Temporarily Suspend Stamp Duty?

dats_right

I know that there has been lots of talk on the bursting of the property bubble, but now we seem to have gone to the other extreme in that there is virtually no property transactions taking place. Now there is of course many reasons for this standstill/impasse, not least the fact that banks have restricted or at least tightened their lending practices, which was inevitable and of course the realisation that we were indeed caught up in a bubble market. Nonetheless, there are people out there who want to buy property at the moment and either a) can't because of tightened credit, or b) are holding off as they expect prices to continue to fall. Indeed it has almost gotten to the stage where the word property is becoming a dirty word!

Some sort of return to normalcy in the property market is required and would provide a much needed boost to many sectors of the economy. I'm not talking about a return to the madness that prevailed for many years in this jursidiction but rather just a normal, functioning market which hasn't existed for some time now. My proposal to help such a normalisation and to encourage some activity would be for the Government to provide for a temporary suspension of stamp duty, say for a period of 6-12 months, whereby all properties both commercial and residential and new and old alike would be exempt. This is not a strategy to bail the developers, builders or banks out, but rather a novel approach to help the average person trying to buy or sell a property and all the ancillary services associated therewith.

As I see it such a move probably wouldn't cost the exchequer all that much as stamp duty receipts have collapsed anyway, and besides if the property market was to function at some level of normality again there would be benefits to the ecnonomy in terms of more money being spent on services and renovations, etc which would benefit the exchequer through VAT receipts, etc. and perhaps keep some people in employment.

Also many people sitting on large investments or deposits may well view it as an opportunity and be encouraged to trade-up or maybe even invest in property once again, however, this time as a long term bet, rather then seeking overnight super profits as previously was the case, particularly as equities and deposits offer such poor value at the moment.

Discuss.

ntlbell

I think it was suspended for sometime last year and it didn't really help.

The only thing that will help is people reducing the prices.

There's nothing going to stimulate the market any quicker than builders and home owners reducing the price.

dats_right

ntlbell wrote: »

I think it was suspended for sometime last year and it didn't really help.

Stamp duty rates were slightly reduced and changes were made to benefit first time buyers but stamp duty was most certainly not suspended.

ntlbell wrote: »

The only thing that will help is people reducing the prices.

There's nothing going to stimulate the market any quicker than builders and home owners reducing the price.

I agree, but by suspending stamp duty the effect would be the same as a price reduction, e.g. If X was to sell his house for €400k and was to buy another house for €700k, X would ordinarily be liable to pay €40,250 in stamp duty in addition to the purchase price, under my proposal he immediately saves €40K.

I see it every day, people wanting to trade up or get on the ladder but for the reasons outlined in my previous post either can't or are reluctant to make the leap. Whilst I accept property has been vastly over valued, if the current trend of no activity whatsoever in the market continues, we will only worsen the problem. Some sort of intervention is required to try and restore normalcy and confidence in the property market, once again I emphasize that I'm not talking about feeding a boom but rather just trying to restore a normal, functioning market because currently we don't have that. And it's all well and good saying properties will sell if prices fall further, but that isn't necessarily so as banks will just tighten lending yet further preventing many who want to buy property from doing so.

mrgaa1

the main issue here is perception. I was trying to sell a house yesterday and the guy offered me 125k, then 130 and then 140k. A sure it'll cost you 15k more in interest payments blah blah blah. And then he tells me that sites are selling now at 20k - when I knew for a fact that sites were selling at 70k in that area and that there wasn't a house in the area that matched for price and quality - he couldn't disagree with tha. So people have this perception that they can bargain and bargain and I suppose they have the right to do so - I'd do it myself - but there is a line that can't be crossed. As the OP says there are very few transactions and the government need revenue another way would be to reduce the VAT on house sales.
Lets an example - a cost costs 100k plus VAT so thats 113,500 - 13,500 of that is given to the VAT man - 13.5%VAT. At the moment the government is getting nothing. So why not reduce that VAT figure for 12 months or so to 5%. this reduces the price of the house to 105,000 as the VAT is included in the house sale price.

If a new house is on the market for 300k at the moment the real cost is actually 264,500 - with VAT at 5% then the sale price would then be 278,500 or there abouts - a saving of 21,500. the government get some monies and people can sell and stay in jobs. The banks will get some monies and the government won't have to pay as many benefits to those who have unfortunately lost their jobs.

ntlbell

dats_right wrote: »

Stamp duty rates were slightly reduced and changes were made to benefit first time buyers but stamp duty was most certainly not suspended.




I agree, but by suspending stamp duty the effect would be the same as a price reduction, e.g. If X was to sell his house for €400k and was to buy another house for €700k, X would ordinarily be liable to pay €40,250 in stamp duty in addition to the purchase price, under my proposal he immediately saves €40K.

