Investors ruining chances for First Time Buyers - regulations?

lima

delthedriver wrote: »

It certainly appears to be the case on this thread!

http://www.boards.ie/vbulletin/showpost.php?p=94811022&postcount=3

"bulk selling of apartments to US investors"

It is indeed great that they are investing money in Ireland, great that they are paying tax.

It's a shame though, they have an advantage due to being from probably the only ever time where property will go up 12 times the original value so they have enormous amount of wealth to suck up all the starter properties and rent them back. (That's why some of the brightest minds I know got the hell out of here!)

Obviously the govt bulk selling 'off market' is horrifying too but that's not in scope in this conversation.

delthedriver

lima wrote: »

http://www.boards.ie/vbulletin/showpost.php?p=94811022&postcount=3

"bulk selling of apartments to US investors"

It is indeed great that they are investing money in Ireland, great that they are paying tax.

It's a shame though, they have an advantage due to being from probably the only ever time where property will go up 12 times the original value so they have enormous amount of wealth to suck up all the starter properties and rent them back. (That's why some of the brightest minds I know got the hell out of here!)

Obviously the govt bulk selling 'off market' is horrifying too but that's not in scope in this conversation.

So what is your solution?

Villa05

A retired couple aged 65 or over with an income of €36,000 have the following liabilities
Paye = 0
PRSI = 0
USC = €1665 (note if the couple have a medical card this would be reduced significantly)

Tax exemptions for over 65's http://www.citizensinformation.ie/en/money_and_tax/tax/income_tax_credits_and_reliefs/older_peoples_tax_credits_and_reliefs.html

A couple (one working) aged 39 with an income of €36,000 have the following liabilities
Paye = 2250
PRSI = 1440
USC = €1665
Source PWC tax Calculator http://download.pwc.com/ie/budget-2015/index.html

Difference €3,690


The state contributory pension is just short of €20,000 for a couple. This means that the couple can earn a further 16,000 tax/prsi free so what better way than to buy a house to rent out.

As I said the playing field is not level and the tax system is indirectly encouraging imprudent behaviour

MysticalRain

anncoates wrote: »

This forum really does prove again and again that for 95% of the people that post here, all a 'functioning market' means is a market that provides them with exactly what they want at a given time in their lives.

Only in Ireland would someone be bashed for wanting affordable housing, and a property market that doesn't turn into a financial armageddon that brings the entire economy to it's knees (speaking as a recent home owner who didn't turn in to a property obsessed Fianna Fail voter the second I went sale agreed). Most of the people here will be losers, not winners if there is another property bubble regardless of what side of the fence they are sitting on.

MouseTail

I don't think that is what was said. Just that wanting affordable housing at the expense of renters is not particularly conducive to a functioning market. There is such a shortage of housing that tinkering around with demand side initiatives wont make any sort of real impact.

MysticalRain

There would be more renters actually buying their own homes if property were more affordable.

I agree supply is a problem - mainly due of course to decades of negative government interference (why city planners in this country have an irrational aversion to building anything above 5 stories is beyond me).

delthedriver

Villa05 wrote: »

A retired couple aged 65 or over with an income of €36,000 have the following liabilities
Paye = 0
PRSI = 0
USC = €1665 (note if the couple have a medical card this would be reduced significantly)

Tax exemptions for over 65's http://www.citizensinformation.ie/en/money_and_tax/tax/income_tax_credits_and_reliefs/older_peoples_tax_credits_and_reliefs.html

A couple (one working) aged 39 with an income of €36,000 have the following liabilities
Paye = 2250
PRSI = 1440
USC = €1665
Source PWC tax Calculator http://download.pwc.com/ie/budget-2015/index.html

Difference €3,690


The state contributory pension is just short of €20,000 for a couple. This means that the couple can earn a further 16,000 tax/prsi free so what better way than to buy a house to rent out.

As I said the playing field is not level and the tax system is indirectly encouraging imprudent behaviour

Interesting figures. In reality how many over 65's are purchasing buy to lets?

Sheldons Brain

There is a lot of talk of a pensions crisis and people not making provision for their retirement. Here we have people providing for their own retirement and this is regarded as irresponsible!

delthedriver

Sheldons Brain wrote: »

There is a lot of talk of a pensions crisis and people not making provision for their retirement. Here we have people providing for their own retirement and this is regarded as irresponsible!

Indeed true. How much longer will the State provide pensions? Furthermore with many Private Pension Schemes in deficit, how will future pensioners survive? Is buy to let the way forward for the silver haired brigade?

MysticalRain

delthedriver wrote: »

Indeed true. How much longer will the State provide pensions? Furthermore with many Private Pension Schemes in deficit, how will future pensioners survive? Is buy to let the way forward for the silver haired brigade?

I really don't get why people perceive BTL's as easy money. Try asking those those in mortgage arrears or negative equity how well their investment worked out. I'm not sure either why any sane person in their 70/80s would want to be dealing with potential problem tenants at that point in their life.

delthedriver

MysticalRain wrote: »

I really don't get why people perceive BTL's as easy money. Try asking those those in mortgage arrears or negative equity how well their investment worked out. I'm not sure either why any sane person in their 70/80s would want to be dealing with potential problem tenants at that point in their life.

