Q&A this week looks at buy-to-let property and home loans
Keen to invest in buy-to-let
I am keen to invest in a buy-to-let property but find that I am priced out of the Irish market. I have been reading about Irish investors buying in the UK where prices are lower. Buying in Northern Ireland seems more manageable (in terms of actually managing the property), so what is the state of the market in the North?
According to a December 2003 report into the property market in Northern Ireland, the buy-to-let market is buoyant in Belfast, with the newer riverside apartments continuing to be in demand. Sales of investment properties to let to students within central Belfast have also been strong.
The report was compiled by the Halifax which also cautioned that "reduced activity at the bottom of the market is making it more difficult to sell houses further up the chain, leading to some delay in the sale of higher priced property".
In other words, the dreaded chain effect is in operation. The Halifax survey looked at prices over the year and found that the average price of a house in Northern Ireland is £87,977 sterling (compared to a UK average of £134,100 sterling).
Prices rose by an average of 9.8 per cent over the year (compared to 18.6 per cent across the UK). That price rise is very much an average - in Armagh the increase was 16 per cent while prices didn't rise at all in Belfast. As a small investor in an area you are unfamiliar with, it is important that you get to grips with the market on the ground.
Statistics on the health or otherwise of the market help in giving an overview but before you make any decision on any investment in the North (or anywhere) you should get up there, talk to estate agents and letting agents and familiarise yourself with likely areas and possible returns on your investment over the short, medium and long term depending on your requirements.
Preferential home loan
I hope to buy a house soon and I can avail of a preferential home loan through my employer. I have been told that this was either done away with or reduced in some way in the Budget but I am having great difficulty in finding out what the position is.
What happened in the recent Budget was that the specified rate for preferential home loans was reduced to reflect reductions in mortgage interest rates.
An employee in receipt of a preferential home loan is charged income tax on the difference between the interest actually paid and the amount which would have been payable at the "specified" rate of interest for home loans.
The specified rate in respect of home loans is being reduced from 4.5 per cent to 3.5 per cent. This change came into effect from January 1st, 2004. If a preferential loan is available to you as part of your employment package through your employer then your company's human resources department should be able to fill you in all the details.
• Send your queries to Property Questions, The Irish Times, 10-16 D'Olier Street, Dublin 2 or e-mail propertyquestions@irish-times.ie.
Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