I see it every day, people wanting to trade up or get on the ladder but for the reasons outlined in my previous post either can't or are reluctant to make the leap. Whilst I accept property has been vastly over valued, if the current trend of no activity whatsoever in the market continues, we will only worsen the problem. Some sort of intervention is required to try and restore normalcy and confidence in the property market, once again I emphasize that I'm not talking about feeding a boom but rather just trying to restore a normal, functioning market because currently we don't have that. And it's all well and good saying properties will sell if prices fall further, but that isn't necessarily so as banks will just tighten lending yet further preventing many who want to buy property from doing so.

the changes were made in the budget but leading up to it IIRC it was completely suspended until the budget then the cut came in.

People are currently reluctant to "get on the ladder" because they're assuming that prices are going to continue to fall for the majority of people the stamp duty is not the issue right now it's the fact they're afraid of buying into a falling market.

the market will function perfectly normal when the houses are priced correctly.

The banks are not tightening lending they're are doing what they should of been doing in the first place.

Stress testing wanting proof of savings demanding large deposits etc they're _now_ doing their job properly.

If you can afford a home today have a deposit you will get a mortgage the fact wont lend money to people is just nonsense.

astrofool

You don't remember correctly at all, Stamp duty was never suspended. Removing tax is reducing the price to the buyer, immediately, by about 6%, in one fell swoop (or about a year's worth of slow depreciation, as the market faces reality). That is FTB aside (they never pay stamp duty).

jdivision

dats_right wrote: »

Some sort of return to normalcy in the property market is required

What is normalcy? The last 12 years haven't been.

whizzbang

jdivision wrote: »

What is normalcy? The last 12 years haven't been.

Neither were the last 12 years.

Normalcy is 2.5 to 3.5 times salary as a mortgage over 20 to 25 years.

We still have a way to go.

SkepticOne

mrgaa1 wrote: »

If a new house is on the market for 300k at the moment the real cost is actually 264,500 - with VAT at 5% then the sale price would then be 278,500 or there abouts - a saving of 21,500. the government get some monies and people can sell and stay in jobs. The banks will get some monies and the government won't have to pay as many benefits to those who have unfortunately lost their jobs.

That would be the government propping up a failed market. Unfortunatly the current government is dumb enough to almost go for such an idea.

If there are tens of thousands of unsold houses then there's no need to cut taxes on them. Eventually all of these houses will be sold. Builders will eventually realise that holding out for some recovery is costing them more than selling them at the proper market price. Those that don't well go bust and their assets will be quickly sold to the highest bidder.

The fact that the builder overpaid on land and labour during the boom is not the concern of the buying public. A house, like anything else, is only worth what someone else is prepared to pay.

The last thing the government should be doing is futilely trying to keep house builders in jobs when there's vast estates of unsold houses. Put those out of work builders to use in work that the country actually needs. Give them the appropriate skills.

gurramok

You need first time buyers to buy again.

Abolishing stamp duty in June '07(i think it was) did nothing to entice first time buyers.

FTB's hold the whole housing market up, we need regular entrants at the bottom of the 'ladder' for a normal market.

Its high prices for FTB's that is the issue as NTLbell stated. At the moment, only a small number can afford to enter the market and yes some who can affford are holding off and rightly so.

The rest cannot afford to, even with big deposits. Lower the prices, you will then get a bottom where the majority of FTB's will enter and then you will have a healthy functioning market.

ntlbell

astrofool wrote: »

You don't remember correctly at all, Stamp duty was never suspended. Removing tax is reducing the price to the buyer, immediately, by about 6%, in one fell swoop (or about a year's worth of slow depreciation, as the market faces reality). That is FTB aside (they never pay stamp duty).

No?

seems they did in june

jimmycrackcorm

whizzbang wrote: »

Neither were the last 12 years.

Normalcy is 2.5 to 3.5 times salary as a mortgage over 20 to 25 years.

We still have a way to go.

You mean like it was 10-15 years ago? Surely that implies also that Salaries should drop to the same level as they were then also?

Blackjack

ntlbell wrote: »

No?

seems they did in june

In Fairness He did say "That is FTB aside (they never pay stamp duty)."

Stamp was effectively abolished for First Time buyers, non-FTB's are still liable for Stamp for properties over a certain amount (125K I believe).

ntlbell

jimmycrackcorm wrote: »

You mean like it was 10-15 years ago? Surely that implies also that Salaries should drop to the same level as they were then also?

Did salries increase inline with house prices increases?

If so I'm oued a serious amount of pay rises

ntlbell

Blackjack wrote: »

In Fairness He did say "That is FTB aside (they never pay stamp duty)."

