Q&A

Beware the RIP terms and conditions

Q My son bought a buy-to-let property in Ireland eight years ago with a buy-to-let mortgage. He initially rented out the property but he moved back to Ireland five years ago and took up residence in his buy-to-let.

He informed the lender (Permanent TSB) but was never changed to a normal owner-occupier residential mortgage (which would be cheaper). He let it slide until now, but now he would like to change it and save some money, but the lender is flatly refusing to change his loan and is keeping him on the buy-to-let mortgage.

A We have heard many stories from home owners seeking to rent out their homes and attempting to change their mortgage from residential to buy-to-let, so this is a little unusual.

We contacted Permanent TSB on the general point. The news is not good. A PTSB spokesperson says that “when a customer takes an investment [RIP/Residential Investment Property] loan they do so with RIP terms and conditions. In the event that the customer moves back into the property those terms and conditions do not change; this would include the rate.

“However, we consider those customers as home-loan owners as far as the benefits of forbearance, arrears management and all the provisions of the Consumer Credit Act are concerned.”

As for the point that a buy-to-let mortgage would be more expensive than a residential one, the spokesperson says “this is sometimes the case but equally would often be the opposite – as a result we are keeping the rate as per the original [RIP] mortgage loan offer”.

How much will it cost to buy out ground rent

Q I read in your paper this week about ground rents. My parents still get an annual bill for ground rent but never pay it, and the article says that it is possible to buy out the rent once and for all. How much will it cost?

A Currently, when a house changes hands the ground rent will be bought out at the same time as part of the conveyancing. Your parents probably haven’t done this because they have been in their house for some time. They are not alone. It is estimated that there are 250,000 ground rents around the State.

In 1967, the government introduced laws enabling tenants to acquire the freehold of their property. It is done through the Land Registry and is usually a simple process. The cost varies but it is unlikely to be very much and is usually based on multiples of the annual rent. For example, the annual ground rent for Dublin Castle is just €7.33.

In the first instance, your parents should contact the Land Registry, Property Registration Authority, Chancery Street, Dublin 7. Tel: 01-6707500, Lo-call: 1890-333001, landregistry.ie. It has an excellent explanatory leaflet, which is also available on the Land Registry website.

Your questions

Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or e-mail propertyquestions@irishtimes.com. This column is a readers’ service and is not intended to replace professional advice.