Investors ruining chances for First Time Buyers - regulations?

Barely Hedged

Villa05 wrote: »

Low earning pensioners should not be incetivised indirectly to invest in property. It is a long term investment not suitable to that age profile.
Flat tax rate encourages investment as investors know there on a level playing field. Your not going to invest if you are taxed at 50% and some one can buy next door and pay 0 tax on rental income.





I made no reference to a couple with one person working being outbid on a property.
That example was purely to show that the tax system discrimates based on age, a practice that is illegal in the workplace. Why should it be allowed in the tax system.

To be fair the title of the thread is investors ruining chances for first time buyers and you provided an example that backed your support of it. You dont need to refer explicitly to it.

Villa05 wrote: »

I think it may be targeted towards an investor age group in retirement where a lot of the above may not apply. Extra tax credits, multiple state benefits that are not means tested. The playing field needs to be level. Being a ftb is more like being a christian at the coliseum in ancient roman times. The playing field has been rigged to sacrifice you

Villa05 wrote: »

A retired couple aged 65 or over with an income of €36,000 have the following liabilities
Paye = 0
PRSI = 0
USC = €1665 (note if the couple have a medical card this would be reduced significantly)

Tax exemptions for over 65's http://www.citizensinformation.ie/en/money_and_tax/tax/income_tax_credits_and_reliefs/older_peoples_tax_credits_and_reliefs.html

A couple (one working) aged 39 with an income of €36,000 have the following liabilities
Paye = 2250
PRSI = 1440
USC = €1665
Source PWC tax Calculator http://download.pwc.com/ie/budget-2015/index.html

Difference €3,690


The state contributory pension is just short of €20,000 for a couple. This means that the couple can earn a further 16,000 tax/prsi free so what better way than to buy a house to rent out.

As I said the playing field is not level and the tax system is indirectly encouraging imprudent behaviour

Barely Hedged

Villa05 wrote: »

535,393 over 65's in the country as of 2011 census.

That statistic alone is poor support for the points you have made regarding income levels of pensioners

gaius c

Barely Hedged wrote: »

How do you "level the playing field" for two groups when one has had 30/40 years more time to attain and develop their wealth. Its just a fact of life

Stop socialising their losses while privatising their profits. That would be a good starting point.

Barely Hedged

gaius c wrote: »

Stop socialising their losses while privatising their profits. That would be a good starting point.

Can you explain? Its not a very specific point

Villa05

Barely Hedged wrote:

That statistic alone is poor support for the points you have made regarding income levels of pensioners

That point was in response to your statistical anomaly coment

gaius c

Barely Hedged wrote: »

Can you explain? Its not a very specific point

If they stop paying for it, repo it and get judgements against them for the outstanding balance. Don't sit and hope everything will work out okay by doing nothing.

Barely Hedged

gaius c wrote: »

If they stop paying for it, repo it and get judgements against them for the outstanding balance. Don't sit and hope everything will work out okay by doing nothing.

I think were talking about two different things

Barely Hedged

Villa05 wrote: »

That point was in response to your statistical anomaly coment

Yes, but what does it do to illustrate the income level of those >500k pensioners?

gaius c

Barely Hedged wrote: »

I think were talking about two different things

No not really. They've blown that wealth they spent years building up on stupid investment calls but are being protected from the consequences.

Barely Hedged

gaius c wrote: »

No not really. They've blown that wealth they spent years building up on stupid investment calls but are being protected from the consequences.

I dont know how you'd prove the breakdown of non performing BTL's is due to pensioners.

In the general BTL market, isnt BoI bringing 5k of non performing mortgages to court with the ultimate outcome of repossession if they dont engage?

Arbiter of Good Taste

stevedublin wrote: »

The man was being presumptious that his offer would be accepted there and then. This would be unfair on other potential buyers who may be prepared to buy the property at a higher price but a polite enough to wait their turn.

Are you serious? The poster has a chip on their shoulder because someone else is able to afford a property that, for some reason, they believe is their entitlement. If they are afraid to speak up, then they are not going to get too far in this world.

gaius c

Barely Hedged wrote: »

I dont know how you'd prove the breakdown of non performing BTL's is due to pensioners.

In the general BTL market, isnt BoI bringing 5k of non performing mortgages to court with the ultimate outcome of repossession if they dont engage?

You can't prove it. For now at least.
But it will come out in the wash in the end. The bulk of the arrears is in the over 50 generation because they took their carefully built up wealth and leveraged it on property. Those are the guys we are bailing out by not repossessing and those are the guys taking cash to build up nest eggs but not paying a cent to the banks.

