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



## whizzbang (23 Aug 2006)

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?


----------



## whathome (23 Aug 2006)

Could new build flippers be eliminated by imposing stamp duty if pre-build contracts are transferred?


----------



## Howitzer (23 Aug 2006)

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.


----------



## Guest107 (23 Aug 2006)

whizzbang said:


> http://www.rte.ie/business/2006/0823/houses.html
> 
> Any suggestions on how they would go about this?
> 
> ...



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.



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 .
> 
> ...


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.


----------



## whizzbang (23 Aug 2006)

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


----------



## Guest107 (23 Aug 2006)

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.


----------



## room305 (23 Aug 2006)

whizzbang said:


> Make investors have to prove property is being rented out, penalty if it is not.



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.


----------



## CelloPoint (23 Aug 2006)

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 (23 Aug 2006)

CelloPoint said:


> Property tax = political suicide.


 
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.


----------



## z107 (23 Aug 2006)

Maybe bertie could call it 'poll tax' or something.


----------



## gearoidmm (23 Aug 2006)

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.



Except for the fact that half the people I know are now property 'investors'.


----------



## bearishbull (23 Aug 2006)

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.


----------



## CelloPoint (23 Aug 2006)

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.



That's 100% true. FF are putting in a last ditch effort at insuring themselves against future back-lash.


----------



## gearoidmm (23 Aug 2006)

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.


----------



## whathome (23 Aug 2006)

Targeting new build flippers initially would affect a minority but would make an excellent headline for Noel in the battle for FTB votes.


----------



## Howitzer (23 Aug 2006)

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.


 


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.


 
And the penny drops. Not just a minority, but an unpopular one. Politicians have been doing this since Pontius Pilote.


----------



## Guest107 (23 Aug 2006)

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


----------



## CelloPoint (23 Aug 2006)

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.


----------



## ajapale (23 Aug 2006)

I have moved this property investment thread from "The Great Debates" Section.

Please post questions relating to property in the appropriate forum.

aj


----------



## Howitzer (23 Aug 2006)

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.


 
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?


----------



## room305 (23 Aug 2006)

CelloPoint said:


> 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.



You've said this before and it's rubbish. The risk for the person in revenue doing this is enormous so by association the reward for doing so would need to be enormous. It would be cheaper for the person buying to simply pay the stamp duty.


----------



## whizzbang (23 Aug 2006)

I know this thread calls for rampant speculation but putting it in the "Property Investment" forum is a bit of a bad joke


----------



## miju (23 Aug 2006)

Lol


----------



## Howitzer (23 Aug 2006)

The lads on the Last Word have never personally heard of anyone flipping property. There ya go. Doesn't exist. I must have been mistaken.


----------



## cjh (23 Aug 2006)

Some one bed apartments in The Beacon and 1, 2, and 3 beds in Bracken Hill (both Sandyford) say that someone is doing it - or trying to - they've been up there for months now.......


----------



## Guest107 (24 Aug 2006)

*Gov to clamp down, Regulations Today*

The first of a raft of initiatives aimed at flippers is being announced my Micheal Martin later today.

He will be issuing regulations which will specifically outlaw the activities of certain [broken link removed]under consumer protection regulations.

As we 'Debaters' already know the property market in Ireland is the biggest Pyramid Scheme of all time in this country and its high time teh government started to regulate it from every angle.


----------



## cjh (24 Aug 2006)

*Minister vows to curb property speculator greed*


http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1675295&issue_id=14540

More from Monister Ahern in today's Indo on speculators and 100% mortgages.


----------



## ajapale (24 Aug 2006)

Hi Guys,

Please keep to the topic.

"Property Flipping" and any Government proposals to regulate (clamp down) the practice.

Thanks,
aj


----------



## Guest107 (24 Aug 2006)

Dude!

we have NO PROPOSALS except some waffle from Noel Ahern about what he intends to ask Brian Cowan some time before the budget.

while we were trying to compose a hypothetical framework in the GFD forum this thread was thrown into the flippers pool instead.

I feel soooooo dirty right now


----------



## liteweight (24 Aug 2006)

In order for someone to 'flip' a property, an extra clause has to be written into the contract by the builder's solicitor. The builder, solicitor, estate agent and purchaser (flipper) have to agree to the various aspects. 

Why not simply outlaw the practice i.e. make it illegal for the builder's solicitor to include this clause.  No more 'flippers'!!


----------



## whizzbang (24 Aug 2006)

liteweight said:


> Why not simply outlaw the practice i.e. make it illegal for the builder's solicitor to include this clause.  No more 'flippers'!!



Yes, they will be called "Skippies" as they skip the property from the developer to the FTB, like skipping stones across water.


----------



## liteweight (24 Aug 2006)

whizzbang said:


> Yes, they will be called "Skippies" as they skip the property from the developer to the FTB, like skipping stones across water.


----------



## whizzbang (24 Aug 2006)

liteweight said:


>


I was suggesting that they were just going to do it by another name... thats all.. possibly not that clear


----------



## thewatcher (24 Aug 2006)

*Re: Gov to clamp down, Regulations Today*



madisona said:


> was wondering the same thing. Can the anti pyramid selling legislation be used to prosecute and jail property speculators. worth a test case


 
People wouldn't be speculating on property if the banks weren't giving them the money in the first place,they are funding the property pyramid, so i'd start with them. 

Flipping only works when prices are rising at recent levels,as the banks are even saying that capital appreciation will be over in 2007 is this not just another classic Fianna Fail spin job to perpetrate on the masses.If they wanted to do something about flipping they should have done it years ago,i remember when people were selling on "deposits" placed on houses and even places in the queue !.
It's easy to start ranting and raving about an issue that will very soon be no longer an issue,classic stuff from the spin factory,fair play to ye.


----------



## liteweight (25 Aug 2006)

I'm not at all sure how many people out there can be called 'flippers'. I suspect this is another red herring...Gov. always brings up something in a run up to the election in order to take our minds off the 'real' issues, like health!

I can't honestly see how the Banks are to blame. A flipper only needs 10% of the property price, plus solicitor's fees. Most apartments are sold off plans about 2 years before completion so the profits (especially in recent years) are good.

Whizzbang, I genuinely can't see how it would be worth it for someone to find an alternative route. The bonus for the 'flipper' is that they sell before they become liable for stamp duty and the apartment/house is returned to the market as 'new'. If a law was brought in which prevented builders selling in this way, the flipper would have to complete the sale and pay stamp duty. Their market is cut down i.e. they can no longer sell to first time buyers/STB owner occupiers, unless under the stamp duty threshold in the former, and in the latter, stamp duty would be liable.


----------



## whizzbang (25 Aug 2006)

liteweight said:


> Whizzbang, I genuinely can't see how it would be worth it for someone to find an alternative route. The bonus for the 'flipper' is that they sell before they become liable for stamp duty and the apartment/house is returned to the market as 'new'. If a law was brought in which prevented builders selling in this way, the flipper would have to complete the sale and pay stamp duty. Their market is cut down i.e. they can no longer sell to first time buyers/STB owner occupiers, unless under the stamp duty threshold in the former, and in the latter, stamp duty would be liable.




very possible, I'm not really an expert in the ins and outs of this!


----------

