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Sunday 23 July 2017

Home Economics: Sinead Ryan answers your property questions

Photo: Bloomberg
Photo: Bloomberg
Sinead Ryan

Sinead Ryan

We've gone 'sale agreed' on our house but, unfortunately, the property we're moving to has fallen through and it has been taken off the market, leaving us having to find another home. We're really upset about this as it took ages to find our perfect home. Our problem is that the buyers of our house are chasing us to close the sale - how long can we delay legally?

A. This is unfortunate. Getting into a buying/selling triangle often poses problems like this. But the options you have depend on whether or not you have signed a contract with the purchaser of your home. You say you're at the 'sale agreed' stage and, if so, then this shouldn't pose a problem, as Susan Cosgrove of Cosgrove Gaynard Solicitors points out.

"If you are only sale agreed on your own sale, you can insert a clause in the contract to state that the closing date will be dependent on the closing date of your own purchase," says Susan. "Essentially, there would be no fixed date until you find a replacement property to buy. The comfort for your purchasers is that they lock in the sale and the price, but they will have to wait on a closing date. They may seek a long stop date, i.e. six months or some similar time frame, and if you have not found a replacement property to purchase by then, they can walk away and their deposit is refunded in full.

"If, however, you have signed contracts already with your new purchaser, the situation is much different. There should be a fixed closing date in the contract and if you do not close by that time frame, your purchasers can issue what is called a Completion Notice to have you close within 28 days. If you do not close within that time frame, they can walk away from the sale and, again, their deposit is refunded in full. However, they also have the option to issue proceedings to force you to close."

Q. I have around €300,000 from the sale of my house coming through, which I want to invest for around a year. I have moved to the UK for work and they are providing me with accommodation during this time. When I move back, I'll buy a house. Where can I get both a decent return and a safe haven for this cash? I'm reluctant to leave it just on deposit since the rates are so terrible.

A. I wouldn't start by confusing 'investing' your money with 'minding' it. This cash is ear-marked for something very specific - i.e. a future house purchase - and for that reason, I expect you don't really want to be taking a risk with it.

That said, deposit rates are so paltry that I understand your frustration at holding this significant sum in a bank. Between a decent return and complete security, you're going to have to pick one or the other, I'm afraid, and I'd opt for the safety net.

You really don't have enough time to get into 'investing' it. However, should your time scale change and you find you are prepared to wait three to five years or longer, then by all means, investigate your investment options with a fee-based broker.

A better return is certainly possible, but it would involve, in almost every case, a level of risk.

For the meantime, you will benefit, albeit only slightly, by keeping your money in a fixed term or notice, rather than a demand, deposit account. Permanent TSB will currently give you AER 0.75pc (€2,250 gross interest) for 12 months fixed, KBC 0.5pc (€1,500), while Bank of Ireland will offer 0.35pc for a 90-day notice account (€1,050). Dirt is payable at 39pc.

The Ryan Review

Recently, in this newspaper, a Munster estate agent took out a full page ad for a property auction being held this month. It advertised houses and apartments in Limerick and Waterford cities, perfect for both singletons (who make up the single biggest grouping on the housing list) and families.

In all, there were 20 properties, with enough space to house up to 92 people. The advised minimum values (AMVs) averaged just over €60,000 per unit. These are all going under the hammer, mostly to private buyers, or landlords eager to re-engage with the market and find a home for their cash.

The total value of all 20 together was €1.245m - of course, they may fly for more on the day.

In 2016, the Government spent €39m housing families in hotels and B&Bs in Dublin alone, double the figure spent the previous year. Seven hundred families every single month live in hotels, often all in one room with no laundry or cooking facilities, at an annual cost to the taxpayer of €55,000 each. Others are bunking on sofas, living in their cars or on the street.

Since the 'rapid build' housing programme was announced in 2015, just 22 units have actually seen the light of day, all in Ballymun. They each cost more than any one of the houses on the market in this one auction.

See where this is going? You don't need a degree in joined-up-thinking to consider a matching exercise.

"It's not that simple," the naysayers will claim. "Housing is complex, needs are many, we don't understand." Well, actually, there are many people scratching their heads as to how, exactly, this is so complicated.

The number of vacant properties amount to some 200,000 - some will never be for sale, others are being 'sat on' by reluctant owners, but many are coming to market.

For the price of 20 families' hotel accommodation, you can buy 20 houses, outright, and house them forever.

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