Buying a second home in Ireland – what to consider

The process for buying a second home in Ireland follows the same steps as buying a first home. However, there are other financial implications and additional considerations such as home security systems to be aware of.

Some people are tempted by the idea of owning a holiday home. A place where you can escape to when the stress of life gets to be too much. Others are thinking about buying a property to rent out as an extra income source. Either way, there are certain factors you need to consider, whether the second home is intended as a holiday home or a buy-to-let.

Below are some areas that are helpful to review beforehand:

Why are you buying a second home

Are you looking for the house to be an investment property or a holiday home where you can relax and have a weekend break away. When it comes to financial support, you’ll need to specify the purpose of the new house. This will have different tax, lending, and insurance implications.

With an investment property, you will be buying the property in order to rent it out to tenants. Review the expected rental yield of a house in your preferred area. After tax, can you afford to make any repayments if you get a mortgage? If buying a holiday home, will you utilise the property enough to justify the expense? Downsizing your home may also come into consideration if you are approaching retirement and you may wish to rent out your primary home while moving to a smaller home more adaptable to your retirement needs.

How to buy a second home and your financial options

Set your budget and ensure you can afford to buy a second home. It's important to examine future expenditure. Don't put yourself under excessive financial pressure by making this purchase. If you plan to use a mortgage to make your purchase, you will need to establish how much you can borrow. Your current assets will be taken into consideration. So you will need an up-to-date valuation of any properties you already own.

Additionally, you will not qualify for first time buyer status whether you are purchasing a second home or a rental property, . This means you will need at least a 20% deposit. It doesn’t matter where else in the world your first property was purchased. Typically, lenders will look for you to be debt free on your first home or have considerable equity which can be leveraged for the purchase.

Check with your nearest bank or credit union to see what their financial criteria is to qualify for a buy to let mortgage or large loan. It is a good idea to get a mortgage offer in principle if you are planning on funding your new home through a mortgage.

Seek advice from a real estate agent

There are so many factors to consider when buying a second home. It is beneficial to know the current trends and market advancements to make informed decisions.

You may consider contacting a real estate agent. They have access to up-to-date information that you may not be aware of, as well as insight and experience in the market. Real estate agents will know all the things to look out for, even some things that you would never have thought of.

People think that seeking expert advice will cost unnecessary funds, but working with professionals will give you valuable knowledge. This knowledge could save you money in the long run. Their advice will help you along your purchasing journey and you are more likely to secure a better deal on your house.

Where to buy a investment property or holiday home in Ireland

Whether you are looking to purchase a rental property or holiday home, you should try to purchase in a location that is in demand. Its important that this demand isn’t based around seasonality as your income will only be limited to that time of the year.

If this second property is specifically orientated around a holiday home, you should ensure you are very familiar with the location and the amenities. This ensures you are completely satisfied with owning a home in that area.

Another consideration when purchasing a holiday home is the distance from your current home. You want to ensure you frequently make the most of the property, in order to justify the large investment. If you live a 4 hour drive away compared to a 2 hour drive away, you are less likely to spend time there or to make last minute plans for celebrations in that home.

Tax implications of owning a second home in Ireland

Given the current housing crisis in Ireland, the Irish government are putting a major emphasis on ensuring as many properties as possible are being made available in the housing market. This means that if you intend on buying a second home which will not be your primary residence and you will not rent out, then you may find yourself with an additional tax burden. Namely the vacant homes tax will apply to people in this situation. The vacant homes tax will apply to any residential properties which are occupied for less than 30 days in a 12-month period.

You should fully investigate the tax implications of buying a second home. In such circumstances you will then be able to handle any financial implications.

Benefits of owning a second home

The main benefit of owning a second home as an investment property is that it is an asset for the future. It is also a safer investment than stocks or investments. A second home is also used by many to top up their pension when they eventually retire. Housing usually goes up in value every year faster than inflation so is also a safer option than holding cash (for those fortunate enough to have the means).

For holiday homeowners, the main benefit is saving on hotel expenses and accommodation in your favourite area to vacate to. You also don’t need to worry about accommodation availability.

Managing home maintenance and home security

Once you have purchased your second property, you’ll need to have a strategy in place to maintain the house. The house will need to be regularly cleaned, be kept sufficiently warm during winter months to avoid damp and mould, as well as require additional checks.

Its also vital to to review home security options. A reliable home security system is a critical element for any house to ensure everyone inside are fully protected as well as the valuables . This will be even more crucial for a holiday homes, if you aren’t going to be around the property on a regular basis. Having a monitored home alarm system means that you are protected 24/7 and that you can keep your alarm armed day and night whether you are at the property or not.

Having a PhoneWatch monitored alarm system is proven to be 4.5 times more effective (based on data from the CSO recorded crime data and PhoneWatch internal ARC statistics) for homes not getting burgled. PhoneWatch don’t just monitor against break-ins but also protect against smoke incidents. Whether your alarm is armed or not, they respond to all alarm activations within 15 seconds to ensure you are safe and emergency services are contacted if required. The PhoneWatch app allows you to arm and disarm your alarm from anywhere in the world, check recent activation history, turn on and off smart plugs, view PIR camera footage and much more. 

You can read our recent blog on how to prevent burglary in your second home to learn more effective measures to keep your potential new second home safe.

Conclusion

Once you have finalised the above steps and have found a property which you are interested in and meets your allocated budget, it is no harm to seek further professional advice and have a structural survey done by a professional surveyor or architect. This will help assess if any renovations are required and if extra funding is needed. One of our recent blogs also has further information on the steps involved in buying a house in Ireland.

From house alarm systems to tailored home security, PhoneWatch create and install alarm systems to match your budget and give you peace of mind. We are trusted by over 118,000 homes in Ireland to keep them safe every day. Get a personalised home security quote today.