Stamp was effectively abolished for First Time buyers, non-FTB's are still liable for Stamp for properties over a certain amount (125K I believe).

and it's not doing anything? so why would ablosihing it for the rest help?

if you don't have FTB you don't have trader uppers...

if no one is taken the first step how are you going to take the second?

if all it takes is a 6% drop to get things going why wait for stamp duty

reduce your asking price by 6%? this is not rocket scieince

if houses across the board drop and i mean serious drops FTB's will come back to the market trader uppers can start moving etc

abolishing stamp duty isn't the answer as we can all ready see from the FTB market...

FTB's fuel any property market..

astrofool

ntlbell wrote: »

No?

seems they did in june

That is only for FTB's (and it was extending it to second hand housing), and I mentioned that already.

Get rid of stamp duty (or reduce the % to 2-3%), and bring in council tax slowly, remove the government crutch on house sales.

Rempve stamp duty and the second hand market immediately gets a 5-6% boost as second time buyers can drop their prices as the house they're moving to is cheaper. This also helps FTB's and removes sales from developers (new houses are stamp duty exampt if under 125sqm).

ntlbell

astrofool wrote: »

That is only for FTB's (and it was extending it to second hand housing), and I mentioned that already.

Get rid of stamp duty (or reduce the % to 2-3%), and bring in council tax slowly, remove the government crutch on house sales.

Rempve stamp duty and the second hand market immediately gets a 5-6% boost as second time buyers can drop their prices as the house they're moving to is cheaper. This also helps FTB's and removes sales from developers (new houses are stamp duty exampt if under 125sqm).

But FTB's aren't buying anything?

and of people stopped faffing about and started dropping the prices all houses would be cheaper so the house your moving to would be dropping also etc?

this brings everyone back FTB's and second time buyers?

Blackjack

ntlbell wrote: »

and it's not doing anything? so why would ablosihing it for the rest help?

if you don't have FTB you don't have trader uppers...

if no one is taken the first step how are you going to take the second?

if all it takes is a 6% drop to get things going why wait for stamp duty

reduce your asking price by 6%? this is not rocket scieince

if houses across the board drop and i mean serious drops FTB's will come back to the market trader uppers can start moving etc

abolishing stamp duty isn't the answer as we can all ready see from the FTB market...

FTB's fuel any property market..

For a start, I never suggested making any changes to Stamp Duty. I think that it's not ideal, but to reduce it and effectively reduce the amount of tax government collects on it is not a good move right now.

My comment was simply to help you understand what Astrofool has said.

Personally, the market needs to find it's own floor and that will only happen when houses start to move and are sold at prices that people believe are reasonable to pay, not what a seller is holding out for.

Mr. Presentable

astrofool wrote: »

That is only for FTB's (and it was extending it to second hand housing), and I mentioned that already.

Get rid of stamp duty (or reduce the % to 2-3%), and bring in council tax slowly, remove the government crutch on house sales.

Rempve stamp duty and the second hand market immediately gets a 5-6% boost as second time buyers can drop their prices as the house they're moving to is cheaper. This also helps FTB's and removes sales from developers (new houses are stamp duty exampt if under 125sqm).

Houses wouldn't be cheaper - the Govt just won't get any revenue from the sale.

ntlbell

Blackjack wrote: »

For a start, I never suggested making any changes to Stamp Duty. I think that it's not ideal, but to reduce it and effectively reduce the amount of tax government collects on it is not a good move right now.

My comment was simply to help you understand what Astrofool has said.

Personally, the market needs to find it's own floor and that will only happen when houses start to move and are sold at prices that people believe are reasonable to pay, not what a seller is holding out for.

Sorry I wasn't meant to direct the questions at you and you alone I'm just putting them out there.

I fully agree about the market finding it's own floor.

whizzbang

jimmycrackcorm wrote: »

You mean like it was 10-15 years ago? Surely that implies also that Salaries should drop to the same level as they were then also?

its the ratio that is important.

salary 15 years ago 15k x 3 = house costs 45k
salary today 30k x 3 = house should cost 90k
where in reality houses for people on 30k now cost about 180k, so until the prices drop to being a reasonable multiple of the average salary there will be more to go.


(these figures are probably way off but you get the idea)

dats_right

ntlbell wrote: »

But FTB's aren't buying anything?

True, but this is because 1. The one's who would like to borrow to buy now now have to find large very large deposits of up to 20%, which of course takes time to accumulate such a deposit, and 2. Many FTB's are holding off buying in the reasonable expectation that prices will continue to fall, but this ultimately only worsens the problem as we get into a catch-22 situation because as prices continue to fall so to will the banks willingness to lend money for property.

