# Son starting college, should we rent or buy?



## Allpartied (7 Apr 2022)

Can I ask how this scenario worked out for the poster.   And put my own situation up for discussion.

I find myself in a similar position.  I have four daughters, all close in age.  Three will be in Dublin, from September 2022 and when one finishes in May 2023, another one will be starting.  So, assuming the youngest goes to Dublin too, it looks like it would be a no brainer for me to buy a small property.
Renting for the next three years, for three children.  Then renting two years for two and one year for one.  So five years of renting in Dublin.
The cheapest rental, onsite accomodation, is 7k per year, so that is 21k per year, for three years.   The cheapest rental apartments in North Dublin are 2k per month, with most demanding a 12 month contract.
I could buy a nice 1 bed apartment, with big sitting room, for 190k.  This would, easily, accomodate three sisters.

 With a 60k deposit that would leave 130k mortgage.

A couple of problems.

I am 56.
My salary is 80k, gross.  There is capacity for contract work, if needed, which can get another 10-15k.
I have a small mortgage ( 50k) left on my PPR, paying 410 per month.
It will only work if I can get an interest only mortgage.
By putting a 60k deposit down, I would deplete my savings.  I would have about 25k left.

  Are interest only mortgages available for this type of scenario, or would I have to classify the mortgage as Buy to Let?


As far as I can see, if I am paying interest only on 130k, that would be about 6k per year, as opposed to 21-25k per year.
Over three years, that is a saving of, at least, 15k per year.   45k over the three years and 8k for the fourth year and 1k for the final year.

So, buy the property, use if for five years and then sell.   If I get back what I paid, I'm still quids in.
I retain my 60k deposit, which I would have spent on rent over the years. 

The only risk is a catastrophic property collapse ( 30% or more) .



Am I right, or have I missed something?


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## Roro999 (7 Apr 2022)

Cannot answer on the financials but this could prove a popular move with the way rents are going. Certainly having so many of your children in one university location is a big incentive.


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## Cavanbhoy (8 Apr 2022)

Allpartied said:


> Can I ask how this scenario worked out for the poster.   And put my own situation up for discussion.
> 
> I find myself in a similar position.  I have four daughters, all close in age.  Three will be in Dublin, from September 2022 and when one finishes in May 2023, another one will be starting.  So, assuming the youngest goes to Dublin too, it looks like it would be a no brainer for me to buy a small property.
> Renting for the next three years, for three children.  Then renting two years for two and one year for one.  So five years of renting in Dublin.
> ...


Another option to consider if you have 3 children going to college at the same time that if your income is under 60k you dont have to pay the student contributions, if its under 55k they will each get 1.6k of a grant as well. 
You could put 1/3 of pay into pension to reduce income and if paying 40% rate of tax it will cost 15k but you will save close to that on fees plus grant.
While increasing pension pot by 27k yearly.


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## _OkGo_ (8 Apr 2022)

Allpartied said:


> Are interest only mortgages available for this type of scenario, or would I have to classify the mortgage as Buy to Let?


Any mortgage that is not your PPR will be at BTL rates and yes there are options to get it as interest only particularly from the non bank lenders



Allpartied said:


> The cheapest rental, onsite accomodation, is 7k per year, so that is 21k per year, for three years.





Allpartied said:


> I could buy a nice 1 bed apartment, with big sitting room, for 190k. This would, easily, accomodate three sisters.


But more importantly, you are comparing apples and oranges to justify the savings. 3 sisters sharing a one bed apartment is miles apart from on campus accommodation. 

On campus accommodation is probably a single room each sharing with friends or other students. It'll give them some independence

3 sisters living in a one bed apartment sounds awful. No privacy, no space, no independence. You need to be realistic about what university is, its not just about a degree. They will meet friends, boyfriends/girlfriends along the way and they need to be allowed behave like an adult

If you still plan on going the route of buying an apartment, it should be a 2 bed minimum.

It would be a much better idea to sit your daughters down and explain to them that they need to work part time to cover the cost of accommodation. When you paint the picture of the 3 of them sharing a one bed, I think they will be straight out job hunting...


