Introduction to the Legal Framework
The Republic of Ireland is a unitary state with a common law legal system, a written constitution and a parliamentary democracy. Primary legislation is in the form of acts of the Oireachtas (the Irish parliament) and secondary legislation is by statutory instruments, which may be issued by authorised bodies such as government ministers, and various other entities, such as the Property Registration Authority and the Law Society of Ireland.
i Ownership of real estate
The two most common forms of title are freehold (perpetual) and leasehold (for a specific term of years). The investment market is characterised by the landlord owning the freehold and the tenant having the occupier's interest under a lease. Some properties, particularly in urban areas, have very long leasehold titles (e.g., 900 years). While not strictly speaking freehold, the investment market regards these as similar to freehold. Leases were used as well in certain commercial contexts (e.g., tax-based financings), and also because of concerns about whether positive covenants would bind subsequent freehold owners. The latter has been confirmed as being effective by the Land and Conveyancing Law Reform Act 2009 (2009 Act).
Previously, the most common form of structure in an office or commercial development was a lease of at least 25 years with an upward-only rent review every five years. Since 28 February 2010, new leases may not have upward-only rent reviews. Residential tenancies tend to be for far shorter periods (usually a year). The residential rental sector is subject to more regulation than the commercial sector, with the statutory Private Residential Tenancies Board operating a national tenancy registration system and resolving disputes.
ii System of registration
Ireland has two systems: Registry of Deeds and Land Registry. While both are operated by the Property Registration Authority, the consequence of the registration in each is quite different. The Registry of Deeds dates back to the 18th century and amounts to a mere register of documents. In other words, registration does not give any indication as to the effect of the documents and the quality of one's title. The Land Registry was set up in the 19th century to enable the government of the day to acquire the often-complicated titles of indebted landlords and redistribute the property among mainly agrarian tenants.
The Land Registry record enabled everyone to start again, with the tenant getting a clear state-guaranteed title. The Land Registry record includes a map, the name of the legal owner and information about certain third-party rights. Some interests, such as leases with fewer than 20 years to run, cannot be registered in the Land Registry, and some matters (e.g., pipelines) can affect title without being registered. The policy of successive governments has been to have as much land registered in the Land Registry as possible, with a view, in part, to enabling e-conveyancing. Since June 2011, all transactions for value result in the purchaser applying for registration of the title in the Land Registry, even if up to then the title has been Registry of Deeds. If the disposition is voluntary in nature (e.g., a gift or a conveyance on the appointment of new trustees), there is no obligation to register a Registry of Deeds title in the Land Registry. The government hopes that, over time, all property in the state will consist of Land Registry title.
In 2012 the Property Services Regulatory Authority (PSRA) commenced its work, and in 2013 it started the Commercial Leases Database and the Residential Property Price Register. Local property tax (LPT) was introduced in May 2013, and includes a valuation register compiled by the Revenue Commissioners (but this is unlikely to be published). Water charges will come in for the residential sector in 2015. The commercial sector (indeed, all non-residential properties) has been paying for water for many years, as have some residential occupiers in rural areas.
iii Choice of law
The private international law principles that Ireland uses are influenced to a large degree by the law applicable in England and Wales and international treaties. The usual approach to property matters is that the lex situs applies (the law of the place where the real estate is located). There is no prohibition on endeavouring to deal with Irish real estate matters in a document governed by the law of another jurisdiction, but to avoid any issues on registration or enforcement it is advisable to have an Irish law document to govern Irish real estate matters.
Overview of Real Estate Activity
2014 has seen a huge increase in activity, as well as increases in rents and capital values. The rating agencies continue to be more positive, and Ireland has successfully re-entered the international bond markets, as well as renegotiated its bailout terms so that it can now refinance the most expensive bailout loans without having to pay down the other elements of the rescue package. The National Asset Management Agency (NAMA) is continuing to release Irish assets into the market and to provide stapled finance in some cases. In a new departure, NAMA is to spearhead the drive for new residential properties, as well as providing development opportunities in Dublin's 'Silicon Docks' area.
Stamp duty on commercial property at a rate of 2 per cent has encouraged transactional activity. The window for qualifying for the seven-year capital gains tax holiday closed on 31 December 2014, but structures such as qualifying investor alternative investment funds mean that there...