This country has an irrational obsession with FTB's and in any event the proposal would have no impact on them so we really shouldn't be focussing on them, who I'm really referring to is 1. Potential trader-uppers 2. Cash rich potential investors who might feel that in the long term (i.e. 10-20+ years) good properties in good locations represent a reasonable investment, and 3. Businesses who may view such a suspension as a good opportunity to acquire property.

I wouldn't expect a suspension of stamp duty to be the cure to all the markets woes, but it would certainly entice certain people, who are so inclined, to re-enter the market. I certainly wouldn't be expecting an enormous rush, but as stated it would encourage some level of activity and as a result certain other ancillary benefits would flow therefrom e.g. certain jobs might be saved, VAT on professional services such as Estate Agent's fees, solicitors fees, etc. and perhaps even renovations and ancillary works, etc. As I see it, the suspension wouldn't cost the exchequer an awful lt, because as things stand the market has more or less seized and by such action the ancillary benefits are clear.

Blackjack

First time buyers are pretty central to the whole process. Without them, people can't trade up, who's going to buy the trader-uppers existing property?.

ntlbell

dats_right wrote: »

True, but this is because 1. The one's who would like to borrow to buy now now have to find large very large deposits of up to 20%

20% should be pretty standard the reason the deposits are large is not due to the % it's the fact that the houses they want to buy are so expensive. 20% should be standard across the board and should of been the way it.

dats_right wrote: »

2. Many FTB's are holding off buying in the reasonable expectation that prices will continue to fall, but this ultimately only worsens the problem as we get into a catch-22 situation because as prices continue to fall so to will the banks willingness to lend money for property.

As I have said all ready the banks are more than willing to loan the money if you come up with the deposit show saving and actually really afford the home. it's a catch 22 because the home owners won't put real drops on the house they're going in dribs and drabs there needs to be serious wake up to people out there and everyone builders and home owners need to start slashing the prices i'm not talking 6-10% i'm tlking 40%-50%

the quicker these houses become actually affordable the quicker people can save up deposits the quicker banks will loan because the houses are actually affordable

Again without FTB's you have no market there is no ladder..

in order for everyone to go up the ladder a step someone has to come on to the bottom otherwise you stay put if people can't afford the first step the guy on the second step cant move on up etc etc etc

the way you solve this is getting FTB buying again how you do that is by lowering the prices of the properties to REALASTIC levels there's 1 bed apartments going for 350k plus in dublin

that's 10 X avg ind wage

which means you need 70k deposit for a 1 bed flat

really?

astrofool

It's simple (using round figures):

4 bed house price today = 400,000 + 10% SD = 440,000

Someone wants to sell their 3 bed house and move into the 4 bed house, they figure they can borrow another 100,000, so if they can sell their 3 bed house for 340,000 they can move.

If SD was 0%, then they can afford to drop their price by 40,000 (~14%), and still sell and move into the larger house.

Previously the large capital gains, and freer credit made SD much less of an issue (but it still discourages mobility), in a dropping market, SD can play havoc as trader uppers can't drop their prices as much as they'd want to (they just don't move) and their house in turn isn't available for another trader upper or FTB to buy. The other upshot is that developers have to compete on price with the second hand market, and thus drop their prices.

Now, i'm not advocating dropping SD completely, but instead, while the market is depressed, to move it to similar levels as the UK, and move the shortfall onto council tax (with tax breaks for those who bought in the last 7-10 years on a sliding scale). You create a much much much more reliable source of revenue, and help the market by having prices drop quicker.

Blackjack

Problem with a council tax solution is that you are penalising people in that instance who aren't moving. Plus, tenants of rented properties who already can't afford a property or are trying to save for a deposit are also penalised.

dats_right

ntlbell wrote: »

As I have said all ready the banks are more than willing to loan the money if you come up with the deposit show saving and actually really afford the home.

I work in this area and have actual experience with what is happening and I can assure you that the propaganda that the banks are 'open for business' is in stark contrast to the reality on the ground, as this is most certainly not the case!! I can give many, many examples of this, unfortunately the harsh reality is that banks have become 'reluctant' to lend to virtually everybody.

ntlbell wrote: »

it's a catch 22 because the home owners won't put real drops on the house they're going in dribs and drabs there needs to be serious wake up to people out there and everyone builders and home owners need to start slashing the prices i'm not talking 6-10% i'm tlking 40%-50%

That's great, but how do you propose homeowners sell houses if they are in negative equity? Don't you think the banks might have something to say about that? The answer of course is yes, the banks will only allow negative equity homeowners to sell if they can also pay the shortfall also. So in reality this is not an option for many, few people are going to sell their properties if to do so they also have to take out additional borrowing or raid their savings in order to pay their mortgages. The reality is that these people will stay put and wait for the inevitable upturn, howsoever long that takes.


