unique pitfall in buying residential property in Ireland, especially relevant to foreigners, is related to "Ghost Estates."

These are developments that were started during the Irish property boom but were never completed due to the economic downturn. Although the situation has improved since the peak of the issue, some ghost estates still exist, primarily in more rural or less developed areas of Ireland.

The term "Ghost Estate" refers to housing developments where a significant number of properties are either unfinished or unoccupied. This can lead to various issues for potential buyers, such as inadequate infrastructure, lack of amenities, or ongoing construction work.

These estates might seem attractive due to lower property prices, but they come with long-term risks and challenges.

As a foreign buyer, you might be drawn to the seemingly affordable prices in these estates without fully understanding the implications. The issues with ghost estates include limited or poor-quality local services, potential for long-term unfinished construction nearby, and a lack of community development.

While the frequency of encountering ghost estates has decreased, they are still present in certain areas. It's crucial to research the area thoroughly and understand the status of any nearby developments.

Check if the estate is fully completed, the occupancy levels, and any plans for further development.

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The issue of "Folio Accuracy" in rural areas

A specific and unique challenge you might face when buying residential property in Ireland, particularly as a foreigner, is dealing with the issue of "Folio Accuracy" in rural areas.

The folio is the official record of property ownership in Ireland, maintained by the Property Registration Authority (PRA). In rural Ireland, where property boundaries have historically been informal and often based on local knowledge rather than precise surveying, the details in the folio may not always accurately reflect the physical boundaries of the property.

This discrepancy can be particularly pronounced in rural areas or for older properties where the boundaries have been traditionally marked by natural features like hedges or stone walls, which may have shifted or been altered over time.

The folio might indicate a certain boundary, but the reality on the ground could be quite different. This could lead to disputes with neighbors over land boundaries after you've purchased the property.

As a foreign buyer, this issue might catch you off guard, especially if you come from a jurisdiction where property records are more exact or where rural properties are less common.

The risk is higher in more remote or historically agricultural areas of Ireland.

To mitigate this risk, you should have a detailed survey conducted by a qualified professional before finalizing the purchase. This survey should include checking the physical boundaries against the folio and any historical records or maps available.

It's also advisable to speak with neighboring property owners to understand any informal agreements or traditional understandings regarding boundaries.

"Local Needs Requirement" risk in Ireland

A highly specific and often overlooked pitfall for foreigners buying residential property in Ireland involves understanding and dealing with the "Local Needs Requirement" in certain rural areas.

This is a unique planning condition in Ireland, particularly relevant in more rural and scenic areas, like parts of Counties Donegal, Kerry, or Galway.

The Local Needs Requirement stipulates that planning permission for new homes in certain rural areas may be granted only if the applicant demonstrates a genuine need to live in that particular locality, usually based on familial or economic ties to the area. This policy aims to prevent over-development in rural areas and preserve the local community and culture.

As a foreigner, especially if you don't have existing ties to the community, you might find it challenging to obtain planning permission to build a new home or make significant alterations to an existing property in these areas.

This can be a surprise if you're not familiar with local planning policies, as this type of requirement is quite rare outside of Ireland.

The impact of this requirement varies based on the specific locality and its planning regulations. Some areas enforce this policy more strictly than others.

To navigate this, you should thoroughly research the local planning requirements before committing to a property purchase, especially if you plan to build or significantly modify a property.

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The concept of "Fair Deal Scheme"

Another particularly unique and challenging aspect for foreigners buying residential property in Ireland is the concept of "Fair Deal Scheme" implications for property ownership.

The Fair Deal Scheme, officially known as the Nursing Homes Support Scheme, is a unique Irish program designed to provide financial support for individuals who need long-term nursing home care.

The complexity arises when you're considering buying a property that is currently or was recently part of an estate involved in the Fair Deal Scheme.

If the previous owner of the property was a participant in this scheme, a charge may have been placed on the property to contribute towards their care costs. This can impact the estate's assets, including the property you're interested in purchasing.

As a foreign buyer, this aspect might not be immediately apparent or familiar.

The issue is more common in cases where you're purchasing a property from an estate or a family selling a property previously owned by an elderly relative.

The frequency of encountering this depends largely on the property's background. To ensure you're not caught off guard, it's important to conduct a thorough due diligence process.

This should include inquiries about any involvement in the Fair Deal Scheme and any potential outstanding charges on the property.

"Heritage or Listed Property" complications

Another unique and significant challenge for foreigners buying residential property in Ireland is understanding and dealing with the complexities of "Heritage or Listed Property" regulations.

In Ireland, properties that are designated as heritage or listed buildings are subject to stringent conservation rules and guidelines under the Planning and Development Acts.

If you're considering purchasing a heritage-listed property, which is common in historic areas like parts of Dublin, Cork, or Limerick, you need to be aware of the restrictions and obligations that come with such a designation. These buildings are protected due to their historical, architectural, or cultural significance, and any alterations, renovations, or repairs must comply with specific conservation guidelines.

As a foreign buyer, this might be a new concept, especially if your home country has different approaches to historic preservation.

The issue is particularly relevant if you're drawn to the charm of older, character-filled properties.

However, the restrictions can significantly impact what changes you can make to the property, often leading to higher costs and longer timelines for any work due to the need for specialized skills and materials.

The frequency of encountering such properties depends on the area you're looking at.

Historic city centers and certain rural areas with a rich cultural heritage are more likely to have a higher concentration of listed buildings.

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