Investing in property can be a rewarding project, you can also make healthy returns if you’re lucky.
But there are no guarantees and there’s always a risk you may not make a profit, and you may even come out with a loss.
If you’re keen to start investing in Ireland, buy-to-let investing is the usual route most people take.
You find a property and rent it out. If it all goes to plan, you should end up making a profit. You can receive a regular income from the rent and you may boost your initial investment when you come to sell it if the property value has risen.
However, if it doesn’t go to plan, in the worst-case scenario you could end up with a property that’s fallen in value or nightmare tenants that aren’t paying.
Here we look at how to start investing in property in Ireland, the pitfalls to watch out for, how to find a property, and things to watch out for along the way.
What’s happening with the Irish property market?
Property investment can be an exciting journey and you may make a profit. If you’re thinking about buying a property in Ireland to rent out, it’s worth having a proper look at the Irish property market first.
Prices rose 7.9% in the 12 months to April, according to the latest national Residential Property Price Index (RPPI). In Dublin prices were up 8.3% on average while outside of Dublin they rose by 7.6%.
The average price of a house was €335,000 over this period. The cheapest on average was €169,000 in Longford, while the highest median price was €624,999 in Dún Laoghaire-Rathdown.
Rental prices have also been rising. Average rent for new tenancies rose by 9.1% to €1,595 over the last quarter of 2023 and by 5.9% for existing tenancies, according to data from the Residential Tenancies Board (RTB).
Should you invest in property in Ireland?
There are lots of reasons to invest in the property market in Ireland, including the following:
- Steady income: you should receive a regular monthly rental income
- Property growth: hopefully the property will grow in value while you own it, so if you sell it you will make a profit.
- Easy way to invest: property investing is one of the simplest ways to start investing.
How much money do you need to have?
When you start your investment journey, you’ll need to look carefully at your budget. How much you need will depend on the type of property you’re looking to buy, and your mortgage.
You will usually need a bigger deposit for a buy to let property, of around 20% of the purchase price. If the house was worth €300,000, for example, you would need €30,000 as a deposit.
The deposit isn’t the only money you will need though. You will also need to think about the following:
- Stamp duty: this is charged at 1% of the property price if its value is under €1 million
- Insurance: while not mandatory, landlord insurance is advised as it can cover you if something goes wrong with the property or the tenants. It can also usually cover missed rental periods.
- Maintenance and wear and tear: as a landlord you are responsible for maintaining a property. You may also need to furnish it (if you’re advertising it as a furnished property).
- Legal fees: when buying the property, you will need to have money set aside for legal fees along with surveyor fees.
How to start investing in property in Ireland
Everyone’s journey into property investing will be different, but you can expect it to follow a similar timeline to the list we’ve put together here:
- Work out a budget for your property purchase and speak to a mortgage adviser about buy-to-let mortgages, unless you are planning to buy the property with cash.
- Research the area you would like to buy in, look at similar property prices in the area and check local estate agents to see how much houses usually sell for. You’ll also want to check things like local planning applications to see if anything is due to be built – like a supermarket or school – in the area.
- View properties and make an offer when you’ve found one that meets your requirements.
- Make an offer and speak to a solicitor and a surveyor. They can advise you on the next steps and everything that needs to be done before you exchange contracts including things like paying tax and stamp duty.
- Complete the purchase and start looking for tenants. You can do this on your own or use a management company to find and manage the property for you. This will eat into your profit, but it could be a sensible option if you don’t live nearby or don’t have the time to do it yourself.
- Arrange insurance: depending on the type of mortgage you have, it’s a good idea to buy landlord insurance to protect your investment property and your rental income.
How will you be taxed on a buy to let property?
Along with stamp duty, you will also need to pay capital gains tax (CGT) on an investment property. It is charged at 33% in Ireland.
You will also pay tax on the rental income you receive – at either 20% or 40% depending on which tax bracket you are in. However, there are a range of expenses that you can claim tax relief on as a landlord. They include the following:
- Accounting and legal fees
- Maintenance and repairs
- Advertising and estate agent costs
- Utilities and other service charges
- RTB (Residential Tenancy Board, formerly known as PRTB – Private Residential Tenancy Board) registration fees
- Insurance
- Property management fees
What are the pros and cons of investing in property in Ireland?
Investing in property in Ireland can be an exciting way to boost your income – but it’s not for everyone and as we’ve already said, there are no guarantees you’ll make a profit. Here are some of the main pros and cons:
The pros of investing in property in Ireland:
- Regular monthly income from your tenants
- Overall profit (if the property rises in value)
- Relatively easy way to start investing
- Tax breaks available on some property expenses
The cons of investing in property in Ireland:
- Property prices may fall and you could lose money
- If you can’t find tenants you’ll need to meet the mortgage costs yourself
- You’ll need a bigger deposit with a buy to let mortgage
- Managing the property yourself can be time consuming
What are the best alternatives to buy to let investment?
Of course property investment in Ireland isn’t just about buy to let. Although this is one of the most well-known ways to invest in property in Ireland, there are alternatives.
There are lots of different avenues where you can invest in Irish property companies, for example, if you don’t want to buy somewhere yourself and have the responsibility of becoming a landlord. This could be via stocks and shares, an investment fund or a unit trust, for example.
With any type of investment it’s important to remember the costs involved, and to calculate these to your budget in advance.
A summary
However you choose to invest in property in Ireland, you will need to do your homework first. Investing is a risky business and while it can pay off – you could also lose the money you put in.
If it’s a buy to let property you would like, the more research you can do, the more prepared you can be for rises and falls in the process.
If you would rather buy a holiday property, there are also lots of options. You could buy somewhere and rent it out via a platform like Airbnb, for example.
Finally, if it’s a property fund you want to invest in – which can be a lot easier – always check the fine print including extra charges you may have to pay.