Anyway, NTLBell you are still focussing exclusively on FTB's despite my reiteration that I am not referring to FTB's because they don't pay stamp duty anyway, so this thread has no application towards them and is not intended to be a discussion on FTB's, it is purely focussing on the narrow issue of temporarily suspending stamp duty in order to encourage certain specified parties back into the market, therefore I respectfully suggest that if you want to discuss those issues relating to FTB's that you start a thread on that particular aspect of the market.

ntlbell

dats_right wrote: »

I work in this area and have actual experience with what is happening and I can assure you that the propaganda that the banks are 'open for business' is in stark contrast to the reality on the ground, as this is most certainly not the case!! I can give many, many examples of this, unfortunately the harsh reality is that banks have become 'reluctant' to lend to virtually everybody.

Well I've had a trip to the bank and they were chomping at the bit for my buisness. I have friends in boi who also say if they show good credit history, deposit history of saving (not getting a loan for a deposit for example) etc there's no problems.

dats_right wrote: »

That's great, but how do you propose homeowners sell houses if they are in negative equity? Don't you think the banks might have something to say about that? The answer of course is yes, the banks will only allow negative equity homeowners to sell if they can also pay the shortfall also. So in reality this is not an option for many, few people are going to sell their properties if to do so they also have to take out additional borrowing or raid their savings in order to pay their mortgages. The reality is that these people will stay put and wait for the inevitable upturn, howsoever long that takes.

and stamp duty will remove negative equity how?

dats_right wrote: »

Anyway, NTLBell you are still focussing exclusively on FTB's despite my reiteration that I am not referring to FTB's because they don't pay stamp duty anyway, so this thread has no application towards them and is not intended to be a discussion on FTB's, it is purely focussing on the narrow issue of temporarily suspending stamp duty in order to encourage certain specified parties back into the market, therefore I respectfully suggest that if you want to discuss those issues relating to FTB's that you start a thread on that particular aspect of the market.

But how will a few second time buyers buying get the market going again when the whole market needs the FTB's to be buying?

i suggest if you want to continue in this thread you work out how the whole things work and we can stop talking nonsense.

ntlbell

astrofool wrote: »

It's simple (using round figures):

4 bed house price today = 400,000 + 10% SD = 440,000

Someone wants to sell their 3 bed house and move into the 4 bed house, they figure they can borrow another 100,000, so if they can sell their 3 bed house for 340,000 they can move.

If SD was 0%, then they can afford to drop their price by 40,000 (~14%), and still sell and move into the larger house.

But house prices dropped over 20% last year 40% in some cases and there's still not moving why would this 14% in this example move it?

SD just isn't going to cut it.

we need real drops.

spockety

There is an 'obsession' with first time buyers, because as ntlbell rightly points out a market cannot function correctly without them coming in 'at the bottom'.

Unfortunately for this country, first time buyers got raped over the last 10 years. The poor suckers didn't even realise what was happening to them at the time, but it was they that enabled the entire bubble to happen. Essentially first time buyers, particularly from 2003-2006, gave away a huge portion of their future earnings from their working graft over the next 40 years to make a relatively small cartel of land owners, developers, and bankers extremely extremely rich relative to everyone else. In return, they got sub standard 1 or 2 bedroom apartments in Dublin, or 3 bedroom semi's in "commuter towns" 70 miles from Dublin ("only 45 minutes from dublin via the new motorway/trainline coming in 2010!"), that they are now stuck with. Their 'ladder' essentially has one rung, and they are now stuck on it.

The current generation of first time buyers have now realised what happened, and are still standing at the sidelines wide eyed and jaw dropped at what they have seen happen to those who came before them. They will not be taken advantage of. The game is up, and god help those who fell victim to it. Shame on those who pillaged, particularly noteworthy shame on landowners and the bankers who facilitated the entire sorry mess.

astrofool

That's over a whole year if not more, reforming stamp duty can drop another significant % of those prices overnight. (as well as increasing market mobility and stability of tax returns in the long run).

ntlbell

stamp duty is running at 5% now is it?

do you think if you woke up tomorrow and there was a cross the board 5% drop things would start to move?

You're in dream land.

astrofool

No, but it's starts things moving faster than it would otherwise.

Do you seriously think that prices coming down 5% overnight won't help us reach the bottom faster than if we didn't? Seriously?

Blackjack

What about the Government coffers?. Remove the Stamp altogether, just to get the housing market kicked off?.

How does Stamp then get re-introduced?.

gurramok

dats_right does not seem to understand how the housing market works as you need FTB's for the thing to work properly.
You can throw all kind of solutions at it regarding stamp duty but it will have a tiny affect if FTB's do not buy, let me explain in plain english.

