Home Economics: Answering your property questions
Q: I am a company director in my 40s. I wish to set up a pension but the returns being quoted are very poor and I'm not convinced it's a good return for my money; there seem to be a lot of charges and fees attached. I have heard about self-administered schemes and wonder if this is the route for me with some property I own. I broached a loan with my bank, but they wanted a 50pc deposit, which seems hefty given I'm taking all the risk. Can you advise how these schemes work?
A. DIY pensions are not for the faint-hearted; myriad choices pertain for self-employed and company directors. However, small self-administered schemes (SSASs) are available for companies with less than 12 employees. The attraction is control regarding the asset type, which is why they are often used as a vehicle for commercial property, which is what you propose.
Oisin Humphreys of MyAdviser.ie says there are restrictions. "Property is owned by the fund and must be at "arms length", i.e. the person selling or letting the property cannot be connected to the SSAS. Holiday homes are not permitted.
"While it is possible for the fund to borrow, as the property is owned by the fund, not the individual, the banks are exposed in the event of the value falling. In practice, SSASs directly holding property usually do so as a result of funds accumulated over many years being used to purchase a property outright.
"Including property in a fund adds cost to the annual fund charge, around 0.25pc to a typical fund charge of 1.1 pc.
"Often this is on top of other management or maintenance the fund, as the property owner will incur."
Regarding general considerations, Humphreys adds: "As you have 20 years to go before retirement, you have time on your side. Historically, the best returns in such a time frame are likely to come from equity investment.
"If charges and fees are putting you off, it is possible to get good value for a top quality diversified equity/bond portfolio including ongoing independent financial planning, for around 1.1pc p.a."
Q. I was cladding and fixing some lights to the (shared) side wall of my house and my next door neighbour has complained that it was damaged in the process with, some of the brick toppers and render falling off it. The wall is 15 years old and others on the road have a similar problem, which is to do with weather, rather than damage. My neighbour is insisting we pay for repairs. What are my rights?
A. I get lots of questions about boundary wall disputes and this, like most of them, comes down to a 'he said, she said', viewpoint. Cara Walsh, Partner with MWM Legal, says the Government introduced provisions contained in the 2009 Conveyancing Act to clarify this area of law.
"The owners of a shared boundary wall have both rights and obligations and you have to be mindful of both. Any structure dividing two properties is by law a 'Party Structure' and these rights and obligations are clearly laid out in the 2009 Act. Both you and your neighbour have the right to carry out work to the shared boundary wall, which is necessary or which is permitted by planning permission.
"In doing so, however, you have to make good any damage caused by you and pay the neighbour's reasonable costs of getting professional advice on the work. In turn, your neighbour must contribute a proportionate amount towards making good the damage.
"If you insist that the damage is due to weather, rather than as a result of your work, then the same provisions will allow your neighbour to say that the repairs are necessary, carry out the repairs herself and claim a proportionate amount of the cost from you.
"So it doesn't really matter whether the damage was caused by the weather or by your home improvements. You are both responsible for the cost of the maintenance and repair of the wall.
"While the 2009 Act also introduced a procedure for applying to the District Court for a Works Order - a Court Order determining what work needs to be done - it (hopefully!) goes without saying that it would be far preferable for you and your neighbour to sit down over a cup of tea and work this out together."
The Ryan Review
"Help to Buy!" begged the despairing first-time buyers. "Well alright, but don't get carried away," responded the Minister in the Budget.
While any new measures are welcome, this complicated tax rebate scheme (5pc tax relief up to ¤20,000) will result in the least cheer as it may not aid supply, but increase demand.
It is both a sop to the Central Bank (who Mr Noonan appears to have given up fighting on deposit limits), and the newbie house buyer, who will believe they're getting something worthwhile, but will be left scratching their heads working it all out.
It will really only appeal to those ready to buy now, with a house in mind, who just need that final deposit to get them over the line. The fact that the rebate is only given to buyers of newly built homes removes a swathe of others from the benefit.
Mr Noonan claims it will encourage builders to build, and perhaps they will, but in so doing, won't they just increase house prices to take advantage of it? Let's hope they do have enough incentive to join the market, because there's precious little evidenced of them having an appetite up to now.