The BREXIT escape – buying a property in Ireland

I have been receiving an increased flow of enquires from UK companies and UK citizens that want to move to Ireland to avoid BREXIT. I thought it was worthwhile writing about one of the main sources of questions I receive, that is, buying a property in Ireland.

There has always been a flow of UK Expats moving to Ireland often to retire or returning emigrants from the UK. BREXIT has created a new category of individuals and companies that want to live or have access to the EU. A trend that is only being.

Firstly, I asked James Butler Head of Country Homes, Farms & Estates at Savills about the current conditions of the Irish property market. He explained that there is “still value in the Irish market with prices still rising outside Dublin but prices are beginning to plateau in Dublin. Valuations in Dublin are underpinned by strong rental yields.”

He added that “Ireland is a good place to buy property for UK citizens as it is convenient with similar rules and regulation. You can buy a lovely house in Ireland for €800,000 that a similar property in the UK home counties would cost you €2.5m”.

Jane Florides a partner and co-founder at Kennelly Tax advisers adds that the stamp duty rate is similar in both countries unless you are buying multiple properties in the UK which has a higher stamp duty rate for second properties”. She added that “when buying assets in Ireland it is important to understand your tax status as your residency will determine your ongoing tax liability. Also, how you structure the purchase becomes relevant if you are non-resident and buying for the purpose of an investment.”

Given the strong appreciation of property prices in the UK in recent years, UK Expatriates are often cash buyers but if you require a mortgage your options depend on your circumstances.

Generally, if you move jobs from the UK to Ireland you will require 6 months proof of income for an Irish financial institution, but some will waive the waiting period if there is no probationary period.

Alternatively, if you are buying from the UK and relying on your UK income to obtain an Irish mortgage there are less options available to you. According to Gerry Hiney, Managing Director of Park Financial Planning “the introduction of the EU Mortgage Credit Directive in 2016 has substantially reduced the number of providers offering mortgages to overseas buyers. The directive created additional compliance and risks for lenders that many have chosen to avoid. Currently, there are now only 3 lenders in the market.”

“In addition, for those lenders the loan is treated as a commercial loan with higher interest rates, currently between 4.50% and 5.50%. It also has increased legal, admin and deposit requirements. “

He noted that holiday home purchase by overseas buyers are becoming more popular as the mortgage is treated as a home loan with lower interest rates and lower legal fees.

Alternatively, if purchasing from overseas, you may wish to consider obtaining a mortgage from a UK provider which may provide wider lending options but will be subject to currency risk.

One of the challenges UK Expats are facing is that their savings are in sterling, but they are buying a property in a foreign currency. BREXIT has significantly reduced the value of sterling against the euro (circa 20%) in last 3 years.  According to James Butler, “one strategy we have seen is clients minimising the capital they put towards the purchase of the property and using an Irish euro mortgage to fund the balance. In the event of the recovery in the value of sterling they can convert their savings to euro and reduce or settle the mortgage.” The drawback to this option is that you are relying on unpredictable currency markets that may not normalise as you hoped for.

While it is difficult if not impossible to predict currency markets it is possible to save thousands on FX rates by using specialist FX companies like MoneyCorp and OFX instead of your bank. They have saved clients substantial amounts by offering more competitive rates.

In short it is very much possible to buy a property in Ireland if you are a UK Expat living in Ireland or from overseas but there are different approaches required depending on your needs.

Author; Frank Mulcahy Principal & Personal Financial Manager at Trinity Financial Management

At TFM we work with Expatriates to help them navigate their complex financial affairs when abroad. Contact me on frank@trinityfinancial.ie to discuss your needs.

This article is provided on the strict understanding that it is for the reader’s general consideration only. Accordingly, no action must be taken or refrained from based on its contests alone.

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