Joe has an apt selling for 230k and wants to upgrade to a 2bed hse for 300k so puts apt on market.
Mary has a 300k 2bed hse up for sale as she wants to expand her family with children on the way so is on the hunt for a 400k 3bed semi.
Jack has a 400k 3bed semi for sale and wants to move to a more upmarket area to buy a 500k 4bed semi for his big family.
Jill has a 500k 4bed semi for sale and wants to move to a posh area having a great paying job and wants to buy a 600k mansion.
Rupert has a 600k mansion for sale and wants to rent/emigrate etc

Joe is having problems selling his apt at 230k as no new buyers will buy his apt at that price which is pitched at new entrants so he has to reduce price to entice a buyer called Patrick and still waits but Patrick still cannot afford the apt as he has not enough savings for a 92% mortgage plus he cannot get the 211k mortgage from the bank as he simply does not earn enough to qualify for that amount.

Mary, Jack & Jill are all waiting for a buyer in the chain but sales are falling through as Joe is holding things back in the chain who blames Patrick.
Rupert is just frustrated, his mansion is pitched at Jill's demographic but Jill cannot sell because Jack is holding things back for her due to Jack not being able to shift his gaff.

Jack is frustrated at Mary and Mary is frustrated at Joe along the chain and start cursing the estate agents as well as viewers for lack of movement.

As Patrick pays no stamp duty anyway, he is blamed by the media and vested interests for waiting on the fence due to no fault of his own.
Joe, Jack, Mary, Jill cannot sell their houses and no stamp duty ends up getting paid, they all blame Patrick.

Get it?

dats_right

gurramok wrote: »

dats_right does not seem to understand how the housing market works as you need FTB's for the thing to work properly.

I am a solicitor who until recently worked mainly in property (commercial and residential), who now spends more time working in litigation/employment/debt collection and probate, so I think you could safely say I am at the coalface, and unlike many of the posters on here who depend on George Lee or ESRI stats that are months out of date before they are released for their opinions, I have real experience of what is actually happening not anecdotal evidence!

On this basis, I think that I understand the market better than most lay observers, and I fully accept the importance of FTB's to the market, but they are by no means the be all and end all, in fact the vast majority of activity even during the boom was not FTB related! So whilst FTB's are important there is a whole lot of others out there who might be tempted back into the market if stamp duty was to be suspended for 6-12 months, as I've said now ad nauseam, the people who may be enticed by such a move to come back tothe market are trader-uppers and commercial entities.

Astrofool has hit the nail on the head:

That's over a whole year if not more, reforming stamp duty can drop another significant % of those prices overnight. (as well as increasing market mobility and stability of tax returns in the long run).

It seems that some commentators are falling into the same trap that they did when prices were increasing enormously, when they told us these price rises and boom would continue forever and that the "fundamentals" will ensure this, now they are telling us that owing to the 'new fundamentals' property is more or less doomed and only head cases would buy now.. Whereas history has shown us that the reality is that these things move in cycles, we may not have reached the bottom of this one yet but we will and then as time ticks by things will increase again. I don't have a glass-ball so I don't know how long it will take for people to regain confidence in the market, indeed some may never regain confidence at all, and it may well take a full generation but one thing is as sure as I'm sitting at my computer typing this reply is that the property market will at some time in the future be part of another boom-bust cycle.

I have no doubt that as soon as the banks have some money to lend again that things will start to function on some level again. On this point NTLBell, have you actually attempted to draw down any money from a bank recently? Sure, I've had problems with banks who have issued loan offers to extremely wealthy clients, the sort of people who banks wet themselves over usually, who were taking out a mortgage with a LTV of about 35% and banks doing everything then can to impede them. I can assure you that they, the banks, will put every hurdle in your path to prevent you and then when you've cleared them all they will throw in a few more 'whammies' in there just for good measure! The banks have lied all along, so why do you suddenly believe them now anyway?

Guys, THIS THREAD IS NOT ABOUT FTB's, so can I please urge those who want to focus on that particular issue to start another thread on that point.

In reply to Blackjack, who asked:

What about the Government coffers?. Remove the Stamp altogether, just to get the housing market kicked off?.

How does Stamp then get re-introduced?.

