Investors ruining chances for First Time Buyers - regulations?

seamus

Yes, because cars are the same as houses.

At the end of the day, housing is a commodity.

It's not like there's anyone sleeping on the street because investors are preventing them from buying a house.

In that regard it is very much like buying a car. If you see a second hand car on sale for €10k and you have an €8k loan, but there's a cash buyer who wants it for €10k, then you have no option except to choose a different car - one that may be smaller or older than what you want.

by the seaside

seamus wrote: »

At the end of the day, housing is a commodity.

It's not like there's anyone sleeping on the street because investors are preventing them from buying a house.

In that regard it is very much like buying a car. If you see a second hand car on sale for €10k and you have an €8k loan, but there's a cash buyer who wants it for €10k, then you have no option except to choose a different car - one that may be smaller or older than what you want.

But there are differences from cars as well as similarities to them.

If demand for cars go up, manufacturing goes up and supply goes up. People aren't sleeping on the streets because of investors and that was not the argument. People are finding it hard to compete, when buying a house to live in, with investors.

The supply of houses is limited, in part through policy. So the question arises of whether it is possible and beneficial to disadvantage investors and 2nd home buyers in comparison to people buying a home to live in who don't already have a house.

Eugene Norman

Eldarion wrote: »

Cash is king. The current market favours cash, not solely investors. Plenty of folk out there who have worked and saved for years to build up their financial status who are in a position to buy a new PPR without the need for financing. Yet somehow they should be penalised for this?

Plenty of folk inherited money and are buying property under the feet of families.

Plenty of renters are paying taxes to maintain the lifestyle of property owners, many deliberately not paying their mortgages. The richer they are were the more likely this is.

there is no free market in property, if there were this wouldn't be much of an issue as supply would be massive.

gizmo555

jimmycrackcorm wrote: »

I faced this dilemma when I was buying my home in the last nineties. Every time we went to view properties they were sold out by the time we got there. Then one week the Peter Bacon report was acted on and suddenly investors disappeared. The following weekend we were able buy our home.

The other side of that coin was that rents shot up - as "investors disappeared", so did new supplies of rental accomodation.

Rents are already at very high levels, especially in Dublin. If, say, new restrictions on interest relief are brought in, the same effect as Bacon caused will be seen in the rental market.

Why should renters pay more for their housing to make life easier for first time buyers?

Eldarion

Eugene Norman wrote: »

Plenty of folk inherited money and are buying property under the feet of families.

So now you're saying inherited means should be penalised?

Plenty of renters are paying taxes to maintain the lifestyle of property owners, many deliberately not paying their mortgages. The richer they are were the more likely this is.

there is no free market in property, if there were this wouldn't be much of an issue as supply would be massive.

Not just renters, all tax payers are suffer from the lack of action against strategic defaulters...Except for the strategic defaulters.

by the seaside

gizmo555 wrote: »

The other side of that coin was that rents shot up - as "investors disappeared", so did new supplies of rental accomodation.

Rents are already at very high levels, especially in Dublin. If, say, new restrictions on interest relief are brought in, the same effect as Bacon caused will be seen in the rental market.

Why should renters pay more for their housing to make life easier for first time buyers?

How about we increase stamp duty to 5% but give relief to reduce it to 0% to buyers who are buying a PPR and who don't already have a PPR that they're not selling (tweak it to make it revenue neutral and to deal with loopholes etc.)

Plenty of investors would still buy, but there would be a small swing in favour of PPR buyers, who could then buy rather than rent. One less house being let for one less renter. I'm trying to work out the economics of whether that would push rents up or just reduce yields. Anyone?

stevedublin

seamus wrote: »

In that regard it is very much like buying a car. If you see a second hand car on sale for €10k and you have an €8k loan, but there's a cash buyer who wants it for €10k, then you have no option except to choose a different car - one that may be smaller or older than what you want.

A closer comparison with what the OP situation is where the cash buyer has €8k cash, but the other buyer has a €7.5k loan and €1.5k cash and the car seller favours the cash buyer.

Also cars are not as much of a necessity of life as a roof over your head.

seamus

stevedublin wrote: »

Also cars are not as much of a necessity of life as a roof over your head.

Like I say, it's not like anyone is living on the street because they can't afford to buy a house.

Nobody is entitled to buy a property, renting is perfectly good.

The supply of houses is limited, in part through policy. So the question arises of whether it is possible and beneficial to disadvantage investors and 2nd home buyers in comparison to people buying a home to live in who don't already have a house.

Why should we though? We've spent so bloody long interfering in the property market and making a complete balls of it, that perhaps it's time to leave the market alone.