I would hope that someone in their '70's / 80's would not be relying on a buy to let as their main source of income.

Villa05

Sheldons Brain wrote:

There is a lot of talk of a pensions crisis and people not making provision for their retirement. Here we have people providing for their own retirement and this is regarded as irresponsible!

The 00 should have thought us that having pension in 1 asset class is high risk.
Should over 65 get preferential treatment over ftb who may be planning to have kids who will pay much more tax to fund the state pension
Over 65 asset class should be in highly liquid assets. Property is not
Tax on rental income should be fixed to avoid blatant favouritism.
Making property expensive through unfair practices leaves less room to save for pensions for current workers.
It is unlikely that current workers will receive the same state pension as current over 65 as the age profile changes to a much older population.

Villa05

delthedriver wrote:

Interesting figures. In reality how many over 65's are purchasing buy to lets?

How many have left the public service with large cash lump sums. The majority of sales over the past 2.5 years were cash add in the tax benefits.

Not conclusive but interesting.

gizmo555

A spokeswoman for the PRTB on "Morning Ireland" a few minutes ago mentioned that 20% of Irish households are renting their accomodation.

Any interference in the market by government to help 1st time buyers by discouraging buy-to-let investors will definitely have the side effect of increasing rents by reducing the supply of rented properties.

Rents in Dublin are already up 10% in the last year.

Why should 1 in 5 people have their accommodation costs increased just to suit - and in effect subsidise - 1st time buyers?

Graham

Villa05 wrote: »

How many have left the public service with large cash lump sums. The majority of sales over the past 2.5 years were cash add in the tax benefits.

Not conclusive but interesting.

I don't know, how many.

Still waiting to see what tax benefits pensioners would get for purchasing property that aren't also available to FTBers.

How many Lotto winners have been going around buying up property, Lotto winners would be able to buy lots of properties for cash. And Lotto winnings are tax free.

Not conclusive but interesting :rolleyes:

Graham

gizmo555 wrote: »

A spokeswoman for the PRTB on "Morning Ireland" a few minutes ago mentioned that 20% of Irish households are renting their accomodation.

Any interference in the market by government to help 1st time buyers by discouraging buy-to-let investors will definitely have the side effect of increasing rents by reducing the supply of rented properties.

Rents in Dublin are already up 10% in the last year.

Why should 1 in 5 people have their accommodation costs increased just to suit - and in effect subsidise - 1st time buyers?

This

seamus

gizmo555 wrote: »

A spokeswoman for the PRTB on "Morning Ireland" a few minutes ago mentioned that 20% of Irish households are renting their accomodation.

Any interference in the market by government to help 1st time buyers by discouraging buy-to-let investors will definitely have the side effect of increasing rents by reducing the supply of rented properties.

Rents in Dublin are already up 10% in the last year.

Why should 1 in 5 people have their accommodation costs increased just to suit - and in effect subsidise - 1st time buyers?

No, I don't think you're getting it gizmo. Those poor unfortunate souls are being forced to rent by the economy from evil landlords who only want to make money. Poor creatures having to suffer the indignity of renting, it's the government at fault for them having to degrade themselves like this because they can't buy a property.

This is ultimately what the OP boils down to. The Irish attitude that renting is a temporary accommodation and everyone should be able to buy a house.

gizmo555

seamus wrote: »

This is ultimately what the OP boils down to. The Irish attitude that renting is a temporary accommodation and everyone should be able to buy a house.

Lady from Threshold on the radio just now saying the cause of rent increases is definitely a shortage of supply. The OP would like the government to artificially reduce supply still further.

anncoates

MysticalRain wrote: »

Only in Ireland would someone be bashed for wanting affordable housing, and a property market that doesn't turn into a financial armageddon that brings the entire economy to it's knees (speaking as a recent home owner who didn't turn in to a property obsessed Fianna Fail voter the second I went sale agreed). Most of the people here will be losers, not winners if there is another property bubble regardless of what side of the fence they are sitting on.

Of course, if you ever need to sell your house, you'll insist on selling it at an 'affordable' price no matter what the market, right?

MouseTail

Everyone should be able to buy a home, anywhere, for 3 times their income. This would absolutely happen if there were more repossessions, and we taxed the bejasus out of anyone with grey hair.

lima

gizmo555 wrote: »

A spokeswoman for the PRTB on "Morning Ireland" a few minutes ago mentioned that 20% of Irish households are renting their accomodation.

Any interference in the market by government to help 1st time buyers by discouraging buy-to-let investors will definitely have the side effect of increasing rents by reducing the supply of rented properties.

Rents in Dublin are already up 10% in the last year.

Why should 1 in 5 people have their accommodation costs increased just to suit - and in effect subsidise - 1st time buyers?

Erm, those FTB's will free up rented property.

1:1 scenario where ownership is transferred to the future of the country.

Graham

lima wrote: »

Erm, those FTB's will free up rented property.

1:1 scenario where ownership is transferred to the future of the country.

