# 'Begin to Buy' Scheme - to replace "affordable housing"



## MiaMia (20 Feb 2007)

I have been on to Labour - about the sham that is the new affordable Housing Initiative excluding people who earn less than 45K.

Their response is to a new "Begin to Buy" scheme (in blue below). I was wondering what people thought of it? Is it financially possible for the state to fund this? 

It looks to me like a better more flexible version of shared ownership scheme. I do like that it is not exclusivley for first time buyers - therefoe if you have bought yourself a dog box sized one bed, fall in love and have kiddies but still haven't managed to acheive that 70K salary, there is still hope!

Anyway their exact wording is in blue below.

The PDs say substantially reduce stamp duty - will this help anyone? What would it do to the housing market?

Has anybody a better idea??? This may be the time to bring it to the attention of the Politians ! 

Labours idea is:
Labour is committed to a ‘Begin to Buy’ scheme which will enable every working household to begin buying a home of their own, or to trade up to a home to meet their family needs. 

Under this plan, the couple will be able to get a mortgage to cover a proportion of the cost of the house. The Govt will guarantee the balance of the loan taking a proportionate stake in the property. The couple will be able to gradually take full ownership of the property over the lifetime of the mortgage. 

Our proposal will end the culture of exclusion that has become part and parcel of our residential property market.


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## Howitzer (21 Feb 2007)

Seems to me to be a mechanism which will further inflate prices to artificially high levels. Reason being that the bottom rung will be raised by whatever amount the Govt is prepared to subsidise the mortgage by. 

Having read the full article the miniumum stake that the owner must take in the property is only 25%. This is hugely scary for 2 reasons. 

1. It will allow people on the bottom rung to bid 4 times what they could have previously, this has the potential to wildly inflate prices. Is this not the opposite of what an Socialist party would want?

2. In the worst case scenario of a fall in the Irish property market where these properties were in negative equity the state could be left holding the bag as there would be much less onus on the "owner" (25%) to stick it out. The Govt would own 75% of the negative equity. That's not where I want my tax money sitting.


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## thewatcher (21 Feb 2007)

MiaMia said:


> Our proposal will end the culture of exclusion that has become part and parcel of our residential property market.


 
Not one party in this country has the neck or the balls to take on the property speculators whether this be the big time boys or Mr and Mrs teacher/public servant with the "investment property".
Until this is done the property market is fecked,and channeling more and more taxpayers money to the building industry is certainly not the answer.
This "plan" is about as crazy as FG compensating the Eircom share holders.
Labour go back to the drawing board - a big fat "F" on this one.


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## MiaMia (23 Feb 2007)

In the worst case scenario of a fall in the Irish property market where these properties were in negative equity the state could be left holding the bag as there would be much less onus on the "owner" (25%) to stick it out. The Govt would own 75% of the negative equity. That's not where I want my tax money sitting.[/quote]

Okay - but where do you want your tax money sitting?  What do you propose instead?  

Do we house our teachers, fire officers and other public servants- or do we adopt a free market economy?  If we house them how?  Rental market regulation?  Better more viable schemes to buy?


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## MiaMia (23 Feb 2007)

thewatcher said:


> Not one party in this country has the neck or the balls to take on the property speculators whether this be the big time boys or Mr and Mrs teacher/public servant with the "investment property".
> Until this is done the property market is fecked,and channeling more and more taxpayers money to the building industry is certainly not the answer.
> This "plan" is about as crazy as FG compensating the Eircom share holders.


 
Actually - mostly agree with this though not completly- the government encouraged property specualtion with the section 23 relief etc. 

Plus its been known for a long time now that mammies and daddies re mortgaging their houses to buy their children houses - therefore ensuring that house prices were increasing based on capital and not income ensured that a large proportion of the market who don't have access to loans etc from parents could never afford a house.

Then the emigrants that we expected not to buy but rent - because surely that is the way its done abroad - saw that the Irish rental systems is a shambes and begin to buy (particuarily in 2005 if I remmber the DAFT report).

Affordable housing has become a large proportion of the popultions only hope of getting on the property ladder and securing their future.

In the future if these people do not own homes or have rent secured homes they will not be able to house themselves (I based this on the old age pension being currently about 200 Euro - and the cheapest private rent (Bed sit/ em I mean Studio) being about 140 Euro.)  Will the government let is retired teachers, work force, nurses etc go without housing?

