Investors ruining chances for First Time Buyers - regulations?

Graham

Villa05 wrote: »

3600 is 300 per month 400 if couple have a medical card
The extra income is 16000 per year over and above the state pension. The 3,600 is the tax/prsi savings

To say it is 100 per month is wrong and highly misleading

I get that you're put out because you think some silvery fox paid over the odds for a property you were hoping to acquire. It's clearly upset you.

If you find any evidence that supports your theory that pensioner property portfolios are driving up house prices by any significant amount be sure to post it.

Villa05

Graham wrote:

Are you seriously suggesting that there's a large proportion of the retired population surviving solely on a state pension that are building a property empire on the side?

Let's keep the form civil.
Supply is being suffocated
Mortgage credit is still very tight
Cash buyers dominate the market for 3 years.
Sales are still historically very low. It only takes a small amount to swing the market.

Over 65's have accumulated wealth. There is a massive incentive to use that wealth to purchase ONE property to enjoy tax/prsi free rent from that property.

These are all facts. Have you any proof that MOST pensioners have other income

c montgomery

Villa05 wrote: »

Let's keep the form civil.
Supply is being suffocated
Mortgage credit is still very tight
Cash buyers dominate the market for 3 years.
Sales are still historically very low. It only takes a small amount to swing the market.

Over 65's have accumulated wealth. There is a massive incentive to use that wealth to purchase ONE property to enjoy tax/prsi free rent from that property.

These are all facts. Have you any proof that MOST pensioners have other income

I imagine that any pensioner with the means to purchase an investment property would also have a pension based on the fact that to earn enough to buy an investment property you would have needed to be in a good job and a lot of good jobs come with pensions.
I can see the point your trying to make but like most I simply don't agree with it.

Also most pensioners I know want an easy life looking after grandkids etc not dealing with tennents, management fees, property tax, possible water charge confusion, tax returns, repairs, prtb,etc etc etc

Villa05

c montgomery wrote:

I imagine that any pensioner with the means to purchase an investment property would also have a pension based on the fact that to earn enough to buy an investment property you would have needed to be in a good job and a lot of good jobs come with pensions. I can see the point your trying to make but like most I simply don't agree with it.

So we did not need that pension reserve fund that was set up in a bit of a panic 15 years ago. So no harm done that the last property bubble gobbled it all up.

There are many jobs that had decent income but no pension. Irish people in general were not very good at taking up pensions. Self employed, farmers, even TV presenters had to return to work due to poor investment decisions

c montgomery wrote:

Also most pensioners I know want an easy life looking after grandkids etc not dealing with tennents, management fees, property tax, possible water charge confusion, tax returns, repairs, prtb,etc etc etc

In fairness it only takes a small percentage to take the bait to impact the market. Management of the rental can be outsourced. Farmers and self employed would have very little issues with these tasks

Believe what you like I'm just putting an alternative view out there. That's the whole purpose of a form

c montgomery

Villa05 wrote: »

So we did not need that pension reserve fund that was set up in a bit of a panic 15 years ago. So no harm done that the last property bubble gobbled it all up.

There are many jobs that had decent income but no pension. Irish people in general were not very good at taking up pensions. Self employed, farmers, even TV presenters had to return to work due to poor investment decisions


In fairness it only takes a small percentage to take the bait to impact the market. Management of the rental can be outsourced. Farmers and self employed would have very little issues with these tasks

Believe what you like I'm just putting an alternative view out there. That's the whole purpose of a form

Farmers rushing out to buy up investment properties!! That's a new one on me anyway.
Also I don't believe what I want but rather what the evidence points to.

Out of interest do you have any rental properties? Anyone who does knows it's not easy and this "outsourcing" you speak about costs money.

Graham

Villa05 wrote: »

So we did not need that pension reserve fund that was set up in a bit of a panic 15 years ago. So no harm done that the last property bubble gobbled it all up.

Go on, I'm genuinely curious to hear the logic behind that apparently bizarre conclusion.

Villa05 wrote: »

I'm just putting an alternative view out there. That's the whole purpose of a form

Ahhhh now I see. We're just throwing out random theories to see what sticks. If I'd known that I could have come up with some much more fun explanations. :pac:

Villa05

Graham wrote:

Go on, I'm genuinely curious to hear the logic behind that apparently bizarre conclusion.

Your sarcasm detector malfunctioned

lima

c montgomery wrote: »

Farmers rushing out to buy up investment properties!! That's a new one on me anyway.
Also I don't believe what I want but rather what the evidence points to.

Out of interest do you have any rental properties? Anyone who does knows it's not easy and this "outsourcing" you speak about costs money.

