How to go about financing the purchase of your fixer-upper – The Irish Times

It’s not hard to find unused, vacant property in Ireland. Empty apartments above closed-down shops in towns. Farmhouses that haven’t had a light in years. Old stone cottages crumbling away on the side of the road might get a visit from the odd tourist here or a group of teenagers with naggins there but are otherwise left unloved, unused and alone.

According to last year’s census figures there were 166,752 vacant residential dwellings in Ireland, not including holiday homes. While this number included houses or flats that are already up for rent or sale, it still seemed like an unacceptably high number of places for a country in a housing crisis. Earlier this year it was reported that registered homeless figures hit a record 11,754 people including children.

Two thoughts were being had about the country at the same time. Ireland had empty dwellings that could, theoretically with some work, house people, and Ireland didn’t have enough housing. The solution seemed simple, especially when the Government increased Vacant Property Refurbishment Grants up to €70,000 for derelict properties. Why didn’t we just restore vacant and/or derelict properties with a bit of help and live in those?

The answer is the process is a bit more complicated than that.

Let’s start with the good news. The refurbishment grant under the Croí Cónaithe scheme got a boost in April 2023 in a bid to bring more would-be homes back into use. Grants for approved vacant dwellings were boosted from a maximum €30,000-€50,000 with a top-up for derelict dwellings available up to an additional €20,000.

This means for a derelict restoration that meets the criteria, the Government could kick in €70,000 towards the project. Properties on qualifying islands attract a higher maximum of up to €84,000 for derelict dwelling, which caused international headlines and the incorrect suggestions that Ireland “will pay you” money to move to offshore islands.

The scheme is now nationwide and also extends to owners who aim to rent out the property on completion where once it was only owner-occupiers intending who were eligible. This could be a particular incentive for people who already own vacant property, eg a disused cottage on farmland.

To qualify, a property must be vacant for two years and have been built no later than 2007 (including that year). This can be proved to local authorities via utility bills showing almost no usage or disconnection for that period. According to the Department of Housing guidelines “an applicant cannot leave a property unreasonably and purposely vacant” to get their mitts on the refurb grant.

To prove a property is derelict in order to access the highest grant amount, it must be deemed dangerous and unfit for habitation by a professional report. However, an existing registration in the local authority’s Derelict Sites Register will do.

The towns and villages in this country instead of sitting empty and sad are getting a dose of revitalisation and regeneration which is badly needed

To qualify, applicants must show they own the property and they have planning permission for the work they intend to carry out or an exemption. Interested parties make the application to their local authority, detail the intended works and costs, prove what they have to prove including tax compliance and submit it.

The local authority assesses eligibility, inspects the site, assesses the feasibility and costs of proposed works and if everything is in order – approves the grant.

However, the grant will only be paid after the owner completes the work, meaning applicants have to front the costs themselves. Then the local authority will inspect the completion of the works and pay the grant if it is in line with the scheme.

Furthermore, in the fine print you’ll find the maximum grant amount doesn’t include all costs tallied up indiscriminately. Meaning a €50,000 grant can’t be made up of €30,000 on designer wall paper, €10,000 on a marble bathtub dropped in by a crane and €10,000 on fixing the floorboards. Even if those are your personal priorities.

Cost thresholds exist per work category. For a two-storey, three-bedroom semi-detached house, the department limits painting and decorating costs to €10,500 and bathroom fittings to €2,800. Structural work and site clearance including hazard removal qualifies for the maximum €50,000-€70,000 depending on dwelling classification.

A hiccup of the scheme for most people is that they have to own the property before they apply and most banks are reluctant to lend against properties that are structurally unsound or deemed uninhabitable.

Even if they own the property, they still have to have enough cash to pay for the building work upfront before they get reimbursed by the grant. This could put the scheme’s helpfulness out of reach for first-home buyers or everyday people struggling in the cost-of-living crisis.

Although Vivian Cummins, architect and partner in Dooley Cummins, finds a trend so far in property professionals with available cash reserves taking up the scheme over regular buyers, he’s encouraged by the grants.

“The towns and villages in this country instead of sitting empty and sad are getting a dose of revitalisation and regeneration which is badly needed,” he said.

Cummins has long advocated for “people to think outside the box” when it comes to hunting for prospective homes by looking at former shop units in towns and villages.

“There are great opportunities for that type of property, they usually don’t require too much work, they have good sized, proportioned rooms and some of them even have yard space from old stables, so that’s substantial garden space to the rear,” he said.

“In most circumstances you can be a 10-minute walk to schools, coffee shops, bakeries,” he said, calling the ability of kids to walk themselves to school “a colossal advantage” for some.

Cummins acknowledges the rollout of the grant can be slow. Earlier this year it was reported no money had been paid out under the scheme yet but the department says at least four grants have been issued up to the June 30th, 2023, with three of those occurring between April 2023 and June 2023. So far 2,868 applications have been made with 1,019 approved.

“It’s fairly typical a new scheme gets announced [where] maybe the resources aren’t there to man it, after all you don’t want to be hanging out €70,000 without checking things so the system is taking a bit of time to work its way, but it does have another effect of people holding off starting,” according to Cummins.

The delays were particularly “tough on people with development approval who are anxious to get going” because of the continued inflation of building materials.

“€70,000 sounds like a lot of money but that can be spent very quickly,” he warned.

Which is something artist John Ruddy found out renovating a four-bedroom farmhouse in Donegal over the pandemic with his wife Roxy.

“Whatever you think your budget is, add at least 40 per cent, at least probably double if you want to be realistic,” he laughed.

While maintaining the process was “fantastic” and “worth it”, Ruddy doesn’t gloss over the challenges when giving advice to others looking to restore a vacant house.

We just had a baby there in March and I think people have been so happy to see new life being brought into the place

“Everything takes longer so if it takes a month it will probably take three, if it takes three months it will probably take nine.”

Ruddy and his wife “fell in love” with the 120-year-old house which despite rotting floor beds wasn’t in “too bad” shape thanks to the farmer who had bought the property primarily for the land, keeping the house warm in the six or seven years it laid vacant.

“We were very much on a limited budget and we were looking for something around the €100,000 mark because I’m an artist and my wife’s a nurse so we couldn’t go too mad extravagant but we wanted to be in the country but not too far in town,” he said.

The couple lived on-site “with no hot running water” and “only a microwave and an airfryer” in a studio in an outbuilding while they built their dream home with the help of builder James McCormack.

They were able to keep costs low at a time where building materials were skyrocketing thanks to McCormack’s insight and Roxy’s organisation.

“He would tell us to buy cladding on the Friday before it tripled over the Easter weekend. We had tiles and doors we didn’t need for a year partly thanks to Roxy’s eagerness to buy them so we just put them in storage until they were needed.”

When it came to securing a home loan for a vacant property, Ruddy credits the value of two acres it came with, plus the relatively lower principle amount helped get the mortgage across the line.

“We paid €85,000 in the end but if it went to €120,000 they might not have approved,” he said.

The couple didn’t avail of any Government grants in the end because “for us it felt they were for people who already had money, it was infuriating”, according to Ruddy.

The couple funded renovations using a mixture of savings, home improvement, business and mortgage loans.

While admitting it was “financially scary” at times and physically challenging having to DIY flooring when “there wasn’t a right angle in the house”, the couple were thrilled with the end result.

“We just had a baby there in March and I think people have been so happy to see new life being brought into the place,” he said

“Plus, I love sweeping my floors knowing how much effort went into that.”