Media: Scrapping Help-to-buy Scheme would be disruptive and a mistake

Mickiemcfist

I don't really see what that achieves. Also I don't think the htb should be given to non first time buyers, why would we increase competition in the market? They've already got a house.

Additionally I don't agree with removing the tied to income tax part of the rules. Makes it a little easier to swallow for those tax payers not availing of it.

The_Conductor

Mickiemcfist wrote: »

I don't really see what that achieves. Also I don't think the htb should be given to non first time buyers, why would we increase competition in the market? They've already got a house.

Additionally I don't agree with removing the tied to income tax part of the rules. Makes it a little easier to swallow for those tax payers not availing of it.

Lots of non-first time buyers- do not have a house, and according to the CSO- you have almost a quarter of a million people (this is the gross number of people- as opposed to the number of properties)- who despite price increases in recent times- will remain in negative equity, on current projections, until 2020. Conveniently- this ties in with the 'at least 5 more years of growth' brigade- however, I don't see that that is relevant.

You assume non-first time buyers own another property. The fact of the matter is- there are hundreds of thousands of them- who do not.

There are also, according to the Revenue Commissioners, almost 64,000, owners of a single property- who are renting elsewhere- as they are unable to sell (mostly negative equity again)- and their sole property either doesn't suit their work or family situations/circumstances.

First Time Buyers- are being treated with kiddie gloves- in comparison to a massive number of other people in the market- this is something that is constantly being ignored.

NERI have produced a lot of spatial analysis to depict this graphically.

Mickiemcfist

The_Conductor wrote: »

Lots of non-first time buyers- do not have a house, and according to the CSO- you have almost a quarter of a million people (this is the gross number of people- as opposed to the number of properties)- who despite price increases in recent times- will remain in negative equity, on current projections, until 2020. Conveniently- this ties in with the 'at least 5 more years of growth' brigade- however, I don't see that that is relevant.

You assume non-first time buyers own another property. The fact of the matter is- there are hundreds of thousands of them- who do not.

There are also, according to the Revenue Commissioners, almost 64,000, owners of a single property- who are renting elsewhere- as they are unable to sell (mostly negative equity again)- and their sole property either doesn't suit their work or family situations/circumstances.

First Time Buyers- are being treated with kiddie gloves- in comparison to a massive number of other people in the market- this is something that is constantly being ignored.

NERI have produced a lot of spatial analysis to depict this graphically.

Ok I agree that if certain second time buyers have no current house and don't have a massive amount of savings (proceeds from sale of same) it might be necessary to assist.

Although I dispute the fact that the 64k of people who don't live in their sole owned house & rent elsewhere need assistance. My (ideal) plan is to buy a 3 bed semi or even 2 bed apartment in Dublin & rent it out while I rent where I currently am as I don't need a 3 bed yet. I wouldn't expect assistance in buying a second one.

Colonel Claptrap

The_Conductor wrote: »

There are also, according to the Revenue Commissioners, almost 64,000, owners of a single property- who are renting elsewhere- as they are unable to sell (mostly negative equity again)- and their sole property either doesn't suit their work or family situations/circumstances.

First Time Buyers- are being treated with kiddie gloves- in comparison to a massive number of other people in the market- this is something that is constantly being ignored.

If we're bluntly comparing the two groups, FTBs have inherited a broken housing market from a generation that took investment risks, which didn't pay off.

Obviously that's an overly simplified way to view it, and there are thousands of genuine families suffering in inadequate accommodation through no fault of their own.

But traditionally first time buyers have generally received a leg up from the state. They are a younger population on lower wages, at a stage of their lives when they start families and put down roots. Extending the scheme to non FTBs creates a level playing field - rightly or wrongly - and gives some reckless property owners another crack of the whip.

I don't mean to offend when I say that. Yes, some non-FTB families should be given assistance in buying a new build. But a blanket extention of the scheme to everybody is unfair to FTBs and overly fair to reckless property speculators who are getting another free go on the property roulette wheel.

LirW

Just being curious: why was the scheme introduced in the first place and applies to new builds only? Was it already in place when you still needed 20% of the price as a deposit?
I honestly never really cared about the scheme so I know little about it beside it causing grief to plenty of people.

