Government Grants Spark Surge in Derelict Home Renovations

Rising property prices, combined with the appeal of sustainable living, are prompting more buyers to turn their attention to derelict and non-habitable home purchases lately.   Margaret Barrett of Mortgage Navigators says that, while these fixer-uppers present obvious challenges, they can offer incredible value, especially with the availability of generous government grants and specialist mortgage options.

Ireland’s vacant and derelict housing stock is receiving a major policy push, with several grants introduced to support buyers willing to undertake renovation projects.  The Vacant Property Refurbishment Grant (Croí Cónaithe) offers up to €50,000 for homes that have been unoccupied for more than two years, and are intended as the buyer’s principal residence. For structurally unsound buildings, the Derelict Property Refurbishment Grant increases this support to €70,000, provided the property has also been vacant for at least two years, and, again, will become the applicant’s primary home.

In addition, the Sustainable Energy Authority of Ireland (SEAI) provides grants of approximately €30,000 to help fund energy-efficient upgrades, including insulation, windows, heating systems, and solar panels. These grants can be combined with the Croí Cónaithe scheme for greater impact.  Applications for Croí Cónaithe funding go through local authorities, while SEAI applications are submitted via seai.ie

Mortgage Complexity

While these grants significantly ease the cost of refurbishment, they cannot be used to purchase the property.  That’s where mortgage financing can prove tricky.  Many lenders are cautious about properties that lack essential facilities, like a working kitchen or bathroom.  In most cases, such homes fall outside the criteria for standard mortgage approval.

Working with a mortgage broker, however, will help identify lenders who specialise in properties requiring extensive work.  They can help structure a mortgage to make the best use of available grants and guide prospective owners through what can be a complex documentation process.

To secure financing, lenders will typically expect several things.  A fully-costed engineer’s report is essential, detailing renovation plans, timelines, and whether planning permission is needed. They must also assess the projected value of the property, after renovation, which determines loan-to-value (LTV) ratio.  As cost overruns are common, banks may require a contingency fund, either incorporated into the loan or backed up by personal savings.

Even when buying a derelict property, Central Bank of Ireland lending rules still apply.  For first-time buyers, borrowing is capped at four times gross income; for others, the limit is 3.5 times.  Borrowers must also demonstrate repayment capacity, typically by showing consistent savings, or rent payments, over at least six months.  Net disposable income, the amount left over after expenses and debts, must also be sufficient to meet the lender’s criteria.

Mortgage funds are typically released in stages. Up to 90% of the purchase price may be available upfront, with renovation funds drawn down in line with construction milestones.  Up to 20% of the loan amount may be held back until the project is fully completed, and an engineer certifies compliance with the agreed works.

Because grants are only paid out after works are completed, they cannot be used for upfront costs.  However, with smart planning, they can still reduce the overall loan burden.  Many brokers recommend splitting the mortgage into two portions, one fixed and one variable. Once the grant is paid, it can be used to pay down the variable portion, often without penalty.  This will help reduce interest payments and improve long-term flexibility.

Following upgrades, the property’s BER (Building Energy Rating) will improve significantly.  This may make borrowers eligible for a Green Mortgage, offering a lower interest rate, as recognition of the home’s enhanced energy performance.

Six Steps

For those considering a property that needs serious renovation, the simple six-step plan to getting an affordable mortgage is, as follows:

1. Survey the property – commission a structural survey and engineer’s report
2. Speak to a broker – get matched with the right lender
3. Apply for grants – Croí Cónaithe and SEAI principally
4. Plan your renovation – factor in contingencies and any necessary permissions
5. Secure your mortgage – including overruns, stage payments and grant integration
6. Reassess the BER – to unlock potential Green Mortgage rates

With the right guidance and financial planning, transforming a derelict or non-habitable property into a modern, efficient home is not only achievable, it increasingly makes sense.  Once the domain of developers and seasoned renovators, this route now represents a smart and rewarding opportunity for ordinary Irish buyers; especially those able to think long term, and hoping to put their mark, and even some renovation skills, on a unique home.