That FTB of yours must be loaded if he's been able to pay rent and save the deposit to buy his own place. Doesn't sound like someone that would need special assistance buying tbh.

gizmo555

lima wrote: »

Erm, those FTB's will free up rented property.

1:1 scenario where ownership is transferred to the future of the country.

Life & economics ain't that simple . . . it certainly didn't work that way after the 1st Bacon report, when rents skyrocketed in response.

(By the way, aren't people renting their homes part of the country's future too?)

witchgirl26

Speaking as someone who has recently done the rounds of viewings & being involved in buying a house, I can honestly say that I didn't experience any issues with investors out bidding. Cash-buyers (who had a much smaller mortgage), yes but they were still families or other first time buyers. None of the houses we were seriously interested in went to investors who were planning on renting them out.
The trouble is a lack of supply and demand in certain areas that people want to live in. It leads to the sellers using more than just the basic criteria to determine which offer to go with. And I know a number of my friends who are first time buyers held off buying for years so would be in the older FTB range but have been saving for the past number of years so have a large cash reserve behind them.
As for jumping on the grey-haired for wanting to buy an apartment and presuming this is coz they're loaded and seeing it as an investment. Well why not? If they've that level of cash, they must have been doing something to earn it. And maybe they want to use the rental property as their pension coz the pension they'd been paying into lost value during the crash & they need something else.
Not everything should revolve around FTB - that would not be a free market.

campingcarist

MouseTail wrote: »

Everyone should be able to buy a home, anywhere, for 3 times their income. This would absolutely happen if there were more repossessions, and we taxed the bejasus out of anyone with grey hair.

I strongly object to that remark. Why should we, who have worked all our lives, paid our taxes in all forms now be taxed in such a manner.

We live in our own 1 bed apartment,that's all we could afford a couple of years ago, and now that we have come into a little money, less than 40k (minus any taxes) we would like to move to a two bed house or apartment. Why should we pay more in taxes now?

Riverireland

The entire property situation needs an immediate overhaul. I have 2 single friends who have 3/4 bedroom houses in Dublin. Both would like to relocate circa 30 miles outside of Dublin to smaller houses. Both still have mortgages circa 50% house value. They can rent rooms out and remain in their houses earning 12k tax free but if they rent their houses out enabling family's to move in then half thir rent will be taken in tax and they will still have to pay rent elsewhere, making it economically impossible for them. There are probably a lot of younger family's stuck in the dame situation but in apartments needing larger houses. Selling is awkward for them as well, one has had cancer so won't get another mortgage and won't make enough by selling to cash buy. The whole thing is a mess. Friend living in Scotland, 22 year old daughter, no children, moved out and straight into a council apartment.

Electric Sheep

campingcarist wrote: »

I strongly object to that remark. Why should we, who have worked all our lives, paid our taxes in all forms now be taxed in such a manner.

We live in our own 1 bed apartment,that's all we could afford a couple of years ago, and now that we have come into a little money, less than 40k (minus any taxes) we would like to move to a two bed house or apartment. Why should we pay more in taxes now?

So that MouseTail can buy the house in Dublin 6 that he is "entitled" to.

Riverireland

The new 220k ceiling for ftbs is fine if you are living in a rural area. It's simply a joke in any of the main cities. There needs to be different bands for different areas.

witchgirl26

Riverireland wrote: »

The entire property situation needs an immediate overhaul. I have 2 single friends who have 3/4 bedroom houses in Dublin. Both would like to relocate circa 30 miles outside of Dublin to smaller houses. Both still have mortgages circa 50% house value. They can rent rooms out and remain in their houses earning 12k tax free but if they rent their houses out enabling family's to move in then half thir rent will be taken in tax and they will still have to pay rent elsewhere, making it economically impossible for them. There are probably a lot of younger family's stuck in the dame situation but in apartments needing larger houses. Selling is awkward for them as well, one has had cancer so won't get another mortgage and won't make enough by selling to cash buy. The whole thing is a mess. Friend living in Scotland, 22 year old daughter, no children, moved out and straight into a council apartment.

Why can't they sell the houses? If they want to move somewhere which has a lower house price generally & they only owe 50% on each of the mortgages, then they should discuss that with the bank & see about moving.
I know a couple of people who have been enabled to do similar by the banks in recent months.

I sympathise with the friend who has cancer & therefore can't get a mortgage but to be honest, that is responsible lending being practised.

Riverireland

witchgirl26 wrote: »

Why can't they sell the houses? If they want to move somewhere which has a lower house price generally & they only owe 50% on each of the mortgages, then they should discuss that with the bank & see about moving.
I know a couple of people who have been enabled to do similar by the banks in recent months.

I sympathise with the friend who has cancer & therefore can't get a mortgage but to be honest, that is responsible lending being practised.

The one with cancer totally understand this. She would only have around €130k to buy with and it still working but not enough cash to buy something she would like. Has several pets so needs a garden. The second person would make around €170k but has lost her job recently and again is worried she doesn't have enough to cash buy, will get a small mortgage if she gets re employed.

I think the point is why not allow them to let out their entire houses tax free as it is both their only property. 12k for rent a room tax free surely should be the same for the entire house if it is ones only house. It would also encourage rents to remain within this level. Maybe I'm missing something?