Open the Door to your new Home – Help to Buy Scheme

Open the Door to your new home –
Help to Buy SchemeOPEN dOORS

If a HTB applicant is self-building a house, his or her solicitor must verify the claim. Solicitors must first apply to Revenue to be a registered solicitor for the HTB incentive.
Neil J. Butler & Co. Solicitors are Registered for this Scheme.
The Help to Buy (HTB) incentive is a scheme for first-time property buyers. If you are a first-time buyer, it will help you with the deposit you need to buy or build a new house or apartment. You must buy or build the property to live in as your home.
When you buy or build your home, the incentive will give you a refund of Income Tax and Deposit Interest Retention Tax (DIRT) that you paid in Ireland over the previous four years.
let’s look at how it works…..

Who can claim the Help to Buy (HTB) incentive?

To claim HTB, you must:
be a first-time buyer
buy or build a new property between 19 July 2016 and 31 December 2019
live in the property as your main home for five years after you buy or build it
be tax compliant, if you are self assessed you must also have tax clearance.
To qualify, you must not have previously bought or built a house or apartment, either on your own or jointly with any other person. If you are buying or building the new property with other people, they must also be first-time buyers.
If you are buying the property, you must have signed a contract to buy that property on or after 19 July 2016. If you are self-building, you must have drawn down the first part of the mortgage on or after that date.
Approved developers and contractors
The contractor you are purchasing your home from must be approved by Revenue. You can check the list of approved developers and contractors to make sure that your developer or contractor is approved.

What type of property qualifies?

To qualify for HTB, the property that you build or buy must be:
your home
newly built with the construction subject to Value Added Tax (VAT) in Ireland.
The property must never have been used, or have been suitable to use, as a residential home. If the property was non-residential, but has been converted for residential use, it may qualify for HTB. If you buy or build the property as an investment, it does not qualify for HTB.
Purchase value
The purchase value of a new build means the price that you bought it for. For self-built property, the purchase value is the approved valuation by the lender at the time that you took out the mortgage.
If you bought the property between 19 July 2016 and 31 December 2016, the purchase price must be €600,000 or less. If you bought it after 1 January 2017, it must be €500,000 or less.
Mortgage
You must take out your mortgage on the property with a qualifying lender. This loan must be used only for buying or building the property. The loan must be at least 70% of the purchase value of the property. This is known as the loan to value ratio.
You are allowed to have a guarantor on the loan.

How much can you claim?

The amount that you can claim is the lesser of:
€20,000
 OR 5% of the purchase price of a new home. For self-builds this is 5% of the completion value of the property
the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid in the four years before your purchase or self-build.
The maximum payment is €20,000 per property. This cap applies regardless of how many people enter into a contract to buy a house.
Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) are not taken into account when calculating how much you can claim.
How will the refund be paid?
If you bought or built the property between 19 July 2016 and 31 December 2016, the refund will be paid directly to you.
If you buy a new build after 1 January 2017, the refund will be paid to the contractor.
If you self-build the property after 1 January 2017, the refund will be paid to the bank account of your loan provider.

What do you need to do before you apply?

Before you apply, you must be registered for either:
myAccount, if you are an employee and pay tax through PAYE
Revenue’s Online Service (ROS), if you are self-employed.
Four year rule
You may have signed your contract to buy a new build or drew down the first part of your mortgage for a self build between 1 January and 31 March 2017. If so, you may select the year of purchase to be the actual year you bought or built your home or the previous year provided you make your application before 31 May 2017. This will allow you to select the four year period which is of most benefit to you.
For example, if your contract or draw-down date is 2 February 2017, you may choose whether that took place in either 2016 or 2017. If you choose 2016, this will allow you to use your Income Tax and DIRT for the four years from 2012 to 2015. If you choose 2017, you can use the years from 2013 to 2016.

How do you apply for Help to Buy (HTB)

Use myAccount or Revenue Online Service (ROS) to apply for HTB online.
There are two stages to the online process:
the application stage
the claim stage.
Application stage
You can apply as an individual, or as part of a group if you are buying or building with other people. You must complete a declaration and select the years you want to use for a refund. If you are tax compliant, your application will be approved and you will be provided with an application number and a summary of the maximum amount you can claim. You will also be given an access code separately through MyEnquiries.
Keep a safe note of both of these codes as you will need to provide them to your lender. If you are buying your home you will also need these codes for your qualifying contractor. If you are self-building you will need these codes for your solicitor. Your contractor or solicitor will require this information to verify what you have submitted.
Claim stage
Once you have signed the contract for your home, or drawn down the first part of the mortgage if you are self building, you can make your claim. Login to HTB through myAccount or Revenue Online Service (ROS) and complete the steps .
If you are applying with other people you will also need to confirm the portion of the refund to be refunded to each person. If you are self-building, you will need to provide the BIC and IBAN of the loan bank account.
Once you have submitted your claim you will be provided with a claim reference.

