# Overseas Landlord - Purchase as a holiday home in Ireland - clarification



## Eistigi (9 Sep 2015)

Hi All

I'm looking for some clarification please - any help would be really appreciated.

I am an Irish citizen residing in Australia.  I have been approved for a loan (by an Irish lender) to purchase a house in Ireland.  The loan is set for purcahse of a holiday home.  My plan is to rent the property out for 2 years.  Then move home to reside in it after that.  I guess my first question is - are there any legal implications here?  I want to ensure everything is above board.  My accountant says I will be liable for tax regardless of holiday home or buy to let.

Secondly, I am given to understand that holiday homes cannot be registered with the PRTB.  However I could not find this stipulated on the PRTB website FAQ section.  Is anyone able to clarify?  Or point me in the direction of where I get clarification.

Much appreciated.

Eistigi


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## Bronte (9 Sep 2015)

Holiday homes, temporary letting therefore, are not registered with the PRTB.

If you receive income, rent, from your holiday home you will have to declare it to revenue and pay tax.  But either way you will have to pay LPT.  Local Property Tax. 

If you keep it for your own use only, then obviously you will have no rent. 

Did an Irish bank approve this loan for you.  Do they know you are in Australia?


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## Eistigi (9 Sep 2015)

Hi Bronte

Yes an Irish bank has approved the loan.  They know I reside in Australia yes.  I am going through a mortgage broker in Ireland, and I have provided all of the information/required documentation they have requested (proof of residency, proof of funds for deposit, bank statements for last 6 months, P60, Salary Cert, Credit History - the works). 

Regards
Eistigi


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## Bronte (9 Sep 2015)

I'm just surprised they've done this, it was my understanding ex pats have a hard time getting loans.  Is your job in Oz a temporary transfer.


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## Eistigi (9 Sep 2015)

Yes it was a quite challenging Bronte - they were pretty strict on the criteria and I had to provide a comprehensive amount of material about my work, salary and credit rating in Australia.  No I am not on a temp transfer.  I have been working and residing in Australia for 14 years.  I work in the IT sector and my deposit is approx 40% of the purchase price.  One of their key focuses was on ability to meet monthly repayments, which they were quite strict on.


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## Bronte (9 Sep 2015)

I've brought from abroad myself in Ireland, it was no problem in the good old days.  From my reading on AAM and elsewhere I understood it had got a lot stricter.  The info you've posted there will be helpful to other expats.  I'd imagine going via a *good* broker was key.  That's a high deposit all right. 

What kind of renting out are you planning.  I presume you've looked into it etc.  I use family as agents.


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## facetious (9 Sep 2015)

As Bronte says, holiday lets are temporary or short term lets, usually no more than a few weeks per let. Also, holiday lets are very seasonal and your ability to let will also depend on the location. You may find that during the winter, you may have 3,4, 5 or more months with no income from lettings.

Once you go over the proverbial holiday letting period you will be bordering on a short term residential letting and must comply with the Residential Tenancies Act 2004 and its associated requirements, briefly explained by Bronte, above.


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## Eistigi (9 Sep 2015)

Hi Facetious and Bronte,

Bronte - to rent the property out, I was planning on going through the normal channels one would go through to let out an investment property.  Will there be restrictions on this given it's a holiday home?

Facetious - so my plan is to let this property out for approx 2 years (as one would with a regular investment property) - not short term rentals.  Is there anything I need to be aware of here?

Thanks


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## Bronte (10 Sep 2015)

I was confused there, so it's not a holiday home but a normal investment property.  Is it in a location that can easily be rented?  It's not one of those special section type properties, they were a disaster for a lot of people.  Unless it's a particular type of holiday home estate with certain restrictions on lettings I cannot see a problem.  But your solicitor is the person to ask this from.  What exactly happens in that estate currently, long term, holiday or residential.  I presume a mix.

What's normal channels for you, an estate agent?  Make sure they are good at the managing side rather than the just letting.  Some are useless.

You register with the PRTB, pay LPT, collect rent, declare to revenue - please hire an accountant for this.  Vet your tenants carefully.  Check out where they are currently living etc. Understand exactly the roles of an agent.  They don't for example do the PRTB in general, unless that's changed.  Can be done online.  One month deposit and one month upfront is the norm.  Do you want the money by dd into your account.  Agent should call to the house a few times at the beginning to see all is ok.  And then monthly.