1. Government coffers? the whole point is that the market has seized anyway and virtually no activity is taking place (=no tax take). This lack of activity is also costing the jobs of people directly and indirectly connected with the market, when they hit the dole queues is that going to help the coffers? And besides the government can claim 21.5% vat on the fees charged by both solicitors and the estate agent, so it can be argued that some money is better than none.
2. I didn't say remove it altogether, I said temporarily suspend and nor did I limit it to just the housing market, I said across the board, so that businesses who may be in a position to buy can do so and save 6% in the process. And what would be wrong with a stimulus to help things get back to normal, afterall isn't that what Governments are there to do? Or would you rather they sit back and watch as thousands of jobs are lost in the sector (not referring to construction related).
3. How does stamp duty get re-introduced? Simple the same way any other tax is introduced i.e. from midnight on a particular day it now becomes payable, just like the 1% employment levy recently introduced.

ZYX

gurramok wrote: »

dats_right does not seem to understand how the housing market works as you need FTB's for the thing to work properly.
You can throw all kind of solutions at it regarding stamp duty but it will have a tiny affect if FTB's do not buy, let me explain in plain english.

Joe has an apt selling for 230k and wants to upgrade to a 2bed hse for 300k so puts apt on market.
Mary has a 300k 2bed hse up for sale as she wants to expand her family with children on the way so is on the hunt for a 400k 3bed semi.
Jack has a 400k 3bed semi for sale and wants to move to a more upmarket area to buy a 500k 4bed semi for his big family.
Jill has a 500k 4bed semi for sale and wants to move to a posh area having a great paying job and wants to buy a 600k mansion.
Rupert has a 600k mansion for sale and wants to rent/emigrate etc

Joe is having problems selling his apt at 230k as no new buyers will buy his apt at that price which is pitched at new entrants so he has to reduce price to entice a buyer called Patrick and still waits but Patrick still cannot afford the apt as he has not enough savings for a 92% mortgage plus he cannot get the 211k mortgage from the bank as he simply does not earn enough to qualify for that amount.

Mary, Jack & Jill are all waiting for a buyer in the chain but sales are falling through as Joe is holding things back in the chain who blames Patrick.
Rupert is just frustrated, his mansion is pitched at Jill's demographic but Jill cannot sell because Jack is holding things back for her due to Jack not being able to shift his gaff.

Jack is frustrated at Mary and Mary is frustrated at Joe along the chain and start cursing the estate agents as well as viewers for lack of movement.

As Patrick pays no stamp duty anyway, he is blamed by the media and vested interests for waiting on the fence due to no fault of his own.
Joe, Jack, Mary, Jill cannot sell their houses and no stamp duty ends up getting paid, they all blame Patrick.

Get it?

So in the mean time Patrick is homeless or have you missed out on something?:)

ntlbell

astrofool wrote: »

No, but it's starts things moving faster than it would otherwise.

Do you seriously think that prices coming down 5% overnight won't help us reach the bottom faster than if we didn't? Seriously?

Not fast enough to make it worth while no. as we have all ready established SD isn't a problem for FTB's who don't pay stamp duty and these are the people we need buying again to get things moving...

around in circles we go...

ntlbell

ZYX wrote: »

So in the mean time Patrick is homeless or have you missed out on something?:)

Hopefully Patrick is using the nogging has moved into a nice apartment as rents are dropping enabling him to keep saving so when where he wants to live becomes affordable he will not only have a deposit but be able to put more money off the asset reducing his monthly outgoing pay less in interest and to sustain his current lifestyle.

dats_right

ntlbell wrote: »

stamp duty is running at 5% now is it?

do you think if you woke up tomorrow and there was a cross the board 5% drop things would start to move?

1. No, you are way off. Stamp duty rates for residential property (owner occupiers and investors) are at 7.5% on amounts over first 125k (which is exempt) up to 1 million and 9% on amounts over that and 6% for non-residential.

2. Yes, to some extent I believe it would, whilst I don't think it would be a magical cure, but I do certainly think it may encourage some of the many people who are presently holding off from buying to consider getting involved in the market again as naturally people would rather put money directly towards the purchase price of a property rather than towards buying an expensive Government sticker/stamp to go onto the Deed of Transfer. Say for example a house that was previously 1.2m can now be bought for say 750k, the stamp duty on such a purchase would be a staggering €46,875, if that was temporarily suspended it would undoubtedly entice some people to consider purchasing.

Presently businesses have to pay 6% on the entire purchase price/ consideration. Remember that not all businesses are suffering from the current economic climate and may well take such an opportunity to purchase a new premises or maybe even purchase their existing rented one from landlord and by so doing make significant savings. Example ABC & Co., have been renting under a 35 year lease with 5 yearly upward only rent review clauses and no break clause (all three are very common in commercial property), they approach landlord to sell freehold to them, as landlord can do with massive cash injection rather than slow and steady cash over prolonged period decides to sell, the property is sold for 1.75m (stamp duty would usually be 105,000k) every body walks away happy. And the Government recoup some money from the 21.5% vat charged on the professional services of Surveyor, Auctioneer, Solicitor and of course Land Registration fees, as well as helping to keep these people in jobs and not joining dole queues. What is your problem with this?