Colonel Claptrap

LirW wrote: »

Just being curious: why was the scheme introduced in the first place and applies to new builds only? Was it already in place when you still needed 20% of the price as a deposit?
I honestly never really cared about the scheme so I know little about it beside it causing grief to plenty of people.

It's aim is to encourage builders to supply more new builds.

The 20% deposit rule was reduced to 10% by the central bank at the same time the government introduced the scheme. It was a double windfall for FTBs. It's important to note that the central bank and dept. Of finance work independent of each other. The timing was....not ideal.

To be honest the scheme doesn't cause that much grief. But in the absence of no other notable government intervention in the housing market (bar rent caps) it comes in for more of its fair share of criticism. After all it affects a very minor subset of the property market.

LirW

Seems like a very short thought thing then really when this was the only reason.
That housing is falling short in supply is a topic for the last 3 or 4 years at least. I don't really see any long term planning to effectively tackle the issue in any of that. But then on the other hand I'm a planning maniac and this gives me a headache.

The_Conductor

I suppose the issue is- this was sold to one group of people- as a manner of helping out a particular demographic (namely First-Time-Buyers) whereas to a whole other sector- it was sold as a fillup to get the building industry going again (which is why it only applied to new builds- and not all residential property).

I think one issue is the FTB definition- which automatically excludes all those who got burnt during the downturn- and don't own any property- and are consigned to renting for the rest of their lives- despite not having any assets to their names...........

The 20k lumpsum- and the manner in which its tied up in a ribbon and bow- as a refund of the income tax you paid- is complete and utter cow manure- it makes it sound like a lovely cosy gesture towards FTBs- when the simple fact- as recorded by the RTE Primetime Investigates team- is the whole of the 20k got incremented onto asking prices within a forthnight of the scheme being announced- regardless of whether, or not, any given buyer was entitled to the full 20k. I.e. it was an opportunity to lob another 20k onto asking prices. Prices were going up anyway- but arguably- they could very well be 20k lower today, than they actually are- if the 20k lumpsum hadn't been incremented onto asking prices..........

If you're willing to imagine that the politicians hadn't got a clue- you might call it the law of unintended consequences- personally- I think it suits them to have people question how much thought has gone into their thought process- as if something doesn't work- they can just move on, without dwelling on how the various elements of their intervention went titsup...........

Housing Minister- isn't quite as bad as Health- but its a poison chalice nonetheless. It may get a little better if the proposals to move all the staff together out of Wexford comes to fruition- then again there have been one or two abortive behind the scenes attempts already that came to nothing. Good luck to their new staff- its one baptism of fire.

Colonel Claptrap

I wonder.... If the HTB scheme applied to everybody, and not just FTBs would the new build prices have gone up €20,000? Or would they have gone up a lot more?

It would effectively take the knees from under the Central Bank as deposit requirements drop by 5% across the board. Imagine the flood of (20k richer) buyers to showhouses....

Graham

Colonel Claptrap wrote: »

It would effectively take the knees from under the Central Bank as deposit requirements drop by 5% across the board. Imagine the flood of (20k richer) buyers to showhouses....

I think that was half the reason behind the existing scheme.

Government theoretically can't interfere with the central bank so the HTB scheme was a way to step around it.

The_Conductor

Colonel Claptrap wrote: »

I wonder.... If the HTB scheme applied to everybody, and not just FTBs would the new build prices have gone up €20,000? Or would they have gone up a lot more?

It would effectively take the knees from under the Central Bank as deposit requirements drop by 5% across the board. Imagine the flood of (20k richer) buyers to showhouses....

Well- prices went up far more than 20k- how much of the increase is attributable to the 20k- and how much is the simple and irrefutable fact that demand is vastly outstripping limited supply?

Yes- the 20k 100% definitely had an impact. Was it responsible for 20k of increase? According to RTE Primetime Investigates- it was. Would prices have risen anyway? Certainly, they would have done.

So its a strong factor behind a portion of the increase- however, based purely on scarscity factors- you may very well have had the increase anyway- just not all lumped into the 2 weeks immediately after the scheme was announced............

I do get what you're saying- and yes- its a very valid observation.

myshirt

What is wrong with linking the FTB to a 'target cost' of say 300k?

