Practice Area » Buying & Selling Property
Buying & Selling Property
Conveyancing is the process where title to property and land is passed from Vendor to Purchaser. There is two forms of title to land in Ireland.
Title registered in the Registry of Deeds is the older form of title and generally relates to urban properties only, with a few notable exceptions - particularly school and church properties in rural areas. The title comprises a bundle of deeds showing the history of the occupation of the property of at least a forty year period, ending with the Vendor. It is necessary to trace the history of the ownership of the property and this requires a far more detailed and time consuming investigation than is the case when one is dealing with registered title. The Registry of Deeds system determines priorities of estates and interests in the land but it does not guarantee ownership which can only be proven by a detailed title investigation.
Title registered in the Land Registry is relatively ‘recent’ having been created by Gladstone in 1870 with the passing of the first Irish Land Acts. It originally related to rural properties only, as lands acquired by tenant farmers under the Land Acts, were registered. With the massive expansion of urban areas into the countryside, more and more urban property is registered in the Land Registry. It comprises a Register, maintained in Dublin by a Government agency, giving a description of the property, showing the current owner of property and any mortgages or burdens affecting the property and most importantly, providing an accurate map.
However, the title of the property, frequently, is the least difficult part of a transaction. Having greatly simplified title to property by creating the Land Registry, successive legislation on areas like Planning, Building Regulations, Stamp Duty, exemption from Stamp Duty, Grants, Capital Gains Tax, Residential Property Tax (which, although abolished is still relevant), Family Law Acts, Licencing, Bank and Building Society requirements has made purchases vastly more complicated.
Depending on whether you are a seller or purchaser of property, difference cost considerations apply.
Topics covered include:-
Seller
As a seller, once a decision to sell the property is made, a number of practical steps need to be taken. The first should be to decide whether or not to retain an Auctioneer. It is generally to be recommended that an Auctioneer be retained if the highest price is to be obtained. It is not to say that a property can not be sold privately by the individual, but it will require a considerable amount of time and effort by the seller, without having any real way of knowing whether the best price has in fact been obtained.
In appointing an Auctioneer, consideration need first be given to whether or not one Agent should be appointed or many. Possibly the best solution is to grant the property to an Auctioneer on a sole agency basis for a specified limited period of time and thereafter, if unsold, to be distributed to other Auctioneers.
Having appointed an Auctioneer, one must also decide whether to sell by public auction or by private treaty. Generally this decision is entirely dependent on the type of property for sale and the climate at the time the property is put on the market. Most Auctioneers opt for a sale by private treaty initially with an option to review that decision, depending on circumstances.
In rural areas auctioneers’ fees are traditionally 3½% plus V.A.T. in addition to advertising expenses. Whereas in urban areas, a similar transaction will incur a fee of 2½% plus V.A.T. in addition to advertising expenses. With the huge upsurge in property prices and increased competition, Auctioneers’ fees are now open to negotiation and should be agreed before a retainer is granted to an Auctioneer. It is difficult, if not impossible, to negotiate a fee downwards after a property has been sold.
Legal Fees
Solicitors’ Bills can be divided into two parts:-
- Professional Fees.
This is the fee payable to the Solicitor for the service rendered and are set by law. They work out at approximately 1% plus €150.00. This is liable to V.A.T. at 21%. However, in the current competitive climate, they can be open to negotiation. - Outlays.
These are items of expense incurred by the Solicitor on your behalf. Generally, if the property involves a dwelling house, there is a Mortgage payable to a Lending Institution. There is usually a fee for obtaining the Title Deeds from the Lending Institution of approximately €75.00. The Lending Institution will also charge for releasing the Mortgage from the title of the property when the sale is complete and this also costs in the region of €75.00. Obtaining an up to date map and Folio and up to date planning documents will cost in the region of €75.00. Therefore, the outlays will generally not exceed €190.00 to €250.00.
Purchaser
The costs incurred by a purchaser can be divided in two:-- Professional Fees.
This is prescribed by law but is generally 1% plus €130 (if no Mortgage is involved) or 1½% if the purchase is tied with a Mortgage. This is liable to V.A.T. at 21%. - Outlays.
The most important consideration in any purchase of a property is whether or not Stamp Duty applies. The Revenue Commissioners have in the past four years gone from a single regime of Stamp Duty to four separate regimes, the most recent being on or after the 1st May, 2003. The regime applicable to a particular transaction will especially dominate the outlays incurred by any purchaser in transaction as stamp duty is often the single largest item of outlay in a purchase. The categories are as follows:-
- First time buyersof a property which will be used for residential purposes as the purchasers’ residence.
- Who is a First Time Buyer ?
A first time buyer is a person, (or where there is more than one buyer each of such persons):
- who has not on any previous occasion, either individually or jointly, purchased or built on his/her own behalf a house or apartment;
- in Ireland or abroad;
- where the property purchased is occupied by the purchaser, or a person on his behalf, as his/her only or principal place of residence,
- and where no rent is derived from the property for five years after completion of the current purchase.
