Home economics: answering your property questions
Our property expert advises on the implications of life assurance for unmarried couples and explains how a letting agent can be a good idea when renting out your property.
Question: My boyfriend and I bought our first home last year but a friend says as we're not married the life insurance has to be changed to one for 'cohabiting couples'. She suggested a tax problem too. Is this the case? The bank never mentioned this to us.
Sinead replies: When you effect a life insurance policy on someone you are not married to or in a civil partnership with, you need to prove 'insurable interest', e.g. a financial loss if one of you dies - often a house or a child in common.
This allows the mortgage to be paid off in the event of death and the remaining partner receive their share of the house. Daragh Feely, of Royal London Assurance says they normally recommend two policies on a 'Life of Another' basis for a belt and braces approach for cohabiting couples, at least to show that premiums were paid by both, based on half the value of the mortgage.
The issue arises with Inheritance Tax. With married couples, assets pass tax free on death. With non-married couples, you are considered 'strangers' in the eyes of the law and, therefore, a potential liability arises from receiving the other 'half' of the house. The thresholds mean the maximum you can receive tax free is €15,075 with any excess taxed at 33pc.
Section 13 of the Capital Acquisitions Tax Consolidation Act 2003 provides that on the death of one of two persons who own property as joint tenants, the survivor takes an inheritance from the deceased joint tenant as disponer, equal to the value of the deceased's share in the joint tenancy.
But there is a 'Dwelling House Exemption' under the Act which means that all inheritances received from a cohabitant are exempt from tax where the recipient has lived there as his/her main residence for the three years prior to the inheritance.
Question: I'm planning on letting my apartment in Dublin 8 - I'm moving to Galway permanently for work, and the flat is modern, one bedroomed and quite small, but nice. My query is should I furnish it cheaply, (e.g. from Ikea) with the view to replacing it with each tenant, or would I be better investing in good quality which will last? How often would a tenant expect it to be repainted, for example? Should I use a letting agent?
Sinead replies: On the letting agent, it's a good idea (given that you're moving permanently) to have someone else look after the property for you.
An agent will select your tenants, which is the most important aspect of this service and will also draw up a full inventory, carry out quarterly inspections, ensure the apartment and its contents are protected, and both you and your tenants are happy.
You can expect to pay the equivalent of a month's rent for this service. Alternatively, you might have a close family member you trust to do it.
I asked Clare Connolly Property Consultants about the interior: "IKEA have good quality, inexpensive furnishings which are ideal for a rental property. They are well designed and highly functional for smaller spaces - saving you the worry that you may have if leaving higher value items in the property.
"A bright, freshly-painted property is much more appealing than a dull, tired looking one and will command a higher rent.
"It is the landlord's responsibility to ensure the rental property meets the minimum physical standards - as outlined in the Housing (Standards for Rented Houses) Regulations 2008 - but there is no legal requirement for a landlord to repaint a property.
"As a guideline, a property should be repainted every three to four years, normally at the end of the tenancy, not while a tenant is in occupation."
The Ryan review
It would be funny if it wasn't so serious.
After all the pre-election brouhaha about housing the homeless, making it a number one priority across the board and so forth, it turns out Dublin City Council, which was due to spend €20m on its provision of modular homes (the pop-up prefabs), has had to cancel its tender for the project due to lack of interest.
Not from the families in dire need, you understand, but from builders who, it seems, can't get any more excited about building temporary accommodation than they are about permanent dwellings.
Five council-owned sites have been selected for 153 homes of which 22 were supposed to be provided before Christmas and all before June this year.
However, the tender received an insufficient number of bids and is going to have to be re-issued.
In fairness, this original tranche got delayed, not due to the council, but bad weather, local objections and protests on site in Ballymun.
It's been brushed off as a 'technical issue' and a new tender will be reissued, which is less onerous.
Given they're costing an eye-watering €191,000 each, when there are 'proper' houses for far less in the designated areas, it must leave officials scratching their heads.