Be Wary of Property Bargains
This Friday, a ghost estate in Castlemaine, Co Kerry, goes up for grabs at Allsop Space’s Irish auction with a reserve price of €50,000. The estate, Annagh Banks, includes 14 unfinished houses.
If you’re holidaying around Ireland this summer, check the window of the local estate agent and chances are you will find properties for sale for a fraction of what they sold for five years ago. You’re also likely to come across half-built houses for sale — by builders who have run out of the money they need to finish properties. Also you’ll find houses that have been for up sale for some time.
Many such properties are owned by people who’ve run into financial difficulties.
Although the prices of distressed properties make them tempting , rushing in blindly could turn that “bargain” property of yours into a full-blown financial nightmare.
You can get a list of all the property on Nama’s books on its website (www.nama.ie). Nama, however, does not own or directly sell these properties. If interested in a Nama property, it is best to contact the debtor who owns that property first — or the receiver, if the property securing the debtor’s loans is under the control of a receiver.
Buying at auction
About half of the properties up for sale at Allsop Irish auctions are sold by receivers. Allsop Space’s auction director Robert Hoban says it is important to get all the legal homework done before an auction.
“If you’re considering buying a property at this Friday’s Allsop auction, get a solicitor to review the property title and contract before the auction,” said Hoban. You can download these documents from the Allsop website (www.allsop.co.uk).
In particular, look out for any planning conditions attached to the property you’re interested in.
“You could buy a ghost estate at auction and then go to the site and find that planning permission has not been complied with,” Stafford points out.
“For example, a creche might have to be built on the ghost estate to comply with planning permission — if this creche has not been built, you will have to build it yourself and you could lose money as a result.”
Planning is also something you should be wary of if you come across a distressed property in a scenic rural or Gaeltacht area. Check if the seller agreed to section 47 when getting planning permission for the property.
If this is the case, you won’t be able to buy the property unless you are from, or have family, in the area, according to David O’Donnell, partner with McGrath O’Donnell & Associates. You would also have to live in the property as your main private residence for five years.
If buying property from someone who has been in financial difficulty for some time, there could be an outstanding tax bill on the property — which you will have to pay (along with any penalties incurred) unless it is settled before you buy it.
Check if any holiday home tax (also known as the non-principal private residence tax) is owed on the property — and if the household charge has been paid.