The government has money now - but is unlikely to have it in 40 years time based on current predicted demographics.

Therfore now is the time to solve the problem.

The question is how???


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## Howitzer (23 Feb 2007)

MiaMia said:


> Okay - but where do you want your tax money sitting? What do you propose instead?
> 
> Do we house our teachers, fire officers and other public servants- or do we adopt a free market economy? If we house them how? Rental market regulation? Better more viable schemes to buy?


 
In a free market economy these people have no more or less "right" to own a property than anyone else. In fact people within these professions are already treated more favorably by all the major lending instituations.

Are you a teacher, fire officer or other public servant? 

Anecdotal evidence suggests that the Irish property will be substantially flatter this year. The guaranteed wage increases obtained through the Govt/ Union wage agreements should insure that affordability for people in the public service category should increase markedly without any, potentially destabilising, intervention from the Govt.


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## Howitzer (23 Feb 2007)

Your assumptions are all over the shop.



MiaMia said:


> Actually - mostly agree with this though not completly- the government encouraged property specualtion with the section 23 relief etc.


 
S23 were about urban renewal and bringing Investors who previously would never have filed a tax return in the tax net. Even though their tax liability may have been zero.



MiaMia said:


> Plus its been known for a long time now that mammies and daddies re mortgaging their houses to buy their children houses - therefore ensuring that house prices were increasing based on capital and not income ensured that a large proportion of the market who don't have access to loans etc from parents could never afford a house.


 
Maybe yours do but this is hardly the driving force behind the market.



MiaMia said:


> Then the emigrants that we expected not to buy but rent - because surely that is the way its done abroad - saw that the Irish rental systems is a shambes and begin to buy (particuarily in 2005 if I remmber the DAFT report).


 
The proportion of houses bought by emigrants is very very small. Some developments have isolated large numbers and these figures were recounted by some estate agents last year. Emigrants from eastern europe have shown no appetitie for purchasing Irish property and now form the backbone of the Irish rental market.



MiaMia said:


> In the future if these people do not own homes or have rent secured homes they will not be able to house themselves (I based this on the old age pension being currently about 200 Euro - and the cheapest private rent (Bed sit/ em I mean Studio) being about 140 Euro.) Will the government let is retired teachers, work force, nurses etc go without housing?


 
Anyone on a pension can get rent supplement.



MiaMia said:


> The government has money now - but is unlikely to have it in 40 years time based on current predicted demographics.


 
CSO statistics show Irish birth rates falling from ~78K in 1980 to ~40K in 1990. www.cso.ie


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## 3littlefish (14 Mar 2007)

MiaMia said:


> Do we house our teachers, fire officers and other public servants- or do we adopt a free market economy? If we house them how? Rental market regulation? Better more viable schemes to buy?


 
Why is everyone banging on about the Teacher or Nurse or Other Public Servant not affording a home? Why are they always singled out as more special in this regard than the rest of society like the book keeper, secretary, customer service agent, Chef, mechanic, musician, driving instructor, purchasing manager, Plumber, insurance claims administrator, taxi driver or junior engineer etc. 
Most Public servants get well paid with wonderful benefits and job security when compared to private sector employees. It's swings and roundabouts. 

I am so sick of hearing about the poor public servants not being able to buy a house. No disrespect to teachers, nurses, fire officers and the rest of the public service etc, they all do important and necessary jobs. I am not public sector bashing, but let them take a ticket and join the queue with the rest of society who also do important necessary jobs and who can't afford a sniff of a house.


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## Gordanus (14 Mar 2007)

And what about single people who don't have access to two incomes?  Should they spend their 30s, 40s and 50s living in rented accommodation because they just can't raise the money for deposit/stamp duty/ mortgage?  What about divorced people? Or single parents?
It seems to me that unless you're in a couple earning good money and buy together, you're f**ed.


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## room305 (14 Mar 2007)

MiaMia said:


> Labours idea is:
> Labour is committed to a ‘Begin to Buy’ scheme which will enable every working household to begin buying a home of their own, or to trade up to a home to meet their family needs.
> 
> Under this plan, the couple will be able to get a mortgage to cover a proportion of the cost of the house. The Govt will guarantee the balance of the loan taking a proportionate stake in the property. The couple will be able to gradually take full ownership of the property over the lifetime of the mortgage.
> ...