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## Roro999 (8 Apr 2022)

Cavanbhoy said:


> Another option to consider if you have 3 children going to college at the same time that if your income is under 60k you dont have to pay the student contributions, if its under 55k they will each get 1.6k of a grant as well.
> You could put 1/3 of pay into pension to reduce income and if paying 40% rate of tax it will cost 15k but you will save close to that on fees plus grant.
> While increasing pension pot by 27k yearly.


Does your under 60k income for 3 children re no student contribution apply in the case of 1 child too ?


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## Allpartied (8 Apr 2022)

_OkGo_ said:


> Any mortgage that is not your PPR will be at BTL rates and yes there are options to get it as interest only particularly from the non bank lenders
> 
> 
> 
> ...


Thanks for your reply.   It is just an idea, at the moment, but I will have to move in the next few weeks, if it is viable. 

To be fair, they are all working and earning during the summer/weekends.  They pay for everything themselves, clothes, food, nightlife, travel and books.  But minimum wage, part time jobs, do not pay 2k a month Dublin rentals. 
Campus accommodation is, actually, very difficult to access.  Most likely you will get it for one year, if you're lucky. 

I know it is a difficult compromise to share a small apartment,  and, yes I do know about boyfriends, but the alternative is giving all of our lifetime savings to a smiling landlord. 

Many students in Dublin are crammed into into 3 bed houses, with 2 or 3 to a bedroom and someone in the living room.  
For people on averarage, or just above average wages, the cost of renting in Dublin, for a few years, is astronomical.  Every budgeting tool is used. 
The idyllic student life, strolling from rooms to campus to union bar, is long gone.   Another of the great progressive advances of neoliberalism.


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## Steven Barrett (8 Apr 2022)

Allpartied said:


> Can I ask how this scenario worked out for the poster.   And put my own situation up for discussion.
> 
> I find myself in a similar position.  I have four daughters, all close in age.  Three will be in Dublin, from September 2022 and when one finishes in May 2023, another one will be starting.  So, assuming the youngest goes to Dublin too, it looks like it would be a no brainer for me to buy a small property.
> Renting for the next three years, for three children.  Then renting two years for two and one year for one.  So five years of renting in Dublin.
> ...


You are taking on €130,000 of debt to fund this idea. That is the risk.


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## Allpartied (8 Apr 2022)

Steven Barrett said:


> You are taking on €130,000 of debt to fund this idea. That is the risk.



Agreed, but the asset remains.  I mean its not going to zero and with a 30% deposit, there is a reasonable cushion, for property crash. 
Even if the property crashes and I can only sell it for 130k, in five years, time, I'm no worse off.   
There is always  possibility of a deflationary depression, but it looks a long way off.   In fact, inflation looks the bigger threat, at the moment.  
Either way, I'm taking a risk.   I could save my 60k, or give it to a landlord,  or lose the 60k it in a property crash, or lose even more in a property crash.


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## Allpartied (8 Apr 2022)

_OkGo_ said:


> Any mortgage that is not your PPR will be at BTL rates and yes there are options to get it as interest only particularly from the non bank lenders


Bank of Ireland seem to be unable to provide interest only options.  When you say " non bank lenders" , is that building societies, or other institutions?


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## _OkGo_ (8 Apr 2022)

The likes of ICS and finance Ireland. I'm pretty sure ICS will do interest only.

Not that I am recommending it but if it is the route you want to go, then you should probably talk to a broker that deals with all (or most) mortgage providers. 



Allpartied said:


> To be fair, they are all working and earning during the summer/weekends. They pay for everything themselves, clothes, food, nightlife, travel and books. But minimum wage, part time jobs, do not pay 2k a month Dublin rentals.
> Campus accommodation is, actually, very difficult to access. Most likely you will get it for one year, if you're lucky.


That is the unfortunate reality for students today and you as a parent trying to fund the difference.



Cavanbhoy said:


> Another option to consider if you have 3 children going to college at the same time that if your income is under 60k you dont have to pay the student contributions, if its under 55k they will each get 1.6k of a grant as well.


