The commercial property market should stabilise in 2012, according to property consultants CBRE.

In its 2012 outlook published this morning, CBRE says it expects to see a notable increase in transaction volumes in all sectors of the market in 2012, though values will only stabilise once once there is sufficient transactional evidence available to provide clarity on pricing. It also notes that debt funding is going to remain severely constrained.

According to CBRE, rents for prime buildings will eventually stabilise in 2012 although rents for secondary properties will continue to decline as occupiers continue to take advantage of the ability to negotiate favourable terms and conditions in an oversupplied market.

The decline in capital values – a feature of the Irish market since 2008 – will come to and end over the course of 2012, according to CBRE. Although yields for prime properties are expected to strengthen as transactional evidence materialises, yields on secondary properties will continue to come under pressure as the year progresses, CBRE predicts.

The property agency also expects a pick-up in the residential property market this year, predicting an increase in the sale of residential investment portfolios over the course of the next 12 months. However, it expects an increase in “functionally obsolete accommodation” in all sectors of the market. “Without a functioning debt market, this accommodation is set to become increasingly unfit for purpose and eventually won’t comply with health and safety and other legislative directives,” it notes.

While welcoming the decision not to restrict Section 23 relief in the Budget, landlords are feeling besieged by the challenges facing them, writes FIONA REDDAN

LANDLORDS ACROSS the country breathed a sigh of relief last week when the Government announced that it was not going to follow through with a proposal to restrict Section 23 relief.

However, while this move may be welcome, landlords are feeling besieged by the scale of the challenges facing them.

“There’s a very, very sizeable problem out there in the buy-to-let market,” notes Trevor Grant of Mortgage Negotiators, adding that for many of those looking for some relief in last week’s Budget, “they actually just got another bill”.

While owners of Section 23 properties will still be able to shelter rental income from their property portfolio, a surcharge of 5 per cent will apply to property investors with income of more than €100,000.

“We’ll live with that,” says Stephen Faughnan, chairman of the Irish Property Owners’ Association, but he adds that the new €100 household charge is a “serious one for us”.

As a result of this, investors will see an effective 50 per cent increase in the €200 second home charge – both of which are not tax deductible.

And for investors who have yet to pay the second property charge, which was first introduced in 2009, they could be facing a bill of some € 1,600 once all the late charges are factored in.

The scale of this charge means that some landlords will now look to levy it on their tenants, notes Faughnan, by introducing a € 25 monthly service charge,

Allied to this is the increase in capital gains tax to 30 per cent in the Budget; along with other costs such as BER certification; certification with the Private Residential Tenancies Board; the reduction in interest relief on mortgages from 100 per cent to 75 per cent; and the proposed review of rent supplements which will take place in 2012.

According to Faughnan, this is likely to lead to reductions in how much the government will pay to supplement rent, which will place further downward pressure on returns.

The maximum monthly rent allowable is currently € 1,100 in Dublin, € 800 in Cork and € 550 in Monaghan for example.

And this is all against a background of ongoing uncertainty in the euro zone and the future viability of the euro currency.

The difficulties are leading to a new class, “the reluctant landlord”, a remnant of the boom years. These are the people who were swept away in the boom, sometimes letting their first property, often a small house or apartment, while they traded up to a larger property, or those who bought a property to supplement their pension or provide a home for their children in college.

The category also includes inexperienced landlords who quickly built up an extensive property portfolio thanks to the easy supply of credit, believing that prices could only go one way – up.

While it is often thought that landlords are experienced property investors with swathes of houses and apartments in their ownership, this changed during the boom years, as borne out by statistics from the Revenue Commissioners.

In 2009, the most recent year available, almost 90,000 PAYE workers, which would include guards, civil servants, accountants etc, filed tax returns on rental income for example. Moreover, according to the Revenue stats, in 2009, 65 per cent of taxpayers who returned rental income did so for one property; a further 30 per cent declared between two and five properties; 4 per cent returned between six and nine properties, while just 1 per cent declared more than 10 properties.

