- The Golden Age of the “Celtic Tiger”
- Phantom cities
- Resuscitation of the housing sector
- Housing value
- Real estate purchase in Ireland
- Some Useful Facts About Housing and Other Costs
- Benefits of buying property in Ireland
The value of real estate in Ireland has reached its historic low: compared to 2007, house prices have dropped by 64%! This is why today is the best time to invest in Irish housing. Moreover, foreign investors are provided not only with a permanent residence permit, but also with Irish citizenship, which previously only a few could count on. Moreover, all buyers of real estate in 2013 are exempt from paying taxes until 2016! Read about this and much more in our article..
The Golden Age of the “Celtic Tiger”
From the mid-90s to the outbreak of the crisis in 2008, Ireland went from being the most disadvantaged country in Europe to a booming economy with European subsidies and concessional lending for multinational companies that have always been comfortable in the multilingual and hospitable Irish environment. The magnet for foreign investment was the low corporate tax in Ireland – only 12.5%. That is why today, despite the demands of the IMF to increase it, the Irish refuse to do so in order to continue to ensure the flow of foreign investors into their territory..
Ireland’s economic recovery began with investments in high technology and explosive real estate development that have made Dublin the “American Dream” city with an economic growth rate of up to 6% per year. The construction boom awakened the excitement in the Irish to buy real estate, and banks easily gave them loans without any government control. The inhabitants of the “Emerald Isle”, pretty tired of poverty and years of terrorist attacks, suddenly felt like residents of the “first world” and were in a state of euphoria.
The crisis broke out like a bolt from the blue. The economy fell sharply, and the budget deficit of 32% of GDP became for Ireland a kind of Frankenstein that caused the national banking collapse. To keep the global market calm, the Irish government took urgent measures to bail out the banks and imposed draconian cuts on the income of the Irish, who, like in the old days, had to clean up the mistakes of their officials and bankers..
Four months after the financial explosion, the rating agencies, which have always held high regard for Irish banks, have lost all credibility. The country was faced with a choice: rescue from the IMF, EU and European Central Bank, or bankruptcy. Ireland had no choice but to accept assistance from the IMF, which poured out 890 million euros in exchange for tough conditions that demanded unconditional fulfillment from it. Otherwise, the collapse would threaten not only Ireland, but all of Europe..
Today, the bank debt of every Irish family averages 132,000 euros, while property prices have dropped by 64% since 2007. At the same time, the unemployment rate in the country has reached its climax: about 2 million Irish people (most between the ages of 20 to 34) were left without work, with a total population of 4.5 million!
Despite the global fall in prices, 15% of Irish real estate is empty today. Entire ghost areas have filled the cities of Ireland, where more than 550,000 residential properties have been built during the construction boom. Today, nearly 300,000 apartments and private houses cannot find their buyers, and the government is allocating millions of dollars to keep ghost buildings safe..
Since July 2012, Ireland has moved to more drastic measures and began a massive demolition of empty and unfinished houses. Today, there are about 1,850 unfinished residential complexes in the country that pose a real threat to the safety of the population. Most recently, a boy died in Ireland after he entered the territory of one of these phantom structures. This served as another impetus for the fastest demolition of unclaimed real estate. In its place, new agricultural land will be created in suburban areas.
Resuscitation of the housing sector
Mired in a crisis, Ireland is striving to stabilize its financial position as soon as possible. To this end, in 2013, the country’s government plans to save 3,500 million euros by cutting government spending and introducing a new property tax. So, from July this year, owners of houses worth over 1 million euros will pay 0.25% of their nominal value to the treasury annually, while the rest of the owners are taxed at 0.18%. These measures are in addition to the law already introduced in 2011, according to which the state collects 100 euros annually from each residential property owned by the Irish..
To reanimate the housing sector, the Irish government is going to new unprecedented promotions: all buyers of real estate in 2013 are exempted from paying taxes until 2016, and those who are not included in this category “determine the value of their property themselves”, guided by the current tariffs.
