Tips for first time buyers: don't rent, avoid Celtic Tiger era apartment blocks, and think ugly
LIKE many Irish adults with children today, I am damned angry that home ownership in our cities is fast diminishing to the degree that mine and other kids of their generation won't own a home; unless they end up in the top-earning 30pc.
What's more, I'm angry about the way things have shaped up in rental. Because, thrown out of mortgaged ownership, most of our city children will also likely end up paying extortionate amounts of rents for far smaller spaces than we, their parents, lived in. This will impact their lives immensely.
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Because of the inflated cost, they will spend much more of their disposable income on a roof over their heads than we ever did. The city spaces they will rent would not be deemed suitable for raising families by today's standards. Young couples with children are already spending more than the mortgages on three-bedroom houses to rent one- and two-bedroom apartments.
The reasons why young people can't buy, or indeed rent, have been delved into widely here and elsewhere. Irish housing provision is over-regulated and overtaxed. Land values remain uncontrolled. Starter family homes in or near cities are in short supply and the political will is not there in Government to build enough for all. A centre-right cabinet has leaned largely on private market solutions.
Little or no traditional social housing has been built by local authorities while at the same time Government is promoting a new foreign fund driven model aimed at seeking to squeeze more of us into smaller spaces paying higher rents - where our kids are headed.
In contrast I could buy my first house (a two-bed terrace) in 1994 for IR€50k aged 24. That's €63,500, and when inflation is taken into account (using the CSO calculator), that's €100K in modern terms. Can you imagine how much better off we'd be if two-bed city houses cost €100k today? We had that before, so why not now?
But we are where we are, with the window of city home ownership already closed or fast closing for average earners in their 20s and 30s.
If I were 24 today and looking at getting on that last rung before it's pulled away, I'd be considering a range of somewhat unorthodox options to get on that ladder. Here's my advice on how to get on before it's pulled up out of reach:
1. Avoid rent. You must find a way of saving a deposit. You absolutely CANNOT do this while paying standard city rents. Neither should you expect to live as a young adult in a shared bedroom in your parents' house.
Temporary solutions are required. Some parents have their offspring and their partners living in caravans or prefab homes/Shomeras in their back gardens. No shame here and it should be looked into. If that isn't an option, look for a site on which to establish a prefab home temporarily. You can buy a two-bed log cabin house built on land for €22,000 all in. The rent you'll pay for non-developable ground is marginal compared with city rents for regular properties. Now save hard.
And when it's time to buy and you find yourself in the sub-€200k city homebuyer's zone, it's time to consider the following:
2. Take your expectations right down. If it's cheap, in poor condition but in a good location and structurally sound, don't be put off by it. Buyers with high standards are being sniffy and that's why it's in your price range. Your parents' generation lived for years in cold run-down homes without proper windows, kitchens, heating and décor because buying like this was a step-up method. Buy more jumpers, get heating/double glazing in a few years' time. Do get a good surveyor, though, to ensure a house is not structurally damaged or does not have a progressive failing.
3. Try hard to acquire a home with an extra room. The Rent A Room scheme is an excellent way to supplement the mortgage payments and you can earn most of the rent tax free. Yes you'll be sharing your house with someone else, but you'll be doing so with more bodies anyhows in a house share rental.
4. Consider a home split. A young couple can't afford a four-bed semi of 1,800 sq ft for €480k but two young couples can. Divide it into two homes above and below so it becomes two 900 sq ft two-bed properties for €240k each. The equivalent two-bed in the area would cost €340k. Get the properties legally split. Splits have been tried and tested for decades in the UK.
5. Do not buy an apartment in a Celtic Tiger era block. There are too many risks involved. We've had increasing revelations about poor standards of build, about fire regulation failings and failing management companies. You have no control over your neighbours or the common areas. Don't do it.
6. Look at 'ugly' options. Four-bed flat roof homes in Tallaght have sold recently for just over €200k. There's nothing wrong with them structurally. Homes near masts, beside airports, on top of main roads are cheaper. Avail of them.
7. Go 'Old Corpo.' Former Corporation homes in mature areas offer excellent value right now, particularly if they are central or near public transport. Buying one in poor condition is less risky because these homes are so well constructed that there's actually little that can go instrinsically wrong. Snobby types still won't buy them and that helps make them affordable. Their loss, your gain. Get in before they come round.
8. Research cheap home locales properly. Some are cheap because the estate is a no-go zone where the local 'kidiots' will smash up parked cars and rob your house. Google the street or estate name and eircode followed by the term 'court' and the cases will show.
9. Get into training. City centre train journeys done in under an hour (it can take that to get in from most Dublin suburbs) could be your solution. For Dublin-born hunters, there are still three-bed houses in Drogheda in good locations for under €200k or two-beds around Mornington and Laytown, all on the Dublin line.
10. Look at commercial conversions. As retail fails, secondary streets and mid-estate shop rows have lost value as commercial buildings. They often have living spaces upstairs. They are generally cheaper than houses, contain more space and they can be converted.
Finally, good luck. It's hell out there!