For many of these reluctant landlords, the property dream has not just turned sour but is threatening to bring them into serious financial difficulties.

“I’ve probably spoken to over 100 customers in the last three months and 90 per cent of those, if they had their time again, wouldn’t touch property, notes Grant.

But for those in difficulties, what are the options?

Grant says banks are tending to be “fairly reasonable” when it comes to working out problems, but that there is an “enormous delay” in getting decisions made. While much has been made of banks retracting interest-only offers, he says that it is still an option.

“If the numbers suggest that interest-only works, then the banks are willing to apply six- to 24-month extensions,” he says.

Of course, there is also the option of selling up, taking a hit and simply getting out. “You can get out at a price – but it’s not very attractive,” notes Faughnan.

And for some, selling hasn’t really been an option until now, given the scale of negative equity many people find themselves in.

However, according to Grant, banks are now starting to consider short sales, whereby you can sell your negative equity property, and repay the oustanding sum over an agreed period of time.

If you are left with a small balance when the property is sold, this could be a viable option, but if negative equity is too great it’s not generally feasible.

And, of course, it is dependent on the property selling.

For some beleagured landlords, going bankrupt might be an option, depending on whether or not property loans are to be included in the forthcoming insolvency legislation. But, as Grant points out, it’s a very big decision to make.

“It’s great to say, ‘I’ll go insolvent and in five years time the problem will have gone away’, but it’s a big personal step to take and most people will want to avoid it.”

Faughnan. however, asserts that landlords are going to consider it. “The viability of the sector is up for question at the moment. Certainly for a lot of people at the moment, insolvency will be a consideration.”

But, while the challenges may be significant for landlords who got into the business during the boom years, given the decline in values – of more than 50 per cent in some cases – for those with some cash in the bank, might it be a case now of fortune favouring the brave?

After all, according to the most recent Daft report of the market, rents are on the rise again, while interest rates are at historically low levels.

Grant, for one, thinks it could be a viable proposition. Given the value of properties it makes a lot of sense. You have to look at what the yields are likely to be, and whether or not you can cover the mortgage if you have void periods,” he advises, but adds that investors who need financing will face challenges.

“The biggest problem is the availability of credit. It just isn’t there for investors.”

Faughnan, however, is less sanguine, and even the prospect of a capital gains tax holiday for investors who buy in the next two years, as announced in the Budget, is not enough of an incentive.

“You would need to very, very brave to do it,” he says, pointing out that there are too many uncertainties on the horizon, such as the introduction of a new property tax; how PRSI will be applied on rental income for PAYE workers, (either on all income or just profit from 2013); as well as talk that mortgage relief might be reduced further.

But for those ruing their boom-time decisions, Grant urges investors to take the long view.

“Property is a long-term play. Even if you bought in the good times and are now in trouble, you probably bought on the basis that you’d hold for 20-25 years. In 10 years, the world will be a completely different place.”

The Irish Times – Monday, October 10, 2011

PROPERTY: A PROPOSAL to consider a drastic cut in the commercial rate of stamp duty arising out of the Global Irish Economic Forum has been welcomed by the Society of Chartered Surveyors.

The Minister for Finance, Michael Noonan, said delegates to the forum had impressed upon him that Ireland’s rate of commercial stamp duty was not competitive.

He said Ireland’s rate of 6 per cent compares to 1 per cent in London. That meant that an American investor, for instance, investing in the Dublin market would have to devote a considerable proportion of his profit to paying stamp duty first.

Society vice-president Roland O’Connell said it would welcome plans to “investigate cuts to stamp duty on commercial properties which could stimulate foreign direct investment and create jobs”.

However, he said that the priority for Government should be ending the uncertainty around the possible retrospective banning of upward-only rent reviews, which he claimed was having a “detrimental effect” on the market.

Speaking before addressing a closed session of the forum, Mr Noonan pointed out the commercial property market in Ireland was controlled by Nama. He cautioned that it was only something that had arisen during discussions at the forum and it was not a given that it would be introduced.