I would second this as well. Make sure you are eligible for every grant and support possible. Speaking to school guidance counselors or paying for advice from someone like an experienced accountant familiar with the grant process could save you thousands


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## T McGibney (8 Apr 2022)

Cavanbhoy said:


> Another option to consider if you have 3 children going to college at the same time that if your income is under 60k you dont have to pay the student contributions, if its under 55k they will each get 1.6k of a grant as well.
> You could put 1/3 of pay into pension to reduce income and if paying 40% rate of tax it will cost 15k but you will save close to that on fees plus grant.
> While increasing pension pot by 27k yearly.


It's not possible to reduce one's reckonable income for SUSI grant purposes by paying into a pension.


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## T McGibney (8 Apr 2022)

_OkGo_ said:


> I would second this as well. Make sure you are eligible for every grant and support possible. Speaking to school guidance counselors or paying for advice from someone like an experienced accountant familiar with the grant process could save you thousands


As an accountant myself, I would seriously question the wisdom in almost all cases of significantly cutting ones income (in this case by €20-25K) to avail of a grant package worth a fraction of that sum.


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## Brendan Burgess (8 Apr 2022)

Allpartied said:


> The idyllic student life, strolling from rooms to campus to union bar, is long gone. Another of the great progressive advances of neoliberalism.



That is very funny.


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## _OkGo_ (8 Apr 2022)

T McGibney said:


> As an accountant myself, I would seriously question the wisdom in almost all cases of significantly cutting ones income (in this case by €20-25K) to avail of a grant package worth a fraction of that sum


Agreed, I missed the OP's salary of €80k, I thought it was €60k from what I quoted. My point was more around the fact that if you are on the border of eligibility, you should be falling on the right side of it with some guidance.


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## T McGibney (8 Apr 2022)

_OkGo_ said:


> Agreed, I missed the OP's salary of €80k, I thought it was €60k from what I quoted. My point was more around the fact that if you are on the border of eligibility, you should be falling on the right side of it with some guidance.


Fair enough and that goes without saying but I would still be wary to tell someone 10-15 years off retirement to forego a promotion for example to keep themselves eligible for a student grant or any other similar short-term benefit.


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## Chelseablue (8 Apr 2022)

The SUSI grant system does not favour a PAYE worker (eg. 2 parents on say €30,000 would be over the limit of the SUSI grant which is I think €54,000 max) not to mention the part-time work a student might do which is also taking into account.

I remember been at a school meeting some years ago about SUSI grants, I was walking out with a very wealthy tradesman who said “I must have a chat with my accountant to see what I can hide”

Unfortunately PAYE workers can’t hide there income


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## Cavanbhoy (8 Apr 2022)

T McGibney said:


> It's not possible to reduce one's reckonable income for SUSI grant purposes by paying into a pension.


You are mistaken it is


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## Cavanbhoy (8 Apr 2022)

Roro999 said:


> Does your under 60k income for 3 children re no student contribution apply in the case of 1 child too ?


No for 1 child its 50k for student contribution or 55k for half


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## Cavanbhoy (8 Apr 2022)

T McGibney said:


> Fair enough and that goes without saying but I would still be wary to tell someone 10-15 years off retirement to forego a promotion for example to keep themselves eligible for a student grant or any other similar short-term benefit.


I was just working of op figures and not suggesting he forgoes anything.
Gross salary of 80k if he contributes his full allowance to his pension it will safe him 10k in taxes. Plus he will save 14k on college expenses. Total of 24k.
So to make a 27k pension contribution in this scenario would cost him a total of 3k net.
It would be hard to beat that roi anywhere


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## Roro999 (8 Apr 2022)

Cavanbhoy said:


> No for 1 child its 50k for student contribution or 55k for half


Can you direct me to rules. Our joint income falls below 55k if we exclude invalidity pension.


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## Cavanbhoy (8 Apr 2022)

Roro999 said:


> Can you direct me to rules. Our joint income falls below 55k if we exclude invalidity pension.


Google student grants and click on citizen's advice.
Unfortunately invalidity pension is not excluded we are in the same boat.
It gives a list of income disregards carers allowance etc.there isnt that many unfortunately.


