The US business news channel was among dozens of major global news outlets that last June got the wrong end of the stick on government plans to incentivise people to revamp homes on our offshore islands.

The viral story generated a surge in inquiries from people around the world expressing their interest in moving to an Irish island, in the misguided belief they’d be paid cash to relocate.

The international coverage compelled the Government to deny it’s paying people to simply move to an island.

The real story was a little more sedate: the Government was hiking by 20pc the grants it offers homeowners refurbishing a vacant or derelict property on an island.

The July increase, which brought the grant for revamping a vacant island property to €60,000 and raised the grant ceiling for doing up a derelict home to €84,000, was among a series of tweaks to the Vacant Property Refurbishment Grant offered under the Croí Cónaithe Fund.

In May, the grant to renovate vacant homes (on the mainland) was increased from €30,000 to €50,000. There’s a top-up grant of €20,000 available if the property is derelict.

The Banshees of Inisherin – which was filmed on Achill Island and Inis Mór – has led to a new generation of international audiences hankering for a remote Irish stone cottage of their own.

But the housing crisis and a Covid-accelerated trend for working remotely has also inspired our own residents to covet a slice of vanishing Ireland as a place to live.

If you sell the property in five years, the entire grant will have to be repaid to your local authority

There have been 4,640 applications for the Vacant Property Refurbishment Grant since the scheme came into effect in July 2022, with 1,975 being approved, figures from the department of housing found earlier this month. Just 21 grants have been draw down since the nascent scheme started.

Nick Taaffe, a chartered quantity surveyor who’s renovating a vacant barber shop in Dún Laoghaire into a home, says: “I’m a classic millennial and have loads of friends struggling to get on the property ladder who send me listings” for vacant and derelict homes.

Buying a cheap vacant or derelict home can prove an escape route from sky-high rents and house prices.

However, turning a damp, vermin-infested crumbling cottage into a habitable home that meets building regulations is expensive, even with a grant. Consider the following financial issues before swooning over that cottage:

1 You can’t use the grant to buy the property

According to the old adage, it takes money to make money. And the vacant property refurbishment grant scheme is no different.

You must own the property or be in the process of buying it to avail of the grant. And because the grant is paid in arrears, you’ll have to pay for, or finance, the refurbishment costs upfront. Your local authority will have to do a final inspection of the finished project and sign off on it before it will pay out the grant. This time-lag means cash buyers have the financial advantage over first-time buyers who need finance.

These properties are derelict or vacant for a reason and often they are problem properties

“Buying with cash is the dream because then you can apply for the grant straight away,” says Taaffe.

If you sell the property in five years, the entire grant will have to be repaid to your local authority, which will hold a charge over the property as security – even if there’s a mortgage on it – for 10 years. You’ll have to live in the home, or rent it, for 10 years before the clawback period ends.

2 The project should be financially viable

Most people will need a mortgage to finance a rebuild or renovate but a lender will typically not provide a mortgage with the usual loan-to-value ratio of 90pc unless the project is financially viable.

To be financially viable, the market value of the completed project must be greater than the combination of the starting market value and the renovation costs.

However, a report published in March by the Society of Chartered Surveyors (SCSI) that analysed the real cost of renovating 20 different vacant and derelict properties found just five of the renovations were financially viable without grant aid.

When relevant grants from the Croí Conaithe Fund and the Sustainable Energy Authority of Ireland were factored in, just one additional owner-occupied residence became financially viable.

The issue is that we nearly have parity between construction costs in regional Ireland and costs in Dublin

For instance, one of the case studies involved a derelict property in Trim. The owner bought it for €95,000, spent €328,896 on revamping it, but the property’s market valuation after the works were complete was just €350,000.

“Would you lend your friend money for that? Well, neither would the bank,” says Taaffe, who contributed to the SCSI’s Real Costs of Renovation Report.

The location, condition and size of the property are critical factors in determining whether a renovation project is likely to be financially viable, the SCSI found.

You must own the property or be in the process of buying it to avail of the grant

“Vacancy may be a countrywide problem but within the country there is a regional imbalance in terms of viability,” Taaffe says.

“The issue is that we nearly have parity between construction costs in regional Ireland and costs in Dublin. You might pick up an asset down the country for €100,000 but you’ll have to factor in that construction costs are the same as in Dublin, where (house) prices are traditionally higher.”

3 It’ll be challenging to get a mortgage

You might be happy to renovate a property in the knowledge that you won’t get your money back on the project if you sold it in the future. But a mortgage lender won’t.

“Every time a lender goes into (a project), they’ll ask themselves, ‘if we ever had to repossess the property, how easy would it be to sell it?’,” says Trevor Grant, chairperson of the Association of Irish Mortgage Advisers.

“These properties are derelict or vacant for a reason and often they are problem properties and not financially viable unless someone has a wad of cash.”

It’s important for lenders that their security is habitable from day one of the mortgage

Both Taaffe and Grant recommend providing the mortgage lender with a larger-than-usual deposit to de-risk the project.

Taaffe says. “If there’s going to be a €50,000 loss on the project, you’ll have to plug the gap.”

Grant says: “It’s important for lenders that their security is habitable from day one of the mortgage. If it’s not, they need to know when it will be habitable and how you’ll fund that work. A lender might say: ‘We’ll give you a 90pc mortgage when the house is done but we will hold back money until then because we don’t want to expose ourselves to risk’.

“In some cases, depending on the condition of the property, they’ll only give you 70pc initially. In the intervening period, you might need to stump between 10pc and 20pc of the cost.”

4 Consider the Local Authority Home Loan

Only habitable properties currently meet the eligibility of the Local Authority Home Loan (LAHL) a government-backed mortgage for first-time buyers who cannot get funding from banks to buy or build a home.

But earlier this month, the Government said it would extend the LAHL to make mortgages available to purchase and renovate derelict or non-habitable properties for the first time.

However, it’s been reported it will take months for that to happen and that the Government aims to have the product ready by the summer.