Your Money

Buy to let purchase will cost you first-time buyer status

Q&A: Dominic Coyle

It may be the house of your dreams but you are a first-time buyer only once.
It may be the house of your dreams but you are a first-time buyer only once.
Dominic Coyle's picture
Dominic Coyle
Tue Aug 07 2018 - 05:50

I was wondering if you could shed some light on the possible implications of a property purchase that I am intending to make.

I am aware that, broadly speaking, first-time buyers only need a 10 per cent deposit, second-time buyers need a 20 per cent deposit, and those wishing to buy an investment property need 30 per cent of the value of the property.

I am currently single and have never owned a property. I am considering buying a small investment property to rent out, while I continue to rent with my friends.

As I will have 30 per cent of the value of the property as a deposit, and I will not be living in the property, can I still avail of the first-time buyers advantage of only a 10 per cent deposit when I eventually (hopefully) decide to buy a home with a future wife? Or have I given up this privilege by buying an investment property (albeit with a 30 per cent deposit)?

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Mr G.D., email

You're one of the few who has managed to put enough aside to be able to land a 30 per cent deposit on a property as a young person, and good luck to you. Unfortunately, however, as I think you might suspect, it will cost you your first-time buyer status.

If you choose to make your first purchase a buy to let, that is your call but you cannot later go back to claim first-time buyer status on a subsequent purchase

It would be nice if the deposits worked as silos – where you got a shot at each, if you like. However, that is not how it works.

Many are choosing to take advantage of strong rental yields by buying property with their pension fund. Photograph: Cyril Byrne
Many are choosing to take advantage of strong rental yields by buying property with their pension fund. Photograph: Cyril Byrne

I can confirm that if you buy any property – even as an investor and even on the strength of your 30 per cent deposit – you can never avail of first-time buyer status.

You are a first-time buyer only once. If you choose to make your first purchase a buy to let, that is your call but you cannot later go back to claim first-time buyer status on a subsequent purchase.

This applies even if you purchase a property in another country. You cannot claim first-time buyer status if you have ever bought a residential property, anywhere, for any reason.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice