LEGAL

What other costs are associated with buying a property?
There are a number of other costs, which you must factor into your budget when you are purchasing a property.

Your lender will value your prospective house for the purpose of assessing it for a mortgage. This differs from an independent structural survey, which it is advised you carry out yourself to ensure that the property is structurally sound.

A valuation usually costs between €100 and €200, while a structural survey can cost between €300 and € 400.

Some lenders can charge an administration fee for arranging the loan. This can be 0.5% of the total cost of the home loan. This is payable if the mortgage is for more than 75% of the property's value. It covers the higher risk that the lender is taking by advancing a larger loan.


Solicitors Fees
Costs are generally around 1% or 1.5% of the purchase price (plus VAT). If, however you are also selling a house, further expenses will be incurred. It is standard practice for a solicitor to provide you with a quotation on request. You are also responsible for any outlay, title deed registration fees and search fees.

Stamp Duty on Property
This is a Government tax on the purchase of a home. From 6 December 2001, the following rates of stamp duty are charged on second-hand residential properties for both first time-time buyers and owner-occupiers/ investors:

** New Houses where the floor space is equal to or less than 125 square metres (1,346 square feet) are exempt from Stamp Duty. The home must be your main residence for at least five years and you must not earn rent from the property for that period of time.

Current Rates

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What is Insurance?
Insurance is the business of providing financial protection for property, life or health, for example, against specified contingencies such as death, loss or damage.
The insured pays the insurer regular 'premiums' in return for a policy guaranteeing such protections. An insurance policy will cover against a stated list of risks including, for example, fire, subsidence, theft, flood and storm.
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Where can I get insurance?
Your mortgage provider may offer you insurance but you do not have to take it. You can shop around and visit other insurance dealers and brokers, much as you would if you were insuring your car.
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What types of insurance do I need for my property?
There are two main types insurance policy associated with purchasing a house.

Buildings Insurance
This is a compulsory condition of any mortgage loan. You can generally purchase your buildings insurance from your mortgage lender or you can shop around with other insurance providers for the best deal.

Some special mortgage packages already include insurance.

Buildings insurance will cover the structure of the home together with its fixtures and fittings. The 'sum insured' is the maximum amount the insurance company will pay you.
It must be the full re-building cost of your property.
It is fully the responsibility of the property owner to get the sum insured correct. If you significantly under-insure your property it may mean that your claim could be reduced or possibly rejected altogether.
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Contents Insurance
This type of insurance will cover the contents of the property against risks, which will be set out clearly in your policy booklet. It can also be extended to cover items you make use of outside the home, such as a bicycles, binoculars or musical equipment.

Contents policies also have other sections such as legal expenses, liability insurance and freezer contents. You may be required to pay an extra premium to avail of this level of coverage.

There are a number of contents policies available. The lowest level of coverage is with an 'indemnity' policy.
This will account for the amount of wear and tear, when paying your claim. If, for example, your eight-year-old carpets get water damaged, it will take into consideration the age of the carpet when determining a replacement value.

A higher level of coverage is given through a 'new for old' policy, which will pay out the full cost for brand new carpets to replace the old, damaged ones.

Other policies are available such as a policy that has a premium calculated on the number of bedrooms in the property. There is no need to work out the total value of your possessions.
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• Fences
• Sheds and garden tools
• Money, credit cards etc.
• Items over a certain value (often around EUR1,900 and known as single-item limit)
• Personal belongings of individuals, such as tenants, not specifically covered in the policy.

If you are any in any doubt as to whether you’re sufficiently covered, call your insurance company and check it out.
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What is an 'All Risk' policy?
An 'All Risk' policy covers you for any loss or damage unless specified by the policy as an excluded item/event.

When purchasing the policy you can decide how many or few of your possessions will be covered. It will have extensive geographical coverage for your possessions so if you take, for example, a camera on holiday, it will be covered by the policy unless specifically stated as excluded.

An 'All Risk' policy will usually cover old for new and accidental damage as well.

'All Risk' policies are generally more expensive than those with lots of exclusions.
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What if my risk changes and I need to adjust or change the level of my insurance coverage?
You quite simply inform your insurance company of a 'material change' in your or your home’s circumstances and they will amend your policy accordingly. This process is known as a 'mid-term adjustment'.

It is important to make your insurer aware of any change in your circumstances because if you don’t you may find that in the event of needing to make a claim, you are not covered. Equally, you may enjoy discounted premiums if you decrease the risk of losing your contents by increasing security at your property.
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What is Mortgage Protection?
If you are unable to work due to an accident, illness or unemployment, Mortgage Protection is a policy you can take out, which is designed to take care of the payments on your mortgage while you are unable to earn.You can usually obtain mortgage protection through your mortgage provider or you may wish to us another insurer.
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Insurance What if I live in rented accommodation?
You should check with the property owner if your personal items are covered by their home contents policy. If your personal items are not covered by the property owner’s policy you should arrange your own personalinsurance through an insurance company or broker.
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Aside from the purchase price of your property it is important that you consider the other costs involved in buying your home.Before you appoint your solicitor ask for an outline of fees. It is worth shopping around as prices can vary. The usual fee quoted by solicitors is between 1% and 1.5% of the purchase price + VAT + 127.

Your solicitor will determine the nature of the title to your property. The costs incurred will depend on whether the title is held in the Land Registry or the Registry of Deeds.

Searches - There will also be a fee for searches your solicitor may carry out in relation to the home you are buying. Searches are undertaken to ensure that there are no outstanding charges on the property.

A structural survey is a detailed and comprehensive report which will involve direct contact between the purchaser of the property and the surveyor. The survey is carried out for the sole benefit of the purchaser and may include information which was irrelevant to the mortgage valuation. The structural survey assesses the condition of the property. It can identify defects and problems which would not be evident fro( i ) Mortgage Interest Relief

Owner-Occupiers and First-time Buyers:
Tax relief is available for mortgage interest paid, subject to certain limits. For the tax year ending 31 December 2003, the maximum available relief for a single person who is not a first time buyer is €2,540 and for a married or widowed person, €5,080. Where it is their first purchase, these figures are increased to €4,000 for a single person and e 8,000 for married couples or a widower. These increased limits apply for the first seven years, thereafter the amounts fall back to €2,540 and €5,080 respectively.

The relief given is always at the standard rate which is 20% for the tax year 2003. Where the interest actually paid in a tax year is below the limits quoted above, the relief is restricted to the actual interest paid.

From 1 January 2003, mortgage interest relief is granted at source. This means that the relief will now be granted by the bank / lending institute involved and will no longer be included in your tax free allowance certificate or your annual income tax return. Thus, an individual's monthly mortgage payments should be reduced by the tax relief available. However, the onus is on the taxpayer to contact their bank / lending institute to ensure that they have all relevant particulars of the borrower so as to enable them to reduce their mortgage by the relevant sum.

For the tax year to 31 December 2003, a married couple who are first time buyers will get mortgage interest relief equating to a maximum tax saving of €133.33 (€66.66 for a single person) per month, assuming the annual interest paid by the couple exceeds €8,000.
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Investors:
With respect to investors, interest relief on monies borrowed to purchase or improve rented residential properties has been restored by the Minister for Finance and can be set off against rental income for the same period. This relief had originally been withdrawn following the 1998 "Bacon Report".
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