I would like to give me experiences of searching for a 2br apt last year - I was almost the only one under 60 at every single viewing. There was one viewing that a proper farmer type was trying to bid the asking to the EA and it was really awkward for everyone! The place went for e55k over asking in the end.

For most properties I viewed, 80-90% of the people there were over the age of 60. I was constantly getting outbid until a strange circumstance happened and I found the other bidder being offered a similar property that would close before xmas (CGT) so I got sale agreed.

super_furry

A sliding scale on tax from rental income would be a good start.

Villa05

c montgomery wrote: »

Farmers rushing out to buy up investment properties!! That's a new one on me anyway.
Also I don't believe what I want but rather what the evidence points to.

Out of interest do you have any rental properties? Anyone who does knows it's not easy and this "outsourcing" you speak about costs money.

Farmer sells one site per year in the bubble tax free. Farmer has children starting college. Farmer thinks rents are too high in the city. Farmer uses cash from site sale to fund apt for children. Farmer rents out other rooms in apartment. Farmer makes lots of mula. Farmer close to retirement, Apartment becomes a nice little earner.
A bit easier to pay management fees when your not obliged to pay tax.

Graham

Villa05 wrote: »

Farmer sells one site per year in the bubble tax free. Farmer has children starting college. Farmer thinks rents are too high in the city. Farmer uses cash from site sale to fund apt for children. Farmer rents out other rooms in apartment. Farmer makes lots of mula. Farmer close to retirement, Apartment becomes a nice little earner.
A bit easier to pay management fees when your not obliged to pay tax.

My sarcasm detector must be working again now, spotted that one a mile off

c montgomery

Villa05 wrote: »

Farmer sells one site per year in the bubble tax free. Farmer has children starting college. Farmer thinks rents are too high in the city. Farmer uses cash from site sale to fund apt for children. Farmer rents out other rooms in apartment. Farmer makes lots of mula. Farmer close to retirement, Apartment becomes a nice little earner.
A bit easier to pay management fees when your not obliged to pay tax.

Retired farmers with kids beginning collage, ya I'd say there's loads of them

Please explain how their not obliged to pay tax! I would like to also pay less tax on my rental income.

NewDirection

So this thread had gotten a bit unruly and out of hand, there seems to be too many different elements being lumped in together.

The essence of the thread (correct if wrong) is a total cash buyer (of any age, and with an unknown purpose for the house, invest or live) is able to underbid and still get the property compared to a buyer with mortgage (of any age, and with an unknown purpose for the house, invest or live).
This seems unfair to the buyer with finance, but in reality its the sellers decision to pick the best deal for their situation. All sellers have different motivations (maximise sale price vs speed in closing sale).


It then moved on to buy to let (of any age) vs buy to live in.
Both are important to a free market to ensure there is a nice balance between rent prices and house prices. As prices fall too low wrt. rent, investors buy up good yield properties, amount of rental properties increases, drops rent prices and increases house prices back into balance. If prices get too high wrt rent, the opposite happens and the number of properties for sale increases etc.


Then moved onto pensioner investors.
I think the only fair comparison here is pensioner investors vs under 65 investors. It has been argued that the pensioner investor has unreasonable tax relief. This is only the case if the individual is earning under 18000, between their state pension and investment property and all other types of income.
If they are earning over 18,000 they will be paying the higher rate of tax like every other investor in that tax bracket.


Finally we are onto farmers, over 65, with children going to college, coming up to Dublin buying up all the good apartments. Ridiculously trying to bid the asking price (which apparently is an embarrassing thing to do these days )
I got nothing for this.

lima

NewDirection wrote: »

Finally we are onto farmers, over 65, with children going to college, coming up to Dublin buying up all the good apartments. Ridiculously trying to bid the asking price (which apparently is an embarrassing thing to do these days )
I got nothing for this.

Ah it's embarrassing in my specific example as this was in D6 where all of the other viewers were refined middle-class types and this loud unkempt prospective buyer started talking (loud enough for everyone to hear) that he would like to bid the asking right there and then. Normal experience in my view would be to say nothing, take the negotiators details and make a call on the Monday. Wasn't embarrassed myself but I could see the others cringe!

Villa05

Villa05 wrote: »

Example posted earlier in thread showing that over 65's pay less tax on the same income when compared to a young couple on the same income. The difference being over 3,500

And please I'm not arguing that over 65's be taxed more. I'm looking for equality and an ending of age discrimination in the tax system

After working hard and paying tax all their lives (at much higher rates than we do now too) and now almost certainly living in much lower incomes than during their working lives do you not think they should be given some reward in the form of paying less tax.

Have a bit of respect for the older generations, you will be one someday and might be glad of the extra few euro you get.