It could be linked with a reduction in vat to 9% for developers producing a unit at 275k (or 300k incl vat).

You want to drive growth in this space. This is the space where there is pent up demand, the c. 300-330k space.

The_Conductor

myshirt wrote: »

What is wrong with linking the FTB to a 'target cost' of say 300k?

It could be linked with a reduction in vat to 9% for developers producing a unit at 275k (or 300k incl vat).

You want to drive growth in this space. This is the space where there is pent up demand, the c. 300-330k space.

The problem with a FTB 'target cost' of 300k- is there is no cognisance of what the FTB is getting for their 300k. The politicians are all back to harping on about the 'property ladder' implying that the FTBs can buy any old crap- and flip it in a few years time- when their circumstances change- to something more akin to their 'forever home'.

I think that anyone who is buying a property should ensure the property is suitable for them for the medium to long term- and if you can't see yourself being ok to live there if everything goes to crap a-la 2009- then- don't buy.
We have enough owner occupiers living in property which fails Local Authority suitability rules (on over-crowding and other grounds)- we do not need to continue this ignoble tradition.

In my opinion- there should be cognisance of size and future needs in every purchase- and this should be at least as important as the absolute cost of the purchase. So- 2-3 bed units with plenty of storage- and access to proper facilities and amenities are required- not 1 bed shoeboxes?

I honestly think the future suitability has to be at least as important as the absolute price in the scheme- i.e. minimum specs, regardless of location- *must* be specified.

myshirt

@the conductor, do you agree with the principle of a target cost?

I take your points, they are good. We are not going to flesh out a full policy here of course, the idea has to be developed, but I certainly think we can pivot off a central idea of a target cost.

The_Conductor

myshirt wrote: »

@the conductor, do you agree with the principle of a target cost?

I take your points, they are good. We are not going to flesh out a full policy here of course, the idea has to be developed, but I certainly think we can pivot off a central idea of a target cost.

Target cost- fine- but only after minimum size and other specs- not before them......... I.e. we do not need to have even more people living in inappropriate accommodation than we already have- and we should actively try to head this off at the pass- when we can- rather than retrospectively scratch our heads looking at the problem, wondering what we can do about it.

myshirt

The_Conductor wrote: »

Target cost- fine- but only after minimum size and other specs- not before them......... I.e. we do not need to have even more people living in inappropriate accommodation than we already have- and we should actively try to head this off at the pass- when we can- rather than retrospectively scratch our heads looking at the problem, wondering what we can do about it.

Agreed, no one wants to see that. We do have the smart architects to design these solutions, so there is no reason we can't get there. There isn't an incentive at the moment to design smart, bar it being kitch.

Another prong to this fork is building standards... are they too onerous? I know that might not be a popular thing to say.

Colonel Claptrap

The_Conductor wrote: »

Target cost- fine- but only after minimum size and other specs- not before them......... I.e. we do not need to have even more people living in inappropriate accommodation than we already have- and we should actively try to head this off at the pass- when we can- rather than retrospectively scratch our heads looking at the problem, wondering what we can do about it.

I disagree with minimum sizes. A 4 bed semi might be ideal for me, my wife and 3 kids. But it's way too big for a single retiree. Or a couple who don't want kids. Some people will only live in a city centre where space is a premium.

"People living in inappropriate accomodation" goes both ways.

I think planning laws should be relied upon to provide mixed units. Slapping it onto HTB as a condition is over egging the pudding.

Tomek398

I've been reading everywhere about housing crisis due to lack of supply and high demand. At the same time government 'gives' money to people causing even higher demand. How crazy is that?

The_Conductor

Colonel Claptrap wrote: »

I disagree with minimum sizes. A 4 bed semi might be ideal for me, my wife and 3 kids. But it's way too big for a single retiree. Or a couple who don't want kids. Some people will only live in a city centre where space is a premium.

"People living in inappropriate accomodation" goes both ways.

I think planning laws should be relied upon to provide mixed units. Slapping it onto HTB as a condition is over egging the pudding.

The current problem is- where apartments are being built- the specs are so quite incredibly small- that for example, it is impossible to make a wheel chair accessible unit (its been highlighted numerous times by the Irish Wheelchair Association to Dublin City Council- and is a massive issue in Dublin at the moment).