“If we were thinking of changing that, now it is a good time because our take on stamp duty is so low anyway. It is always at the bottom of the market that you can change things,” he said.

Mr Noonan hoped that three or four big ideas could come out of the forum that would feed into a jobs initiative being launched next April by Minister for Enterprise Richard Bruton.

Aine Coffey Published: 5 June 2011 The Sunday Times

The coalition is considering axing the clause that keeps retail rents rising, but

landlord challenges could bring it down to earth

Ciaran Ruane will remember October 20, 2010 for a long time. It was the day Pulse Accessories, the family business started in 1992 in the back room of the Ruanes’ house, went into liquidation. When it closed, Pulse had a wholesale business and 27 stores selling jewellery, handbags and hair accessories — five opened in the peak expansionary period of 2007 — and employed 130 people.

“It was a tough day,” said Ruane.

According to him, Pulse’s lights started to dim in March 2008 when sales plummeted. “The first thing we did was look at other costs, because our view was that property costs were sacrosanct,” he said. “It was only in September 2008 that we started trying to negotiate with landlords.” Few would budge. “The best we were getting was a 12-month agreement on a payment basis, paying 20% less, but at the end you still owed the money. Sales were still decreasing and we tried everywhere. “There was the odd landlord who was reasonable and brought the rent down. Those that didn’t were mostly institutional landlords, blaming the banks. The banks were telling us to get rent cuts from our
landlords, so they were talking out of both sides of their mouths.” Brendan Investments Property Management, the Cork company whose shareholders include Eddie Hobbs, the consumer finance guru, bought Pulse from the liquidator in November 2010. Eighteen stores are now open for business, none paying the kind of rents Pulse was paying previously. “A handful of leases have been signed,” said Ruane. “Others have re-opened on short-term deals.”
Pulse is one of many retailers blaming their failure on what they say are disproportionately high rents in
today’s market. Some, such as Xtra-vision, the video chain, have taken the examinership route to shake
off onerous leases.
Struggling retailers have long campaigned against upward-only rent review (UORR) clauses, which
copperfasten a landlord’s right to hike rents, effectively removing a tenant’s right to seek a cut. Now, as
part of the programme for government, the coalition is mulling over legislation to abolish UORRs
retrospectively. The prospect has mobilised vested interests, from developers to institutional landlords and Nama. The developer community has begun accumulating war chests for legal battles against any new law. There
are rumblings of a constitutional challenge by institutional landlords. It’s a right royal headache for Alan Shatter, the justice minister, who has sought advice from the Office of the Attorney General on a magic legal pill strong enough to withstand challenges from all-comers.
THE retrospective abolition of UORRs would affect all commercial tenants, but retailers have hustled
hardest for change. Retailers tend to pay a higher percentage of their turnover as rent than other businesses. Many
expanded into pricey premises during the boom, in anticipation of a glorious never-ending national
shopping spree. It ended. Falling rents have since created opportunities for new market entrants and discount stores. Other retailers claim their problems have been exacerbated by new competitors on lower cost bases. Some
even say the abolition of upward-only rent clauses in new leases since February 28, 2010 has only made
things worse for them.
Larry Brennan, the chairman and director of retail at Savills Dublin Commercial, the estate agent,
accepts that some retailers have a problem because of falling turnover and high rents, but he also argues
that they signed up willingly for leases. “In 2004, 2005 and 2006, I didn’t have a shotgun in my
briefcase,” he said. “None of these people were battered into taking shops. People made decisions and, unfortunately, they were made on growth projections we know haven’t happened. These were clever businessmen who had
been around for a long time making decisions on their businesses.”

