€300,000 loan proposal for FTBs is a joke.

Milk & Honey

The latest gimmick to transfer money into the hands of property developers at the expense of young people and tax payers is the proposal that the local authorities lend first time buyers up to €300k to but new houses.
As soon as the purchaser walks in the door the house cannot be sold under the same conditions because it will now be a second hand house. The price will have been set by the developer not by the market. The result will be the purchaser is almost certainly walking straight into negative equity. Negative equity can be ectremely serious for anybody needing to sell for whatever reason. A national deposit scheme similiar to the SSIA to enable first time buyers accumulate a deposit which they can use to purchase any house would be a far better system. A subsidised rental scheme for first time buyers, leasing property at a low rent to enable them to save a deposit would also be of use. The €300K loan is clearly an attempt to assist struggling property developers clear unsold inventory, dressed up as "helping first time buyers".
The reality would be that many of them would be condemned to a living hell.

copacetic

any links to this 'proposal'

Caoimhín

copacetic wrote: »

any links to this 'proposal'

http://www.independent.ie/national-n...s-1496202.html

copacetic

caoibhin wrote: »

http://www.independent.ie/national-n...s-1496202.html

cheers, guess we will see on Tuesday. The indo claiming something is true means there is a less than 50% chance that it is.

Senna

There should be public outrage at this, FF are doing what they said they wouldn't, bailing out the builders. They know this isn't the answer and its not in the best interest of the public, but their builder buddies (developers rather than average builders) have given them a lot of financial backings, so its screw the public and help the people that inflated the housing bubble.

The only god sent maybe the fact that the government has no money to be throwing at FTB's and so will do very little to prop up prices. Also secondhand houses will be unaffected, so their prices will continue to drop. If a secondhand house is worth 200k and the same new one is 300k, who's going to buy the new one?

This bailout will have little of no effect on the market, FTB's aren't stupid enough to jump at this poor excuse of a carrot on a stick.

ParkRunner

That scheme beggars belief. Again the income threshold is set at €60,000. It should be half that if the scheme was to have credibility. I hope they arent going to bring this in and if they do I hope people boycott it

BendiBus

This would make most existing homeowners (i.e. the majority of voters) feel like they'd been screwed as it effectively forces them to reduce prices to compete for sales against new homes.

A guaranteed election loser.

I'll be very surprised if this happens.

gurramok

Would be interesting to see the stress levels on this. Surely they cannot give someone earning 35k a 300k mortgage?
Any FTB worth their salt would not want to put on huge amount of extra debt in order to buy.
One thing though, we have a recession now and that means job security comes before a house purchase for a buyer and thats one reason this proposed scheme will fail to halt price falls.

jackal

State backed sub-prime mortgages, only available for new builds. This makes no sense.

I get the feeling that their builder friends have turned nasty and are threatening to sing like canaries about planning corruption, bribes etc. unless they are given a dig out.

tHE vAGGABOND

Being Devils Advocate here for a sec...

For all the venom against builders here, if something is not done, the number of people on the dole will go through the roof as all manner of tradesmen and people who work in the greater construction industry [from people who work in woodies all the way thru the chain] wont have jobs. The government have to do *something*. Would people on this forum rather we had 20% unemployment or something terrible?

A scheme letting people save more would be great - but would not help people in the construction industry keep their jobs. We may not like it, but a large percentage of people working in this country now rely on that industry. [from shopkeepers and hardware stores all the way up to the hated developers themselves].

loyatemu

tHE vAGGABOND wrote: »

Being Devils Advocate here for a sec...

For all the venom against builders here, if something is not done, the number of people on the dole will go through the roof as all manner of tradesmen and people who work in the greater construction industry [from people who work in woodies all the way thru the chain] wont have jobs. The government have to do *something*. Would people on this forum rather we had 20% unemployment or something terrible?

A scheme letting people save more would be great - but would not help people in the construction industry keep their jobs. We may not like it, but a large percentage of people working in this country now rely on that industry. [from shopkeepers and hardware stores all the way up to the hated developers themselves].

but surely it would only be a short-term fix for these problems - if you are selling houses to people who fundamentally can't afford them at some stage the whole thing is going to come crashing down - this is how the sub-prime crisis started.

terrible idea - I don't have much respect for FF anyway, but I had assumed that Cowen and Lenihan had a bit more sense and competence than Ahern. I hope this is just a rumour...

ionapaul

tHE vAGGABOND wrote: »

Being Devils Advocate here for a sec...