Obviously- a single person does not need 3 or 4 bed unit- a one or two is more appropriate- the current issue is not whether a single person needs a 1 or 2 bed- its whether there is a supply of 3 and 4 beds available- when they are needed- because, patently, there are not.

We are building 'starter units'- we are not building 'subsequent units' other than in improbably small volumes.

Fabregas86

morrga wrote: »

The people buying a house in that bracket are buying in areas where they grew up in or are now settled so you cant exclude someone's want to settle in their area based on where they are from as that equates to Geographical discrimination.

Maybe iv missed your point her but its nothing to do with geographical discrimination we would all love to live exactly were we wish but if you cannot afford it you do not get it settled or not settled
picking and choosing for the vast majority is long gone
your basically saying if joe bloggs is settled in foxrock and likes the new houses up the road worth 2 million ''ah sure help him out'' yet he or she has not got two shillings to rub together.

morrga

Fabregas86 wrote: »

Maybe iv missed your point her but its nothing to do with geographical discrimination we would all love to live exactly were we wish but if you cannot afford it you do not get it settled or not settled
picking and choosing for the vast majority is long gone
your basically saying if joe bloggs is settled in foxrock and likes the new houses up the road worth 2 million ''ah sure help him out'' yet he or she has not got two shillings to rub together.

Yeah look of course the 2 million' homes are not part of my reasoning. That's an extreme case. My example is very basic yet realistic.

My point is that a 3/4 bed home in South Dublin could cost 505k and a similar build north of the Liffey costs 495k. So one buyer is excluded and the other included despite the fact that they could both work for the same company and earn the same salary. That's geographical discrimination.

I just dont think they should have bowed to cheap political wins to reduce the cap to 500k. If they left it at 600k or 550k you would just have a broad enough gap to be fair to everyone for the example I have outlined above.

The_Conductor

Fabregas86 wrote: »

Maybe iv missed your point her but its nothing to do with geographical discrimination we would all love to live exactly were we wish but if you cannot afford it you do not get it settled or not settled
picking and choosing for the vast majority is long gone
your basically saying if joe bloggs is settled in foxrock and likes the new houses up the road worth 2 million ''ah sure help him out'' yet he or she has not got two shillings to rub together.

If Erica Fleming can get a nice new 'forever home' exactly where she wants it- why can't everyone else?

That's a rhetorical question of course.

You get what I'm saying though- its damn hard to tell Joe Bloggs he has to move away from his family supports and networks- even if he can pay what would be a reasonable rent from his own means- when you have the likes of Ms. Fleming getting handed a 'forever home' exactly where she wants- just because she has kicked and screamed a bit...........

There is some sort of inequity there- Joe Bloggs should have the same entitlement to Ms. Fleming- or anyone else- to live where they want to live- and if they are not in a position to support themselves- they should cut their cloth to suit their means.

Its this lack of cloth- and lack of acceptance that they have limited means- that seems to be the issue- both Joe Bloggs and Ms. Fleming believe they are entitled to live in a certain area- regardless of whether, or not, they can afford to do so. This salient point- is a point which really needs to be hit on the head- I'd love to live somewhere I had family support- I can't afford to- I- like most people who live off our means- live where I can afford to live. This should be a mantra that more people should subscribe to.

Fabregas86

morrga wrote: »

Yeah look of course the 2 million' homes are not part of my reasoning. That's an extreme case. My example is very basic yet realistic.

My point is that a 3/4 bed home in South Dublin could cost 505k and a similar build north of the Liffey costs 495k. So one buyer is excluded and the other included despite the fact that they could both work for the same company and earn the same salary. That's geographical discrimination.

I just dont think they bowed to cheap policitical wins to reduce the cap to 500k. If they left it at 600k or 550k you would just have a broad enough gap to be fair to everyone for the example I have outlined above.

I agree some may feel a little hard done by in certain cases in the example above for such small margins in the difference i suppose we cannot please everyone

morrga

Fabregas86 wrote: »

I agree some may feel a little hard done by in certain cases in the example above for such small margins in the difference i suppose we cannot please everyone

Exactly but why not include everyone? A threshold of 550k is not going to break the bank and it would avoid the geographical discrimination.