Moreover, since the beginning of this year, Ireland has launched another program to attract foreign investors and entrepreneurs: today they are granted residence permits and citizenship in exchange for buying real estate in the amount of 500 thousand euros, buying out public debt with low interest rates or investing in business creation with a minimum investment of 500 thousand to 2 million euros.
There is another special program for foreigners wishing to start their own business with a minimum investment of 75,000 euros: they are issued a residence permit for a period of 2 years to develop their business. Today in Ireland 87% of investors and property buyers are foreigners.
Property prices in Ireland have hit their record lows and are forecast to remain unchanged for many years. The average price of a private house or apartment in the country does not exceed 100 thousand euros, which is 1/3 of their original cost in 2007. Today, to buy a property, the average Irishman will need the sum of his 3-year salary on an income of 36,000 euros per year. For comparison: in the UK, buying a home costs 4 annual salaries, while in Spain this will require 8 years of earnings.
Throughout Ireland today, you can see abandoned homes without owners, lonely along the side of the road, and cranes rusted from disuse and frequent rain. Everything here is motionless, and only some seagulls fly over the ghostly wastelands in search of food. This is what Dublin’s new port area looks like today – the Docklands with the River Liffey crossing it, which separates the capital’s proletarian north and the Southside with its bohemian atmosphere, luxury apartments and the best nightclubs. The Docklands picture is depressing: abandoned new buildings, signs for sale or rent, which no one is interested in, empty trams, where no one enters and no one leaves at the Spencer Dock stop for one simple reason: almost no one lives in this entire zone…
Churchtown House – a fashionable Georgian-style house in Dublin, built in 1870 – is another symbol of boom to bust: this is what the Anglo-Saxons call the transition from success to bankruptcy. This huge residence, once home to the Dutch Embassy in Ireland, has been sold 4 times over 13 years. In 1997, the building was sold for 700 thousand euros, 200 thousand euros more than expected. In 2006, the house found a new buyer for 10.5 million euros. Today, the administrator of the bankrupt company, which was its last owner, will be happy to receive at least 3 million euros for him..
Apartment prices in Dublin depend on the area, although over the years of the crisis, the difference in price has significantly “blurred”. Today the apartment is 42 sq. m with one bedroom in the very center of the city is quite realistic to buy for 75 thousand euros. Renting out such apartments can bring income to its owner from 900 to 1500 euros per month. Dublin is a student city with 4 universities, one of which, Trinity College, is one of the most famous and prestigious universities in the world. The demand for rent is always very high here, which makes investments in Dublin real estate especially attractive.
2 and 3-room apartments in one of the most popular and quiet areas of Dublin – FinglasVillage – cost from 80 thousand euros. Despite the affordable prices, many of them have not been able to find their customers for more than 3-4-5 years. Most of the apartments are sold with furniture and a full set of household appliances, many have their own garden, terrace and parking.
Real estate prices in the elite area of Dublin – Ballsbridge – are slightly higher than in other areas of the city, but they also compare favorably with the cost of housing in other European capitals. So, an 80-meter apartment with 2 bedrooms, 1 living room, 2 bathrooms, with a balcony can cost from 180 thousand euros here. At the same time, bargaining is appropriate here, and the final price may differ significantly from the one stated at the beginning. Private houses and villas in the capital, furnished and in impeccable condition, today can be purchased from 140 thousand euros. The cost of housing in other cities in Ireland is usually lower than in Dublin, and in many cases does not reach 100 thousand euros..
Today, 60% of foreign buyers of real estate in the country are British, 15% are residents of other European countries, 10% are Americans and another 15% are Irish immigrants. And since last year, residents of Russia have actively joined the purchase of housing in Ireland. So, in February of this year, in just two days, the Russians acquired 17 Irish real estate objects for a total of 1 million euros..
Real estate purchase in Ireland
The procedure for buying and registering real estate in Ireland consists of several stages. After choosing a residential property, you will need the help of a lawyer (solicitor) who will deal with the preparation of purchase documents and be responsible for all legal issues related to it. His services usually cost € 900-1000, although some of the more experienced lawyers prefer to receive a fee of 1-1.5% of the cost of housing plus 21% VAT. Add another € 150 to this amount for overhead costs. When buying real estate at auction, you must pay the intermediary 1-3% of its total value plus an additional 21% VAT.