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## Chelseablue (8 Apr 2022)

Cavanbhoy said:


> I was just working of op figures and not suggesting he forgoes anything.
> Gross salary of 80k if he contributes his full allowance to his pension it will safe him 10k in taxes. Plus he will save 14k on college expenses. Total of 24k.
> So to make a 27k pension contribution in this scenario would cost him a total of 3k net.
> It would be hard to beat that roi anywhere


Gross income​Gross income includes income before any deductions made for PAYE, income tax and other taxes, PRSI, income levies, etc. and also includes income that is described as “tax-free”, “tax-paid”, “not liable to tax” or “exempt from tax.

If you are unsure whether any income should be included in your application you should provide details of this income in the application form.

SUSI may receive data from the Revenue Commissioners and the Department of Social Protection to assist in the evaluation and processing of your grant application. After the provisional assessment of your application you may be asked to send SUSI documentary evidence of your declared income.


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## T McGibney (11 Apr 2022)

Chelseablue said:


> I remember been at a school meeting some years ago about SUSI grants, I was walking out with a very wealthy tradesman who said “I must have a chat with my accountant to see what I can hide”


LOL File under "things that never happened".


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## T McGibney (11 Apr 2022)

Cavanbhoy said:


> You are mistaken it is


I stand corrected. Thanks for pointing that out. Great to know.


There are also some further deductions that can be made, as follows:​(a) in respect of income from employment, employment-related expenses as approved by the Revenue Commissioners that appear on your Statement of Liability, (formerly P21);

(b) income from employment which represents holiday earnings outside of term time, maximum €4,500;

(c) maintenance payments made under a legally enforceable arrangement to a separated spouse, as approved by the Revenue Commissioners that appear on your Statement of Liability, (formerly P21);

(d) contributions to pension schemes and pension or retirement products, paid in the reference period only, within the limits allowed by the Revenue Commissioners that appear on your Statement of Liability, (formerly P21) and

(e) overtime payments earned in the reference period (2020) that are not recurring payments.

We may be able to confirm the amounts of these payments directly with Revenue on your behalf, however we will request documentary evidence from you where necessary, such as payslips or a letter from your employer.


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## Chelseablue (11 Apr 2022)

T McGibney said:


> LOL File under "things that never happened".


Things that do happen!!!!, his kid received a SUSI grant


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## T McGibney (11 Apr 2022)

Chelseablue said:


> Things that do happen!!!!, his kid received a SUSI grant


If he really was very wealthy, he must have become so by inheriting it  because anyone who'd say something like that, and mean it, wouldn't be the sharpest tool in the drawer.

There are more pub stories and urban myths out there about rich people getting SUSI grants than almost anything else. The reality is somewhat different. A good few years ago, I did some quick sums and worked out that a kid with both parents working for 40 hours a week each, at 10% more than the minimum wage at the time, would only get a partial grant, and I concluded on that basis that it would be more honest for the State to end the pretence and hand over the whole SUSI shebang to the Dept of Social Welfare.


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## Allpartied (27 Apr 2022)

T McGibney said:


> If he really was very wealthy, he must have become so by inheriting it  because anyone who'd say something like that, and mean it, wouldn't be the sharpest tool in the drawer.
> 
> There are more pub stories and urban myths out there about rich people getting SUSI grants than almost anything else. The reality is somewhat different. A good few years ago, I did some quick sums and worked out that a kid with both parents working for 40 hours a week each, at 10% more than the minimum wage at the time, would only get a partial grant, and I concluded on that basis that it would be more honest for the State to end the pretence and hand over the whole SUSI shebang to the Dept of Social Welfare.



It would be more honest, but it would also be more honest to assess the student as an adult. 
In other words, base the grant on their own income and assets, rather than parents who may still be struggling with celtic tiger mortgages ( that cohort will now be seeing their children entering college education). 

