Start amassing a war chest if you want to sell your house
Published 03/08/2014 | 00:00
This year is the first time since 2008 that many people will seriously consider selling their homes.
Earlier this summer, national house price rises breached the double digit barrier for the first time since the property crash. Although prices are still a far cry from their peak at the height of the boom, if you're one of those who has been itching to sell but held off during the downturn, you might well be tempted to sell now.
Today's house sellers, however, face a raft of costs which their boom-time predecessors didn't have to worry about.
Tax could be a major thorn in your side if you're about to sell a property - particularly if you haven't been upfront. Any homeowner who dodged the €100 household charge of 2012 or the subsequent property tax will be caught for those taxes - as well as penalties and interest - when they come to sell their property.
Owners of second properties will be caught for the non-principal private residence (NPPR) charge if they haven't yet paid it. The NPPR charge, which comes to €200 a year, was introduced in 2009 and phased out in 2013. So if you have owned a second home since 2009 or earlier and haven't yet paid that charge, you will have to pay up once you sell - and you will also be hit with late payment fees. Since July 2013, your second property is also liable for the property tax.
The hike in capital gains tax (CGT), the tax paid on profits when you sell certain properties, could also come as a bit of a surprise.
Should landlords make a profit when selling an investment property, they will face a much higher rate of CGT than if they had sold during the boom.
Landlords now lose 33pc of the profits made on the sale of a property to CGT - up from the 20pc in 2008. You do not have to pay CGT on any profits you make when selling your own private home - as long as you lived there as your principal private residence while you owned it or within a year of the sale.
Many of those who bought during the boom could also run into unexpected costs when selling their home. This will be particularly the case if they hired cut-price solicitors to handle the conveyancing when originally buying their home, warned Bill Holohan, senior partner at Holohan Law solicitors.
"The problem was that during the boom, things were being shoved through en masse," said Holohan. "There was a huge downward pressure on conveyancing fees so many solicitors cut back and took short cuts. They took things at face value and didn't check the fundamentals of title."
You could face a bill of several thousand euro if you run into title problems when selling your home, according to Holohan. Problems could arise, for example, if there's a conflict between the maps on the deeds of a property and Ordnance Survey maps.
"You could find that you legally don't own your garden or sitting room," said Holohan. "These are extreme examples but they do happen. There have been cases where maps have been wrong. If there's a fundamental defect on the title, particularly if there's something that has been missed, that can take time to sort out and lead to additional expense such as legal, surveyor and investigation costs. All of this could clock up to several thousand euro."
Planning permission offences or oversights could also come back to haunt you. Extensions or sunrooms which were built without the proper planning permission in place could hold up the sale of a home - even if it was the previous owner of the property who built it.
"People have bought properties during the boom where planning permission was not up to scratch," said Holohan. "They may have presumed that a development was exempted and didn't need planning permission - but this might not be the case.
"You could be told to knock down any unauthorised development when you try to sell a home - or to apply for retention permission."
To apply for retention permission, you need to make a case to your local authority explaining why you should be allowed to hold on to the structure which was built without planning permission. It could take months or years for such retention permission to come through - if it comes through at all. As well as holding up the sale of a property, this will cost you money. "The bill [for a retention application] could run into a few thousand euro," said Holohan.
Even those who followed the rules when it came to planning permission could run into trouble selling it - if they never got a professional to supervise and sign off on the development.
"There may not be a certificate of compliance for the development," said Holohan. "Such a certificate is necessary to show that someone supervised the development when it was being built in the first place. Not having the cert could turn out more expensive than had you hired a surveyor or engineer at the outset to get a development certified."
Even a septic tank could hold up the sale of your home. In rural areas, particularly areas of outstanding natural beauty, a septic tank often has to be upgraded as a condition of planning permission. Even if you correctly upgraded your septic tank, you will usually need to produce a certificate of compliance when selling your home to prove that the upgrade was up to scratch. You won't be able to sell your home without it, so you will need to hire a engineer to check and sign off on your septic tank.
Don't forget the usual legal and estate agent fees. You'll pay at least €1,000 to hire a solicitor to handle the sale of your home. You'll typically pay an estate agent between 1.25pc and 2.5pc commission to sell your home. You also need a building energy rating (BER) cert before you can sell your home. This cert, which tells prospective vendors how expensive it will be to heat your property, will easily cost a couple of hundred euro.
It takes time and money to sell a house - so start to get a war chest together if you're serious about selling.
Sunday Indo Business