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## facetious (10 Sep 2015)

As Bronte says, it may be a home in a holiday location, either among many individual holiday homes or in a holiday complex, but what you are suggesting is not a holiday rental under Irish law. There are certainly a number of holiday complexes where homes are now being sold by the owner (or their banks because the renting did not prove viable against the purchase price) who has come to the end of the 10 year tax relief period and they may now dispose of the property. A number of these homes are being taken up by owner occupiers and the complexes are becoming semi rental, semi residential.

If you are not resident in Ireland, and you are letting a property you need either a family member, friend or professional person (accountant, agent, solicitor) do do your tax returns or the tenant is required to retain 20% of the rent and forward same to Revenue. Furthermore, you are required to have an emergency contact number for repairs, issues etc., for your tenants. In my opinion, a contact number in Australia is not suitable and again an agent in Ireland would be the way to go.

Again, as Bronte says, some estate agents (note: I did not write Estate Agents as I have very little respect or confidence in the majority of them) are useless. I would go much further and say that of any I have had to deal with, probably 80% are useless. Many do not seem to know the basics of the Residential Tenancies Act 2004 and I have had disputes in their offices over things they were doing/saying. So, how you find an agent who is good at all aspects of renting (finding tenants, proper quality vetting and management of the property as well as dealing with tenants in a respectful manner) from Australia, I have no idea.

Finally, Bronte says one month's rent and one month up front (as a deposit is the norm. However, the 'norm' in Ireland is slowly changing and while the one month's rent in advance remains the norm, landlord's are now asking 1.5x, 2x or more of the rent value as a deposit. Part of this is because some tenants decide to use the deposit as the last month's rent, leaving the landlord nothing to cover any damage the tenants may ahve caused. The 'norm' in continental Europe is 2x or 3x the rent.


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## Eistigi (10 Sep 2015)

Hey Guys

Thank you very much for all the great feedback.  I better clarify things as I am probably not being clear in the information I am giving - sorry I am completely new to this forum and I am not well read on the property system (but I am learning), hence the reason I am seeking advice.

The property I am purchasing is 'not' a holiday home.  It is in a regular residential estate - it is a 3 bedroom residential family home and most of the homes in the estate are owned by the residents.  It is in a good area and the rental prospects are very good.  

The loan is being secured as a purchase for a holiday home.  What I am wanting to do is rent it out for 2 years (like you would a regular investment property - i.e buy-to-let).  Hopefully this clarifies the situation....?  I am trying to get clarity on whether there is anything I need to be concerned about with with this arrangement?  

As far as paying Tax etc - I have no concerns here and I will use a Tax agency to handle my affairs according to the law.

Secondly, because the property is being secured as a holiday home, I cannot register it with the PRTB, which for me is a disadvantage, in the event that their are any disputes.

Thank you for all of your other advice on rental agents and tax, etc - it is definitely information that will be useful for me.

Eistigi


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## facetious (10 Sep 2015)

Eistigi said:


> Hey Guys
> 
> Secondly, because the property is being secured as a holiday home, I cannot register it with the PRTB, which for me is a disadvantage, in the event that their are any disputes.
> Eistigi



And therein lies your difficulty. A tenancy for a residential property is required by law to be registered. It is not really the property but the tenancy that is registered and some of the details of that tenancy such as the property address, the landlord, the tenants and so on. If you let on a long term basis, the letting will be as a residential letting.

There are some landlords who rent in, for example, seaside resorts, who rent as a residential letting during the winter months (for less than 6 months) then rent in the summer on a week to week basis to different holiday makers. 

It must be noted that in Irish law, once a tenant has been in legal occupation for six months, that tenant automatically has a 'Part 4' tenancy irrespective of his previous tenancy (fixed term or periodic (month to month) and is entitled to remain in the property for a total of 4 years without signing any new agreement. For an initial tenancy, landlords usually prefer a 12 month fixed term agreement (usually written but may be oral) and at the end of the fixed term, a tenant's Part 4 rights automatically take over without any documentation. 

If the tenant vacates at the end of the first 12 months, new tenants move in then a new registration with the PRTB is required as there is a new tenancy.


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## Eistigi (17 Sep 2015)

Thank you very much facetious - your feedback around the tenancy being registered and not the physical property itself has made things clearer for me, so yes I will be obliged to register.

Yes I have been familiarising myself a little with the RT Act 2004...is there a cut down version that makes for easier reading by any chance?

And Bronte - thanks for your earlier post above around renting.  I guess the tenant vetting is going to be one of my concerns.  Because I reside in Australia, I'm going to have to seek the services of a letting agent to do this.  Similarly with Income Tax - I have approached a firm who will handle Tax returns and also Collection Agent duties.  Finally for the ongoing property management, I am not sure what do here; I was going to use the letting agent handle the Letting service only, but I may have to look at getting them to do the full management, given my situation.  Not really sure how much work this will involve in a given year - I don't want to hassle a family member for this...