Graham

gaius c wrote: »

The bulk of the arrears is in the over 50 generation because they took their carefully built up wealth and leveraged it on property. Those are the guys we are bailing out by not repossessing and those are the guys taking cash to build up nest eggs but not paying a cent to the banks.

The other school of thought is younger BTL landlords leveraged equity on their initial properties to secure mortgages on new properties. These landlords ended up being pincered from both sides by mortgage payments not being covered by falling rents and decreases in value that hammered their LTV ratios. There's likely to be a significant number of these 'investors' that are preying property prices recover before the banks repo their properties. That scenario is much less likely for older investors that financed their properties with retirement savings with lower LTV ratios.

MouseTail

gaius c wrote: »

You can't prove it. For now at least.
But it will come out in the wash in the end.

If you can't prove it, or point to any statistics that might correlate with your argument, you have nothing. Just a hunch and a few anecdotes.

gaius c

MouseTail wrote: »

If you can't prove it, or point to any statistics that might correlate with your argument, you have nothing. Just a hunch and a few anecdotes.

Nah, it's more than that. MABS have commented on how surprised they were about the older age profile of the people coming to them with mortgage problems. I wouldn't call it "proof" but it's a pretty strong indicator that people who should have been approaching the end of their mortgage terms, decided to chuck it all on 36 black.

I can't find the MABS commentary but here is the press release that they commented on.

The age profile of the MABS mortgaged client is considerably older than the national MABS average

Journal piece on the same release comments that the age profile is older and also that:

over a third of all MABS clients with mortgages were living in Dublin, Cork or Galway, indicating an urban majority.

Kind of blows the "arrears are all in Roscommon" myth out of the water too.

Graham

gaius c wrote: »

Nah, it's more than that. MABS have commented on how surprised they were about the older age profile of the people coming to them with mortgage problems. I wouldn't call it "proof" but it's a pretty strong indicator that people who should have been approaching the end of their mortgage terms, decided to chuck it all on 36 black.

I can't find the MABS commentary but here is the press release that they commented on.


Journal piece on the same release comments that the age profile is older and also that:

Kind of blows the "arrears are all in Roscommon" myth out of the water too.

Nothing at all indicates pensioners blowing their savings on buy to let properties. In fact the MABS report you link to shows a tiny % in the 65+ category.

The same report goes on to mention that most of this arrears is likely accounted for by mover, top-up and remortgage business with only a very small percentage accounting for BTL mortgages of any kind.

If anything the MABS report completely discredits the 'it's all the pensioners' theory.

MouseTail

gaius, that is ridiculous, it lends no weight whatsoever to your assertion.

gaius c

Graham wrote: »

Nothing at all indicates pensioners blowing their savings on buy to let properties. In fact the MABS report you link to shows a tiny % in the 65+ category.

The same report goes on to mention that most of this arrears is likely accounted for by mover, top-up and remortgage business with only a very small percentage accounting for BTL mortgages of any kind.

If anything the MABS report completely discredits the 'it's all the pensioners' theory.

Maybe you should read my posts because at no point did I refer to pensioners. That's other people projecting onto my posts. I did however refer to over 50's, the people who should be coming towards the end of their mortgages, not piled high with debt.

antoinolachtnai

Well, we really need people who have equity to reinvest in property. It is a good thing, not a bad thing. The problem is that it is not being directed into new builds. This could be done with tax breaks like the sold section 23/section 27.

RainyDay

antoinolachtnai wrote: »

This could be done with tax breaks like the sold section 23/section 27.

Have we learnt nothing?

MouseTail

Section 23/7 did serve a purpose, there was a real dearth of accommodation in the inner city and holiday homes in seaside towns before their introduction. Similarly with reliefs for the construction of student accommodation and nursing homes. They were probably extended beyond their usefulness.
They wont be reintroduced though, because a) there is no need, and b) they would be politically unpalatable.
The Living Cities tax relief should be extended though.

antoinolachtnai

Then why aren't all these people with equity investing their money in new builds?

If there is currently no shortage of accommodation, then why can't the OP find a house to buy?

The 'living cities' tax relief is a gutless, sentimental sop to subsidise people with plenty of money who want to do a refurb project. It is no help at all to the many poor people who just need somewhere to live that they can afford to rent or buy. (It could even have a depressing effect on supply, by encouraging purchasers to convert multi-dwelling houses into single family homes.)