Quick Fix for the property Market

willbeuptuesday

Hi All

I was just reading the Daft report on the housing market and I saw that there is twice the mortgage approvals to the amount of properties for sale! This is madness and will ultimately drive the prices even higher for both renters and first time buyers. We all know that the country is not building enough houses and even if we started today it will take too long for most people. So this got me thinking, how can we get mores houses on the market? In this country there are a lot of professional landlords and accidental Landlords (Celtic Tiger legacy) who are paying 48% income tax on the rent they receive. What if the government exempted them Capital gains TAX on their investment for a set period, say 12 months (This will be an incentive for people to off load houses that they have). So in theory if a person had a house and they had equity in it, if they sold it in the 12 month window, they would be exempt the capital Gains Tax. This would in my opinion bring a lot more houses onto the market and in turn stop the crazy price hikes and lessen the rental demand so more renters could buy property at more affordable prices. I am no expert but I feel that we need to try something different and this would cost the government nothing as the money lost from the Capital gains Tax would be offset against the Stamp Duty they would receive. This is not a long term solution and would need to be phased out until a steady stream of houses comes on to the market. Any thoughts?

quadrifoglio verde

Take a four bed house. It's rented out to three couples and their permanently single friend.
So 7 people living in this house.
Landlord decides to sell to take advantage of the cgt exemption.
He sells to one of the couples in that house. They're fed up sharing and looking to start a family so they live in it by themselves.
We've gone from a house housing 7 people to a house housing 2 people.
How does that sort the availability of houses for rent?

ThisRegard

I think a better fix may be some sort of negative equity mortgage. I know banks already do so in some cases but there's plenty out there that want to sell but banks won't allow them to carry any negative equity into a new mortgage or property.

I don't think CGT is much of a barrier to selling.

Lumen

As the clover dude says, changing ownership of property doesn't increase supply.

draiochtanois

This post has been deleted.

willbeuptuesday

A lot of Professional Land lords bought when the tax was far lees on their rental income, they have the most houses and would benefit from a CGT relief. The returns are not the same as they were and they could invest their money elsewhere and get as good a return for way less hastle.

Michael D Not Higgins

willbeuptuesday wrote: »

A lot of Professional Land lords bought when the tax was far lees on their rental income, they have the most houses and would benefit from a CGT relief. The returns are not the same as they were and they could invest their money elsewhere and get as good a return for way less hastle.

Whether or not your proposal would lead to more houses for sale, it's at best neutral in the housing supply equation. You're just shifting the balance between owners and renters. The only real solution is houses and apartments being built.

antoinolachtnai

What we really need is more people to invest in residential property and bring new supply on-line.

The quickest fix I can see is to tax all residential property in RPZs that are neither rented nor the principal private residence of the owner. The tax about the same as what the rent would be (so say, 5 percent of the value). This would bring a couple of thousand units onto the market pretty quickly. The tax would also apply to local authority units or housing association units which are lying empty. Exempt new lets from the letting regulations for two years and maybe have an income tax allowance for costs to get the units ready to let.

This could be done next month if the government wanted to, and it could all be done easily enough with existing databases that revenue and RTB have.

For the longer term, the immediately obvious way to increase supply would be to give a €40k grant for every new unit completed in the RPZs until end 2019 (or end 2020 in the case of apartments to account for longer construction time) and a €5k grant to the local authority in the area.

Samuel T. Cogley

OP the government are doing EXACTLY what you suggest just by different means and it's not entirely clear if it's intentional or not. Most rental property is held by people like yours truly. We bought high but have excellent finance in place. So much so that there is very little reason to sell unless there is a profit to be had. The situation you describe is creating that profit and I know for a fact I'm not the only one, even on boards, who is just waiting to dump. Add to that the constant pressure being created by legislation and negative press.

It will do absolutely nothing to help supply or prices but it will massively shrink the rental market, presumably to allow big business in to control it, when magically the rental controls will be lifted and some for of deal about units in social housing will be brought in, probably in ghettos in places no one wants to rent. People not qualifying for social housing will either have to buy, work for the right company or deal with rentals with good standards and facilities but eye watering prices.

If the supply side was there that would actually be a very sensible policy - make renting a truly temporary thing with advantages - and buying the norm. However the supply side isn't there, so:

FFS can't start it into the video - whole clip is worth a watch as it's Blackadder.