For all the venom against builders here, if something is not done, the number of people on the dole will go through the roof as all manner of tradesmen and people who work in the greater construction industry [from people who work in woodies all the way thru the chain] wont have jobs. The government have to do *something*. Would people on this forum rather we had 20% unemployment or something terrible?

A scheme letting people save more would be great - but would not help people in the construction industry keep their jobs. We may not like it, but a large percentage of people working in this country now rely on that industry. [from shopkeepers and hardware stores all the way up to the hated developers themselves].

I'm afraid you might be a little off here; the proposed scheme will not do very much for the masses of contruction-related workers who are newly on the dole or facing it, all it is designed to do is shift those new units that are already built / almost finished but unsold. Once this overhang is cleared, you can bet your bottom dollar the scheme will be wound up and the prices of the sold units will hit the floor.

It is a developers' bailout, the fact they plan to excluded 2nd-hand property from the scheme is jaw-dropping as they don't even try to hide the scheme for what it is; taxpayer money transferred to the developers by FF via gullible FTBs. That said, I don't think as many FTBs will go for it as they expect...the amount of 'greater fools' needed to prop up the property pyramid is much much lower than in previous years.

Also, a related point; people keep on banging on about how so many of the workforce work in construction or rely on contruction (delis selling breakfast rolls, etc) that we simply cannot afford to reduce the size of this segment of the economy or the country as the whole will suffer too much. The fact is we got ourselves into this horrible situation of a bloated contruction sector and we HAVE to (for the country's future) reduce it; it WILL be painful but it is 100% NECESSARY. You can compare it to ripping off a bandaid (faster is better than slower) or weaning a junkie off heroin (better to go clean ASAP than drag it out over years), but we need to reduce our reliance of the construction sector and we need to do it now.

gurramok

Thats mismanagement of the economy vAGGABOND. Too many employed in construction related acitivity to the size of the house-buying population and of those who can afford to buy.

Laying extra taxpayers funded debt onto FTB's who cannot afford to buy in the first place will not help one iota. What will help is retraining those people in another sustainable industry.

spockety

I wonder if along with the 300k mortgages on new builds, will the government bring in FTB stamp duty on second hand properties.........?

:eek:

travellerI

This scheme has been in development for some months and is all down to effective lobbying of the Government by Tom Parlon and the CIF. It is highly likely that a raft of stealth taxes will be included in the forthcoming budget which will have real negative effects on people's daily lives. We will then be told by the spokespeople after the budget how the Government is concerned to protect the weak and vunerable in society and how we all must shoulder the burden.

Then while all this is happening, it will use our PAYE/Self Employed tax money (about 99% or earners), to subsidise property developers (about 0.01% of people). Has the Government got such loathing for it own citizens that it would promote a scheme which would spell almost immediate negative equity for those who participated in it.

ionapaul

travellerI wrote: »

This scheme has been in development for some months and is all down to effective lobbying of the Government by Tom Parlon and the CIF. It is highly likely that a raft of stealth taxes will be included in the forthcoming budget which will have real negative effects on people's daily lives. We will then be told by the spokespeople after the budget how the Government is concerned to protect the weak and vunerable in society and how we all must shoulder the burden.

Then while all this is happening, it will use our PAYE/Self Employed tax money (about 99% or earners), to subsidise property developers (about 0.01% of people). Has the Government got such loathing for it own citizens that it would promote a scheme which would spell almost immediate negative equity for those who participated in it.

It simply knows that most people will believe the spin fed to them in the Sindo, think it's a great, 'brave' move that will save the Irish economy and hope that the tightening of their own belts will be worth it in the end. And vote FF in again and again and again....sure wasn't Bertie a great taoiseach who 'won' that money 'on the horses' and recommended that the 'begrudgers' who questioned the boom should kill themselves?

thebman

ionapaul wrote: »

It simply knows that most people will believe the spin fed to them in the Sindo, think it's a great, 'brave' move that will save the Irish economy and hope that the tightening of their own belts will be worth it in the end. And vote FF in again and again and again....sure wasn't Bertie a great taoiseach who 'won' that money 'on the horses' and recommended that the 'begrudgers' who questioned the boom should kill themselves?

Yeah and the government are dead right and who are we to question them.

/goes to get noose