Purchasing a New Build in Ireland as a First Time Home Buyer

You are ready to make your first home purchase in Ireland – exciting… and scary!

If you live in Ireland, you are grossly familiar with the severe housing crisis the country’s residents have been experiencing for the past decade… and it’s only getting worse. Rent is astronomical and is eating up most of your paycheck, so you finally decide it’s time to take the plunge and purchase your first home.

You have two options – a second-hand home or a new build. As someone who has recently gone through the home purchasing experience with my partner, I can help you avoid the “stages of grief” and never-ending disappointment that came from our forced reality checks. 

Initially, we were thinking that we would buy a second-hand apartment in South Dublin, but after a couple of viewings (shared with 20+ other people), we knew we were going to fight an uphill battle of competition and bidding wars. Tiny 2 bedroom second-hand apartments were going for half a million euros, and obviously they were not even close to being worth the cost. 

So we needed to readjust our expectations and strategy. We started looking into more affordable areas further from the city center, and new builds appeared on our radar. We realized that they came out in large batches at a set price, so we wouldn’t have to engage in the anxiety-provoking bidding wars that came with second-hand homes. They are also brand new and in walk-in condition – no repairs required (which can’t be said for most old Irish homes). In that same vein, new builds have a high energy rating A, meaning that the home is energy efficient and we would not be crippled with electricity bills during the winter months. As first time buyers, we were aware that Help to Buy and First Home schemes were offered to help offset costs. And since these were greenfield projects in brand new neighborhoods, the value of the properties would only go up as schools, grocery stores, and other amenities are later built in the developments.

It was a no brainer! We decided to go down the new build route, and be able to buy a proper 3 bedroom house with a backyard, for the same cost (or less) than a downtown 2 bedroom apartment. So I decided to write a post with an easy, step-by-step guide on buying your first new build home in Ireland:

Save for your deposit

First time buyers will need to save about 10% of the total home cost. We would recommend saving more than this (about €10k more), as there are many fees associated with buying a home. 

Help to Buy Incentive and First Home Scheme 

The Help to Buy (HTB) scheme is an incentive for first-time property purchases. It directly helps with the deposit you need to purchase or self-build a new home, which must be your primary residence. You will receive a refund of Irish Income Tax and Deposit Interest Retention Tax you paid in Ireland, which need to be from the four tax years prior to when you make your application. Check your eligibility for the Help to Buy Incentive on Revenue.ie, since you could be entitled to a tax rebate of up to €30,000. You can easily get up to €30,000 knocked off the price of your home if you qualify, which can really help with the affordability of the new build. 

The First Home Scheme (FHS) is an affordable housing scheme which helps you to buy or build your first home. It is a shared equity scheme, which means that the government and participating banks pay up to 30% of the cost of your new home in return for ownership over that percentage of the home. You can always buy back their share at any time, but you don’t have to. To qualify, you must not only be a first-time homebuyer, but you must also live in the property as your only place of residence. To avail of this scheme, you must also borrow the maximum mortgage your lender is offering and they must also be a participating member of the scheme. What’s the catch? The equity share in your home is the percentage of the market value of your home. So, if the property price increases, the amount that you would have to pay back to the government to buy back their share, will also increase. For example, if you bought your property in 2022 for €300,000 and the FHS provided equity of 10% or €30,000 and you want to buy back the equity share in 2025 when the property is valued at €350,000, you will have to pay 10% of this, which is €35,000.

Speak with a lender or broker

It is a good idea to get mortgage approval in principle before you even start to look for a home. This gives you a good idea of your overall budget and if you qualify for any exceptions on the maximum cap of borrowing. Currently in Ireland, banks will generally lend up to 4 times your income (or combined income if you are applying as a couple). For example, if you make €75,000, the bank can loan you up to €300,000 for your home.

Make sure you have all your ducks in a row before applying for your approval in principle. You’ll need a salary cert from your employer, so before you even consider buying, you’ll want to make sure you pass your 6 month probationary period at your job. You’ll also want to show your lender that you are capable of paying back a monthly mortgage. Consistently set money aside for the down payment of your home, and DO NOT touch this money, as it can negatively affect your approval. The bank calculates all of your monthly outputs, including rent, utilities, subscriptions, and savings, into the number that they believe you’ll be able to afford for a monthly mortgage. If they see that you dip into your house savings for whatever reason, this will negatively impact you. 