People "who don't already have a house", do have a home though. It makes no sense to favour them above trader-uppers (or downers). In the grand scheme it also makes no sense to disincentivise investors specifically unless supply is restricted. At present supply is restricted, so it does make sense to disincentivise investing (or remove the barriers to supply).

jayjay2010

Just got a call from the estate agent.....cash buyer has gotten the sale agreed.

What a joke!

by the seaside

seamus wrote: »

Like I say, it's not like anyone is living on the street because they can't afford to buy a house.

Nobody is entitled to buy a property, renting is perfectly good.

So presumably an investor is not entitled to buy a property as owning one property is perfectly good?

seamus

by the seaside wrote: »

So presumably an investor is not entitled to buy a property as owning one property is perfectly good?

No, nobody is "entitled" to buy any property. The suggestion is that FTBs should be favoured above everyone else in buying a property. But there's no obvious reason why this should be.

by the seaside

seamus wrote: »

No, nobody is "entitled" to buy any property. The suggestion is that FTBs should be favoured above everyone else in buying a property. But there's no obvious reason why this should be.

There is an obvious reason, but you don't happen to agree with it. That's fine.

And I don't think this was about FTBs, but (from my point of view) PPR buyers vs investment and second home buyers.

The Spider

lima wrote: »

In a fair, capitalist, society it should be each person out for themselves. However Ireland is not like that. On one had the country protects people who haven't paid their mortgages by not allowing repossessions while at the same time it makes it horrifically difficult for a younger person to get a foot in the door of property ownership.

There should be incentives to sell property to FTB's over Investors or people with existing property. The country is awash with wealthy old people and they are unfortunately sucking up any available property to the detriment of the young of this country. Of course idea's like that would be laughed out the door by the landlord politicians.

So Lima, someday you may want to sell that repo apartment you bought, and you may have the choice of someone with a briefcase full of cash or someone who is hoping the bank give him approval to buy.

Now would you like the government to step in and tell you that you can't sell to the guy with the cash, in fact you have to wait months and see if the FTB gets approval from the bank and then you may be able to sell to them.

Somehow I think you'd be screaming blue murder!

NewDirection

Investors are good news for the housing market. Speculators are bad.

If house prices drop to silly low prices compared to rent, investors will stop prices dropping too far. If prices rise so that the rental yield will be too low investors will move away from property. They are a stabilizing influence on both the high and low swings of property.

Speculators are the curse of the property market. The exacerbate the swings in the market. Upping capital gains on nppr property to something prohibitive might help sort out this issue.

by the seaside

The Spider wrote: »

So Lima, someday you may want to sell that repo apartment you bought, and you may have the choice of someone with a briefcase full of cash or someone who is hoping the bank give him approval to buy.

Now would you like the government to step in and tell you that you can't sell to the guy with the cash, in fact you have to wait months and see if the FTB gets approval from the bank and then you may be able to sell to them.

Somehow I think you'd be screaming blue murder!

I'm selling a house now. I'd be very happy if someone buying for a PPR had a 0% stamp duty and someone buying as an investment had a 5% stamp duty. It would be closer to the ind of society I want my kids to grow up into for when they are old enough to buy a house.

The Spider

by the seaside wrote: »

I'm selling a house now. I'd be very happy if someone buying for a PPR had a 0% stamp duty and someone buying as an investment had a 5% stamp duty. It would be closer to the ind of society I want my kids to grow up into for when they are old enough to buy a house.

That's fair enough, but I see you're looking to move to Ireland, so the question is, would you be prepared to wait for the FTB to get mortgage approval drawdown the loan etc, or would you go with the guy who has the cash there and then and you could speed up your move, rather than potentially waiting months, and the FTB's approval could possibly fall through.

Is the cash buyer not a safer bet from your point of view and would allow you to move quickly with little risk?

Icepick

No, we definitely don't need to fix distortions with more distortions.
What should be done is tax old people the same as everyone else and meanstest all benefits.

NewDirection

Surely its up to the FTBer to make the case that they are the best candidate to sell to. One way as mentioned before is to outbid the cash buyer by enough that the risk is worth it for the seller.

A cheaper way is to come with as much proof that you can deliver quickly on the sale. Have your mortgage approval letter in hand when your going to see the property. You might give up some of your negotiating powers by showing your hand, but by the sounds of the properties mentioned on this thread these properties are in demand so you might not be giving up much.

by the seaside

The Spider wrote: »

That's fair enough, but I see you're looking to move to Ireland, so the question is, would you be prepared to wait for the FTB to get mortgage approval drawdown the loan etc, or would you go with the guy who has the cash there and then and you could speed up your move, rather than potentially waiting months, and the FTB's approval could possibly fall through.

Is the cash buyer not a safer bet from your point of view and would allow you to move quickly with little risk?