I would also be of the opinin that far more people in older generations are using their savings to help out their ftb children with deposits etc rather than spending it investing. Then again I'm sure some here will say this shouldn't be allowed either :rolleyes:

Barely Hedged

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

Youre really stretching the boundaries of your point you made previous to this post and the posts subsequently. You say you are trying to put forward an alternative view point but all your opinion is based on is really an anomaly in the data population.

Youre defending the position of a FTB couple with one person working from being outbid! Unless were talking about the household demographics in the 70's and 80's i dont really see why you have chosen that other than it conveniently supports your point of debate. Its convenient alright, but no way realistic. What does that then say about the point youve developed from it?

lima

Ximena Steep Villager wrote: »

After working hard and paying tax all their lives (at much higher rates than we do now too) and now almost certainly living in much lower incomes than during their working lives do you not think they should be given some reward in the form of paying less tax.

Have a bit of respect for the older generations, you will be one someday and might be glad of the extra few euro you get.

I would also be of the opinin that far more people in older generations are using their savings to help out their ftb children with deposits etc rather than spending it investing. Then again I'm sure some here will say this shouldn't be allowed either :rolleyes:

I think the older generation got enough already. The enormous increase in house prices that happened during their lives is enough to keep them going. That type of increase is unlikely to happen again. The younger generation, even with all their jobs etc., will have to pay a far higher price for property compared to their generation.

witchgirl26

lima wrote: »

I think the older generation got enough already. The enormous increase in house prices that happened during their lives is enough to keep them going. That type of increase is unlikely to happen again. The younger generation, even with all their jobs etc., will have to pay a far higher price for property compared to their generation.

How did it help them though? Unless you are looking to sell, an increase in house prices affects you in exactly zero ways. My mam has seen the value of her house go up past 650k during the boom & now back down to around 350k. No extra money came her way with that.

Actually I think it was brought out that when you do a like for like comparison, while prices looked lower in years gone by, the percentage amount paid to buy them out of income was indeed higher. Also generally there was only 1 full income coming into the family so spending money was less.

Eugene Norman

Ximena Steep Villager wrote: »

After working hard and paying tax all their lives (at much higher rates than we do now too) and now almost certainly living in much lower incomes than during their working lives do you not think they should be given some reward in the form of paying less tax.

Have a bit of respect for the older generations, you will be one someday and might be glad of the extra few euro you get.

I would also be of the opinin that far more people in older generations are using their savings to help out their ftb children with deposits etc rather than spending it investing. Then again I'm sure some here will say this shouldn't be allowed either :rolleyes:

No it shouldn't. In a perfect world. M
The old generation now are indeed lucky.

The retirement age for most people posting here will be at least 68, that's the law now. For many it will be 69 or 70.

zagmund

lima wrote: »

I think the older generation got enough already. The enormous increase in house prices that happened during their lives is enough to keep them going. That type of increase is unlikely to happen again. The younger generation, even with all their jobs etc., will have to pay a far higher price for property compared to their generation.

Do you think all "old people" benefited and got wodges of cash in their hands just out of the blue one day? If so, I can't wait till I too am an old person and someone just delivers a load of money to my door. Man, I'm going to have some party that day.

"I think the older generation got enough already" - it's not that simple.

z

[edit] try talking to some of them and asking what their marginal income tax rate was in the 1980s. After £5,000 you were paying 55% on everything. After £7,000 it was 65%. Yes, 65% tax. Todays marginal income tax plus the assorted levies is very low compared to that.

lima

lima wrote: »

I think the older generation got enough already. The enormous increase in house prices that happened during their lives is enough to keep them going. That type of increase is unlikely to happen again. The younger generation, even with all their jobs etc., will have to pay a far higher price for property compared to their generation.

You do realise interest rates were up around 15% on mortagages at one point in the past? Money was never as cheap as it is now.

Also if you adjust for inflation etc house prices 30 years ago were not much different than now, it was just the boom where they were much higher and as most people retired now didnt sell their house in the boom I dont see how that makes any difference.

Graham

Ximena Steep Villager wrote: »

You do realise interest rates were up around 15% on mortagages at one point in the past? Money was never as cheap as it is now.

When they're lending money, it is relatively cheap. The cost of property as a proportion of income certainly isn't though.

Villa05

NewDirection wrote:

Then moved onto pensioner investors. I think the only fair comparison here is pensioner investors vs under 65 investors. It has been argued that the pensioner investor has unreasonable tax relief. This is only the case if the individual is earning under 18000, between their state pension and investment property and all other types of income. If they are earning over 18,000 they will be paying the higher rate of tax like every other investor in that tax bracket.