Once you have submitted your claim you should advise your developer or contractor (or solicitor if you are self-building).
Provide them with your claim reference (issued to you after step 2) and access code (issued to you when you submitted your application). Before you receive any refund, the information you have provided will need to be verified by the:
developer or contractor, in the case of a new build
solicitor acting on your behalf, in the case of a self-build.
The refund that you finally receive is limited to 5% of the purchase price of the house. This may mean that it is different to the maximum relief amount that you were given at application stage.

 

10 ESSENTIALS WHEN BUYING A PROPERTY USING A MORTGAGE

The initial excitement of getting your Loan Offer can often be quickly diluted when apparent obstacles are put in your way by the mortgage process. Avoid the problems – follow our Guide.

 

When we as your solicitor get the Loan Offer, we can deal with the legal conditions but there are often items that must be dealt with by you and the Bank.  Until those are dealt with, the Bank will not process further even if our legal requirements are fully dealt with.

 

Bear in mind the following:-

1.A Valuation Report is needed by the Bank –

    •  Identify the agreed Valuer (the Bank usually have a panel);
    •  Know the cost involved;
    •  Make the arrangement to inspect with the help of the Auctioneer.

2.Life Insurance cover is generally required.

    • BUT,  you don’t have to take any package that is offered by the Bank.
    •  You can often find a more competitive quotation in the general market or particularly from a professional brokerage firm.
    •   Do your research early so that you don’t run out of time.
    •   Making a phone call or filling out a proposal form is not enough – the policy must be in place and the interest of the Bank must be noted on it.

3. Household insurance, particularly fire cover.

    • Do your research early to get a price that is acceptable to you.
    • Compare to the price offered by  the Bank.
    • The name of the Bank must be noted on the fire policy
    • Get the letter of cover required by the Bank.

4. Accurate address of the property – we regularly see a difference between the auctioneer’s description of the address, the one used in the loan offer (which is often the one given by you to the Bank) and the actual legal address when the title deeds reach us.  That can cause untold delays because the Bank may take the view that it is a different property.

5. Accurate names of you the borrowers – You must use a consistent form of your name.  You should decide on the format you want to use on your legal title and on your loan papers and you should stick to the one format at all times.  Otherwise questions and delays will occur.

6. Lifetime of Loan Offer. Be aware that most loan offers now have a life time of only three months.  If you have to gather the information we are describing here you can quickly run out of time which will force you to reapply, incurring further delay and expense.

7. A structural survey – we always recommend this.  It is not a strict requirement of the Bank, but it is very wise that you protect yourself by having a proper survey done by a fully qualified and insured person.

8. Be certain that you have access to any further funds that are needed.  The loan will only be part of the purchase price.  The deposit and any balance together with the stamp duty, registration fees and legal costs must come from your resources.  Have them available at an early stage.

9. If you are receiving money support to buy the house from a member of family, then we as your solicitors must know that early.  Further documents are needed to be prepared and signed by the person making the gift.  This can be another source of delay.

10. Finally, your expectations need to be managed and we can help you do that when you contact us early in the process.  We can then try to minimise further unnecessary delay but of course we are all subject to the internal workings of the Banks and it is sometimes hard to understand the bureaucracy that they apply.

 

Property Bargains – are they real?

imagepropertyHave you been tempted trying to buy a property at a repossession- type auction?

 

Have you thought about what makes these auctions different – apart from an expectation that prices will be lower?

 

There are certain key differences that must be clearly understood if you are to avoid significant problems for yourself when buying in this kind of environment.

 

Who is  the Seller?

One of the key issues is who in fact will act as seller. Is it the Bank that holds the mortgage or is it a receiver?

If  it is a receiver then that person acts as agent of the legal owner. The receiver, as agent of the legal owner has more limited powers than the bank acting under it’s mortgage.

For instance, if there is a judgement against the property apart from the mortgage held by the bank who appointed the receiver, the receiver has no power to avoid the effect of that other judgement. In those circumstances, you run the risk of buying a property that is still affected by another judgement.

 

On the other hand, if the bank that holds the mortgage acts as seller, then that bank under statutory powers, can effectively prevent the sale of property being affected by any other judgement.

 

Risks – the Contract

 

The standard Contract for Sale which is recommended for use by the Law Society of Ireland will be very substantially changed  to render it more favourable to the seller. In particular, the usual warranties that a seller is required to give to a buyer are likely to be be deleted. This is because most Receivers don’t have any detailed knowledge of the property involved and will not incur the cost of obtaining it.

 

As you can imagine, the Law Society and its member solicitors, over many years,developed a standard Contract for Sale in a format that tried to provide fairness to both sides. To substantially change the standard Contract by deleting clauses that are designed to achieve that fairness means that you as a buyer are far more exposed to risk.

