The C.I.F., most partnery partners of them all

Akrasia

(even though they left partnership at the last pay deal)

These guys are unfuppinbelievable aren't they?

They comprise the same personalities who got this whole country FUBARed in the first place, and yet they're the very first voice the government listen to when trying to formulate a 'national' rescue plan (never mind women and children first, this is clearly a plan of developers and bankers first)

At the 'mini' budget last november, every sector of society shared some pain, except for the CIF who were delighted at the announcement of a 'Home Choice Loan' (state sub prime) scheme to try and 'kick start' the construction industry (which is the feckin last thing we should be doing)
As the weeks rolled by it became apparent that not even the Irish public were gullible enough to fall for that con, so they've moved on to much softer targets altogether, the government.

Yesterday the minister for housing announced that we're going to spend millions of euros buying up 'vacant' houses on long term lease from developers to be used as 'social housing'

So much for all of us 'sharing the pain'. Ordinary people face tax increases and service cuts so that the state can pay off developers mortgages for them in the most tax efficient way possible (for the developer) They had already had their VAT bills extended out over 20 years on any homes they rented out, the problem was that nobody wanted to rent those kips in isolated half finished estates, but never fear, the state is here, we'll take on these properties as liabilities for the state (and the poor unfortunates who get forced to live in them) for the next 20 bloody years by which time the developers will regain control (the property market might just have recovered by then) and there will be another windfall to the developers as they either get to re-develop the land or get paid huge compensation as the state purchases the houses on behalf of the long term occupants. (in the meantime, the developer will have a guaranteed fixed income and the state will have massive maintanance costs as these properties are not designed to last anywhere near 20 years without substantial refurbishment expenses)

I'm sorry, am i not being 'Patriotic'? I keep forgetting that we're all supposed to pull together to get ourselves out of this mess. Its not hard to forget however when we see the first weapon of choice by the government to be regressive flat taxes that overwhelmingly target the poor and middle incomes while the wealthy and the guilty are paid golden handshakes to 'resign' when they should in reality be appearing before courts in handcuffs to account and repent for what they have done to this country and to their fellow citizens.

They have bankrupted us, we should bankrupt them, not just out of rage or for revenge, but as a deliberate policy decision, It is gravely destructive to allow these charlatans to remain so wealthy and so influential considering the damage they have caused with their power and are likely to cause again. Allowing the plutocratic aristocracy to remain is a further smack in the face of the Irish people.

I demand a number of measures to be implemented immediately for the good of the nation.

1. Immediate punitive tax on second homes

2. Immediate punitive tax on unoccupied houses. They'll complain that this will reduce their value. thats the bloody point high property prices are a millstone around our neck and the sooner they fall the better

3. Immediate extremely punitive tax on unused commercial property. this is the big one Go to any town in the country and you will see hundreds of thousands of square metres of warehouses, offices and retail space that is just lying there, still unrapped having been completed years ago. Tax the sh1t out of them, make it too expensive for the developers to roll over the loans and force them to sell them or rent them, if there are no buyers or renters at their desired prices, the local authorities will buy them for a euro each and let the developers go bust.
This will immediately drive down all commercial rent in the state, it will destroy the landowning class, but thats the intention, they're the people who held us to ransom and exploited all of us over the last 20 years. When commercial rates go down, entrepreneurship will increase and prices will fall. It will also benefit local communities who will have unprecendented access to cheap space for programs and projects for the community.
(one caveat for this measure, to escape the tax, the buildings will have to be gainfully employed, not just occupied by virtual businesses, make such an evasion a criminal offense with very high fines as punishment)

4. Set up state shops to sell high quality staple products at very low prices (like in venezuela) this will smash the cartel of the wholesalers in ireland who are another greedy shower who artificially inflate prices (and its much better than the proposed price controls) the state shops could be based in some of the newly available commercial properties and run as independent local cooperatives with legal mandates to run as non profit entities, to give priority to local producers and avoid the pitfalls of state ownership.

5. Force the ESB, eircom and the waste collectors to reduce their prices. We can not sustain bubble prices for essential public services, forget about this fanciful idea of 'competition' in public utilities, it has totally failed to achieve any of its goals even after more than a decade of aggressive policy decisions, prices rose, and quality of service is no better than it ever was.