He points out that many tenants were given inducements such as fit-out costs and rent-free periods when signing leases. Retailers signed up because they were operating on super-charged profits, he argues. “I remember one retailer saying to me he could have put a pair of dirty wellies in the window and made a profit on them.” Another property source notes that retail tenants were pocketing millions of euros in key money during the boom from selling on leases to others. “A bandwagon has gathered pace that says jobs are on the line because greedy landlords are charging too much rent,” Stephen Vernon, chairman of the investment and development group Green Property, told The Sunday Times recently. “It is ridiculous.” Vernon believes the problem is correcting itself and that changing rules retrospectively is a ham-fisted approach that would put up a red flag for potential investors. “The loser will ultimately be the taxpayer, because the rents don’t go to the landlords, they go to the banks. Investments are cash swept, it goes to the state indirectly.”

Green Property has helped about 80% of its Irish small to medium-sized enterprise tenants in the past three years, he says. “In the case of the foreign tenants, it is less than 20%, because they don’t need it and haven’t asked for it.”

Retailers counter such arguments by claiming the boom created a false rental market. “We had a number of rent reviews back in 2007 at the height of the market,” said Colm Carroll, the managing director of Carroll’s, the Irish gift store chain. “They were determined against the highest rent, not the average rent. “If you had a mobile phone shop moving in, or a high street plc, they didn’t really care what the rent was, they just wanted the premises. It created a false market and the rents went through the roof, sometimes doubling or trebling.”

Keith Rogers, retail director of Ecco, the shoe shop chain, says rent in its shops here averages 18% of turnover, though in some locations it is well over 20%. “Across Europe, the best case scenario is Eastern European countries, where it is 8%. In Britain it is 12%.” Some retailers question the fairness of Nama taking over property loans at November 2009 property asset valuations, while tenants in those developments continue to pay peak-level rent. Cormac Tobin, managing director of the expanding Unicare pharmacy group, says his property team has sought a meeting with Nama to discuss the issue. “We are in a development Nama has taken control of in the Munster area where we are the only paying tenant. A big multiple is the anchor,” he said. “We agreed to a rent of more than €200,000 on the basis that the shopping centre would be full. There are 17 empty units. This has gone into Nama and I guarantee you that was at 60% of its previous valuation. We are subsidising Nama’s control of the centre. It is unfair and unjust.”

Advocates of change say the market needs a hard dose of reality. “The most critical thing the Irish property market needs, whether in residential or commercial property, is the introduction of normalisation at real market prices,” said Ciarán Lynch, the Labour TD who drafted the part of the party’s manifesto related to UORRs that made it into the programme for government. “It is more important to get this bill complete than ready.”

David Fitzsimons, of industry group Retail Excellence Ireland (REI) says he hopes to see a bill on UORRs before the Dail summer recess. Submissions to the Department of Justice on broader reform of landlord and tenant law were invited up to the end of May. As far as the timing of any legislation to abolish UORRs is concerned, the Department of Justice points to the minister’s response on May 18 to a Dail question from Willie O’Dea, the Fianna Fail TD. Shatter said: “I am engaged in consultations with the Attorney General in order to determine how this matter can best be expedited.”

He added that he plans to amend the Property Services (Regulation) Bill to enable the creation of a public database containing details of letting arrangements and rent reviews in the commercial property market. The minister also said that “significant stakeholders” had endorsed another recommendation by a working group in 2010 to amend arbitration procedures, including putting a duty on landlords to disclose all relevant documentation. One of retailers’ bugbears is that headline rents, agreed in a blaze of publicity and then used as benchmarks for other landlords’ reviews, are often accompanied by secret side letters giving sweeteners such as rent-free periods. Brennan, of Savills, says his experience is that many landlords have been working with good tenants on rent deals. He suggests that remedies other than legal change could be explored for retailers in real difficulty. “What about a targeted job-protection initiative in respect of the retail sector? You could put a hardship fund in place of €100m or €200m, and where qualified businesses can genuinely show problems related to rents being paid in specific locations, a fund [would be] available to support them for two or three years until the retail market gets onto a stable footing.”

He questions both the need for a broad-brush approach and the rights of such a move. “There are pension funds and God knows what out there that own buildings,” he said. “Interest rates are rising, asset values are down, people are in breach of loan to value covenants, or close to breach, and they now face the prospect of downward rent reviews. Is that fair?”

