House BuyingProperty developers have agreed to abolish controversial stage payments which will result in a saving of an estimated €175 million for new home buyers around the country.
The charging of stage payments - common in certain parts of Ireland outside of Dublin - involves purchasers at new housing estates being charged stage payments before and during the construction of their homes.
The practice is widespread in counties Cork, Limerick, Galway, Sligo and Mayo, and there is evidence of its re-emergence in other counties where it had been discontinued in recent years.
An estimated 25,000 homes are purchased through stage payments, according to the Law Society, costing buyers on average an extra €7,000 in additional loan interest and fees.
Under the practice, new house buyers are required to pay 80 per cent and more of the cost of their new home for up to 12 months before taking possession.
Typically these payments start with a payment of 20-35 per cent of the total cost to cover the purchase of the site. Buyers then must make payments at different stages of construction.
The practice is now to be ended under a new set of codes agreed between the Irish Home Builders Association (IHBA) and the Department of the Environment.
Under this new voluntary code, the IHBA has agreed that the practice will no longer apply to houses where contracts are signed after June 30th, 2007.
The voluntary code will be operated by the Irish Home Builders Association, under the auspices of the Construction Industry Federation, and there will be a complaints procedure for members who break the code.
The new code will not affect agreements between the buyers and developers of one-off or specially commissioned houses.
The Law Society, which has been a prime mover in the campaign to abolish stage payments, welcomed the news.
It has argued that stage payments had no justification other than the historical ability of house builders to enforce the practice in certain areas of the country.
"This appears to be a strong commitment from Government to ensure that this practice is ended," according to solicitor Patrick Dorgan, chairman of the society's conveyancing committee.