6. Get rid of FF. I know FG are almost exactly the same (and worse in some areas) but i'm just so bloody sick of looking at their smug moronic faces.

RedPlanet

+1
Where do I sign up?

SkepticOne

It is getting harder and harder to dismiss the governments actions as mere incompetence.

I think the government see the situation like a sinking ship, though unlike the traditional image, this time it is the passengers that go down with the ship, while the captain and favoured crew grab the few lifeboats.

Time Magazine

Akrasia wrote: »

2. Immediate punitive tax on unoccupied houses. They'll complain that this will reduce their value. thats the bloody point high property prices are a millstone around our neck and the sooner they fall the better

Since when did increasing taxes on something lower the price?

Idiotic.

mountainyman

The Economist wrote: »

Since when did increasing taxes on something lower the price?

Idiotic.

Akrasia is right that a tax on houses would lower the price of houses in that it would affect the value of houses as an asset class. Currently house owership is untaxed. If I own ten houses outright they are costing me nothing. I can hold them as long as I want. A tax will force me to:
[1] Generate revenue from them sufficient to cover the tax.
OR
[2] Sell them

This will increase the supply of homes available. This will lower the price.

Time Magazine

mountainyman wrote: »

Akrasia is right that a tax on houses would lower the price of houses in that it would affect the value of houses as an asset class.

Taxes lower the value and raise the price.

If I own ten houses outright they are costing me nothing.

Opportunity cost.

If you tax that opportunity cost, it decreases the likelihood of them coming to market.

SkepticOne

The Economist wrote: »

Taxes lower the value and raise the price.

Opportunity cost.

If you tax that opportunity cost, it decreases the likelihood of them coming to market.

I agree with Akrasia. I think the above would be true if we were talking about a sales tax.

The tax he is talking about is a tax on sitting on assets. As soon as the house is sold the tax is no longer payable by the developer. The developer has an extra incentive to sell, supply is increased and prices come down.

Result: a) less burden on the private rented sector, therefore less need for social housing. b) improved public finances due to increased tax take.

Time Magazine

I disagree. However we might be disagreeing about something different, so I'll wait for Akrasia to specify the details of the tax before going gung-ho.

SkepticOne

The Economist wrote: »

I disagree. However we might be disagreeing about something different, so I'll wait for Akrasia to specify the details of the tax before going gung-ho.

What did you think he meant when you called his idea "idiotic"?

Time Magazine

SkepticOne wrote: »

What did you think he meant when you called his idea "idiotic"?

A tax on the sale of non-occupied houses.

SkepticOne

The Economist wrote: »

A tax on the sale of non-occupied houses.

Yes, this would not make sense.

The_Minister

Akrasia wrote: »

They comprise the same personalities who got this whole country FUBARed in the first place, and yet they're the very first voice the government listen to when trying to formulate a 'national' rescue plan (never mind women and children first, this is clearly a plan of developers and bankers first)

CIE represent employers who employ either directly, or indirectly, close to 20% of the workforce.
Of course they are consulted.
And of course the first concern of any plan is to make sure that they survive, because without the bankers or the builders, then the economy is not just ****ed, it doesn't really exist. And then your women and children can take a flying leap.

Akrasia wrote: »

At the 'mini' budget last november, every sector of society shared some pain, except for the CIF who were delighted at the announcement of a 'Home Choice Loan' (state sub prime) scheme to try and 'kick start' the construction industry (which is the feckin last thing we should be doing)

Again, they employ so many people that we don't want them to immediately collapse and make all those people suddenly redundant, or the sudden surge in social welfare will cripple the budget. They have had lots and lots of pain already this year without the government putting in too much of a boot, and it is in our own interests to make sure they have enough work to limp on.

Akrasia wrote: »

Yesterday the minister for housing announced that we're going to spend millions of euros buying up 'vacant' houses on long term lease from developers to be used as 'social housing'

We have had a major shortfall of social housing for years, but now prices have gone down so we are buying houses on the cheap, and slowing the fall in house prices (which is a good thing)

Akrasia wrote: »

They have bankrupted us, we should bankrupt them, not just out of rage or for revenge, but as a deliberate policy decision, It is gravely destructive to allow these charlatans to remain so wealthy and so influential considering the damage they have caused with their power and are likely to cause again. Allowing the plutocratic aristocracy to remain is a further smack in the face of the Irish people.