NewDirection wrote:

Then moved onto pensioner investors. I think the only fair comparison here is pensioner investors vs under 65 investors. It has been argued that the pensioner investor has unreasonable tax relief. This is only the case if the individual is earning under 18000, between their state pension and investment property and all other types of income. If they are earning over 18,000 they will be paying the higher rate of tax like every other investor in that tax bracket.

Barely Hedged wrote:

Youre defending the position of a FTB couple with one person working from being outbid! Unless were talking about the household demographics in the 70's and 80's i dont really see why you have chosen that other than it conveniently supports your point of debate. Its convenient alright, but no way realistic. What does that then say about the point youve developed from it?

Why is that every time I post someone comes along and twists what I've said

Do you only partially read my post, think it's okay to take a figure I post and immediately halve it or less.

Farmer comment aside. (It was used as an example of profession where there may be no pension but potential for plenty cash). I misused it
Is it not possible to engage in a mature debate here

MouseTail

Graham wrote: »

When they're lending money, it is relatively cheap. The cost of property as a proportion of income certainly isn't though.

Neither was it when interest rates were north of 15%, when taxation rates were penal, when there was a marriage bar, when third level education was beyond the reach of the vast majority of people. This 'the older generation had it cushy' argument is ignorance, pure and simple.

Graham

MouseTail wrote: »

Neither was it when interest rates were north of 15%, when taxation rates were penal, when there was a marriage bar, when third level education was beyond the reach of the vast majority of people. This 'the older generation had it cushy' argument is ignorance, pure and simple.

Yup, buying a house 20 or 30 years ago was tough.

At least a good proportion of purchasers from that era can take some comfort in the equity they can release if/when they choose to downsize.

NewDirection

Villa05 wrote: »

Why is that every time I post someone comes along and twists what I've said

Do you only partially read my post, think it's okay to take a figure I post and immediately halve it or less.

Farmer comment aside. (It was used as an example of profession where there may be no pension but potential for plenty cash). I misused it
Is it not possible to engage in a mature debate here

There's nothing skewed at all. From the link you posted the exemption is 18,000 per person.

Also from your example and subsequent post about a flat tax rate for rental income, you seem to be only targetting low earning pensioners with your arguements. I just dont understand the motivation?

Eugene Norman

Ximena Steep Villager wrote: »

You do realise interest rates were up around 15% on mortagages at one point in the past? Money was never as cheap as it is now.

Also if you adjust for inflation etc house prices 30 years ago were not much different than now, it was just the boom where they were much higher and as most people retired now didnt sell their house in the boom I dont see how that makes any difference.

They are higher of course because interest rates are lower. High interest rates on housing are a good thing. Most people don't get that.

Banks tend to lend to a percent of take home pay. If you max out the percentage of your salary when interest rates are low you are in danger when they go up. Furthermore interest rates being low signals low inflation so the actual real debt you pay is going to be the same year over year. Inflation hurts creditors and benefits debtors.

If on the other hand interest rates are high then they are likely to fall, and as they fall your house will increase in value because credit is the large determinant of house prices. Also the high interest rates tend to co-incide with high inflation.

A house bought for £30K in 1972 worth £1m in 2002, the last year of the mortgage, cost £30K plus interest. That is if you didn't sell your car to pay off the mortgage early, you would be paying a pittance every year.

Modern buyers have the opposite dilemma - when interest rates increase from their lowest point ever, the shock will be intense particularity to trackers.

Graham

Graham wrote: »

Yup, buying a house 20 or 30 years ago was tough.

At least a good proportion of purchasers from that era can take some comfort in the equity they can release if/when they choose to downsize.

How many actually downsize though? The majority of home owners would look to pass on their home to one of their own children. Also very few want to leave a place that has been their home for many many years.

Some people living in expensive areas of Dublin etc may be able to downsize and release equity but for the majority of the country there would be little equity to release as the value of the house would not be that high in comparison to what they could buy locally.

Eugene Norman

MouseTail wrote: »

Neither was it when interest rates were north of 15%, when taxation rates were penal, when there was a marriage bar, when third level education was beyond the reach of the vast majority of people. This 'the older generation had it cushy' argument is ignorance, pure and simple.

No its absolutely true. None of those things matter because they are all relative.

Barely Hedged

Villa05 wrote: »

Why is that every time I post someone comes along and twists what I've said

Do you only partially read my post, think it's okay to take a figure I post and immediately halve it or less.

Farmer comment aside. (It was used as an example of profession where there may be no pension but potential for plenty cash). I misused it
Is it not possible to engage in a mature debate here

I did in no way twist what you've said. I have quoted you verbatim and responded to it and your subsequent posts that developed off it.

If you care to explain how I've twisted what you said I'd be very interested to hear