They also specifically look at the past 6 months of your spending, so take this into consideration when making large purchases or going on expensive trips. Word of warning – we learned the hard way when my partner applied for his approval in principle a third time. Since the approvals expire every six months, this was his third time applying and he just assumed it would be another easy approval. This was during a summer when he had spent significant money on trips, gifts, and his sister’s wedding. Since they only look at the past 6 months of spending, this had a significant impact on his third application, and he was almost not granted the maximum mortgage that he had received in his prior two approvals. However, if you are disciplined and consistent with your savings and financial outputs, you should be fine.

Find a solicitor

It is also wise to get in contact with potential solicitors who have experience carrying out the conveyancing process, even before you start seriously looking into homes. Once you find a home, you’ll need to have the solicitor’s contact details ready to go, so it’s best to have this prepared beforehand. Speak with family and friends who may be able to recommend someone.

Open viewing day

Once you have the above steps solidified, you are ready to start searching for homes! We recommend continuously researching the new builds in your desired area, to get an idea of price, location, amenities, etc. Register your interest for different developments, so that you get regular email updates and have open viewing timelines on your radar. Remember, those who register their interest are the first to know specific dates and times of viewings. If you are really gunning for a particular development, find out who the selling agent is and start communicating with them (but don’t overdo it!) so you can demonstrate your serious interest. Depending on the development, you may even get the chance to book a private viewing over email, which operates on a first come, first serve basis. But most of the time, viewings are open to the public on a particular day. Since new builds are sold at a set price, competition is high and you really have to prepare if you are serious about securing a home in that development.

For example, our development’s viewing was from 8-10 am on a Saturday for those who registered interest. My partner arrived before 7 am that morning and there was already a line of 200 people in front of him for a total of about 50 houses being sold. A good amount of people started to line up the day before and camped in the queue overnight! This is the reality of the current housing crisis in Ireland and what you will realistically experience when it comes to the day of booking your new build home. Getting there very, very early does pay off. Even if you are unable to book a house that day (as was the case for my partner), you are at least able to get your name at the top of the waitlist for any cancellations (ours was a cancellation, yay!) and future phases being developed. The selling agents work from the top of the cancellation list to book houses, so securing an early spot in the line will not be in vain.

Submit booking deposit

Once you have successfully agreed the purchase with the selling agent, you will need to pay a booking deposit (in most cases around €5,000) to the developers. Bank details to make a direct wire transfer will be provided. You are given only a few days to make this deposit, so we recommend you do this ASAP; otherwise you lose your booking.

Contract issue

Once your booking deposit has been paid and you have confirmed your solicitor’s details with the selling agent, they will arrange for the contracts of sale to be issued to your solicitor. At this point, it is a good idea to contact your lender so that they can prepare to send you and your solicor a formal offer letter for your mortgage. Once that is reviewed, you sign and return to the bank.

Exchanging contracts and full deposit

Once your solicitor thoroughly reviews the contracts and is satisfied that all questions have been answered, they will arrange for you to sign the contracts of sale, before returning the contracts to the developers for counter-signing. You will then be required to pay the balance of the deposit due. If you are availing of the Help to Buy Incentive and/or First Home Scheme, they will be applied at this point.

Snagging

Once the developers are done building your home, you will be invited to a snag. This appointment is an opportunity for you and a hired professional (hiring an engineer isn’t required but we strongly recommend it!) to thoroughly inspect the home and create a list of any items that may need to be addressed before you close the sale. Once the developers have addressed the items on the list, you will be invited back for a final inspection ahead of closing the sale.

Completion notice

Once your home is ready and all documents are in place, a Completion Notice will be issued to your solicitor, notifying them the sale is due to complete within 14 days. This will serve as official notification to arrange the drawdown of your mortgage and arrange for the balance of funds required to complete the purchase of your new home.

Drawdown of your mortgage

Confirm with your lender that they are in receipt of all necessary documents in order for you to draw down your mortgage funds. It is recommended that you arrange your mortgage protection, life assurance, and home insurance in advance of this step to avoid any delays.

Closing

Once the mortgage funds are in your solicitor’s account, they will notify the developer’s solicitors that everything is ready to close the sale. Generally the sale will close 24-48 hours after your solicitor receives the funds from your lender. Once the sale is closed, you are officially a homeowner and the agents will be in touch to arrange the handover of your keys!