The number of first-time buyers is falling year on year. Blame the Central Bank rules, blame lack of supply or high property prices or any one of the current market’s idiosyncrasies. But as a result, those wanting to get a foot on the ladder are having to think outside the box.
he pandemic has helped buyers by opening up new possibilities, as remote workers realise they no longer need to buy within commuting distance of the office.
Maggie Molloy is the woman behind the RTE series Cheap Irish Homes, and she believes that buying a fixer upper can be the solution for cash-strapped house-hunters. Herself and fellow presenter, engineer Kieran McCarthy, take buyers all over the country to view rundown properties that otherwise might not have shown up on their radar.
The secret, says Maggie, is to let go of the idea of moving ‘into a brand-new shiny house’. “People forget that, first of all, everyone is not entitled to have this fancy €300,000-equivalent house. People in this day and age think it is their God-given right to have that and it’s actually not.”
This isn’t just talk. Maggie actually did this herself, moving from a rental flat in Cork to a rundown Tipperary farmhouse that had no central heating and was missing half its windows. “I was just trying to get a step up from where I was, instead of going from nothing to having my dream final house.
“If you owned the place you were renting right now,” says Maggie, “you would’ve probably made the improvements that your landlord won’t make, with your spare money. So you can move into a place that is less than ideal and still be in a better position than you are in your rental.”
“Older houses that are not fully modernised are a really great way of people getting into the market if they don’t have a huge budget,” she says.
“There are a huge amount of houses out there that are under €70,000 – the type of project that I wouldn’t worry too much taking on, where it had a roof. It had windows. It had someone living in it, maybe up to five or six years ago. That’s the type of thing I would look at. If someone [elderly] was living in that up to 10 years ago even, that house can physically hold a small family. If that person was able to survive there, you can survive there in your early 30s. Of course you can.”
These bargains, however, are only found in certain parts of the country. “The further west you go, the closer to a finished house you’ll get for your €70,000.”
She lists Sligo, Mayo, parts of Roscommon, and Leitrim as places that buyers could find a walk-in property. “You wouldn’t have to take on a massive building project. You could go and unpack your bags and live there.”
Buyers in Leinster, however, are facing a bigger challenge. “If you’re looking within 10-15km radius of where you grew up in Leinster, there’s nothing out there,” she says. “In the south-east and east, what people end up doing is buying a way more derelict place … so you could be buying a house with no roof. Or you could be buying a house with no windows in one of the gable ends. These are massive, massive projects.”
Dream or nightmare?
Is this a cheaper way to get on the ladder or are buyers saddling themselves with a money pit? The answer is, it depends, says quantity surveyor Lisa O’Brien of OBQS.
She was the reality check on Dermot Bannon’s dream projects in Room to Improve, and has years of experience in heritage and conservation properties. She also recently bought and upgraded an old Land Commission cottage herself in Co Meath.
“I fall in love with these properties all the time because you won’t get the character in a new house,” says Lisa, of old Irish farmhouses or cottages, “you don’t get the lovely brickwork, the stonework or the proportions so their benefits are huge. And they are typically in very nice settings which is great.”
But before you fall for a property, she says, you’ve got to look beyond the price tag to question what you’re actually buying. “There’s this romantic notion that you can get a cheap house in Ireland, but can you live in it? Probably not, from a comfort point of view. I say to clients, ‘I’m not raining on your dream parade, I’m protecting you from a nightmare’. Unfortunately, having 20 years’ experience, I have seen some very bad nightmares because of a romantic idea.”
Any old property needs to tick a lot of boxes as far as Lisa is concerned, before she would advise a client to put down a deposit. Otherwise the costs can end up outweighing the benefits.
First comes location
“Unless you can get services like water and electricity and drainage to the property, it has zero value,” she says. The next hurdle is access. Off the beaten track is lovely, she points out, until you find that the grassy boreen leading to your house is a death trap in winter and you have to pay to lay down a road to it.
It’s only when a property passes these tests that she looks more closely at the house itself. “You’re looking at the structure. Is it solid – the four walls, the roof, has it potential for extension? And then your utilities. Will you get broadband or not, now that’s more important than ever because we’re all working at home.”
