Real Estate
RESIDENTIAL/PRS DEVELOPMENTS
Update on Measures to Restrict Bulk Purchasing of Homes
The Minister for Housing, Local Government and Heritage, Darragh O’Brien, has published a progress update on the planning measures introduced two years ago to increase home ownership and restrict the practice of the bulk purchasing of homes. It shows that 31,000 homes received planning permission with conditions restricting the bulk buying or multiple sales to a single purchaser in the two-year period between May 2021 and May 2023.
Government Consultation on PRS
The Government is consulting until 26 July 2023 on the review of the private rental sector, looking at topics which include:
- composition of the sector (including cost rental impacts and pension policy implications),
- policy of price controls,
- subsidisation of households,
- standards, and
- supply and investment, institutional investment, subsidising investors and student housing.
New Pilot Scheme for Grants to Prepare Vacant Farmhouses for Refurbishment
The Department of Housing is introducing a new pilot scheme to provide grants for expert conservation advice to private owners of vacant farmhouses who wish to avail of the Vacant Property Refurbishment Grant, which provides a grant of up to €50,000 to renovate a vacant property.
“The Central Bank’s attention is focused on ensuring that borrowers who are eligible for switching are supported in doing so, and that firms (banks and non-banks) have sufficient operational capacity to manage the flow of switchers.”
RESIDENTIAL MORTGAGE LENDING
Residential Mortgage Arrears
The Central Bank’s latest residential mortgage arrears statistics to the end of Q1 2023 are available. Key points include:
1. Overall picture:
- PDH accounts in arrears: 48,760 (up 3%). The Central Bank attributes a “significant share of this increase…to a reclassification effect” from Q1 loan sales as lenders differ in how they classify accounts in up to 30 days’ arrears. The number of accounts in > 365 days arrears continues to decline.
- BTL accounts in arrears: 10,454 (an increase of 113 accounts quarter-on-quarter).
2. > 90 days’ arrears:
- PDH: 3.1% (22,015) of all PDH accounts are in > 90 days’ arrears – lowest number since March 2010.
- BTLs: 11% (7,848) of all BTL accounts are in > 90 days’ arrears (a very slight increase quarter-on-quarter).
3. Favoured restructuring arrangements:
- PDH: split mortgages are now the most common option, followed by arrears capitalisation and term extension.
- BTLs: term extensions and arrears capitalisations.
Conditions in Residential Loan Offers
The Law Society Conveyancing Committee issued a practice note reminding borrowers’ solicitors that where title matters are covered by the Residential Mortgage Lending Certificate of Title without qualification, lenders should not seek separate confirmation of the matters prior to loan drawdown (or at all).
Interest Rates, Mortgage Switching etc.
The Central Bank published its response to Deputy Doherty in relation to queries on mortgages held by non-bank non-lenders on 4 July 2023, reiterating the Central Bank’s work to date, covered in recent industry letters. The Central Bank’s attention is focused on ensuring that borrowers who are eligible for switching are supported in doing so, and that firms (banks and non-banks) have sufficient operational capacity to manage the flow of switchers.
The Central Bank acknowledged in the letter that there will always be borrowers who cannot switch for credit reasons, so they will also focus on supports for borrowers in financial difficulties. In particular, it observed that “more can be done by the industry to enhance the information available to borrowers to navigate the rising interest rate landscape and the options and support available to them.” It also confirmed that it has “not seen any evidence of discrimination against switching applicants coming from [non-bank mortgage lenders]”.
On policy considerations and weighted interest rates, the information repeats the content of a recent June 2023 Central Bank letter to the Minister.
Additional retail interest rate statistics highlight that (at the end of Q1):
· Banks accounted for c.80% of the total outstanding value of home loans. Non-bank lenders (NBLs) account for 8%, while the share of non-banks that do not lend had grown to 13%.
· While the range of interest rates charged by banks and NBLs tightened, it has widened for non-banks that do not lend since late 2022.
· Non-banks that do not lend had a higher concentration of home loans at both the lower and upper end of the interest rate spectrum.
· 90% of bank-held home loans had an interest rate of ≤ 4.4%. For NBLs, 90% of loans are paying ≤ 3.5%. 90% of loans held by non-banks that do not lend have an interest rate of ≤6.5%.
· While 20% of non-lending non-bank home loans had an interest rate of ≥6%, <1% of loans had a rate of ≥8%.
PROPERTY TAX
Properties Changing Ownership with Outstanding LPT Liability
The Law Society Conveyancing Committee issued a practice note reminding solicitors that outstanding LPT, interest and penalties must be paid on the sale of residential property whether or not the purchase price represents full market value.
Non-Resident Landlords Tightening of Tax Rules
Revenue launched a new system aimed at tightening the tax rules for up to 20,000 private landlords based overseas. The new Non-resident Landlord Witholding Tax (NLWT) platform will require tenants or collection agents to withhold a portion of rent from their landlord each month and send it directly to Revenue through the portal. The rules do not apply to rented property owned by investment funds.
New Stamp Duty Reliefs for Residential Property
Measures for the repayment of stamp duty where certain qualifying conditions are met take effect on 1 June 2023.
The first measure provides for a full repayment of stamp duty paid on the acquisition of residential property where the property is sold, within 12 months of its acquisition, for the purposes of an affordable dwelling purchase arrangement under the Affordable Housing Act 2021.
The second measure provides for a partial repayment of stamp duty paid at the higher rate of 10% (the rate of duty on multiple purchases of residential properties introduced as part of the Government’s response to the bulk-purchasing of residential properties by commercial institutional investors pursuant to Section 31E of the Stamp Duties Consolidation Act 1999) in respect of residential properties that are:
- let to a housing authority or approved housing body for social housing purposes,
- designated as a cost rental dwelling under the Affordable Housing Act 2021,
- registered as a designated centre under the Health Act 2007, which provides community care for those with special needs, or
- registered as children’s residential centre under the Child Care Act 1991, which provides homes for children in care.
INFRASTRUCTURE DEVELOPMENT
High Court Reinforces Powers of Irish Water over Public Land
In Dowdall & Anor v O’Caoimh & Ors (Approved) [2023] IEHC 257, the High Court refused to grant orders for prohibitory and mandatory injunctions in relation to the defendant’s installation of wastewater pipes on the plaintiff’s land. The Court found that there was no basis for granting the orders, given that the trespass had ceased, and the works were carried out on public land in accordance with section 41 of the Water Services Act 2009. The case is a good reminder of what a landowner may or may not object to in light of statutory rights granted to Uisce Éireann/local authorities.