Owen Reilly recently spoke with the Irish Times on the topic of “Pros and cons of buying a Celtic Tiger-era apartment”. The article covers the new remediation scheme for fire safety defects which the government have brought in to help repair 100,000 apartments and duplexes built during the Celtic Tiger. Owen touches on how to buy the right apartment and what to be on the look out for.
How to buy
Buyers of second-hand apartments are “cautious” but informed, says estate agent Owen Reilly.
Asking the right questions before signing a contract is key to uncovering any issues, he says. An MUD requisition, sought by a buyer’s solicitor, should tell them what they need to know, says Reilly.
“It includes things like the sinking fund, who the auditor is but also any known defects. Has there been a fire audit, is there a fire cert in place? Once those answers are submitted, there can be another list of questions from the buyer’s solicitor,” he says.
“Uncertainty kills the deal more than anything else. Where a management company is aware of the issues and how they are going to deal with them, that’s much better,” says Reilly.
“Roofs will need work, lifts will need to be replaced – a new lift is €75,000, so how have they planned for this? Some have planned very well and have a healthy sinking fund. If you buy an apartment that has done upgrading works, you really get to benefit from that.”
Opting for one apartment over another for a lower annual management charge can be a false economy. Too low a fee can spell trouble.
“The key question for me is, has a building investment fund report been done?” says Kevin Hollingsworth, president of the Society of Chartered Surveyors Ireland (SCSI). The report is used by OMCs to cost the maintenance of a building’s depreciating assets over time – such as roofs and windows.
“If you go into a development that has a slate roof, brickwork elevation, UPVC windows and it’s low rise with no lifts, that building has low-cost, long-life elements and that is going to be less expensive to run,” says Hollingsworth.
Those buying with a mortgage will need a surveyor’s report, just as those who bought in the Celtic Tiger era did. A surveyor’s ability to inspect the roof or services, however, may be limited, says Hollingsworth.
“The savvy surveyor should be pointing out to the purchaser that they should ask if a building investment fund report has been done, has a fire safety audit been undertaken and has it been implemented,” he says.
“If the surveyor says the cost of maintaining the building is €1,000 per apartment per annum, for example, but the owners agree €500, this leaves a funding gap if the lifts and fire alarms fail at the same time,” he says.
A buyer, their solicitor and surveyor must carefully interrogate the property management company to satisfy themselves that any defects have been identified and addressed and that there is a sufficient sinking fund for maintenance.
There are about 1,300 new and second-hand apartments for sale right now, according to MyHome.ie. About two-thirds of them are in Dublin. For those single, child-free or planning a smaller brood, being close to the buzz of the city may trump extra rooms in the commuter counties. An apartment can be more affordable, too. Once defects are ruled out, there are some upsides to the older ones.
“The older developments tend to be in more established neighbourhoods and they tend to be smaller developments,” says Owen Reilly. Those built 20 years ago will have more generous grounds. More recent developments have a much higher density of units and far less communal space. Some older schemes close to the city can have as few as 60 units while newer ones have up to 300.
Older apartments also tend to be larger and some can have lower management fees, he says. They can come with an assigned parking space with plenty of overflow parking for visitors too.
“In build-to-rent apartments in the city centre now, you tend to have no parking. In the suburbs, you’ll get a space, but you’ll only get one, so that would be an advantage the older apartments would have,” says Reilly.
A downside of older apartments is that they are less energy efficient than new builds, though apartment owners are availing of Sustainable Energy Authority of Ireland (SEAI) grants to improve energy efficiency.
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