Returning to Ireland: Renting or buying a home
Rent and house prices have risen considerably, especially in Dublin city
This article forms part of the Returning to Ireland guide by The Irish Times, with information on jobs, housing, health and education, and advice from Irish emigrants who’ve already moved home.
If you're not returning to a property you own, it's likely that you'll be looking to rent. If you wish to do so in the capital or one of the larger cities, you may be surprised by just how much rents have risen in recent years. Supply is also a huge issue. The cost and availability of rental accommodation is cited time and time again by people looking to return to live in Ireland as one of the biggest barriers.
A survey from Daft.ie in February 2016 showed that while rent inflation in Dublin has eased, rents in the commuter counties are now rising rapidly. Overall, rents have risen by more than 20 per cent in the past two years, resulting in an average nationwide rent of €979 per month at the end of 2015.
This means that a two-bed will cost from €1,696 in Dublin 4, to €622 in Limerick City and €803 in Cork city. If you're looking for a three-bed family home, you can expect to pay about €1,245 in north county Dublin, or €1,717 on the southside.
To search for a rental property daft.ie and myhome.ie are two of the better options. Another innovation in the rental market you may be unaware of is the proliferation of real estate investment funds (reits) and investment funds in the rental market. This has introduced a professional landlord base, something you may be more familiar with when living abroad.
Something else you may have experienced abroad is stronger rights for tenants. In Ireland, while rights of tenants are increasingly on the agenda, little progress has yet to be made on this front.
Remember also that the obligation to pay water charges in Ireland is on tenants – not landlords. If you don't register for, and pay the charges, then your landlord will be entitled to withhold your deposit.
Buying a home
House prices plummeted after the crash, but have been rising rapidly again in recent years. The latest Daft House Price Report shows asking prices rose across Ireland by an average of 8.5 per cent in 2015. The average asking price for a house in the last three months of 2015 was €204,000, compared with €188,000 at the end of 2014 and €164,000 at the market trough in early 2013. Prices in Dublin have streaked ahead of other regions due to short supply, but very good value can still be found outside the capital.
Dublin rent prices map
Getting a mortgage
With rents so elevated, you may feel it makes better sense to buy a property. Financially, this may be a prudent approach. Figures put together by economist Ronan Lyons show that monthly rent on a three-bed house in north county Dublin will cost €1,245, but to buy it will cost €1,078 a month (on a mortgage rate of 4.3% for a 30-year term).
And the good news is that getting approved for a mortgage if you have been living abroad for some years should not be any more difficult than getting one if you always lived in Ireland. The bad news of course is that it has become more difficult for everyone!
According to Dublin mortgage broker Sean Couch, the main issue you might face when returning home to buy a property is having a job for long enough.
“The bank normally will insist that you're back in work at least six months and finished the probation period,” he said, although adds that some banks will look for 12 months in a job before lending.
Typically, your job will have to be permanent to qualify, although Couch notes that there are a couple of exceptions, such as a doctor on a contract.
“By and large, for 90 per cent of the people, it's permanent,” he says.
Once you've crossed that hurdle, you'll have to prove that you can afford the monthly repayments on a mortgage, and that you have the requisite deposit.
Of course if looking in Dublin, you will need a hefty deposit, thanks to the recent change in mortgage lending rules from the Central Bank. If you have been saving abroad, particularly in the UK or US, the weak euro should give your deposit a decent boost thanks to currency conversion rates, but it may not be enough.
If you're a first-time buyer, you'll be able to buy to a house valued at up to €220,000 with a deposit of 10 per cent. If the property price is over this however, your deposit is likely to be closer to 15 per cent. If you, or your partner, have already purchased a property however – either in Ireland or abroad - you'll have to come up with a deposit of 20 per cent, which is no mean feat given Dublin property prices.
According to figures from the Banking & Payments Federation Ireland (BPFI), the average deposit needed to buy a property in Dublin was €51,000 in 2015, a level of savings which may be out of the reach of many.
The Central Bank also introduced new income multiple limits which may impact how much you can borrow. You can now only borrow 3.5 times your gross income (ie joint salary of €100,000=mortgage of €350,000), although this limit can be exceeded in about one in every five applications.
If you wish to buy a property before you make the move back home, you'll need to be aware of additional restrictions – unless of course your years abroad have been so good that you'll be a cash purchaser.
Banks typically apply stricter requirements for non-resident purchasers. So Permanent TSB for example, will require a deposit of 40 per cent and will also want borrowers to be earning more than €100,000. In addition, non-resident borrowers can expect to pay a higher rate of interest on their borrowings.
Another change you should be aware of is that mortgage interest relief, which offered relief on the interest part of a mortgage is no longer available, while a first time buyers grant was abolished in 2002.
Read more about applying for a mortgage as a returning emigrant here.
This article forms part of the Returning to Ireland guide by The Irish Times, with information on jobs, housing, health and education, and advice from Irish emigrants who've already moved home.
While every effort is made to ensure the information provided is correct at the time of update on May 25th, 2016, readers are advised to check official websites linked to in the guide for the most up-to-date information.