I’ve been asked a few times two related questions: (1) what do I think are potential issues relating to residential property that might have been overlooked or skirted around by the media which might have long term consequences for the property market? (2) what issues would you keep an eye out for if you were buying a home?  Here’s five of those issues, which may be ticking time bombs that will not be revealed until owners try to sell.

1) Units that are poorly built and/or used poor materials.  From talking to people in the construction/planning sector I worry that Priory Hall is the tip of an iceberg.  A massive amount of property was built between 1995-2007.  It was put up quickly in a system that largely  self-certified.  The emphasis was often on speed and profit, not quality and standards.  Any system that pays people by quantity (think brickies per block) and does not have adequate oversight will lead to shortcuts and bodges. As the scandal around pyrite in homes has revealed, materials too were often sub-par.  It’s estimated that 20-60,000 units have problems of pyrite.  Without widescale, independent inspection it is difficult to know the scale of the quality and safety problem. I worry that the DECLG, local authorities, banks, construction insurers, and developers are not keen to undertake or commission such a systematic survey of new properties for fear of cost, disruption, legal wranglings, and political fallout.  A survey would reveal the scale of issues, provide confidence for all units meeting standards, and highlight what does need to be addressed.  That has to be better than burying our heads in the sand and hoping it’ll all be okay.  It’s clearly not okay.  Ask anyone in a pyrite house or Priory Hall or have other construction issues.

My advice for buyers: do as much research about the builder/developer/estate as you can and get the house thoroughly surveyed, especially if it is built in the last 15 years.

2) Housing built on flood plains.  Again, we know this has happened – they’ve flooded.  Just because a house has not yet flooded, does not mean it is safe from future flooding.  We do not know the full-scale of the issue.  It would be possible to calculate by plotting the location of all the houses in the state onto floodplain data.  Knowing what houses are at risk enables us to start to try and do something about it, like prepare flood defenses.  Flooding causes great damage and causes much distress.  We also need to prevent future development on flood plains – simply stated, local authorities should dezone floodplains and not zone there again in the future.

My advice for buyers: do some research on the likelihood of a property flooding.  Look at myplan.ie and the OPW floodplain data and talk to local residents who have lived in the area for a while.

3) Housing that lacks building regulation certification.  As noted above, in a system that requires self-certification, corners can be cut.  For relatively small jobs, that are being undertaken by small building firms that do not have company engineers/architects or are being carried out by the owner themselves, one of the corners that can be cut is getting the building quality and standards certified.  A lot of people seem to think that they only need to comply with planning legislation for their extension or garages/outbuildings.  Not so.  There are a whole suite of building regulations that have to be complied with.  It is impossible to get a full compliance certification retrospectively as there is no way of testing the foundations, etc.  The best one can get is partial compliance based on an inspection of what is visible.  My sense is that many extensions built during the bubble do not have full certification.  This can cause a major problem to prospective sellers/ buyers as mortgage companies are reluctant to lend money on such property at this time (they didn’t care so much during the bubble as captial appreciation offset the problem caused by the extension).  They might only lend money to the value of the house minus the extension, or ask that the price of the property be dropped to that minus the extension.  They might also ask for the extension to be knocked down as it is a liability on the prospects of selling the property in the future.

My advice for buyers: even if you are buying with cash, make sure that the property has building regulation compliance certs – not having them will affect your future ability to sell.

4) Housing that lacks or fails to comply with planning permission.  We do not know how many houses were built/extended in the bubble without planning permission, though we know it did happen.  It could be calculated by cross-referencing properties built over the past decade or so (using geodirectory) with local authority planning files.  Unlike building regulations certs, planning permission can be regularised after seven years through retention.  The question that lurks at the back of my mind is, if the person who built the property deliberately did not comply with the planning system, what other corners have they cut with regards to build quality, standards and compliance?

My advice to buyers: make sure the property, including garages, etc, comply with planning permission.  If they do not comply and the property is over seven years old, then make the present residents get compliance before completing the sale.  If the property is less than seven years old, then seriously consider your position (the mortgage lender might well make the decision for you).  Make sure that no other corners, as per above, have been cut.

5) The location vis-a-vis public services.  This issue has no legal consequences, but is important for quality of life and future prospects of sale.  Most development in the bubble preceded public services such as schools, doctors, playgrounds, creches, public transport, etc.  In many cases the crash occurred before they could be put in place.  Given the perilious state of the Irish economy, there are questions as to when they are going to materialize any time soon.  Some people will little care about these things, but if you have children local services might be an important consideration.  If these services are missing, it may well make the property more difficult to sell in the future.

My advice to buyers: do a thorough scoping of the local area and the services you think you’ll need to use.  Take a look at local area plans (see myplan.ie) and take a look at local newspapers to get a sense of what is likely to happen in an area.

