I live in Dublin, we bought a house 4 years ago and renovated the house, incorporating the conversion of the garage into the granny flat as part of the mortgage. We had to put in a separate internal porch and keep it as part of the main house because the local council would not allow us put a second door out front anyhow due to planning restrictions. Our flat is 22m2 and has a bathroom at the back, a single bedroom and then a kitchen living area in front. We are getting 1000 a month under Rent a Room and have rented to a lovely person who is on the Hap scheme. Bills are included. It is small but perfect for one person. It meets all requirements as it was examined by Inspex. Be aware of making sure that it is fully firesafe and meets the requirements as laid out https://www.gov.ie/en/publication/3...accommodation/#what-the-minimum-standards-are as you maybe inspected depending on where you live. We were. I would recommend doing your job OP as you're getting income for yourself and removing one person from a possible situation of homelessness. We do eventually intend on either letting the children live there when they're older or letting one of their actual grannies or grandfathers live there if ever needed.
Considering purchasing a house with a garage that could be converted into a granny flat. What should I be aware of?
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In the OPs case, my understanding is that they are converting the garage to create an additional ensuite bedroom. It's under 40 sq m.
When that is done, they will rent it out as part of a house share arrangement aka rent-a-room.
There is no second entrance & no extension.
When the time comes to sell, or when the additional space is needed, it can be incorporated back into the main property.
Still dont think it stacks up financially at this stage.
Ingredients
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Thanks for the feedback. Why you don't feel it's a good plan please - the way I see it, the positives are;
- Earn approx €900/month (based on Daft figures in the area) rental income tax free.
- Have this supplemental income as a fallback security for any changes in personal circumstances (I'm self employed)
- Expand the liveable space within the house
- Add value to the house (a granny flat would surely be more appealing to a buyer/investor than a garage)
I'd seek a loan of ~70k to achieve it and rent from the Granny Flat should cover the loan repayments, and I could see myself paying off chunks of it early, especially with getting a mortgage lower than my full AIP.
Would be interested to hear your thoughts, thanks
Ingredients
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Could you tell me more about how you managed this please? I asked PTSB specifically about borrowing extra on the mortgage towards a granny flat conversion and they said it couldn't be done.
Dr Strangelove
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I understand that this is the kind of thing credit unions lend for.
I was replying to the other user who spoke of creating a granny flat, but you are correct. So long as the garage is incorporated into and accessed via the house then planning is usually not required. I say usually because there are some caveats in the legislation. Anyone going down this road would be advised to seek a Section 5 Declaration from the LA to avoid any doubt and eliminate any potential issues when it comes to sell.
Not necessarily. We're currently house hunting and have just turned down a great 5 bed property mainly because the garage had been coverted into an additional living space. Mr Mct1 wants a nuts and bolts workshop where he can saw, hammer and weld, and we don't want the hassle of converting it back. Due to new planning edicts, garages are rare as hens' teeth in new builds around here, and so I wouldn't assume everyone wants to be a landlady/landlord or move their in-laws in.
While that is true, in SDCC there is absolutely no follow up on a planning condition that a garage conversion cannot be let out. We objected to a planning by our neighbour including garage conversion. Permissions was granted for all with above condition on the garage Completed bulid is not to approved planning permission. We put in a complaint and 4 yrs later nothing has come of it and the garage is let since day one. The access to this is not from within the house either. A door that was in the plans is actually not a functioning door at all.
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That is disappointing.
Mine had a fake door, as in I plastered the internal door to garage conversion over with a light partition, 2 doors like some hotels have would also work. Or a very good solid door. And I got a free division of electricity as the ESB wanted my box outside so they did that bit for me from road to house and 2 boxes back in the early 90's. When I sold, it was sold as is, but without mention of their being a granny flat because of course I'd no planning permission. And banks are very strict about planning now.
Most people have to earn double that to get 9K, as in he'd need an income of 18K. Because once you're a higher earner and over to the 40% tax bracket that's the reality of it.