 

Because very few standard warranties are being given, the old adage of “Buyer beware” becomes very important. The burden falls to you as the buyer to make a very full enquiry about the property – planning, access, drainage, condition, relations with neighbours etc.

 

Risks – early commitment

The very fact of buying at auction means that you must ,if successful , sign a Contract and pay a deposit there and then. That gives you no opportunity to have your solicitor investigate the title or the conditions of sale with a view to giving you clear advice as to the risk involved.

 

Quite often, solicitors will be consulted by clients after such an auction when the client feels he has achieved a bargain price. However it can off  become apparent  very quickly that if it looked to good to be true, it is in  fact too good to be true! You as buyer can find yourself with some serious problems.

 

Help Yourself!

 

Hopefully you can now see how important it is that you choose the correct solicitor to handle this type of transaction for you. Previous experience and knowledge of debt management, enforcement and the technical rules about buying from receivers or banks, is an essential skill. We at Neil J. Butler & Co. have been doing this type of work for approximately 30 years and have developed the expertise to protect you.

 

There are bargains but they need  to be well managed.

 

Help yourself to bag that bargain by having us on your side !

 

Contact us on

0504-24173 ; neil@njbutler.ie ; www.njbutler.ie

 

 

Thinking of buying or selling your home?

Thinking of buying or selling your home?

While the Dublin economy has been energised for some time now , it is only recently that we  in rural Ireland are seeing the beginnings of change.

In my Practice , I see people who are finally able to consider getting on the property ladder , as there are houses being brought to the market by Banks ; by people who are in discussions with Banks or others who are simply in trouble and are looking for a way out.

While there is some pent-up demand , there is also a big obstacle in the way Banks who have loans on premises  that are in arrears , take so long to make decisions when asked to consent to sales. That is a real problem at a human level – it is taking up to 9 months to get a decision.

Buying or selling your home is a big decision – some might even call it brave.

There are some useful points in the following Article from the Irish Times…

Eoin Burke Kennedy – Irish Times May 27 2014

The housing market, too, is showing signs of recovery. Property prices across the State were up 7.8 per cent in the 12 months to the end of March, according to the Central Statistics Office, with the capital recording a year-on-year bounce of 14.3 per cent.

Property transactions The price rises are not confined to Dublin – data shows they have started to spread across the State. The number of property transactions are increasing significantly year on year – although they are still well below the 4 per cent turnover threshold expected from a normal functioning market.

According to The Irish Times-owned Myhome.ie, transaction levels rose right across the country in 2013. Counties that reported a strong rise in transactions include Leitrim (up 57 per cent to 350 sales; Carlow (up 41 per cent to 376); and Cavan (up 55 per cent to 500).

And the banks appear to be back in business to some degree. The value of mortgage lending rose by 72 per cent on an annual basis in the first quarter of this year, with 3,425 mortgages, worth €568 million, drawn down.

A survey by the Irish Brokers Federation and PricewaterhouseCoopers has shown that activity in the Irish mortgage market rose by 66 per cent in the first quarter, the highest increase since 2010, and the first year-on-year growth since 2006.

Banks are still taking a cautious approach and looking for a solid track record of savings. Their primary considerations now are repayment capacity if interest rates rise. Lenders are also focusing on the level of outstanding borrowings would-be customers have, but they claim to be lending.

Problem mortgages When it comes to housing, and mortgages in particular, much of the talk has been about those struggling to pay mortgages or trapped in negative equity. However, there is another cohort who need solutions, even if they have equity in their homes and can pay their debts. People in this group are trapped because they will lose their tracker mortgage – whereby the interest rate they pay is tied to European Central Bank rates and can’t be changed by banks – if they move.

A person with a €350,000 mortgage paying interest on a tracker mortgage at a rate of 1.5 per cent has monthly repayments of just €1,207. If they sell, lose their tracker and take out a mortgage of the same size at a rate of 4.5 per cent, the monthly repayments climb to €1,773.

Banks have finally started to do something about this log-jam. A couple of months ago, Permanent TSB brought a new product to market allowing tracker holders to sell and buy and keep their tracker – sort of. Bank of Ireland, Ulster Bank, AIB, EBS and KBC Bank are offering similar products or plan to do so.

There are caveats. PTSB applies a 1 per cent margin on an applicant’s existing tracker rate so if they are on ECB+1 per cent, it will increase to ECB+2 per cent, for a total interest rate of 2.25 per cent. This is two points less than the best variable rate loan on offer.

And these products can be time-limited too. Bank of Ireland and Ulster Bank will offer the lower tracker for just five years only, after which people have to switch to a variable or fixed rate. It is too early to tell if the new deals will amount to much. However, if they succeed in allowing people to sell up and move on, then the “next big crisis” of too much demand in too few areas leading to another property bubble could be still be averted.

By Neil Butler

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