She advises spending up front to get professional advice, for example, on the legalities of boundaries and access with your solicitor, and enlisting structural and environmental engineers to check water, drainage and so on, then getting realistic quotes on any works.
“If you can’t afford a quantity surveyor throughout the lifecycle of a project, get them at the very start before you go to planning,” she advises, a pre-purchase survey typically costs around €350 to €450 plus VAT, and can save heartache further down the line.
Stick to budget
The key to making a doer-upper work for you is to get a handle on construction costs, work out your budget and stick to it.
But just how much restoring a rundown property will cost is notoriously tricky. First, you never know what you’re going to find once works begin on an old structure. Second, labour costs vary depending on whether you’re in the city or country, and third, a higher spec – triple-glazing, underfloor heating, a B2 BER – will affect costs.
Lisa gives the example of two similar restorations she recently completed. Both turned out to have serious structural issues. The first one in Wicklow cost around €3,200 per sqm because the owners were paying ‘Dublin prices’ and specified a very high-end bespoke finish and joinery. The second was in Tipperary. “The local builder did it. That came in at €1,500-1,600 per sqm.”
With the average price of a new build currently hovering around €267,000, both owners could have bought a brand-new home for the same money.
“It’s only when you get into the build that you realise how difficult it will be. These houses are so attractive because they are at such low initial prices. They are at low prices for a reason,” says Lisa.
Maggie has a different take: “If you take a vernacular cottage and you want it with underfloor heating and you want it NZEB-rated, you’re going to spend probably more money than putting it into a new house because you’re going to have to retrofit quite a lot of tech into a house that isn’t necessarily built for it. But if you’re willing to think a little outside of the box and live with a little less bells and whistles, then you can, of course, get a house that is more affordable.”
It’s also about carrying out renovations in phases, adds Maggie. “If you can open your mind to not having really high-end finishes when you move in for the first year, you can always save to put them in later. But getting a bit more realistic about what you are actually willing to live with in the house initially keeps the cost down a huge amount.”
Think long term
There’s another issue with fixer uppers that Lisa often sees. It’s when a couple buys a property to get on the ladder rather than as a ‘forever’ home, and then invests heavily in renovations that they won’t be able to profit from when they sell. “They actually have to think about their next move. Where do they want to be. And ask whether the investment in this property is going to get them there.
“You can’t foresee pandemics or even property crashes,” says Lisa, “but you can get your design plans right and maximise the value of your house.”
LISA O’BRIEN’S REVAMP
Lisa paid €270,000 for a 1930s cottage with outbuildings on an acre in Co Meath just over a year ago.
“When I bought my little 550sq ft cottage, it needed extensive work. I was buying the location, the school bus went past the gate. I would have paid €100,000 for that — I’m a single, working mum, I can’t do the school run. I knew the area well. I was also buying the site, as there it has an acre and, potentially, down the line, I might get planning for a house.
“The whole roof had to come off. It was completely rotten. Even with my contacts, it cost €12,000. I never envisaged that. This coming from me, the professional.
“I did all the demolition work first, rewired, re-plumbed. I put in €100,000 just to get it liveable. There were single-glazed windows and I lived with them for a good year. You couldn’t close them. I had tea towels stuck in them in the winter to stop the spiders getting in and the draughts because the windows I wanted cost ten grand and I didn’t have it. So I left the windows, they were fine. I phased that.
“If I had to sell my cottage tomorrow, would I lose money on it? Yes. It wouldn’t be valued at €370,000 if I was to put it back on the market. It would be prices at around €320,000, it’s still two bedrooms. But I just wanted to get on the property market and I see the potential of this site. I probably will get planning permission, so I’d have a site with planning and I’d sell it for €120,000.
“I got draft plans for an extension drawn up and took them to a local estate agent to get valued. They told me that, as a four-bed, my house would be worth €550,000 to €600,000. I knew then what I could spend on an extension and still have equity in my house if I sold up. That’s the next phase.
“As it stands, I’m not in negative equity, but I’m in a position where I haven’t covered the cost of the renovation if I sold out.
“But the potential for me overrode the risk. The affordability of the payments on my own, what my mortgage payments are on a monthly basis — it was cheaper for me to pay the mortgage here, than it was to rent a similar size house. My mortgage payment is €500 less than my rent was.”
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