It is not a straightforward question. THE Construction Industry Federation director Hubert Fitzpatrick wrote to Shatter recently warning that landlords would bring a constitutional challenge against any retrospective change to legislation, and that such legislation would further decrease the value of assets on Nama’s books and could increase the banks’ capital requirements.

Nama has written to the Department of Finance expressing its concerns about change in legislation. Theagency has estimated that the retrospective abolition of UORRs could knock around €2 billion off the value of assets on its books. Frank Daly, the chairman of Nama, said in April the key issue is that a decision should be made fast to provide certainty for potential investors in Irish property.

The institutional landlord community has commissioned DKM Economic Consultants to prepare a report on commercial rents and reviews for presentation to government, but is so far keeping schtum publicly about its findings. Institutions and landlords have also been preparing alternative proposals to a ban on UORRS. A group of landlords has taken legal advice on the constitutionality of legislation introducing retrospective change. The constitutional argument centres on balancing the protection of property rights and the common good. One thorny issue is whether landlords would be entitled to claim compensation. “If they were going to take a challenge, I would bet whatever you like that a landlord could not beat a tenant in a constitutional referendum,” said Labour’s Lynch. In pleading the case for retailers, REI says 55,000 jobs have gone in the sector. “What has happened in the country is unprecedented,” said Ruane, who is now running Pulse for its new owners. “It is all very well to say tough luck, but we have to do something.”

Sunday Business Post

It’s been an eventful fortnight for the property speculators. Following the successful auction of distressed properties by British auction house Allsop a certain air of excitement was unleashed in the property industry.

The fire sale of properties saw a resurgence of that hysteria surrounding owning property that caused so much trouble in the past.

Out of 82 lots put under the hammer 81 sold on the day for a total of €15 million.

The success of its first Irish auction has prompted Allsop and its Irish affiliate agency, Space, to hold up to five distressed property auctions a year.

Estate agents in the capital have reported an increased number of people viewing properties since the auction and an improvement in consumer sentiment, but they’re conscious that any improvement in activity levels is dependent on the availability of finance.

‘‘It’s been fairly uplifting following on from the auction, it’s been the talk of the town since. It’s very positive for the market,” said Lisney director John O’Sullivan.

‘‘Most people bought out of speculation, they weren’t buying family homes. It proves that there is a market out there, as we’ve been saying. Since the budget changes on stamp duty we’ve seen an increase in activity, but obviously the conditions are difficult.

‘‘Our private treaty sales aren’t public, so people don’t know what’s selling. Now the public knows that there’s a market and at what level,” he said.

Michael Grehan, managing director of estate agency Sherry FitzGerald, said the outcome had been encouraging.

‘‘The day before the auction we had no investor market, 24 hours later we had an investor market.

There is investor appetite -so me people are buying themselves an income. Some of the properties had a yield of 9 per cent. It proved to be a good way to sell distressed properties and a good way to get people to spend when finance is limited.”

According to Sherry FitzGerald’s latest market research more than half of their registered buyers have finance in place and almost 20 per cent are awaiting approval.

The survey of its potential buyers found that 84 per cent said they intended to buy within the next year, almost half in the next six months. The majority of those looking to buy were searching for three or four-bed semidetached homes.

Following the success of the recent auction, Savills has decided to hold a similar property auction in September. Like Allsop, Savills in Britain has it’s own auction division. Its Irish offices have held few auctions since the downturn, but its forthcoming auction will comprise a large number of lots, but they won’t be distressed properties.

Janet Carroll, manager of Savills Blackrock branch, said Savills had decided to hold an auction of multiple properties for those vendors who wanted to sell immediately ‘‘like those who want to let go of investment properties’’.

But she said it would mainly be made up of properties suited to families, properties owned by families and not banks.

‘‘All of the properties will have disclosed reserves.

We held off on doing one so far, but now we think the time is right.

‘‘It’s been really busy.

