Welcome to the July edition of your Privateseller.ie newsletter

Its been a strange and stormy summer so far this year, and not just in terms of the weather! We seem to have come under a barrage of facts and figures in relation to the property market over the last few weeks. Mortgage interest rates, as always, attract the most attention. The EBS Building Society and DKM Economic Consultants Affordability Index, show that, first time buyer couples nationally are spending, on average, 27% of their income on their mortgage repayments. In Dublin, this figure is closer to 32%. These figures compare to 24% nationwide and 29% in the Dublin area this time last year.  The Index, which will be published quarterly, will track levels of affordability for first time buyers and will allow buyers and lenders to monitor the level of debt that first time home buyers across the country are taking on.

According to the PermanentTSB /ESRI House Price Index, the average price paid for a house in Dublin and outside Dublin in April 2006 was €388,466 and €252,030 respectively. The equivalent prices at the start of 2006 were €368,576 and €240,201. Average net monthly repayments are in excess of €1,300 for first-time buyer couples across Ireland and almost €1,700 for couples buying in Dublin.  

Trends over the past ten years show a significant deterioration in housing affordability for first-time buyer couples. First time buyers represent a large part of the mortgage market and are expected to contribute €8.5 billion to the market this year.  It is expected that 47,000 first time buyers will take out a mortgage this year the average price nationally at the moment at €292k and €388k in Dublin.

Research has shown that 51% of all first time buyers agree that, having what they consider to be a significant sized mortgage, restricts them in the lifestyle they can live. Future affordability should be a key factor in the choice of a mortgage and lenders need to take a responsible approach to affordability and encourage consumers to consider the impact of possible interest rate rises.

In an article entitled'Muslim Mortgages' we see that as our immigrant population increases, so does their property purchasing power. A fresh approach has been requested from one of our leading banks to assist Muslims to overcome obstacles to taking up standard mortgages.

This month we take a look at the 'Six Golden Choice' houseplants for your home or office. Hopefully it will offer some little solace to those of us who have not been able to enjoy our outdoor plants as much as we would wish recently! The featured plants really are practically bomb proof, and we would be very interested in hearing from anyone who has not managed to keep even one of this selection alive!

John Lowe 'Gets it Off' [according to plan of course], and we have some practical advice for Deidre who had a legal query about the new Finance Bill.

Until August rushes in upon us, lets hope for an improvement in the weather. Privateseller.ie welcomes any feedback or ideas for features you may have for future editions of our newsletter. If you have a legal question you would like to see featured email medbh.gillard@privateseller.ie Particularly, in response to several questions we have had recently about the moving process, we would like to hear whether readers, having sold property, prefer to take your furniture with you to the new address? Sell it on with the house, or swap it?

We look forward to hearing from you. Enjoy the read!

Muslim Mortgages

Muslims represent a significant portion of the population and their presence is being felt in the property market. It is against Islamic law to pay or receive interest. This has been a problem for Muslims living in non Muslim countries. Recently, a leading Irish Bank has been asked to extend to this jurisdiction, a special "Islamic mortgage" package, which it already provides for the Muslim population in the UK. Read the full article on Islamic Mortgages'         

The Money Doctor - Making money, getting it off!

Dear John, I want to build a lucrative property empire, can I achieve this by buying off-plan. Ciaran, Enniscrone.

Dear Ciaran, You may have heard stories of the fantastic gains to be made buying off-plan. All you have to do is put down a small deposit on a yet-to-be-built property – and then ‘flip it’ – flipping being the process of selling it on before you have to complete.   Read full article on flipping     

Legal Question: The new finance bill

Q - I am a first time buyer. I have a legal seperation, and I would like to know if I am exempt from stamp duty under the new finance bill? - Deidre, Tuam.

A - Dear Deidre, It's after much debate and a little turbulence in the property market that the Finance No. 2 Bill 2007 came into force on Monday 9th July. Essentially the existing stamp duty regime for first time buyers is being overhauled.

Stamp duty will be abolished for all first time buyers irrespective of the size of the property or whether the property is new or second hand. Also, the stamp duty exemption will apply to first time buyers irrespective of what price was paid for the property. This will be applied retrospectively to deeds executed on or after the 31st March 2007. 

The changes to stamp duty apply to first time buyers only and do not apply to any other category of purchaser for example investors. The bill does not address the issue of stamp duty for those who wish to downsize or  upgrade.

The concept of a first time buyer still remains the same however, and it is important that you fall within the three pronged definition of a first time buyer:

• A first time buyer (or where there is more than one buyer, each of such persons) must not on any previous occasion; either individually or jointly have purchased or built on their own behalf a residence (in Ireland or abroad) and 

• The property purchased must be occupied by the purchaser, or a person on his behalf, as his/her only and principal place of residence.

• No rent (other than rent under the rent a room scheme) can be derived from the property for a period of five years after the date of the current purchase.

The revenue operates a clawback mechanism in respect of the relief given. This clawback of stamp duty applies if rent is earned from the letting of the residence (other than the rent a room scheme). The clawback amounts to the difference between the higher stamp duty rates and the duty paid. The clawback will become payable on the date when rent was first received.

Under the previous system of stamp duty first time buyers of a new property were exempt from stamp duty where the floor area measurement was under 125 sq meters (only where a floor area certificate was issued by the Department of the Environment, Heritage and Local Government.) Previously the situation was that if no floor area certificate existed for the new residence, the full rate of duty applied. First time buyers of second hand residences were liable to pay stamp duty on a purchase price above €317,500.

The new bill changes this condition so that all residential properties will be exempt from stamp duty for first time buyers.

First time buyer relief also applies to spouses who are the subject of a decree of judicial separation, a deed of separation,  a decree of divorce  or a decree of nullity. However certain conditions must be satisfied in relation to the marital home and your solicitor will be able to advise you about this. People who have purchased a property that will be their main private home after March 31st 2007 should contact their Solicitor for further advice. Those buyers are entitled to a repayment of stamp duty already paid.