:rolleyes: Recreational Outrage

Akrasia wrote: »

1. Immediate punitive tax on second homes

My family had a second home for a while - my Gran died. Luckily a family member needed a home, but if we had been unable to sell it to him, should we have had to dump our Gran's house ASAP for a super-cheap price, within a few months of her death? Not only the rich have second homes, there were alot of people with relatively low incomes who were buying houses as an investment, using their first house as collateral. Normally they did it to make sure that their children would be able to get a home - should they be punished.

Akrasia wrote: »

2. Immediate punitive tax on unoccupied houses. They'll complain that this will reduce their value. thats the bloody point high property prices are a millstone around our neck and the sooner they fall the better

Property prices have fallen hugely, and while that is a good thing, we don't actually want them to crash completely.
Say a bank lent someone 350,000 to buy a home worth 400,000. The price has now sunk to 250,000. If the person defaults, the bank could be out up to 100,000 even if they seize the house (and they could get even less). The falling house prices are raising the banks level of risk daily, and making it more and more likely that if enough people default, the bank will be out so much money that they could collapse, or at the very least have to severely curtail their lending (which we are already seeing).
Lower house prices are not always a good thing.

Akrasia wrote: »

3. Immediate extremely punitive tax on unused commercial property. this is the big one Go to any town in the country and you will see hundreds of thousands of square metres of warehouses, offices and retail space that is just lying there, still unrapped having been completed years ago. Tax the sh1t out of them, make it too expensive for the developers to roll over the loans and force them to sell them or rent them, if there are no buyers or renters at their desired prices, the local authorities will buy them for a euro each and let the developers go bust.
This will immediately drive down all commercial rent in the state, it will destroy the landowning class, but thats the intention, they're the people who held us to ransom and exploited all of us over the last 20 years. When commercial rates go down, entrepreneurship will increase and prices will fall. It will also benefit local communities who will have unprecendented access to cheap space for programs and projects for the community.
(one caveat for this measure, to escape the tax, the buildings will have to be gainfully employed, not just occupied by virtual businesses, make such an evasion a criminal offense with very high fines as punishment)

Again, unworkable socialist rubbish.
You seem to have this idea that everyone who invested in property is a fat cat, but there were people in perfetly normal jobs (a prison guard for one) who bought properties as investments. You will destroy thousands of normal people as well as 'fat cats' for daring to think ahead with their money, and trying to make something out of it.
Beside, I'd just demolish all my buildings and set up a complicated trust for the land, making it incredibly difficult for you to do anything even if you change the law.
And I'd tie you up in court long enough to remove all benefit to you.

Akrasia wrote: »

4. Set up state shops to sell high quality staple products at very low prices (like in venezuela) this will smash the cartel of the wholesalers in ireland who are another greedy shower who artificially inflate prices (and its much better than the proposed price controls) the state shops could be based in some of the newly available commercial properties and run as independent local cooperatives with legal mandates to run as non profit entities, to give priority to local producers and avoid the pitfalls of state ownership.

Venezuela with its runaway inflation?
Rather then setting up unnessacery state businesses, we could just *gasp* encourage more competition, and ban exclusive contracts with wholesalers.
Far more effective then a fat state-run quango.

Akrasia wrote: »

5. Force the ESB, eircom and the waste collectors to reduce their prices. We can not sustain bubble prices for essential public services, forget about this fanciful idea of 'competition' in public utilities, it has totally failed to achieve any of its goals even after more than a decade of aggressive policy decisions, prices rose, and quality of service is no better than it ever was.

Actually private waste collectors have drastically cut prices in my area, despite the efforts of the council to maintain a monopoly. Competition has achieved huge prices decreases in my area.
The ESB should be divided into the ESB and Eirgrid, and real competition should be allowed, not the current crap where the biggest energy supplier owns the grid and tries to hinder other companies from using it. We have no competition in this area, and while prices have risen 70% since 2000, other companies really only started in on the market in 2005. So the high prices are due to a fat, bloated, state-run monopoly.

Akrasia wrote: »

6. Get rid of FF. I know FG are almost exactly the same (and worse in some areas) but i'm just so bloody sick of looking at their smug moronic faces.

