[Article] Staged payments costing home buyers €175m a year

Victor

http://www.sbpost.ie/web/DocumentView/did-420233224-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

Staged payments costing home buyers €175m a year
02/05/04 00:00
By Susan Mitchell

House buyers have to pay an average €7,000 extra for their homes because builders are forcing them to make staged payments, according to a report from the Law Society.

The total loss to consumers is estimated to be about €175 million a year.

The report, prepared by prominent accountant Des Peelo, concludes that there is no justification for the practice of staged payments. The practice is widespread in Cork, Limerick, Galway, Sligo and Mayo, and is emerging in other parts of the country.

Peelo found that purchasers were often out of pocket for

80 per cent of the purchase price for up to a year. He said it was not unusual for 18 months or more to elapse between payment of the initial deposit and completion of the house.

Builders typically look for an initial 4 per cent booking deposit. After that, 11 per cent is required as a contract deposit. A further 25 per cent is put down at joist level, roof level and at the internal plastering stage.The final 10 per cent is paid on completion.

The practice forces property buyers to borrow money earlier. Buyers also incur additional legal costs and certification fees.

Peelo estimated that a buyer would pay an extra €5,585 in interest and €1,500 on certificates and fees on a house costing €250,000.

Patrick Dorgan, chairman of the Law Society Conveyancing Committee, said solicitors were inundated with complaints, particularly from first-time buyers. "It is an anti-consumer practice that only exists for the builders' convenience," he said.

The report, to be published this week, is expected to increase support for a Private Members' Bill calling for a ban on staged payments.