How do I figure out what’s a good buy?
Q New apartments are dropping in price and it’s made me think that now might be the time to buy an investment property. Apartments I’ve been tracking have dropped by €100,000. I have a small mortgage on my home, enough savings and estimate that I would only need an 80 per cent mortgage. Is there any way of figuring out if it would be a good investment?
ADuring the boom many first-time property investors entered the market, relying on the apartment to greatly increase in value (capital appreciation), the rent to pay the mortgage and the influx of people into the country to make for a steady supply of tenants. All those conditions have changed.
Look at the Worth the Investmentcolumn in Property and ask the same questions of this apartment you are interested in. It is unlikely that the rent you could get would cover an 80 per cent mortgage so how would you make up the shortfall – and does it make sense for you to do that? What is the market rent for similar apartments?
Remember, rents are falling. Is there a glut of rentals in the area? Property investment, no matter how small scale, is a business. Are you set up for dealing with the Revenue implications?
Do you know all the costs? For example, annual service charges can work out between €100-€200 a month – on top of your monthly mortgage repayments. Are you going to be a hands-on landlord – how, for example, would you feel about being phoned at 3am to deal with the washing machine flooding? If not, you might prefer to hire a letting agent to manage the rental. If there was a long void period between tenants, could you afford to bridge the gap?
The buy-to-let market is slow, so take your time, get mortgage approval before you begin looking, do your figures and don’t be blinded by that large sounding €100,000 drop.
What does ‘subject to Section 47’ mean?
Q I hope to build a holiday home in Wexford and have been looking at sites. I have found one on an estate agent’s website with full planning permission “subject to Section 47”. What is this? And if land has full planning permission how much leeway do I have in terms of changing the design of the house?
ASection 47 is an occupancy agreement which rules out this site for you as it requires that the house is used as a primary residence, typically for five years from the date of occupation.
As to plans that have already been approved? It can be done but, if the changes are significant, ie from adding another floor to installing larger windows to the front elevation, it would require a new planning application.
At the very least anyone who is buying a site with full planning permission but who intends to change the house design should talk to the local planning department to see how much change they might go for.
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or email propertyquestions@irish-times.ie. This column is a readers’ service and is not intended to replace professional advice.
