Home Economics: Answering your property questions
Q We are planning on building an extension later this year to add one room and revamp the kitchen. What is the best way to borrow for it? It will cost €20,000 and we have a tracker mortgage, which we don't want to lose.
Sinead says: You are quite right not to want to lose the tracker and should hang onto it at all costs. There are several options open to you but the easiest is probably to see if your bank will offer you a separate loan, while leaving your tracker standing rather than a straight re-mortgage which would most likely affect your tracker. They can do this in one of two ways: firstly,they can do it as a mortgage top-up where it is repaid over the same, or a shorter term (the shorter the term, the less you'll pay overall, although your monthly payments will be higher. Alternatively, they can do it as a separate personal loan over a fixed term with fixed repayments.
Bank of Ireland, for example, offer both at 9.9pc pa where €20,000 would cost €419.79pm, €326.62 pm or €258.52 pm over five, seven or 10 years respectively.
As an alternative, if you have a credit union account, you could also try them and possibly get a lower interest rate.
Q My wife and I are arguing over where to put new space in our house. I favour flooring and converting the attic while she wants an extension into the back garden. Which is worth more?
Sinead says: Well, the question shouldn't be about which alteration is worth more; rather it should be about which is more useful to your family life? If you are having the conversation, it is clearly about adding living space and firstly, you need to decide whether that's more valuable as an extra bedroom/bathroom upstairs or reception room added to your kitchen or living space downstairs.
An extension will typically cost more, and probably gain more in re-sale value, but even doing an attic conversion properly (with a staircase rather than pull-down ladder, for example) is not to be undertaken lightly. Loft space is not suitable in every house, so you need to check that out also.
I would be inclined to sit down as a family and decide, based on your day-to-day living which is likely to be needed both now and in the longer term. That should be your priority.
Q We are putting our house up for sale and are disappointed with the price a local estate agent has suggested. Although it reflects one sold recently on the property price register, we have a Neff fitted kitchen, solid oak floors throughout, very expensive designer curtains and top-of-the-range appliances. Surely the price should reflect this?
Sinead says: Well, of course you can put your house up for sale at any price you wish, but if you've engaged an estate agent, they're probably worth listening to, as they've been doing this a lot longer than you. Most will tell you that there's a 'street price' for your road, and unless the property has been substantially transformed by way of a big extension or the like, then the fittings aren't really going to make a big difference.
Karl Deeter of Irish Mortgage Brokers says that even with the best finish it's hard to get more than 5-10pc on a comparable property, but estate agents are hungry people and they know how to buy and sell, so they might be suggesting putting it on the market at a particular price, knowing others will check the property price register, be impressed and bid it up. Remember, this is your 'list price' rather than the 'sale agreed' price, so discuss it with them; if they have plausible reasons, let them do their job – if they don't, consider going elsewhere.
Alternatively of course, you could take some of the appliances and furnishings with you and not include them in the sale price.
Q I am doing up an old house before I move into it at the moment and deciding between wooden floors or carpeting. The BER is quite low, and I think carpets would be a better bet but love the idea of wood. Which is more expensive and better in long run?
Sinead says: I think your first thought should be about proper insulation to get the BER up. If the house is pre-2006, and I suspect it is, consider availing of a grant through Sustainable Energy Authority Ireland (www.seai.ie) towards this. Spending your money primarily on this would mean that your decision then could be purely aesthetic.
Grants are available under the Better Energy Scheme for attic and internal and external wall insulation, heating system upgrades and getting the BER rated. The minimum spend must be €400 and works undertaken under specific guidelines, but there is a good lot of money available towards it and it's not means tested.
Carlow interior designer Margaret Harrington suggests people are returning to carpet for luxury and warmth. "You can match colour more easily and it insulates and absorbs sound. However, dust mites, spillage and wear and tear mitigate against, especially in hard-wear areas. A lot of the time I find clients, after spending a fortune laying a wood floor, end up putting a big rug over it", she says.
How about a mix of both depending on which part of the house suits each better?
Q My brother is a carpenter and fitter but currently out of work. We would like to employ him to refit our kitchen while availing of the recent budget changes to allow tax back on renovations. Would we, or he, have to declare the work as this might affect his benefits?
Sinead says: You're talking about a nixer, I presume, and for many reasons, while you might certainly want to avail of his talent and free time, availing of the Home Renovation Tax Incentive Scheme won't be an option. The rebate works by refunding the VAT paid to a VAT-registered, tax-compliant builder, over a two-year period. If your brother is not registered for VAT any longer, then you can't reclaim it from revenue.
Whilst many people undertaking renovations want to use someone they know and trust, employing a family member can be fraught with difficulty, not least because s/he may not be carrying valid insurance if he is no longer working. This would be vital in case something goes wrong and you would have no redress, and could possibly fall out with him. My advice is to get a quote from a registered builder or firm and then check your brother's tax status before making up your mind.
Q I've bought a house, which, to put it mildly, needs a complete overhaul. Although the property was paid for with cash, I will be taking on a 15-year mortgage for the work and it will be about eight months before the house is habitable. Would you recommend a fixed or variable rate mortgage?
Sinead says: This question is always quite difficult to answer as it really depends on your personal attitude to risk and need for value or consistency.
Frank Conway of the 'Irish Financial Review' says: "From a simple 'value' perspective, a standard variable rate mortgage is the best option. It costs less than a fixed-rate loan. However, standard variable loan rates are set by the individual banks, independent of the European Central Bank which can be adjusted upwards or downwards, depending on the banks own commercial needs.
Fixed rate loans offer repayment guarantees as the monthly amounts are set but in any event would be for a shorter period than 15 years. Most banks are quoting around the 4.9pc mark for a three-year fixed rate deal but you can get one and five-year rates and see how you go for a few years, if the security is what is important to you.
Q I am a widow and would like to get some work done in my house by way of plumbing and taking out a wall. However, I am on the old age pension and don't pay tax, but my son has agreed to pay for the work which will cost €5,000. Can he get the tax rebate under the new scheme?
Sinead says: Unfortunately not. The tax credit is only available to homeowners, according to Revenue guidelines. The rebate applies to the VAT portion of the bill at 13.5pc paid to a registered builder/contractor. However, the improvement works must be paid for by a taxpaying owner-occupier to qualify.
Q We are building a new kitchen and getting all new electric appliances, tiles and paint along with the units themselves. How much of this qualifies for the tax rebate under the HRI Scheme?
Sinead says: You must spend a minimum of €4,405 (before VAT) on construction and labour. Qualifying spends include supply and fitting of the kitchen, rewiring, tiling, painting and decorating. What's not included are carpets, furniture, white goods and services (such as architect's fees). In addition, any materials a homeowner buys such as paint, tiles and so on, don't qualify either.