Rates of stamp duty for Conveyances on Sale or Lease Premiums of Residential Property (10th April, 2005)
| Aggregate Consideration | FTB Rate After 02/12/04 | Full Rate |
| Less than €127,000 | Exempt | Exempt |
| €127,001 - €190,500 | Exempt | 3% |
| €190,501 - €254,000 | Exempt | 4% |
| €254,001 - €317,500 | Exempt | 5% |
| €317,501 - €381,000 | 3% | 6% |
| €381,001 - €635,000 | 6% | 7.5% |
| Over €635,000 | 9% | 9% |
N.B. Where applicable VAT should be excluded from the chargeable consideration.
The Rates above apply to the entire consideration or value of the property e.g. :
(a) Where the consideration for a property is €350,000 (and the purchaser is not a first time buyer) the stamp duty liability would be €21,000(€350,000 at 6%).
(b) Where the consideration for a property is €350,000 and the purchaser IS a first time buyer (where the deed of conveyance is executed on or after 2 December 2004) the stamp duty liability would be €10,500 (€350,000 at 3%).
There is a limited extension of this rate to a person who is acquiring a second home, having divorced or is separated, provided certain criteria are met. In addition to the Stamp Duties, if the house purchased by a first time purchaser is of a grant size and has a Floor Area Certificate, then it is entirely exempt from stamp duty, regardless of the price, and the purchaser will also be entitled to a grant from the Department of the Environment.
- Non residential property this covers sites and commercial property.
Where a conveyance/lease is exempt from stamp duty, the instrument need only be presented for PD stamping.
Rates of stamp duty for Conveyances on Sale or Lease Premiums executed on
or after 4th December 2002 of Non-Residential Property
| Aggregate Consideration | FTB Rate After 02/12/04 |
|---|---|
| Not Exceeding €10,000 | Exempt |
| €10,001 - €20,000 | 1% |
| €20,001 - €30,000 | 2% |
| €30,001 - €40,000 | 3% |
| €40,001 - €70,000 | 4% |
| €70,001 - €80,000 | 5% |
| €80,001 - €100,000 | 6% |
| €100,001 - €120,000 | 7% |
| €120,001 - €150,000 | 8% |
| Over €150,000 | 9% |
N.B. Where applicable VAT should be excluded from the chargeable consideration.
In addition to Stamp Duty on the Deed of Transfer, the purchasers generally will also be obtaining a Mortgage. Stamp Duty is paid on the Mortgage at the rate of €1.00 per €1,000.00 plus €12.50.
Once documentation in relation to the house and Mortgage is stamped, it must be lodged in the Land Registry for registration. Land Registry fees are also payable. If the transaction involves creating a new Folio number for the Purchaser, the Land Registry will charge an additional €60.00 and €131.00 for the Mortgage.
Land Registry Fees’
| Consideration/Premium | Rate |
|---|---|
| €1 - €13,000 | €125 |
| €13,001 - €26,000 | €190 |
| €26,001 - €51,000 | €250 |
| €51,001 - €255,000 | €375 |
| €255,001 - €385,000 | €500 |
| €385,001 - upwards | €625 |
| (a) | Voluntary Transfer | €85 |
| (b) | Opening of a new Folio on subdivision of parent folio | €60 |
| (c) | Charge | €125 |
| (d) | Transfer Order | €85 |
| (e) | Registration of a Lease as a Burden and opening New Leasehold Folio | €85 |
| (f) | Transmission on Death | €85 |
| (g) | Section 49 Application | €85 |
| (h) | All other Registrations | €25 |
| First Registration | €85 |
A typical transaction for €150,000.00 for a first time purchaser or a second time purchaser will result in the following sample outlays.
Sample Bill of Costs - First Time Purchaser
| Stamp Duty | Exempt |
| Purchase Transfer Land Registry fees | €375 |
| Map/Land Certificate | €50 |
| Law Searchers fees | €95 |
| Mortgage LR Fees | €125 |
| New Folio LR fees | €60 |
| Certificate of Charge | €6 |
| Total | €711 |
The Land Registry fees referred to, cover all types of transactions and some of the charges may not apply in some circumstances, for example the voluntary transfer fees relates to a transfer of a site or house from a relative, free of charge, and do not apply to a purchase. The Law Searchers Fees referred to are searches undertaken on the completion of sale in the Land Registry, Judgments Office and the Bankruptcy Office which are a requirement of the Mortgage.
Not included in the above are Surveyors’ Fees. On the acquisition of any property, the Purchaser should retain the services of an Engineer, and if obtaining a Mortgage, must obtain the services of an Engineer to:-
- Verify the boundaries on the ground with the Title Deeds.
- Survey the structure of the property.
The selection of an Engineer is a matter for the Purchaser but any Engineer selected should have Professional Indemnity Insurance. Typical Surveyors’ Fees range from €300.00 to €400.00 plus V.A.T for a simple physical survey for the Lending Institution. This can increase from €750 to €1,000 plus V.A.T for a detailed structural survey.
It is now a statutory requirement to have mortgage protection - a policy that will pay off any outstanding mortgage at the time of death. This is the minimum requirement. Purchasers are strongly advised to take out an ordinary life policy that is indexed linked to go with inflation. The cost at the start is the same as a mortgage protection policy and provides greater security to the family.
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