Eistigi


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## facetious (17 Sep 2015)

I think the PRTB website has a 'layman's' version. In any case, that website is a good place to start.

Just a note, although it is the tenancy that is registered, when a landlord ceases to rent out his property he should notify the PRTB that the property is no longer rented. The PRTB do keep a record which properties are used for residential lettings. Likewise for the tenants, tenants belonging to a specific tenancy must be recorded by the PRTB; probably, in part, so that if the tenant makes a claim, the PRTB know that s/he is a tenant in that property.


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## Bronte (17 Sep 2015)

Eistigi said:


> The loan is being secured as a purchase for a holiday home.  What I am wanting to do is rent it out for 2 years (like you would a regular investment property - i.e buy-to-let).  Hopefully this clarifies the situation....?  I am trying to get clarity on whether there is anything I need to be concerned about with with this arrangement?
> 
> Secondly, because the property is being secured as a holiday home, I cannot register it with the PRTB, which for me is a disadvantage, in the event that their are any disputes.



(I could have sworn I replied to this)

Would I be right in thinking that you told the bank in order to get the loan that it's a holiday home for you, it was in effect the only way to get a loan off them.  (I noted yesterday for examply Ulster bank will no longer mortgage properties for non residents - apparently - but there are always tricks to be pulled)

If the above is the case you've no need to worry about registering with the PRTB, the bank will never know.  And do register.  But forget the PRTB being of any help in relation to a 'real' dispute.  But do register in order to get your mortgage interest relief.  All bank correspondance should go to your Oz address.

For your house insurance, it is VERY important they know you are non resident and that it is an investment property, so if I'm correct about the bank, don't arrange your insurance via the bank.  It's more difficult and more costly as non residents to get landlord insurance.

I'm a bit confused about who is going to do what for you re letting.  You need someone to a) get a tenant, vet the tenants - normally I think the fee is one months rent b) someone to collect the rent - fee is percentage of rent, this person normally does c) organises repairs, deducts repairs from rent.

I'd find it odd the letting agent doing the tax returns.

I don't have much faith in letting agents, based on my experience and also based on stories I've read on here over the years.  My advice to you is a professional relationship with a relation who you pay for doing the service.


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## Eistigi (18 Sep 2015)

Thank you Bronte - sorry if my posts have been a little confusing.  And yes you are correct.

So yes I will register with PRTB.  Fine.  However what I am hearing from your post is you feel they are ineffective at handling disputes?  Ok, I will research this a bit.

Regarding your comment on insurance:
1. Mortgage Protection Insurance:  Mortgage Broker is organising this for me.
2. Home Insurance:  Mortgage Broker has also recommended organising this for me.  You're saying it's more costly for NR landlords to get home insurance via the bank?  Or are you saying getting Home Insurance via the bank who are also supplying the loan is not a good idea?  Or am I misunderstanding completely?
3. Is there another level of insurance I need to cater for as a landlord?

Regarding who is doing what - sorry let me clarify:
- Tax Returns - Accountant in Irleand
- Rent Collection - Accountant in Irleand (they offer this service for additional fee of 150 per year)
- Securing Tenants - Letting Agent
- Ongoing Management (Someone to contact, organises repairs, grass cutting, shoulder to cry on, etc) - ??  Unfortunately I don't have a family member who could assist me with this, hence the reason I am thinking Letting Agent.  Looking for other options.

Hope this is clearer.  And again, thank you, your feedback is really helpful.  Same applies to facetious.


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## ajob12 (24 Sep 2015)

Hi EISTIGI,

Whats the difference between Holiday Home and Buy-to-Let?
Do you require a bigger deposit for a Holiday Home?
I'm told that as a Non Resident you must have at least a 30% deposit on a Buy to Let
Is this the same for a Holiday Home?
Also how can the lender in Ireland verify you're borrowing power if you are paid in Aussie $?
Can you use a property in Australia as collateral to purchase in Ireland when borrowing from an Irish lender?

Sorry for all the questions but I'm Irish living in OZ and interested in buying a property in Ireland and as you have been through the process, I'm picking your brain a little (hope you don't mind !!).

Ta


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## Bronte (24 Sep 2015)

Eistigi said:


> Thank you Bronte - sorry if my posts have been a little confusing.  And yes you are correct.
> 
> So yes I will register with PRTB.  Fine.  However what I am hearing from your post is you feel they are ineffective at handling disputes?  Ok, I will research this a bit.
> 
> ...