We’ve had quality viewers it’s just hard for them to commit. It’s all about confidence in that way the Allsop auction has helped. Everything sold out so it proves there are a lot of people to go [ready to buy] if prices are right.”

‘‘Easter would normally be a quiet week, but we’ve had lots of requests for viewings this weekend.”

The majority of buyers at the Allsop auction nine days ago were investors, and it’s understood that most of them bought with cash.

All of the agents agreed gaining finance was difficult and that any increase in the number of transactions would hinge on the banks lending on a greater scale.

Initiatives must be made by the banks to allow for movement in the market, without them the market will stay in a state of flux, according to O’Sullivan.

He said at the moment there were many homeowners in negative equity with good incomes who were able to pay their mortgage, but their home no longer suits their requirements.

For example, O’Sullivan said there were lots of couples with children in two-bed apartments who were not looking for debt forgiveness but who wanted to trade up. ‘‘There must be initiatives to allow them to carry their debt with them to another property.

We’re not building any more and there must be movement in the market. Otherwise, nothing will happen,” he said.

Carroll said that whatever debt forgiveness Method was chosen that it had to be fair and not discriminate against those who struggled to pay their mortgage. ‘‘It must be one rule for all. If there’s going to be relief then the regular family who bought the four-bed semidetached beside the school and are paying their mortgage and their taxes deserve to be considered.”

The Nyberg report, which was released last week, found the main cause of the banking crisis was the ‘‘unhindered expansion of the property bubble’’ fuelled by banks using borrowed money. Therefore it’s unlikely we’re going to see a sudden surge in bank lending.

But the agents remained positive. ‘‘It was the herd mentality around property that got us in trouble, but maybe it’ll get us out of it as well.

There’s been a noticeable increase in consumer sentiment, but it remains to be seen if it’s just because of the government,” said Grehan.

Sunday Business Post

The government’s promised economic impact assessment of the proposed changes to Section 23 relief will begin next month, following hundreds of submissions from property owners to the government on the issue.

Last December’s budget announced a major clamp-down on legacy property-based tax reliefs, including a controversial proposal to restrict the carrying forward of capital allowances on Section 23 properties.

The budgetary decision meant that from January 1 investors could only offset capital allowances against rental income from their Section 23 property, rather than on all properties owned.

However, the Finance Bill saw the government announce a U-turn of sorts on the controversial proposal, when it announced that an economic impact assessment would be carried out to examine the effect of the move.

This effectively deferred the tax relief changes for at least a year.

The move to phase out Section 23 relief was not welcomed by investor s and property owners, with the Irish Property Owners Association (IPOA) saying it was ‘‘unacceptable for anyone to change the terms of a contract after it has been signed’’.

A spokesman for the Department of Finance said the government had received about 300 formal submissions from property owners about the proposed changes.

Stephen Faughnan, chairman of the IPOA, said the impact assessment would show that the proposed changes would ‘‘damage the economy, result in wholesale mortgage default and curtail the investment in much needed infrastructure’’.

‘‘These measures would undermine investment in the state and cause mistrust in public private investments for decades to come,” Faughnan said.

By Geoff Percival

Monday, April 04, 2011

ONE of the main representative bodies for the retail industry has called on new Attorney General, Maire Whelan, to tackle the ongoing issue of commercial rent rates by introducing legislation ending upward-only rent reviews for existing leases.

Such a move, according to IBEC-affiliated body Retail Ireland, is urgently needed and should be accompanied by the establishment of a commercial rents assessment board, something which should be chaired by a High Court judge and have statutory powers, where tenants could seek rent reductions to reflect economic circumstances.

“As it stands, there is no self-correcting mechanism available for inflated commercial rents. Over the last decade rent as a percentage of turnover has doubled from 10% to 20% for retailers. Upward-only rent reviews have not only contributed to this inflation, but have contributed significantly to the loss of over 50,000 jobs in the retail sector since 2008,” according to Retail Ireland director, Torlach Denihan.