I've had an interesting time delving into the Dublin property market , for rentals and purchase, over the last couple of weeks.  
The dysfunctionality is mind boggling.   Huge numbers of desperate people, lined up outside poorly built, badly maintained, cramped blocks of flats, in the early morning rain.  All, literally, begging to be allowed to give half their salary to some absentee landlord.  
I was looking at one apartment for sale and was met with a huge queue stretching down the road.  
The Estate Agent lead me away and told me the queue was for a rental in the same block.  The rent for a 50 square metre 2 bedder was around 2.3k per month.  He said that these people were the lucky ones, the ones who had been deemed worthy of viewing the flat.  He gets hundreds of emails for every rental and ignores most of them, picking a few, at random, for the viewings.  
So, why don't these people buy, instead of rent, I said.  I mean, they looked like people young enough to get 35 year mortgages, which would be about 850 a month for a 250k mortgage.   Of course, the reason was simple.  They have no capital, and no way of getting capital.  They were most likely, low paid, but essential workers.  The Health Care Assistants, the cleaners, the shop workers, the factory production line staff, the security guards, the warehouse operatives and they, probably, earned below average wages, 30k or less.  Now, they would be gouged for rents they couldn't possibly afford.   So HAP would come in to make up the difference.  So , not only  are wealthy landlords grabbing large portions of low paid workers wages, they are getting a big sloppy handout from the taxpayer.


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## T McGibney (27 Apr 2022)

Allpartied said:


> It would be more honest, but it would also be more honest to assess the student as an adult.
> In other words, base the grant on their own income and assets, rather than parents who may still be struggling with celtic tiger mortgages ( that cohort will now be seeing their children entering college education).
> 
> I've had an interesting time delving into the Dublin property market , for rentals and purchase, over the last couple of weeks.
> ...


I agree with pretty much all of this except your last sentence. It was politicians and civil servants, not landlords, who in 2009 decided to turn our housing surplus into a shortage and who in the intervening 13 years have repeatedly doubled down on this blunder to the point that what started as a localised shortage has deteriorated into a full-blown nationwide disaster. Blaming landlords for this is like blaming filling stations for your rocketing diesel bills.

As for your comment about absentee landlords, isn't it a good thing that tenants don't have to share their homes with their landlords?


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## Allpartied (27 Apr 2022)

T McGibney said:


> I agree with pretty much all of this except your last sentence. It was politicians and civil servants, not landlords, who in 2009 decided to turn our housing surplus into a shortage and who in the intervening 13 years have repeatedly doubled down on this blunder to the point that what started as a localised shortage has deteriorated into a full-blown nationwide disaster. Blaming landlords for this is like blaming filling stations for your rocketing diesel bills.
> 
> As for your comment about absentee landlords, isn't it a good thing that tenants don't have to share their homes with their landlords?


It is, of course, the government's fault.   Landlords are simply using the housing market to profiteer, that's the whole point of landlordism.  Their motivation is profit, making money.    The government makes housing policy and they have plumped for the private, market solution.
The govt is ideologically tied to the market solution.  Its obvious failure will not budge them.   At this stage, the only housing policy that makes sense is the People Before Profit option of wholesale seizure of empty buildings and build for rent apartment blocks.  Proper management, proper rents, security of tenure for Irish citizens and emergency accommodation for the tens of thousands of refugees.


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## T McGibney (27 Apr 2022)

Allpartied said:


> At this stage, the only housing policy that makes sense is the People Before Profit option of wholesale seizure of empty buildings and build for rent apartment blocks.  Proper management, proper rents, security of tenure for Irish citizens and emergency accommodation for the tens of thousands of refugees.


Bless your innocence.

People Before Profit are directly to blame for this entire mess. They were at the front of the hard left chorus in 2009, along with the Socialist Party and Sinn Féin, that demanded the imposition of punitive tax and other measures to screw landlords and effectively shut down new residential property investment and housebuilding, even though our population was rising and it was inevitable that this would cause a housing shortage. They have never even once called for this insane policy move to be renounced and reversed.

Your claim that the government "is ideologically tied to the market solution" has no basis in reality as long as it micro-manages the housing and property development market while simultaneously remaining as its biggest landlord, tenant and land hoarder.


