Gov to clamp down on property flippers, any idea how?

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whizzbang

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http://www.rte.ie/business/2006/0823/houses.html

Any suggestions on how they would go about this?

Higher CGT for properties sold within 5 years
"investor tax" on mortgate repayments
Make investors have to prove property is being rented out, penalty if it is not.
Offer a reward for any tennant who rats out a non registered landlord.

Not sure how workable these are, any other ideas?

maybe they will just finally do the recommendations in the Bacon report?
 
Could new build flippers be eliminated by imposing stamp duty if pre-build contracts are transferred?
 
I'm not sure what the recommendations of the Bacon report are anymore (were there 2?) but I would have thought simply enforcing the payment of stamp duty would prove a sufficient detriment.

Anything complicated would probably just introduce more loopholes.
 
whizzbang said:
http://www.rte.ie/business/2006/0823/houses.html

Any suggestions on how they would go about this?

Higher CGT for properties sold within 5 years
"investor tax" on mortgate repayments
Make investors have to prove property is being rented out, penalty if it is not.
Offer a reward for any tennant who rats out a non registered landlord.

Not sure how workable these are, any other ideas?

maybe they will just finally do the recommendations in the Bacon report?
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A mixture of all of those I would have thought or here are 2 other ways to deal with them

Measure A is A special scale of 50% CGT where a property was NOT registered with the PTRB and was not PPR would be neat.

Registration and checking of valid tenancy agreement gets you onto a sliding scale.

Min 3 years renting out required before you get to a 20% CGT rate at 10% reduction per year.
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alternatively

Measure B is Use stamp duty as before and Bring Back Bacon exactly as before

EXCEPT that you are entitled to an annual rebate on that 9% investor SD rate at a rate of 1% Stamp Duty Refund per year of PRTB registration (and checking of valid tenancy in place) until your stamp duty is the same as any STB would have been .

The gap betwen investor and STB back then was typically 3% so you need to rent the place for 3 years to get your clawback in full.

No changes to CGT
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Measure A could be applied retroactively to existing flippers , Measure B could not. I would look at the first option meself. Tax the flipper at disposal not at acquisition.

Both force empties onto the rental market.
 
You can see the Bacon report here
[broken link removed]

Some of the recommendations:

43. Stamp duty for investors

45. Therefore, it is recommended that an annual tax, say of 2-3 per cent of the declared value of such properties acquired in the future should be introduced.

47. A mechanism should be developed to exempt landlords from the tax measure proposed in paragraph 45 above, where certain specified conditions apply, including compliance with the standards and other requirements of the regulatory regime and there is evidence of a commitment to the availability of the accommodation for renting on a long-term basis
 
Measure 43 is an annual property tax so they will not go there , the measure I proposed are disposal or acquisition taxes with sliding penalties which leve a genuine BTL investor no worse off really after 3 years .

The PRTB registraion also makes clear who should be chased for bin charges and the like and helps local authorities to function better.
 
whizzbang said:
Make investors have to prove property is being rented out, penalty if it is not.
Click to expand...

Up until 2001 there was an anti-speculative tax on the books. If you owned a house that wasn't your PPR and you weren't trying to rent it out, you paid 2% tax on the value of the house.

Not sure if it was ever actually enacted but it was scrapped in 2001.
 
Property tax = political suicide.

On the enforcement of stamp duty - this practice is rampant in Ireland. I have first-hand experience with this. It's who you know really. The 'aul "cast a blind eye/lost in the filing cabinet" happens more often than you'd like to think.
 
Howitzer said:
Not if you're looking for a scapegoat and you phrase the tax as being geared towards "speculators". In that case it would be a populist measure.
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Except for the fact that half the people I know are now property 'investors'.
 
landlords will always be required but these should be long term investors so a large CGT rate for investors selling within five to ten years could do the job. If you were gonna be taxed 100% on a profit within 5 years than you wouldnt buy if you had a short term timeframe. would cut a lot of speculative froth out of market.
 
Howitzer said:
Not if you're looking for a scapegoat and you phrase the tax as being geared towards "speculators". In that case it would be a populist measure.
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That's 100% true. FF are putting in a last ditch effort at insuring themselves against future back-lash.
 
Is it not just too late at this stage? Any measures to reduce the influence of speculators in the market are likely to precipitate a crash.
 
Targeting new build flippers initially would affect a minority but would make an excellent headline for Noel in the battle for FTB votes.
 
gearoidmm said:
Is it not just too late at this stage? Any measures to reduce the influence of speculators in the market are likely to precipitate a crash.
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whathome said:
Targeting new build flippers initially would affect a minority but would make an excellent headline for Noel in the battle for FTB votes.
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And the penny drops. Not just a minority, but an unpopular one. Politicians have been doing this since Pontius Pilote.
 
Even a plausible threat if a punitive regime could cause the flippers to pull out sharpish if they thought it would be law by the time the houses were built...like by April 2007 when the budget is really enacted for example.

But nobody takes Noel Ahern seriously at all. Had Brian Cowan said this the flippers would be panicking and stampeding out of market stage left. Daft would crash under the strain so it would :D
 
If I were a FF politician right now, I'd be keeping my head down, mouth shut and out of the limelight - people like Noel Dempsey are playing a very dangerous game by commenting on the property market. If these comments are perceived by some as signalling an imminent crash, he could be left centre-stage having to justify FF policy and investment schemes!

You're right gearoidmm - it is too late. Nobody can stop it. All we can do, is let the train run as fast as she can down that runaway hill and deal with the consequences afterwards.
 
I have moved this property investment thread from "The Great Debates" Section.

Please post questions relating to property in the appropriate forum.

aj
 
2Pack said:
Even a plausible threat if a punitive regime could cause the flippers to pull out sharpish if they thought it would be law by the time the houses were built...like by April 2007 when the budget is really enacted for example.
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I don't see why the legislation can't be enacted on budget day, in the same way as the First Time Buyers Grant was removed. If you'd signed the previous day you got the grant, if you signed the day after you missed out. Couldn't the same principle not apply here?
 
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