Mr Denihan added: “The previous government would not remove upward-only rent review clauses from existing leases because their Attorney General said to do so would be unconstitutional.

“The new Attorney General should, as an immediate priority, review this decision, with a view to introducing new legislation to remove these clauses from existing leases. Apologists for upward-only rent reviews are unwilling to contemplate solutions. They fail to grasp that Ireland’s economy would be best served by managed rent reductions, rather than the closure of perfectly good retail businesses with the consequent unemployment for staff, bankruptcies of owners and losses for creditors.”

Mr Denihan added that “a major adjustment” throughout the economy via prices, pay rates and social welfare payments is underway resulting in “a painful process” and that commercial rents need to be added to this list.

“Landlords should participate in this adjustment, too. Unless this is done, jobs will be lost and otherwise viable businesses will have to close,” he added.

This appeared in the printed version of the Irish Examiner Monday, April 04, 2011

ONE IN three Irish-Americans has expressed an interest in buying property in Ireland at some stage this decade, according to a survey.

The survey by Amárach Research/Irishcentral.com also found three-quarters of Irish-American retirees say they would look at spending part of each year based in Ireland.

However, the monthly survey of Irish-American attitudes also reveals that Ireland scores badly as a place to do business and to get things done efficiently. However, it scores well when it comes to hospitality and friendliness.

Market research company Amárach teamed up with media website irishcentral.com last year to develop The Link, an online survey of the Irish in the US and Irish-Americans.

The latest survey of 1,100 people was carried out last week. It finds that while only 3 per cent of Irish-Americans living in the US own property in Ireland, one-third would be interested in purchasing a house in Ireland between now and 2019.

Some 53 per cent said the key motivation for buying would be the prospect of having a personal or family holiday home in Ireland.

More women, 55 per cent, expressed an interested in becoming property owners here than men, at 49 per cent.

Some 61 per cent of those who said they would buy property here expressed an interest in a “house”.

Some 44 per cent would be specifically interested in a “cottage”, while 23 per cent would be interested in a “country house”.

Galway scored highly as the location in which most Irish-Americans would like to buy a property, with 15 per cent giving it first choice.

Next were Kerry and Cork each at 11 per cent; Cork at 11 per cent; and Clare, Donegal and Dublin each at 9 per cent.

Some 59 per cent said they were driven by an instinct to find a location with links to family origins and heritage. Some 55 per cent expressing a preference for a rural over an urban setting.

Monday, March 14, 2011

FIRST-time buyers have been told they could receive a €25,000 windfall by purchasing a home this year.

Mortgage interest for first-time buyers is being all but abolished from 2012, according to the director of the Irish Mortgage Corporation Frank Conway. He said however first-time buyers who buy this year will still manage to qualify for the maximum amount.

Mortgage interest relief is a special scheme in which mortgage holders receive back a proportion of the interest they pay on their mortgages. The special tax deal is managed through what is known as Tax Relief at Source (TRS), first-time buyers are the biggest beneficiaries where up to €416.67 is repaid directly back to mortgage holders bank accounts each month.

Tax relief is available up to seven years after taking out a mortgage.

The maximum qualifying interest amount for a first- time couple is €20,000. In year one and year two of purchasing, the maximum interest relief is 25% or €5,000 annually. This reduces to €4,500 in years three, four and five and to €4,000 in years six and seven.

“2011 is the last year in which first-time buyers can avail of the maximum relief of €416.67 per month. From 2012, all first-time buyers will move to the standard rate of mortgage interest relief, which has a monthly maximum value of just €75,” said Mr Conway.

It means that a first-time buyer who purchases a home up to and including the 31 December 2011 will be in line to qualify for up to a massive €31,500 over a seven-year period.

However, a first-time buyer who completes their mortgage and home purchase just one day later, on January 1, 2012 will receive a maximum benefit of just €6,300.

“First-time buyers who complete their purchase in 2011 will be up to €25,000 better off than first-time buyers who complete their purchase from January 1, 2012, onwards,” said Mr Conway.