ZYX

ntlbell wrote: »

Hopefully Patrick is using the nogging has moved into a nice apartment as rents are dropping enabling him to keep saving so when where he wants to live becomes affordable he will not only have a deposit but be able to put more money off the asset reducing his monthly outgoing pay less in interest and to sustain his current lifestyle.

So does he rent from Joe, Mary, Jack, Jill or Rupert?

ntlbell

ZYX wrote: »

So does he rent from Joe, Mary, Jack, Jill or Rupert?

he rents from canny mc savvy

blah

ntlbell wrote: »

he rents from canny mc savvy

Who bought a house in Ranelagh in 1972 for nigh on £6, 4s and 2d

gurramok

dats_right wrote:

On this basis, I think that I understand the market better than most lay observers, and I fully accept the importance of FTB's to the market, but they are by no means the be all and end all, in fact the vast majority of activity even during the boom was not FTB related! So whilst FTB's are important there is a whole lot of others out there who might be tempted back into the market if stamp duty was to be suspended for 6-12 months, as I've said now ad nauseam, the people who may be enticed by such a move to come back tothe market are trader-uppers and commercial entities.

Again, you do not seem to understand.

Each buyer/seller is dependent on another for activity. FTB's are indeed a minority of activists but everyone else on the ladder depends on them to get activity returning again so yes FTB discussion in this thread is 100% relevant.
Once activity returns based on this, you will get your stamp duty suggestion applied.

No offence but if you claim to be a solicitor who is/was at the coalface of the property market, it does not show good light on your profession not to understand the property ladder.

ntlbell

gurramok wrote: »

Again, you do not seem to understand.

Each buyer/seller is dependent on another for activity. FTB's are indeed a minority of activists but everyone else on the ladder depends on them to get activity returning again so yes FTB discussion in this thread is 100% relevant.
Once activity returns based on this, you will get your stamp duty suggestion applied.

No offence but if you claim to be a solicitor who is/was at the coalface of the property market, it does not show good light on your profession not to understand the property ladder.

To be honest gurramok you're just a lay observer so your opinion doesn't hold much weight around these here waters.

It's not like your Austin Hughes.

astrofool

gurramok wrote: »

Again, you do not seem to understand.

Each buyer/seller is dependent on another for activity. FTB's are indeed a minority of activists but everyone else on the ladder depends on them to get activity returning again so yes FTB discussion in this thread is 100% relevant.
Once activity returns based on this, you will get your stamp duty suggestion applied.

No offence but if you claim to be a solicitor who is/was at the coalface of the property market, it does not show good light on your profession not to understand the property ladder.

FTB's are needed to fill empty houses, people can still move house without an FTB being involved at all (and this still generates work, and allows people to move countries, move jobs etc.).

Macha

ntlbell wrote: »

To be honest gurramok you're just a lay observer so your opinion doesn't hold much weight around these here waters.

It's not like your Austin Hughes.

And we all know where blindly following the self-determined "experts" has gotten us. There's education and then there's common sense.

This is a chat board for everyone to express their opinion, not just people with a title or certificate on their wall.

ntlbell

taconnol wrote: »

And we all know where blindly following the self-determined "experts" has gotten us. There's education and then there's common sense.

This is a chat board for everyone to express their opinion, not just people with a title or certificate on their wall.

It was tongue and cheek as dats_right was calling people here layman observers with austin being regarded as comical austin it was just a bit of nuddging to gurramok I know very well how good a poster he is.

whizzbang

Like all good pyramid schemes you always need new people joining at the bottom. Its that simple. Once the new joiners dry up it all collapses down until some new joiners are found.

Macha

ntlbell wrote: »

It was tongue and cheek as dats_right was calling people here layman observers with austin being regarding comical austin it was just a bit of nuddging to gurramok I know very well how good a poster he is.

Doh...so sorry. I forgot to turn on my sarcasm radar this morning.

Apologies.

A good site for showing up the experts is the quotes that come up on www.irishhometruths.com/

gurramok

astrofool wrote: »

FTB's are needed to fill empty houses, people can still move house without an FTB being involved at all (and this still generates work, and allows people to move countries, move jobs etc.).

Good point. Somebody banded a figure about that FTB's buy around 50% of housing as new builds.
Point about Patrick still stands to help the 2nd hand market get moving again and support the OP's point about stamp duty.

ntlbell wrote:

It was tongue and cheek as dats_right was calling people here layman observers with austin being regarded as comical austin it was just a bit of nuddging to gurramok I know very well how good a poster he is

Thank you

Now, Patrick should buy because Austin and Sherry Fitz says so :rolleyes: