Seeking a home of your own for the first time can be a trying business, with one financial hurdle after another standing between you and those glorious keys.
The main stumbling block of course will be the mortgage, with only the lucky few managing to avoid borrowing an extremely hefty sum that will carry very large repayments.
The statistics tell the story - take, for example, the most average property in the Republic. The most recent research on house prices from Permanent TSB and the ESRI shows that this was costing about €255,000 last month.
Taking out a 92 per cent mortgage (the level so beloved of first-time buyers) on this would involve borrowing just shy of €235,000. Over 30 years at a reasonably competitive rate, that would currently produce repayments of roughly €1,000 each month. Unless the first-time buyer in question is part of one of the more salaried classes, a repayment of this magnitude is bound to cause some financial stress. And a rate rise of one percentage point would increase cause the repayment by at least €175. Ouch!
As canny first-timers will know however, buying a house does not have to be all about spending money - some cash can be taken in too. All the new homeowner needs to do to help ease their financial burden in this way is to invite a lodger in to share their property dream. Since April 2001, homeowners have been able to rent out space in their home to a tenant without the rental income attracting tax.
This "rent a room scheme" has been extremely popular with new buyers. Sarah Wellband of mortgage broker Rea says that as many as three-quarters of single people applying for homeloans have plans to rent a room.
The numbers fall when it comes to couples (just a tenth of such applicants like the idea, according to Ms Wellband) but even with this, the scheme remains an extremely important part of the Irish property scene.
This is so much the case that lenders are now presuming that single homeowners will be renting out a room unless they are told otherwise. "Most lenders automatically factor in around €350 per month for a single applicant buying a property with more than one bedroom," Ms Wellband says.
She points out that most tenants in situations such as this will be relatives but acknowledges that the nature of relationship will be irrelevant as long as it works. Citing one case where the scheme worked well, she says the tenant stayed with the landlord for three and a half years before leaving to buy his own place. The landlady then took a six-month break before organising a new lodger. In another case however, the same landlady issued a lodger with his marching orders within one month.
As well as making sure that they actually like their tenant, the landlord (or lady) must also take care to follow a few rules laid down by the Revenue Commissioners. First, the rental income received will only be exempt from tax where it amounts to less than €7,620 in a full year, or €635 per month. The residence must also be occupied by the landlord for the tax year in question. Finally, the landlord must include the rental income on their annual tax return. Tax matters aside, the arrangement will also come under the State's landlord/tenant legislation. This means the landlord must issue a rent book and register officially as a landlord.