All I can say is "wow". This scheme is breathtaking in both its stupidity and its naivety. Labour lost my vote a long time ago but this is truly stunning.

Take a long hard look at the sub-prime mess unfolding in the US if you want to see how this will end up. The state has no business spending the tax monies of the hard working private sector promoting an "ownership society" at all costs.

Nobody has the "right" to own a home. Buy a house you can afford or don't buy one at all.


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## 3littlefish (15 Mar 2007)

I agree with your assertion that nobody has the 'right' to own a home. However in fairness it is a bitter pill to swallow for anyone not old enough or financially mature enough to buy their first house 10 years ago. To see that they have missed that part of life completely and that it may never come around again is hard. To see poeple maybe only 5 to 10 years older than you not necessarily earning more income that you, with such wonderful security. It doesn't feel fair.
To them, their only prospect may be to inherit a family home from a parent and either live in it or sell it and divide the proceeds between siblings to each go off and buy a smaller house of their own. 

I would like to see some protection for future generations who are counting on inheriting a family owned home. We don't want to see loads of houses disappearing to the banks/ Seniors MOney clubs etc OR in Inheritance tax.  Property could well become a generational thing. We need to be careful not to force generations to sell off inherited family homes in the future to pay off inheritance tax bills or lenders.b


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## room305 (15 Mar 2007)

3littlefish said:


> I agree with your assertion that nobody has the 'right' to own a home. However in fairness it is a bitter pill to swallow for anyone not old enough or financially mature enough to buy their first house 10 years ago. To see that they have missed that part of life completely and that it may never come around again is hard. To see poeple maybe only 5 to 10 years older than you not necessarily earning more income that you, with such wonderful security. It doesn't feel fair.



No disagreement here. It is indeed a bitter pill to swallow. Nobody likes arriving late to the party. However, the answer is not to recklessly loan money to people who will struggle to pay it back. Following that road leads to immense pain and it was such reckless irresponsibility on the part of the US government and Federal Reserve that may derail the world economy.

There are no easy answers to the mess Ireland finds itself in and everyone should be suspicious of people offering any particularly political parties. This solution will be a boon to developers and banks, leaving people struggling to buy a house they could only afford to take out a 25% loan on. Try to imagine it for a second. The outstanding balance on your mortgage might be scary but imagine how bad it would be if you knew you still had another three mortgages to go afterwards? Nonsense of the highest order.



3littlefish said:


> To them, their only prospect may be to inherit a family home from a parent and either live in it or sell it and divide the proceeds between siblings to each go off and buy a smaller house of their own.
> 
> I would like to see some protection for future generations who are counting on inheriting a family owned home. We don't want to see loads of houses disappearing to the banks/ Seniors MOney clubs etc OR in Inheritance tax.  Property could well become a generational thing. We need to be careful not to force generations to sell off inherited family homes in the future to pay off inheritance tax bills or lenders.b



What do you mean "protection"? Surely it is up to the parents to do with their own assets as they see fit. There is something repellent about people viewing their parent's home as an inheritance before their parents have even seen fit to pass it on (I just mean in general - I know nothing of your circumstances). 

I don't know how much inheritance tax there is on property - I think it should be low for your parents PPR (family home and all that) but high for all other assets. Capitalism works because people are forced to earn their wealth, inherited wealth flys in the face of that.


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## liteweight (16 Mar 2007)

A child is allowed to inherit approx 478k from parents tax free. This includes property and all other assets.


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## 3littlefish (16 Mar 2007)

Protection - I'm referring to educating home owners about the risks of re-mortgaging their homes in their retirement, possibly without any repayments. 
The affect of compounding interest (6-7%) over 10 or 15  years is really very SIGNIFICANT coupled with potential property price stagnation or very low growth. If people enter in to these contracts without a full appreciation of the ultimate outcome, this will end up with many family homes having to be sold to clear the debt possibly with very little residual value remaining..i.e. the Bank/lender instead of the family ending up owning most of the family home. 

That is fine where that is what the property owner wants but I suspect many many of them do not fully appreciate how much €60k @ 6.5%apr over 15 or 20 years will amount to!!!!!

There is nothing inherently wrong with these products but consumers need more Education


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