INSIGHTS | PRIVATE CLIENT | BY MICHELLE MCARDLE
With housing stock in short supply and the cost of home renovations consistently increasing, it has become difficult for purchasers to fund both the purchase of a property and the renovations it may need to bring it up to modern standards. The introduction of the Local Authority Purchase and Renovation Loan allows the Local Authority for the first time to lend funds for both the purchase and renovation of properties.
What is it?
This is a new local authority loan which is being introduced to fund the purchase and renovation of certain properties.
Am I eligible?
This scheme is open to first time buyers or “fresh start” purchasers (i.e. people who are divorced or separated and have no interest in the family home, or who have undergone personal insolvency or bankruptcy arrangement or proceedings). You will need to meet the existing local authority mortgage lending eligibility criteria, which has income limits. It is also necessary that your tax affairs are in order to avail of the loan, including that Local Property Tax is paid up to date.
What properties are eligible?
As the Local Authority Purchase and Renovation Loan acts as a bridging loan while the works are carried out, with the renovation portion being repaid once the Vacant Property Refurbishment Grant is paid, it is essential that the property is eligible for the Vacant Property Refurbishment Grant.
The basic requirements are that the property needs to have been built prior to 2008 and be vacant for 2 years or more, and not purposely or unreasonably left vacant. The condition of the property then needs to be assessed to decide if the proposed project is viable for the scheme, given its value and the works that would be necessary.
Funds
The Local Authority will carry out a cost assessment of the work required and this will form the basis of the loan. The value at the end of the renovation works cannot exceed the existing Local Authority Home Loan price and loan limits – in Dublin for example, the limit is €360,000.
One key consideration is that the owner will need to make up any shortfall between the loan amount and the renovations cost. You may be eligible for an SEAI grant on top of the loan if the works will improve the energy efficiency of the building.
The Local Authority Purchase and Renovation Loan, as it comes on-stream in the coming weeks, is a significant expansion of the existing local authority loan structure and has the potential to bring a significant number of vacant and/or derelict properties back into use.
How we can help
If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Michelle McArdle in our Real Estate Department on [email protected] / +353 (0)1 440 8313.
This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.