This appeared in the printed version of the Irish Examiner Monday, March 14, 2011

Friday, March 04, 2011

FARMLAND prices have been decimated by four years of nationwide decline, a report out this week shows.

The Irish Farmers’ Journal Agricultural Land Price Report 2010 shows considerable regional variation, but average prices have fallen 57% nationally over the past four years.

In Dublin, the average of €13,233 per acre makes far more realistic reading than the Celtic Tiger highs of €35,000 in some prime land sales.

Prices fell a further 14.5% in 2010, and the report’s editor Shirley Busteed suggests that the floor has yet to be reached in national terms. The report makes good reading for those thinking of buying, not so good for those selling; certainly not for those who thought of selling in the boom years but hesitated.

Ms Busteed also qualifies the 2010 prices: “A significant amount of land that arrived on the market last year was of marginal quality and that had a big impact on price. Neighbouring farmers are generally the buyers of these parcels [...] Although not widespread, I did notice an increase in the number of pressure sales last year. Some of these included land that was part of NAMA but was being sold by a willing seller in a bid to pay off some of the debt.”

Other downward price factors cited by the IFJ’s first ever 32-county guide include a lack of access to credit, the reduction in part-time farmer numbers, the abolition of REPS and the fact that deals are taking longer to conclude.

Some of the key statistics are as follows:

Republic:

* The national average for 2010 is €8,741/acre — down almost 14.5% on the previous year.

* 41,339 acres were offered for sale in 2010.

* Dublin had the highest average at €13,233/acre followed by Kildare at €12,914/acre and Cork at €11,830/acre.

* Roscommon had the lowest average at €5,545/acre followed closely by Mayo at €5,555/acre and Offaly at €5,616/acre.

* Twenty-two of the 26 counties experienced a decrease in the average price of agricultural land.

* Offaly experienced the highest percentage drop at 42.6%, followed by Sligo at 34.1% and Louth at 33.4%.

* Cavan had the lowest percentage drop at 2.5%, followed by Waterford at 2.6% and Kildare at 6%.

* Only Carlow and Leitrim experienced price increases.

* The price gap between small and big farms has significantly narrowed.

Northern Ireland:

* The average price for agricultural land in 2010 was £9,585/acre (€11,276/acre).

* Armagh recorded the highest average at £11,199/acre (€13,175/acre)

* Fermanagh had the lowest average at £7,638/acre (€8,986/acre).

* A total of 2,440 acres were recorded as sold in Northern Ireland last year.

Ms Busteed said: “A 57% drop in four years is significant. There are signs of the price levelling out in some counties, but there may be further falls in others. For instance, we previously used €10,000 per acre as a benchmark. The fact is that 21 out of 26 counties in the Republic had an average of less than that, so €10,000 is no longer really a useful benchmark. Some counties are struggling to make €8,000 an acre.

“That said, every sale is farm specific. Nobody wants to buy bad land, and only a certain number of buyers are willing to go beyond €10,000 an acre in many counties. Those who want premium land, with a good house and good road frontage, will be willing to a pay premium price for it. Others won’t.

“Even Cork, which had the third highest average sales in 2010, had a price range that ran from €5,500 to €19,000 per acre. It depends on the quality of each individual sale.”

Landowners will also take some encouragement from the fact that the rate of price decline is certainly slowing down. Having fallen 35.6% on average in 2009, last year’s 14.5% fall seems less dramatic.

The IFJ survey examined 885 farms offered for sale in 2010. The biggest sale related to a 600-acre farm. The survey found that the demand largely matched the increase in supply.

Recent sales reported in the Irish Examiner include: €15,000 an acre for a farm at Baltovin, Ardfert, Co Kerry; €18,000 an acre for the 98-acre farm at Killahora House at Glounthaune, Co Cork; and about €10,000 an acre for a 35-acre holding at Crecora, Co Limerick.

This appeared in the printed version of the Irish Examiner Friday, March 04, 2011