First-time buyers are now able to avail of a new grant for repurposing vacant or derelict properties under new measures introduced by the Government.
The Government has announced a new grant which will allow first-time buyers to purchase a derelict or vacant property and turn it into a home without the need for planning permission.
The new Croí Cónaithe (Towns) Fund Scheme will see eligible first-time buyers with mortgage approval receive a grant of up to €50,000 in plans which are aimed at tackling the nationwide housing crisis.
Minister for Housing Darragh O'Brien announced the new regulations, which will also allow pubs to change from commercial to residential buildings.
€50 million in funding has been allocated to local authorities under the scheme with the aim of delivering 2,000 homes by 2025.
Here's everything you need to know.
Why introduce this grant?
The grant is another part of the Government's strategy to tackle the ongoing housing crisis and is targeted at towns and villages where vacant and derelict buildings could be repurposed as residential units.
The aim of the new grant is twofold: to provide more assistance to first-time buyers (especially those struggling to find properties in their price range), and to tackle the issue of vacant and derelict properties locally which are a blight on many towns and villages nationwide.
A residential buildings report from GeoDirectory revealed that there are now more than 100,000 vacant and derelict homes across the country - 90,158 vacant residential dwellings and 22,096 derelict residential addresses.
However, Revenue said that 57,206 properties were reported as vacant by their owners on November 1st 2021 - contrary to figures revealed by the census which reported that a total of 166,752 vacant homes existed nationwide.
So what grant figures have been announced?
A maximum grant of €30,000 will be available to those looking to refurbish a vacant property to use as their main home. This includes the conversion of a non-residential property into residential use, e.g. from a commercial property to a residential one.
An additional top-up grant of up to €20,000 will be available where the property is deemed to be structurally unsound or dangerous i.e. derelict, bringing the total available grant for a derelict property up to a maximum of €50,000.
Where someone is looking to access the top-up grant, an independent report must be undertaken by a quantity surveyor or engineer to confirm the property is unsound. The report must then be submitted along with the application. Those applying will be required to indicate in their application whether or not they are seeking the top-up grant.
The grant includes the cost of VAT for the works carried out.
What are the eligibility criteria?
Here are some of the most important criteria to avail of the Croí Cónaithe scheme:
- Applicants must be first-time buyers. Divorcees or people who have been declared bankrupt and who may previously have bought a home can also apply.
- Applicants who have particular needs such as those with disabilities or older people can apply.
- Applicants who are moving from their current home which they are selling or have sold and want to live in a town or village setting may also apply.
- Applicants must be refurbishing a home that has been vacant for at least two years and the property must have been built before 1993.
- You must live in the home as your main residence for at least five years.
- You must be buying a property in a qualifying town or village. Initially the scheme will not apply to towns within the city and suburbs of Dublin, Cork, Limerick, Waterford, and Galway.
- Your tax affairs must be in order with Revenue.
The relevant local authority will also carry out a reasonable cost assessment on the works you do and may not approve payment for some work if they think it's excessive. In other words, you can't go and blow €30k on new windows!
Other important eligibility criteria can be found on www.gov.ie.
However, despite this new grant being announced, it won’t necessarily make it easier for people to get a mortgage...
Getting a mortgage on a derelict property
There are some difficulties with the proposed new grant for first-time buyers.
The main point to bear in mind is that just because you’re eligible for the above grant doesn’t mean a mortgage lender will be happy to give you a loan. We don’t yet know how willing lenders are going to be to lend against derelict properties.
When trying to secure finance for a new home as a first-time buyer, it’s important to remember that you’ll be underwritten twice in the mortgage approval process - firstly on your income and secondly on the property you’re looking at purchasing.
That is to say, some mortgage lenders may not approve the latter end of the underwriting process based on the property that’s being proposed.
Another important point prospective homeowners need to consider is that if you’re thinking of turning a derelict property into the home of your dreams, you’ll need to hire the relevant tradespeople, which is fairly tough right now to say the least.
Is there any clawback?
Yes. If you sell the property within five years the full amount of the grant will be clawed back.
If you sell the property after five years and before ten, 75% of the amount of the grant will have to be repaid.
Nothing will be clawed back if you sell after 10 years.
Can I avail of other grants?
Yes. The SEAI Better Energy Home Scheme Grant, which covers payment for things such as attic insulation, cavity wall insulation, internal and external wall insulation, and the installation of heat pumps and solar panels may also be applied for.
However you can't claim for the same thing twice under both schemes.
Is this a good proposition?
Only time will tell how effective the new grant will be, however it’s clear the grant favours those who have more money and time on their hands.
Not every first-time buyer will be in a position to be able to afford to renovate a property, never mind have the time and energy it takes to turn something derelict into a loving home, especially families working on a budget.
Nevertheless, any measure that will help towards repurposing otherwise vacant and derelict buildings is welcomed.
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