And spend 3 months waiting for them all to familiarise themselves with their briefs?
Fix the situation as best as we can (In other words, using none of your ideas) - then we can have an election, and let the former Minister for Tourism run the country, if that is what you really want.

SkepticOne

The_Minister wrote: »

CIE represent employers who employ either directly, or indirectly, close to 20% of the workforce.

Therein lies the problem. We have had a huge proportion of the workforce building houses where no one wants them at prices no one is interested in paying. Then the government rewards builders for their commercial failure by buying up these unsold unwanted overpriced houses.

Of course they are consulted.

The government, in the absence of leadership, panders to the various vested interests, honours quid pro quo, does deals, but the end result is the sort of meltdown we're seeing now.

Akrasia

The Economist wrote: »

Since when did increasing taxes on something lower the price?

Idiotic.

it lowers the price in this instance by making it more expensive for them to be left onoccupied and pressuring developers to sell or rent out the property.

If your statement above shows the depth of understanding of other 'economists' then its no wonder we're so screwed

Time Magazine

Akrasia wrote: »

it lowers the price in this instance by making it more expensive for them to be left onoccupied and pressuring developers to sell or rent out the property.

Would you like to suggest the details of the tax, as suggested?

If your statement above shows the depth of understanding of other 'economists' then its no wonder we're so screwed

Yes, us "economists" don't understand markets. It's the people who claim that prices rose after deregulation that we should listen to.

mountainyman

The_Minister wrote: »

My family had a second home for a while - my Gran died. Luckily a family member needed a home, but if we had been unable to sell it to him, should we have had to dump our Gran's house ASAP for a super-cheap price, within a few months of her death? .

I don't understand the relevance of this. Either you should be able to hold the asset tax free or not. Akrasia proposes an asset tax. You seem to making some sort of argument from virtue.
The price of the house is what someone will pay for it. I don't think you should be allowed to hold it indefinitely in the hope of selling it at some future date.

The_Minister wrote: »

Normally they did it to make sure that their children would be able to get a home - should they be punished.

They are free to sell the house to their children. And we will all be punished rich, poor and middling for the excesses fo the past few years.

The_Minister wrote: »

Lower house prices are not always a good thing.

A house is just a machine for living in. Why should high house prices be more desirable than hight clothes or car prices?

mountainyman

The Economist wrote: »

Taxes lower the value and raise the price.

What's the difference between (long term ) price and value?
Serious question.

Time Magazine

mountainyman wrote: »

What's the difference between (long term ) price and value?
Serious question.

While we're waiting for Akrasia to get back to us: the tax-rate + a little bit.

Say you're a company and it takes you an hour to produce some product that you sell for €10 in a free market economy and a VAT rate of 20% is brought in. Obviously the price will go up. Typically it won't go up by 20%, it'll go up by about €1 and you'll end up sacrificing the other €1 (obviously these are example figures). So now consumers are paying €11 and suppliers are getting only €9. That's the difference between the price and the value, at least in terms of the buyer and the seller.

But that's not the whole picture. When suppliers are getting €9 (where they used to get €10) and consumers are paying €11 (where they used to pay €10), less are supplied (not worth people's time for €9, go on the dole instead) and less are demanded (too expensive at €11). Thus the total level of economic activity falls. (In lingo, this is called the dead-weight loss.) So extending beyond the difference between price and value in terms of the buyer and seller, some people who could previously afford the good no longer can and some people who would previously supplied the good no longer do because the government are taking too much from them.

These problems exist when you tax things, there's no denying that. Unfortunately you can't get around it by applying the rate onto suppliers instead of consumers or anything like that, a tax is a tax. Similarly, unfortunately, you can't really get around it by imposing rental rates (or something) on suppliers instead of a "per unit" basis, either. That's why I will most likely still have problems with Akrasia's land tax, though I'll give him a chance to convince me. He tends to be evasive when these sorts of questions are posed to him, though.

For what it's worth when I come out against a policy position because I think it's stupid it's not necessarily because I disagree politically with its motive. I'd like everyone to be richer, that'd be great. But I'm not going to support a policy proposition to add a zero onto everyone's payslip. That's an obvious example of a stupid policy that only people with no concept of economic reality would support. Similarly there are policies that are stupid and would not work, but that are less blatantly obvious to the uncritical eye.