GGTrek

antoinolachtnai wrote: »

What we really need is more people to invest in residential property and bring new supply on-line.

The quickest fix I can see is to tax all residential property in RPZs that are neither rented nor the principal private residence of the owner. The tax about the same as what the rent would be (so say, 5 percent of the value). This would bring a couple of thousand units onto the market pretty quickly. The tax would also apply to local authority units or housing association units which are lying empty. Exempt new lets from the letting regulations for two years and maybe have an income tax allowance for costs to get the units ready to let.

This could be done next month if the government wanted to, and it could all be done easily enough with existing databases that revenue and RTB have.

For the longer term, the immediately obvious way to increase supply would be to give a €40k grant for every new unit completed in the RPZs until end 2019 (or end 2020 in the case of apartments to account for longer construction time) and a €5k grant to the local authority in the area.

Your suggestion ignores the elephant in the room: Dublin City Council Planning and Development Department incredible conservative views on granting planning applications for more density developments (the local authority where the housing crisis is at its worst). I would suggest a deep reading of the zoning maps: http://dublincitydevelopmentplan.ie/documents.php and tell me where all these massive amount of new buildings should be built.

The people at DCC love Dublin as it is now, after all they have their secure job and probably their house already. Sorry to be so blunt, but the original OP get-rich-quick style solution is just another quick patch that Dublin really does not need. Real solution is having new builds, it will require sacrifice and hard work and time from all the parties in society. There are obviously some parts of society who do not want to listen and the Irish govvie should focus on those parts instead of making great announcements or following your suggestions without first having removed the big obstacles created by DCC.

It is not just a question of money as you put, ideological constraints need to be overcome to solve the crisis and this is sometimes more difficult than just throwing money at the problem.

antoinolachtnai

You may be right. I agree with you that there is a big gulf between 'the smug housed' and all the people who are really struggling in this property market. It is at all levels and all sorts of places, not just in any particular local authority.

The government is doing a good thing by selling land it holds. http://www.independent.ie/irish-news/news/revealed-some-of-the-biggest-sites-offered-by-the-state-to-build-50000-new-homes-35659123.html

I do think there needs to be an incentive for local authorities to 'play ball', and I think 5k/unit might help that along. Maybe it should be more?

If there is still a problem with one local authority, they could put SDZ designation on these sites.

You don't actually need to build anything to get a lot of unoccupied property back into circulation quickly and that is where I would start.

Here we go

Heard on the radio this morning about there being 3k air b&b properties and how families are being put in hotels and tourists are staying in houses/apartments we really need to ask why why people are letting to air b&b and not convetnal renters that being profit and risk easy thing do do is help landlords choose renters over air b&b so may give them same tax status as multi national companies that hold 100/200 apartments make evicting bad tennents easier but still keep part 4 like clear rules on paying your rent to put real people being abused by bad landlords with those who want a free house is insane and legislate air b&b

GGTrek

antoinolachtnai wrote: »

You may be right. I agree with you that there is a big gulf between 'the smug housed' and all the people who are really struggling in this property market. It is at all levels and all sorts of places, not just in any particular local authority.

The government is doing a good thing by selling land it holds. http://www.independent.ie/irish-news/news/revealed-some-of-the-biggest-sites-offered-by-the-state-to-build-50000-new-homes-35659123.html

I do think there needs to be an incentive for local authorities to 'play ball', and I think 5k/unit might help that along. Maybe it should be more?

If there is still a problem with one local authority, they could put SDZ designation on these sites.

You don't actually need to build anything to get a lot of unoccupied property back into circulation quickly and that is where I would start.

I believe that the DCC official will laugh at 5k, those are the contribution fees for a very small extension requiring planning!
Throwing small money at DCC will not be useful, I believe their big grand zoning plan 2016-2022 is a big laugh at the housing crisis on DCC part. The government will have to take radical action, change the law and force DCC to designate more areas in the zoning map close to public transport to high rise buildings, I do not see any other solution for DCC. This is what happened in other big cities, small residential units get demolished and high rise building are built, green areas between the high rise buildings are defined by the zoning plan and paid by developers.

antoinolachtnai

Could be. It is the old problem of how do you force people in authority to do stuff they don't want to do?

There are many problems.

If you start building high rise, you will run out of public transport capacity pretty quick. The Luas extension will be chockablock within months of opening. There are no other major public transport projects coming on stream for the next five years.

The bus company should do a lot to help fill the gap in the medium term, but is basically incapable.

RuMan

ThisRegard wrote: »

I think a better fix may be some sort of negative equity mortgage. I know banks already do so in some cases but there's plenty out there that want to sell but banks won't allow them to carry any negative equity into a new mortgage or property.

I don't think CGT is much of a barrier to selling.

Would have been a lot easier if banks were forced to face reality on house prices initially. Also if people realised they couldn't afford the house they were living in.

Removing incentives to take on more debt by pushing prices higher isn't the solution.

Government policy has largely dictated land values and therefore house prices. Cutting government taxes would help while also bringing in the vacant site levy.

<mod snip>

jimmycrackcorm

antoinolachtnai wrote:

The quickest fix I can see is to tax all residential property in RPZs that are neither rented nor the principal private residence of the owner. The tax about the same as what the rent would be (so say, 5 percent of the value). This would bring a couple of thousand units onto the market pretty quickly. The tax would also apply to local authority units or housing association units which are lying empty. Exempt new lets from the letting regulations for two years and maybe have an income tax allowance for costs to get the units ready to let.

I wonder how many Empty houses there are in that scenario?

antoinolachtnai wrote:

If you start building high rise, you will run out of public transport capacity pretty quick. The Luas extension will be chockablock within months of opening. There are no other major public transport projects coming on stream for the next five years.

Run more trams, give buses priority over cars. Even today I think it is silly that the LUAS doesn't get priority at junctions and has to wait in turn.

antoinolachtnai

There are around 30000 vacantt units in 2016 according to the census. This is a major reduction from 2011. The property tax and increasing rents have definitely drawn property into the market.

You can't run more trams. It will interfere with the other road users (and in particular the buses). The Luas does in principle have priority over all traffic by virtue of its railway order. But it sometimes has to wait because traffic is backing up and interfering with junctions downstream, and at peak times, the Luas managers are trying to maintain a gap ('headway' in the jargon) between the trams.

The buses will be marginalised even further by the new Luas lines. At the macro level, 'What the Luas giveth, the Luas taketh away.'

The bus service is quite badly managed and there is no real will to fix it that I can see. There is not much point in giving it more priority when it is so badly run. If you build high buildings you will always be generating vehicle and people movements. Some vehicle movements, for example deliveries and taxis, are really absolutely essential.

antoinolachtnai

Statistics from CSO on vacant houses in four Dublin counties.

over 32000 vacant houses in Dublin.png

Samuel T. Cogley

Dublin City number is suspect - how many of the 10K were people that routinely don't answer the door in CC apartment blocks?

antoinolachtnai

Samuel T. Cogley wrote: »

Dublin City number is suspect - how many of the 10K were people that routinely don't answer the door in CC apartment blocks?

There is a note on this on the CSO site.

http://www.cso.ie/en/csolatestnews/pressreleases/2017pressreleases/pressstatementcensus2016resultsprofile1-housinginireland/


And more here. The enumerators dig into this quite a bit. http://www.cso.ie/en/releasesandpublications/ep/p-cp1hii/cp1hii/vac/

quadrifoglio verde

antoinolachtnai wrote: »

Could be. It is the old problem of how do you force people in authority to do stuff they don't want to do?

There are many problems.

If you start building high rise, you will run out of public transport capacity pretty quick. The Luas extension will be chockablock within months of opening. There are no other major public transport projects coming on stream for the next five years.

The bus company should do a lot to help fill the gap in the medium term, but is basically incapable.

If you go high rise in the areas inside the canal, indeed you'll put pressure on the public transport infrastructure inside in the canal.
However the upside of this is that most people living inside the canals work inside the canals. Canal to city centre isn't that far of walk and is certainly within cycling distance.

By not going high-rise inside the canal, you create a situation where people end up commuting from far off places on the hinterlands which need massive public transport investment as what's currently there is over subscribed. I'm not sure if you've ever got a bus from celbridge in the morning, but you'll be standing for an hour.

People want to live in the city. This should be facilitated by going up.
Going up concentrates people in one area meaning that the cost of bringing infrastructure to that area is cheaper. Not to mention being a quick stroll from work and not needing to rely on a car or a packed bus for transport.