I might accept the investment buyer over the PPR buyer - they can still bid. But all we've done is just tip the scales a little.

(As it happens I'm not in a hurry for the sale, but I appreciate the point you're illustrating).

Baby01032012

I don't see how people are feeling investors are at an advantage. Investors under the central bank rules can only borrow 50% of value where first timers or those trading up/ Down can borrow 90/80%. Investors are taxed to hilt on any income, 52% given higher rate plus USC and prsi. Interest allowable is 75%, any other business any financing cost would be fully allowable. I'm not understanding the arguements being made against investors.

stevedublin

Baby01032012 wrote: »

I don't see how people are feeling investors are at an advantage..

cash buyers (often investors) can buy property for a lower price than those who have to get a mortgage.

ardmacha

Icepick wrote: »

No, we definitely don't need to fix distortions with more distortions.
What should be done is tax old people the same as everyone else and meanstest all benefits.

Means testing the bus pass will have feck all effect on the housing market.

Villa05

Baby01032012 wrote:

I don't see how people are feeling investors are at an advantage. Investors under the central bank rules can only borrow 50% of value where first timers or those trading up/ Down can borrow 90/80%. Investors are taxed to hilt on any income, 52% given higher rate plus USC and prsi. Interest allowable is 75%, any other business any financing cost would be fully allowable. I'm not understanding the arguements being made against investors.

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

Barely Hedged

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

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

quadrifoglio verde

stevedublin wrote: »

cash buyers (often investors) can buy property for a lower price than those who have to get a mortgage.

But I can buy most things cheaper with cash than where I need to borrow the money first and delay a sale. The seller wants the speediest sale that gives him the most cash. If it's a case of waiting 3 months for an extra 5k or go with cash and have it all done straight away, why shouldn't he be allowed choose the lower price. Likewise both of us can make an offer requiring mortgages, mine can be lower but he can still choose to go with me.

I wouldn't be surprised if some bank deals are done with backhanders to the seller.

Villa05

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

That's not what I was referring to.
Tax on rental income should be fixed rate for everyone. Retired can be 0 while a worker could be paying over 50%.

State benefits should be means tested. Retirees get far too many state benefits regardless of wealth.

Barely Hedged

Villa05 wrote: »

That's not what I was referring to.
Tax on rental income should be fixed rate for everyone. Retired can be 0 while a worker could be paying over 50%.

State benefits should be means tested. Retirees get far too many state benefits regardless of wealth.

Can you explain how a pensioner can avail of 0% tax on rental income?

Arbiter of Good Taste

Villa05 wrote: »

That's not what I was referring to.
Tax on rental income should be fixed rate for everyone. Retired can be 0 while a worker could be paying over 50%.

State benefits should be means tested. Retirees get far too many state benefits regardless of wealth.

The only way a pensioner will be paying 0% tax on rental income is that if they have no other source of income and their net rental income is so paltry that they don't even surpass their tax credits. In that case do you really want to tax them for the heck of it. While you are at it, lets start taxing everyone the minute they make €1. Tax credits and lower tax rates be damned!

The fact of the matter is, every generation of FTBs feels aggrieved. Yet somehow people manage to get on that clichéd "property ladder". No one is entitled to buy a house and there are people who are perfectly happy to rent for their entire lives.

FTB grants and lower stamp duty rates did nothing but to accelerate the property prices. Why do people think that any new measures will be different?

Villa05

Arbiter of Good Taste wrote: »

The only way a pensioner will be paying 0% tax on rental income is that if they have no other source of income and their net rental income is so paltry that they don't even surpass their tax credits. In that case do you really want to tax them for the heck of it. While you are at it, lets start taxing everyone the minute they make €1. Tax credits and lower tax rates be damned!

The fact of the matter is, every generation of FTBs feels aggrieved. Yet somehow people manage to get on that clichéd "property ladder". No one is entitled to buy a house and there are people who are perfectly happy to rent for their entire lives.

FTB grants and lower stamp duty rates did nothing but to accelerate the property prices. Why do people think that any new measures will be different?

As mentioned in my earlier post a flat tax on rental income ie 30% - level playing field.
Making a long term investment like property advantageous to to a demographic that may have large cash reserves but who's investment profile should be towards risk free safe investments is a recipe for disaster. Disasters we are all too familiar with over the past 8 years

Graham

Villa05 wrote: »

As mentioned in my earlier post a flat tax on rental income ie 30% - level playing field.
Making a long term investment like property advantageous to to a demographic that may have large cash reserves but who's investment profile should be towards risk free safe investments is a recipe for disaster. Disasters we are all too familiar with over the past 8 years

Tax on income is generally a level playing field some people just pay less because their income is less. No idea how you've managed to muddle that into somehow being responsible for the global financial crisis.