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## AlbacoreA (27 Apr 2022)

If they keep increasing demand out of all proportion to the available resources, you'd need Harry Potter to fix it.


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## Allpartied (27 Apr 2022)

T McGibney said:


> Bless your innocence.
> 
> People Before Profit are directly to blame for this entire mess. They were at the front of the hard left chorus in 2009, along with the Socialist Party and Sinn Féin, that demanding the imposition of punitive tax and other measures to screw landlords and effectively shut down new residential property investment and housebuilding.
> 
> Your claim that the government "is ideologically tied to the market solution" has no basis in reality as long as it micro-manages the housing and property development market while simultaneously remaining as its biggest landlord, tenant and land hoarder.


Proper housing policy involves large scale, publicly funded, council housing.   It was the norm in the 80's and 70's.  It was largley abandoned at that stage and private profit became the main motivation of all housing policy.  
I grew up in a council house, secure lifelong tenancy, low rent, properly maintained, located close to all amenities,  in a large city.  We moved into the house in 1977.  My parents, both low paid working people,  had the choice of three properties to pick.  All three bedroomed houses, with front and back gardens.   My mother still lives in the house.  
That was nearly 50 years ago.   Things are supposed to improve, but they have gone backwards to the rackrent  days of the dismal past.  

And blaming opposition parties for government failure, certainly has no basis in reality.


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## T McGibney (27 Apr 2022)

Allpartied said:


> Proper housing policy involves large scale, publicly funded, council housing.   It was the norm in the 80's and 70's.  It was largley abandoned at that stage and private profit became the main motivation of all housing policy.
> I grew up in a council house, secure lifelong tenancy, low rent, properly maintained, located close to all amenities,  in a large city.  We moved into the house in 1977.  My parents, both low paid working people,  had the choice of three properties to pick.  All three bedroomed houses, with front and back gardens.   My mother still lives in the house.
> That was nearly 50 years ago.   Things are supposed to improve, but they have gone backwards to the rackrent  days of the dismal past.


There is a very good reason for this. Your council house in 1977 was built very cheaply, on the back of what would now be termed almost slave wages and to minimal standards in terms of insulation and other modern conveniences. A stark contrast to today's council houses which cost upwards of €250k plus site cost. Public housing is now a massive money pit for developed economy governments and its economics are now an impossible problem for governments to square.



Allpartied said:


> And blaming opposition parties for government failure, certainly has no basis in reality.


No, I blame all the political parties for this failure, but reserve special contempt for those who complain about it while denying their role in creating it.


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## Allpartied (27 Apr 2022)

T McGibney said:


> There is a very good reason for this. Your council house in 1977 was built very cheaply.



Our house is still council owned, but most of the others were sold off in the 80's, to the tenants. 

They, currently, retail at about 750k and, with proper maintenance,  will last another 100 years.


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## T McGibney (27 Apr 2022)

Allpartied said:


> Our house is still council owned, but most of the others were sold off in the 80's, to the tenants.
> 
> They, currently, retail at about 750k and, with proper maintenance,  will last another 100 years.


That doesn't contradict my point that it's now impossible for the State to replicate what it did in the 1970s in building cheap homes for long-term rent.

Those houses only retail at 750k now because the government, backed by People Before Profit, have rigged the market by constructively banning new supply for over a decade. At the current rate of going the next generation living there will be millionaires.


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## AlbacoreA (27 Apr 2022)

All politicians regardless of Party have had a part to play in the housing crisis. Its being going on decades.

Wartime emergency housing is what's needed at this point.


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## galway_blow_in (18 May 2022)

impossible to time the property market , only thing there is in common with 2007 right now are prices


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## Roro999 (29 Jun 2022)

T McGibney said:


> I stand corrected. Thanks for pointing that out. Great to know.
> 
> 
> There are also some further deductions that can be made, as follows:​(a) in respect of income from employment, employment-related expenses as approved by the Revenue Commissioners that appear on your Statement of Liability, (formerly P21);
> ...


So under (d) if gross income is 60k and pension contributions/avc's on Statement of Liability are 15k in tax year 2021 SUSI take the means income as 45k.  Is that right ?


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