Home Economics: Our property finance expert answers your questions
Question: I'm aware that the Local Property Tax amount hasn't changed since 2013 and I have paid all the bills since then based on the original valuation. However, I am now selling my property and, like most houses, it has risen considerably in value since the original valuation. Will I now be charged outstanding LPT as a result? Or is there any other charge that can be levied against the current value?
A You won't be charged any more as a result of the growth in your house's value at the time of sale, unless you have reason to believe the declaration you originally made on May 1, 2013 was not 'reasonable and honest', according to Revenue.
You have paid LPT for each year (and presumably, before that, the Household Charge), but you will be expected to get a clearance certificate for this prior to completing the sale. A form indicating your payments is available from your local Revenue office. If you sell for less than €350,000 then a 'general' clearance is all that's required. For 'specific' clearance on sales above this figure, Revenue needs to be provided with the original valuation from 2013, evidence this was in line with local market prices at the time (from the Property Price Register, Daft, or MyHome etc), and the actual sale price, which should fall within Revenue's increase guidelines for the property/area. A form, LPT5, downloaded from its website (revenue.ie) is used for this purpose.
In addition, you must issue the new buyer with the property ID, the appropriate valuation band for LPT and any corrections you may have made to this or any exemption you sought in the tax.
It's quite a lot to assemble, but your estate agent may be able to provide further assistance.
Q I'm in the process of getting in tenants for a first let on an apartment I own. My question is about insurance. I want to make sure the property is adequately covered and I will be letting my insurer know about the change of use as I previously lived in it, but what is the case with tenants? Can I insist they effect contents cover or should I do this? I certainly don't want to have to insure their bits and pieces but I have some furniture I am providing and want this insured.
A Well the first thing is that you do, of course, need buildings cover on the property itself. It is more likely to accrue a higher premium than an owner-occupied house given the extra risk tenants bring to it, but it's essential, so go get some quotes.
The main difference between private (owner occupied) and landlord cover is that some policies can cover loss of income if say, your tenants have to leave due to an insurable event like fire or flood. Others include key items of furniture that the landlord owns which may need replacement. Personal items can be covered (if the tenants wish) by renters insurance.
Deirdre McCarthy of insuremyhouse.ie adds: "You are right in making sure you let your insurers know you will be changing the use of the property, as failure to do this could result in an issue if you were to claim in the future and/or you could possibly have a claim denied. A landlord contents policy will cover all of the contents you own in the property, but will not cover any of the contents belonging to the tenants. It is up to the tenants themselves to take out their own policy if they wish to do so. A landlord policy will also cover you for loss of rent and liability."
I'd only add that it's worthwhile setting out in the lease agreement exactly what you are insuring so nobody is in any doubt.
The Ryan Review
The stabilising of house prices in Dublin and surrounding commuter counties will come as a relief to prospective buyers. The third quarter of 2018 showed little or no change from the previous one in terms of property values in the capital, Wicklow or Kildare with only a small bump in Meath.
The term 'negative equity' is becoming a thing of the past as a result of the increases in values over the last number of years, meaning that finally those who bought lego-land apartments during the boom and which are now too small for growing families, can finally consider moving into the coveted three-bed semi. That banks are willing and able to lend helps them along. And, of course, the banks themselves are feeling a little bit better about the state of the remaining books they hold on repossessed properties, which take them from wobbly to somewhat balanced. Supply remains an issue, though and looming large is the prospect of interest rate rises which the ECB has signalled now that its expensive and expansive QE programme has come to an end. It won't be soon, or much, especially with Brexit, but it will be certain.
After all, when rates are zero, there's only one way to go.