It's unfortunate less blatantly obviously stupid policies typically include the words "taxes" and "better for consumers".

RedPlanet

I read that part as a "levy".
Probably a temporary measure until balance and sanity to the property market has been restored.

Time Magazine

RedPlanet wrote: »

I read that part as a "levy".

Which is, for all intents and purposes, a tax.

Probably a temporary measure until balance and sanity to the property market has been restored.

Personally I think the market is doing a fine job of collapsing all by itself . We hadn't enough houses, now we've probably too many. The market price has fallen and will continue to do so. If we've too many houses, they're basically not going to sell anyway. Putting a tax levy on them won't change that, particularly with our planning laws. If anything it just puts off people potentially buying them and renting them to students etc., which is a very important part of the market. I'm a student and could not possibly afford to buy, and I'm only here for a year anyway, thus me and a few lads are renting someone's second home. That's absolutely fine by me. Taxing second homes would ultimately be passed onto us, which I don't think is particularly socially desirable. And, as I said, if the tax is to be levied on only unoccupied homes, you really have to ask why the owners are not renting them out. (Hint: prices are not going to rise, so it's probably because nobody wants to live in them anyway.)

That said, we're getting into a debate without Akrasia actually telling us what he's proposing, so we could well be wasting our time.

SkepticOne

The Economist wrote: »

While we're waiting for Akrasia to get back to us: the tax-rate + a little bit.

I think we can safely assume he did not mean a sales tax. He meant a tax on holding property. This is fairly clear from the context. This sort of tax has been suggested many times, most recently by David Begg. What you called idiotic is a particular interpretation which, tbh, I think fairly obviously works against its stated aim and therefore is unlikely to have been the intended meaning.

I would suggest we discuss this other, more obvious, interpretation.

Personally I would be in favour of a move away from stamp duty type taxes on the sale of houses towards a property tax. It would introduce much needed liquidy into the market and work against hoarding. It would be unfair however to those who have bought recently and paid this fee at the recent bloated prices so some sort of rebate might be necessary. Another problem at the moment is judging the market value of housing as there are very few transactions at present. There would be a lot of disputes.

Time Magazine

SkepticOne wrote: »

I think we can safely assume he did not mean a sales tax. He meant a tax on holding property.

I agree you're almost certainly correct. However there are many further different interpretations of this tax. Should it be a fixed rate? Should it be based on the value of the house? Should it be based on the price you paid? What if people are in negative equity, having lost €100,000 on the house, should they still pay a tax if they don't accept this loss of €100,000?

There are issues here. I put my hands up and admit that I was too quick to jump to conclusions previously, so I'm doing my best to not do that again.

Akrasia

The_Minister wrote: »

CIE represent employers who employ either directly, or indirectly, close to 20% of the workforce.
Of course they are consulted.
And of course the first concern of any plan is to make sure that they survive, because without the bankers or the builders, then the economy is not just ****ed, it doesn't really exist. And then your women and children can take a flying leap.

If the irish economy wouldn't exist without construction and banking than it never really existed at all. Those are two sectors that are supposed to facilitate economic growth, not comprise it. Construction projects are only of value to an economy if they are used to generate wealth after they have been constructed, banks are only useful to an economy if they provide liquidity for the use in productive activity. What we had was one big bubble and what we have now is one big crash. All our policies now should be aimed at, not the 'fastest' recovery possible (that will crash again in a few years), but in preventing such a bubble from ever occoring again.

Again, they employ so many people that we don't want them to immediately collapse and make all those people suddenly redundant, or the sudden surge in social welfare will cripple the budget. They have had lots and lots of pain already this year without the government putting in too much of a boot, and it is in our own interests to make sure they have enough work to limp on.

by artificially propping up house prices we are doing two things, dragging out the crash unnecessarily, and burdening more and more people with more unnecessary debt. We should not be pandering to one sector, the state should be showing vision and leadership and planning for the long term which unfortunately means we need to now accept the disasterous consequences of the disasterous policies the government pursued over the last 2 decades

We have had a major shortfall of social housing for years, but now prices have gone down so we are buying houses on the cheap, and slowing the fall in house prices (which is a good thing)

Slowing the fall in house prices is not a good thing, its a very bad thing, it is much better for them to reach their true level quickly and get it over and done with rather than drag it out over a decade or more.