Another issue to consider, which has been extensively covered in the media is levels of oversupply.  It is clear that some parts of the country has more oversupply than others.  The alignment of supply and demand is a fundamental aspect of prices.  Oversupply might mean that as a buyer you can get a great price for a property.  It might also mean it’ll be more difficult to sell that property in the future.  Again, it would be useful to research this issue to get a sense of the future trajectory of property locally.  Our AIRO mapping tools, such as VacantIreland, might be useful for that.

Buying a home is the most expensive single purchase you’ll ever make. There are a number of issues that are coming to light after the bubble and bust that home buyers need to be aware of and to take into consideration when evaluating potential purchases.  It is worth taking the time to research thoroughly what and where you are buying and it pays to hire professionals to give you advice.  Their expertise might be an additional cost, but they could save you an absolute fortune and the misery of living with the consequences of the issues detailed above.

Rob Kitchin

Walking around a flooded Carrick-on-Shannon it’s easy to come to the conclusion that 2009 was an Annus Mirabilis for County Leitrim.  On so many fronts the county has been badly hit by the recession and has a range of challenges stockpiled for 2010 and beyond.

Leitrim has the smallest population of any county in the Republic, with 28,950 population in 2006 (up from 25,301 in 1991).  Accompanying this modest population growth has been a building boom, with new industrial estates and shops, along with housing estates, added to towns and villages, and a frenzy of one-off housing developments.

This building frenzy nose-dived after the peak of the property boom, but the damage has already been done – the housing vacancy rate is above 30 percent.  In April 2006, housing vacancy in the county was 29.3 percent.  Since then many new properties have been built, and with very low demand few have been occupied.  Whilst the growth in housing and industrial units to large degree mirrored population growth, it outpaced demand driven by tax 23 incentive developments (through the Rural Renewal Scheme introduced in the Finance Act 1998) and a strong pro-growth strategy in an area that was only ever likely to sustain relatively weak growth given its peripheral location to major urban centres, its population make-up, and its indigenous economic base.

Animation of new housing growth in Leitrim since 2003 in 1km grid squares

What this means is that the county has a massive oversupply of housing and industrial units that, even with sustained growth (and this is unlikely for at least a few years, possibly longer), will take many years to fill.  The result has been plummeting house prices, with a significant fall in asking price and the second lowest average price for homes in the country after Longford (according to daft.ie average asking prices in Leitrim are currently in the region of €181,285, which represents a year-on year fall of 18%, and a 28% fall from peak prices) and the creation of a small number of ghost estates (for example in Cootehall and the grounds of Kilronan Hotel).  For those that bought property post 2003 (and perhaps earlier) this will mean living with negative equity, and probably doing so for quite some time.

In addition, cuts in funding from central government have meant the curtailing of many social schemes and to the halting of local infrastructural projects such as road improvements.  The county is particular vulnerable to further cuts due to the division of the Leitrim constituency into two new constituencies – Sligo-North Leitrim and Roscommon-South Leitrim – for the 2007 election which leaves Leitrim with no locally based TD.  Moreover, the county would be highly vulnerable if the An Bord Snip (2009) proposal to merge county councils to gain economies of scale where implemented.

To add to Leitrim’s woes, claimants on the Live Register have more than trebled from a low of 1040 people in April to 2006 to 3482 in October 2009 (a 235% increase).  The national unemployment rate for the second quarter was 12% (males 15.1% and females 8.1%), with a rate of 13.4% for the Border region (the finest spatial resolution available).  In addition, for those working in agriculture in what is a largely rural county, the CSO has recently reported that farm operating surpluses are down by 30.3% in 2009, on top of a fall of 10.9% in 2008.

Unemployment has the potential to rise further and some parts of the county are prospectively quite vulnerable to a significant increase given the reliance on a small number of large employers that also help maintain the broader local economy.  For example, in the south of the county, Bank of America and Masonite are two major employers and any job losses in these cases will have serious ripples throughout the area.

As a border county Leitrim is losing some retail revenue to Fermanagh.  Another CSO report details that 41% of border residents shopped in the North between July 2008 and June 2009, a fair number making fairly regular trips.  Another indicator of consumer confidence is reflected in new car registrations which for January and February, 2009, nose-dived (leading, for example, to Casey’s Ford garage in Carrick on Shannon closing).

Carrick on Shannon flooding

Then to cap, what has been a pretty awful year, the unprecedented rainfall of November led to the River Shannon bursting its banks and flooding large parts of Carrick-on-Shannon, Cootehall, and Leitrim Village.  It has to be said that the devastation that followed seemed almost inevitable given that much of the recent development had taken place on the Shannon’s floodplains.  Nevertheless, for a struggling economy it was a bitter blow that will require millions of euro of state investment in flood management to address.

Leitrim people are a resilient and proud bunch, and while the recession will take its toll, they’ll continue to get on with life.  It would have been a damn sight easier though without the woes of 2009.

Prime development land?

Declan Curran, Justin Gleeson and Rob Kitchin