This is incorrect. As long as it's part of the building he's fine. What is not fine is a garden chalet separate to the house. So all standard built Irish estate houses with garages are suitable for rent a room.
Many that were built originally as garages were a way for builders to give a bigger building, but for 1st time buyers there was a size rule on the stamp duty so that made builders do a house with a garage to get around it. The idea was the buyer would convert them later into an extra bedroom/playroom/utility - but many of them were instead converted into granny flats to let out.
The eagle eyed, like the OP will spot them in the ads if they pay attention.
Gordon Gekko
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I’m struggling to understand the jaundiced view towards acquiring €9k of annual tax-free income for an outlay of €70k. As others have pointed out, it’s like €18k of taxable income. I think it makes sense, assuming the person doesn’t want the garage, wants the money, and doesn’t mind strangers living at the side of the house.
Gordon Gekko
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Would it not be easier to use excess living space as a workshop, rather than the other way round?
We just submitted the plans with the mortgage application. It looked like a room, a smaller room and a bathroom. As long as there was no actual mention of it being a granny flat, then it seemed to be no issue. That's what the mortgage broker recommended. This was 4 years ago though so maybe things have changed since.
Ingredients' situation is different in that they are looking to borrow the sum to purchase the house and additional money to convert the garage.
Ingredients
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Just to clarify - you were granted funds for the house purchase (max of 90%) plus additional funds for the conversion? Did this not put the mortgage (the total of the two) beyond the 90% cap of the house value? eg if the sale agreed price was 340k, and you wanted to borrow another 60k, that means you were borrowing ~300k (sale agreed minus your deposit) plus €60k = €360k which is beyond 100% of the sale agreed.
I was told by the bank that because this puts the loan beyond the max of 90% that this is now allowable for that reason.
The way this proposal should be done for the mortgage application is say (assuming figures) 250k pp, 70k renovation cost, you'll need quote from builder for this showing you converting it into a useable part of the house, I would leave off any mention of kitchen etc in it, ensuite bedroom plus office maybe
Then your application is for 90% of 250+70=320k, based on what you say you will qualify for that. Now the valuer for the bank has to agree when the valuation is done that the renovated value of the property will be 320k, that is not always the case, just because you add on an extra 'ensuite bedroom' to the property does not mean it will go up that much and there may be a ceiling in the area you are buying anyway where nothing would make that regardless.If that were to work valuation and mortgage wise what would happen is the bank would release 90% of 250k (PP) to enable you purchase the house then you would have to do the work to the extent that the valuer was satisfied it was done and then they would release the balance of mortgage i.e the outstanding amount for the renovations. Sometimes you can get it released in stage payments subject to certification at each stage. However going this route means the bank most likely will want to see paperwork to show that planning is covered or exempt whichever, may also require engineer/architect sign off if any structural aspect to it.
It's not uncommon to buy and mortgage a house that needs work of whatever sort but it must all be put in as one proposal initially if you want to include it all in the mortgage and of course the value much agree with the final product. However now that there is no such thing as bridging finance anymore you are left with the issue of how to do the work upfront when the draw down of mortgage comes at the end, short term loans or good stage payment contract with builder is only option usually.
You have to weigh up is all that hassle worth it to get the lower mortgage rate or go with a short term CU loan (assuming you can get it) with higher rate and repayments.
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Banks don't lend on what a property might be worth in the future, the valuation will be what it's worth at time of purchase.
At no time will the bank have advanced anymore than 90% of present value/purchase price, the balance is only released when the work is done and the valuer confirms that the house is worth what valuer initially said it would be when the renovations were done.
Now unless banks don't do this anymore but if not how is anyone meant to fund a big job needed on a newly purchased house or extension or anything, once the work being proposed improves the house and increases the value then this is always the way this situation was dealt with in the past when the work was being done immediately on purchase.