My family had a second home for a while - my Gran died. Luckily a family member needed a home, but if we had been unable to sell it to him, should we have had to dump our Gran's house ASAP for a super-cheap price, within a few months of her death? Not only the rich have second homes, there were alot of people with relatively low incomes who were buying houses as an investment, using their first house as collateral. Normally they did it to make sure that their children would be able to get a home - should they be punished.

provision could be made for the families of recently deceased people, a 1 year moritorium for example to give them time to decide what to do with the house. That would be more than fair, any complaining after that should be met with little sympathy, especially considering the terrible situation so many other innocent people find themselves in through no fault of their own.

Property prices have fallen hugely, and while that is a good thing, we don't actually want them to crash completely.
Say a bank lent someone 350,000 to buy a home worth 400,000. The price has now sunk to 250,000. If the person defaults, the bank could be out up to 100,000 even if they seize the house (and they could get even less). The falling house prices are raising the banks level of risk daily, and making it more and more likely that if enough people default, the bank will be out so much money that they could collapse, or at the very least have to severely curtail their lending (which we are already seeing).
Lower house prices are not always a good thing.

The prices are going to crash one way or another, we can not artificially prop them up and if we try it will bankrupt the country. Its better for it to happen quickly than to have the misery dragged out over a decade. The banks are going to lose an awful lot of money, this is unavoidable, but again, its better to happen now so we can get back to the recovery, than to have it drag out over decades.

Again, unworkable socialist rubbish.
You seem to have this idea that everyone who invested in property is a fat cat, but there were people in perfetly normal jobs (a prison guard for one) who bought properties as investments. You will destroy thousands of normal people as well as 'fat cats' for daring to think ahead with their money, and trying to make something out of it.

Those people will already be wiped out if they aren't renting out their premisis as the mythical small man on the street can hardly afford to roll over interest on an empty commercial premesis, and if he could, then he's rich enough to be able to afford a little pain to help us pull through the recession. If he rents out the buildings than he wouldn't be liable for the tax, it only targets people who built silly properties in silly places with no plan other than to wait for a few years and sell it on at a higher price. Those speculators have no sympathy from me, big or small.
He should chalk it down to experience, he took a gamble, he lost, he is still in a much better position than countless other people who lost through no fault of their own.

Beside, I'd just demolish all my buildings and set up a complicated trust for the land, making it incredibly difficult for you to do anything even if you change the law.
And I'd tie you up in court long enough to remove all benefit to you.

Thats not very patriotic of you is it. I would prosecute you for every breach of planning or environmental law in your hurried demolition, in both the civil and criminal courts.

Venezuela with its runaway inflation?

are you suggesting the state shops caused the runnaway inflation?

Actually private waste collectors have drastically cut prices in my area, despite the efforts of the council to maintain a monopoly. Competition has achieved huge prices decreases in my area.

I don't know what area you are in, but that's not reflected where I live (perhaps thats because there is no council collection service at all and the private companies are happy to operate as a cartel) Regardless, bin charges were much lower when there weren't any and waste collection was a public utility and not a commercial enterprise.

The ESB should be divided into the ESB and Eirgrid, and real competition should be allowed, not the current crap where the biggest energy supplier owns the grid and tries to hinder other companies from using it. We have no competition in this area, and while prices have risen 70% since 2000, other companies really only started in on the market in 2005. So the high prices are due to a fat, bloated, state-run monopoly.

No the high prices are due to the 'regulator' increasing the costs to attract competition. They're also down to the mandate ESB has to run as if it was a private company profits and all. It should be run as a utility with the 'profits' invested back into the infrastructure rather than paid as dividends to the state as a further tax on ordinary people and business.

Ireland needs to reduce our cost base, the regulator could do that with a stroke of a pen.

And spend 3 months waiting for them all to familiarise themselves with their briefs?
Fix the situation as best as we can (In other words, using none of your ideas) - then we can have an election, and let the former Minister for Tourism run the country, if that is what you really want.

And you really think that FF are 'fixing the situation' and not just digging an even bigger hole with no plan of any other kind other than increasing regressive taxation and giving blank cheques to developers and bankers?

Akrasia

The Economist wrote: »

Would you like to suggest the details of the tax, as suggested?


Yes, us "economists" don't understand markets. It's the people who claim that prices rose after deregulation that we should listen to.

