Stage payments cost house buyers €175m

HARD-PRESSED Irish house buyers are paying an extra €175 million loan interest annually, according to the findings of a report on stage payments commissioned by the Law Society of Ireland.

The practice of builders operating a staged payment system, whereby buyers pay for homes in instalments as the work progresses, is costing purchasers €7,000 additional loan interest.

The stage payment system, which has been in operation in Cork for over 30 years, is also active in counties Limerick, Galway, Sligo and Mayo. Under the practice, new house buyers are being forced to pay builders up to 90% of the total price of the house before taking possession. The purchaser is asked to pay the full price of the site for the house up front, which can be 35% of the total purchase price. Buyers are then forced to make a number of stage payments as the building progresses and pay the last 10% on completion.