I hope to never have the misfortune to have a PRTB case, and I've no faith in them being any help if a tenant defaults or causes massive damage.  You don't need to research it, you need to carefully vet your tenants.  But even that might not be enough.

You need two insurances only.  House insurance, fire/water damage plus personal liability, standard for landlrods, and this is in my experience more costly as a NR landlord, as insurance companies seem to offer deals to owner occupiers for their BTL properties.  Not a big deal.  The other insurance is the mortgage protection insurance, sometimes called life insurance or term insurance, to pay off the mortgage if you die. Compulsory for the banks, not always in BTL situations though. 

You pick whoever gives you the cheapest insurance. 

That's seems strange, 150 Euro for an accountant to collect rent.  Explain how that works?

Seems to me you need a good letting agent who will vet tenants, collect rent and manage the tenant's ongoing problems.


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## Bronte (24 Sep 2015)

ajob12 said:


> Hi EISTIGI,
> 
> Whats the difference between Holiday Home and Buy-to-Let?
> Do you require a bigger deposit for a Holiday Home?
> ...



Might be an idea for you to go via a Broker, they knew the systems.  Liam Ferguson a poster on here is one, there are others I'm sure, or get a broker your family recommends. 

Why do you want to buy a property in Ireland.  I really think Oz is way too far to manage a property.


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## LS400 (24 Sep 2015)

Hi Eistigi, you have my sympathy, you want to buy in this country with all its buracratical red tape, we have an organisation so mis-trusted "PRTB" and one one-side to the tenant, landlords have been driven to dispair, yet we champion them regularly. I can hear it now, the cases of the bad landlord, if we were any good at this, we would have fines so large, you would take the bodgitt LL out of the equation and the same goes for the nightmare tenant, but we just move the problem around the corner. You regularly hear the phrase, get a good solicitor, get a good agent, get a good accountant, well God help you in your search, I live here, and I've been shafted by the latter. I wasn't doing it on the cheap either, just a recommendation from someone else. There isn't a Liam Ferguson in every port you see. You may want to live back here, but, food for though, if I had to weigh up a 2 year time frame, to get in on the property market, I have property here and England and I have to say, I would rate the UK far above with professionalism with both tenant and letting agents. Not wanting to put you off or anything...


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## Eistigi (28 Sep 2015)

ajob12 said:


> Hi EISTIGI,
> 
> Whats the difference between Holiday Home and Buy-to-Let?
> Do you require a bigger deposit for a Holiday Home?
> ...



Hi ajob12,

Sorry for the late reply.  Not sure I can answer all your questions, as I am new to this too, but I will try assist best I can:
- Holiday home vs Buy-to-let = Lenders offer different loan packages.  I am not well versed here.  I would suggest an Irish broker to guide you through this.

- Deposit = As a non-resident, I was asked for 35%.  That was compulsory for my application.  It may differ across lending institutions but I don't think by much.  Some lenders won't even look at your application if you are not earning a certain salary overseas (I understand 100K Euro).  So even if you are on a good salary in Oz, it may not convert well with the shocking rate.

- Verify borrowing power =  This is easy. You'll be asked for Oz payslips, savings statements, P60 (Oz equiv), etc.  They simply take today's exchange rate, calculate it all and compare it against their lending criteria.  Simple as that.  You will also be asked for a credit history statement from Veda in Oz.  That's just the half of it - they check everything.  And rightly so I guess.

- Oz property collateral = no idea on this.  Irish Tax accountant for this question I think. 

So a very important thing I saw across all the lenders in Ireland that was consistent is that they want to see very clearly your ability to repay.  So you do the math on how much you think your monthly repayments will be (let's say 1000 Euro) - then convert it to AUD = 1600 AUD.  This is the amount you have to be able to show 'you can save' per month.  Not the amount 'you have coming in' per month but the amount you can save after all your outgoings.  They asked me for 9 months of bank statements to show this.  So in other words, if you're planning to rent it out, and you can't, they want to see you have it covered.

So my thoughts:
1. Search for an Irish mortgage broker on line (google mortgages for ex-pats or suchlike - there are a few).
2. They will ask you for heaps of information and documentation - this takes some time.  Once submitted, it's in the hands of the broker and the lenders.
3. At the same time, do your planning and do your math in advance and work out if you can afford it.  The repayments, the insurance, all of the fees - estate agents, solicitors, tax accountants, surveys, valuations, and if you're renting it out - what's the rental market like in that area, etc.  80% of this whole process I spent planning, researching and doing figures.  
4. Then ask yourself, do you really want to buy a house in Ireland?


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