Details of the tax, unused commercial property incurs a tax until it is let out or sold.

its not a very complicated idea, although the details would be much more intricate. it could be based on a per day levy that increases with time the longer a servicable building is left vacant.

The local authority can purchase any unrentable property on behalf of the state for a nominal sum and the tax would not apply to them.

A similar tax could be levied on all uncompleted or derelict buildings subject to some exemptions for listed buildings and other extenuating circumstances. (such as old farm properties) This would prevent developers from vandalising existing properties to avoid the tax.

Akrasia

The Economist wrote: »

Which is, for all intents and purposes, a tax.


Personally I think the market is doing a fine job of collapsing all by itself . We hadn't enough houses, now we've probably too many. The market price has fallen and will continue to do so. If we've too many houses, they're basically not going to sell anyway. Putting a tax levy on them won't change that, particularly with our planning laws.

This is your economic analysis? that we have too many houses and they 'just won't sell' You need to study a bit harder. All assets with any value have a clearing price, we need to reach that price in order for them to sell. A tax on unoccupied houses would create an additional pressure on owners of these properties to accept lower prices and not just adopt a 'wait and hope for the best' approach. It would meanwhile provide some income for the state who has to deal with the economic, environmental and social cost of all this vacant property everywhere.

If anything it just puts off people potentially buying them and renting them to students etc., which is a very important part of the market. I'm a student and could not possibly afford to buy, and I'm only here for a year anyway, thus me and a few lads are renting someone's second home. That's absolutely fine by me. Taxing second homes would ultimately be passed onto us, which I don't think is particularly socially desirable.

You are conflating a number of different things, firstly, second homes are not the same as rental properties, rental properties would not be affected, at least not while they're being rented out. Taxing unoccupied second homes would drive down rents as people would either sell the properties to BTL investors or they would rent them out themselves and rents would fall.

And, as I said, if the tax is to be levied on only unoccupied homes, you really have to ask why the owners are not renting them out. (Hint: prices are not going to rise, so it's probably because nobody wants to live in them anyway.)

hint? its more likely that the owners are too reluctant to reduce the prices of the rents they are asking, or else they're still deluded enough to think the market will recover.
What do you think ought to happen to all those properties that according to you 'no-one wants to live in'?

That said, we're getting into a debate without Akrasia actually telling us what he's proposing, so we could well be wasting our time.

I apologise for taking so long to reply, I am at work and can only post during my breaks. I don't have the internet at home because I quite simply can't afford it at the moment.

RedPlanet

Maybe an added benefit would be that such a system may help eliminate the inefficiency of "one-off houses".
High-density buildings may be a safer investment than housing estates in the middle of a farmer's field, filled with stand-alone houses.

topper75

Beside, I'd just demolish all my buildings and set up a complicated trust for the land, making it incredibly difficult for you to do anything even if you change the law.
And I'd tie you up in court long enough to remove all benefit to you.

You may be for this in principle or against this in principle. But it is unworkable in practice for the reason alluded to in this quote. No government would waste time trying it. Case closed.

Akrasia

We have been told a number of times that we are in a 'national emergency' (I happen to agree, I also firmly believe that the politicians have no idea exactly how bad the emergency is going to be)

If this was a war the legislators could enact laws to prevent the kind of treason as outlined above, I'm not talking about gulags here, but laws that the CAB already use to prevent drug dealers and tax evaders from hiding their assets in umbrella trusts and in the names of relatives and children.

Freeze the assets first and ask questions later.

mountainyman

The_Minister wrote: »

You seem to have this idea that everyone who invested in property is a fat cat, but there were people in perfetly normal jobs (a prison guard for one) who bought properties as investments. You will destroy thousands of normal people as well as 'fat cats' for daring to think ahead with their money, and trying to make something out of it.

If all they can think to do is buy property they don't deserve any money. A prison guard should live in a council house. They shouldn't be paid enough to do better. An animal could do their job.

The_Minister wrote: »

Beside, I'd just demolish all my buildings and set up a complicated trust for the land, making it incredibly difficult for you to do anything even if you change the law.

I think that's legit. If you can't sell and aren't renting the land there should be no charge, this would facilitate people with a house in Cork city that they live in and a house in Goleeen that they inherited.