Before the transaction is completed, your lawyer concludes a preliminary sale and purchase agreement with the seller’s lawyer, after which you pay a deposit of 10% of the value of the property (booking deposit). This amount is fully refunded to you if, for any reason, you change your mind about making a purchase and have not yet signed the final contract.
Most Russian buyers pay the full value of the property at once and usually do not need a loan. However, this does not exclude that some of them will still need a mortgage, especially since they are very loyal to the issuance of loans to foreigners in Ireland. Of course, the bank will carefully study your “dossier” and all the guarantees provided by you, but at the same time you will have a very real opportunity to get a mortgage in the amount of 40 to 60% of the total value of the property at an annual interest of 5 to 7%.
In the case of a purchase on credit, the bank sends its valuer to determine the real value of the housing and an engineer (engeneer) to assess its technical condition. Without the need for credit, you don’t need an appraiser or an inspector, unless you yourself want to invite them to make sure your purchase is correct. In this case, the services of each of them will cost you 100-150 euros. It is optional, but highly desirable to inspect your future property by a surveyor who will carefully check the boundaries of your site with the plan, make sure that neighbors have not moved their fence into your territory, etc. Usually his services cost 150-200 euros.
In addition, there is the so-called stamp duty, the amount of which depends on the value of the home and the status of the buyer (whether he is an investor, whether he is purchasing his first home in Ireland, etc.). For real estate purchases up to € 317,500, buyers are exempt from this tax. Investors and owners of second homes in the country are required to pay stamp duty to the state, regardless of their spending.
After your lawyer checks whether the house has any debts or other obligations, you can proceed to the active phase of the purchase: taking a loan from the bank (if necessary), concluding a final agreement in the land registry (service cost – 500 euros ), payment of money to the seller (through lawyers) and re-registration of the owner in the real estate registry (service cost – from 300 to 1000 euros). After that, the lawyer hands you the entire package of documents and the keys to your new home.
Some Useful Facts About Housing and Other Costs
Most of the time water heating, heating and stoves in Ireland are electric. Electricity bills are paid every 2 months and averages 170 euros per family. The use of water in the country is free.
The simplest TV license with 4 channels costs 160 euros per year. Internet with a telephone costs about 43 euros per month. The average payment for renting an apartment is 800-1100 euros per month, for renting a parking lot – about 50 euros per month. Garbage collection in Ireland is paid and costs an average of 240 euros per year (paid for by the property owner).
Many castles, museums, gardens and parks in Ireland are free. A ticket to the cinema here costs 10 euros, to the national gallery – 7 euros, to the zoo – 10 euros, for a tourist bus in Dublin – 16 euros, for one trip by tram – from 1.5 to 3 euros, a tram ticket for 7 days – from 12 to 22 euros, depending on the area, bus pass for 1 day – 6.20 euros, for 3 days – 13.50 euros, for 5 days – 19 euros, for 10 days – 22 euros. A taxi ride from the airport to Dublin city center costs 22 euros, the same route by bus will cost 8 euros.
Benefits of buying property in Ireland
Obtaining a permanent residence permit and Irish citizenship when buying real estate in the amount of 500 thousand euros.
Obtaining a residence permit for 2 (sometimes 3) years when buying commercial real estate, followed by opening and running a business.
Preferential receipt of a multiple-entry visa for up to 1 year and the ability to stay in the country for up to 90 days in each half of the year.
Investing in real estate on the greenest island in the world, with the cleanest ecology, mild climate, comfortable living conditions, European standard of living and a friendly attitude towards foreigners.
Constant receipt of dividends from the rental of real estate, especially when it comes to Dublin.
Neighborhood with one of the most developed countries in the world – Great Britain. Useful information: Ireland has canceled short-stay visas for Russians until October 31, 2016. This means that all Russian residents can freely enter Irish territory with a valid UK visa..