# Investors make it hard on FTB's: Why doesnt the Govt clamp down on them?



## foxylady (20 Apr 2005)

When are the government going to clamp down on investors if at all because they are really making life even harder for us first time buyers as if it wasnt already hard enough. I recently was to view a house and got a call back off the auctioneer to say it was sold to an investor who offered 10k over the asking without even looking at the place. Two days later i tried to look at another property that had just gone on the market and same thing had happened.Talk about frustrating


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## Fly (20 Apr 2005)

*Re: Investors*

I understand your frustration but I don't think the government will do anything about it - I'd say hang on in there though because the change in the market will mean that investors can get better returns elsewhere, and so the numbers of buy to lets should decrease substantially.  For people looking primarily for somewhere to live, it doesn't really matter if projected house price growth slows to 4%...but for investors, it means that easier money is to be had elsewhere - and without any tenant or upkeep hassles.


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## ClubMan (20 Apr 2005)

*Re: Investors*

What do you mean by "clamp down"?


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## foxylady (20 Apr 2005)

*Re: Investors*



			
				ClubMan said:
			
		

> What do you mean by "clamp down"?


 
tax them higher .


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## daveco23 (20 Apr 2005)

*Re: Investors*

tax them higher .
Why do that? I understand your frustration, but why punish people for showing some initiative and entrepreneurial get up and go? All that will do is discourage people who want to purchase an investment property as well as their PPR, and pave the way for companies who can absorb higher taxes but still profit when they sell it on.


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## Billy (20 Apr 2005)

*Re: Investors*



			
				Fly said:
			
		

> I understand your frustration but I don't think the government will do anything about it - I'd say hang on in there though because the change in the market will mean that investors can get better returns elsewhere, and so the numbers of buy to lets should decrease substantially. For people looking primarily for somewhere to live, it doesn't really matter if projected house price growth slows to 4%...but for investors, it means that easier money is to be had elsewhere - and without any tenant or upkeep hassles.


 



Fly; the implication for me in what you are saying is that ...hang on in there, because eventually prices will go up so high that the only people who will buy are the people that have to; i.e. first time buyers, its not a worthwile investment for anyone else......

 in other words the people who are taking all the risk of buying at the top of the market, just before interest rates start to rise later next year, are the people who can least afford to see house prices fall


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## ClubMan (20 Apr 2005)

*Re: Investors*



			
				foxylady said:
			
		

> tax them higher .



Aren't they already taxed higher than owner occupiers? Even if they can offset 100% of mortgage interest and other expenses against rental income, unlike some owner occupiers they are never exempt from stamp duty on the purchase and unlike all owner occupiers they are never exempt from _CGT _on the eventual disposal. Also, while (in my opinion) the _Government _should not unnecessarily interfere with or overregulate the property or any other market in such a way as to distort the market, they do still have some level of responsibility to ensure that there is an adequate supply of public and private rented accommodation available to those who do not decide to buy for whatever reason.

Just for the record I am not a property investor myself and have no vested interest in this area.


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## RainyDay (20 Apr 2005)

foxylady said:
			
		

> When are the government going to clamp down on investors if at all because they are really making life even harder for us first time buyers



The reason why is of course because if they did so, the builders who fill the FF tent at the Galway Races would stop lashing out the donations that keep the party going. Happy investors = happy builders - Not too many political donations coming in from First Time Buyers, I guess.

Of course, the Govt could simply even the playing field - and cap or restrict mortgage interest relief for investors in the same way that it is capped for residential buyers. This would stop the current obscenity whereby investors use interest-only loans to ensure that the Govt effectively subsidises the bank interest for them.


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## ClubMan (20 Apr 2005)

RainyDay said:
			
		

> The reason why is of course because if they did so, the builders who fill the FF tent at the Galway Races would stop lashing out the donations that keep the party going. Happy investors = happy builders - Not too many political donations coming in from First Time Buyers, I guess.
> 
> Of course, the Govt could simply even the playing field - and cap or restrict mortgage interest relief for investors in the same way that it is capped for residential buyers. This would stop the current obscenity whereby investors use interest-only loans to ensure that the Govt effectively subsidises the bank interest for them.



Might be no harm if you declare your vested interest in this context for people who might not be already aware of it?


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## RainyDay (20 Apr 2005)

ClubMan said:
			
		

> Might be no harm if you declare your vested interest in this context for people who might not be already aware of it?


I'm guessing that you're referring to my Labour party membership, but I'm not clear why this would be seen as a 'vested interest' in this (or any other socio-economic matter)?


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## ClubMan (21 Apr 2005)

Without meaning to sidetrack the substantive discussion, I think that this information is very relevant in the context of your earlier attacks on the _Government _in general and _FF _in particular. As a member of an opposition party presumably you have a vested interest in removing them from power?


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## Unregistered (21 Apr 2005)

Don't want to get stuck in the middle of another slanging match between the mods, but didn't the previous attempt to tax landlords at punitive levels after Bacon II just result in huge rent hikes, and landlords not declaring their rental income ?

Personally, although using tax as a way to punish investors may seem attractive, especially to the unreformed socialists in the Labour party and elsewhere, it is far too crude a tool to use.


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## ubiquitous (21 Apr 2005)

Unregistered said:
			
		

> but didn't the previous attempt to tax landlords at punitive levels after Bacon II just result in huge rent hikes, and landlords not declaring their rental income ?



Indeed. It also failed spectacularly in making houses/apts more affordable for FTBs.


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## Unregistered (21 Apr 2005)

Yup !! More classic economic policies from the Labour party !! Keep the Red flag flying boys !!


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## Unregistered (21 Apr 2005)

Ah sure !! Who'd ever forget the old nationalise the banks ruse !

Oh, how we laughed .....


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## RainyDay (21 Apr 2005)

ClubMan said:
			
		

> Without meaning to sidetrack the substantive discussion, I think that this information is very relevant in the context of your earlier attacks on the _Government _in general and _FF _in particular. As a member of an opposition party presumably you have a vested interest in removing them from power?


Actually no, I have no vested interest - no more than any other citizen. I'm not going to get a bonus payment, or a job as govt advisor or any other explicit benefit directed at me. Of course, I will share in the benefits (as will you and every other poster here) of having a Govt that aims to treat all citizens equally and ensure every citizen has a fair chance at building their own success. But I wouldn't consider that to be a vested interest - as it is not specific to me.

And those who were so quick to pooh-pooh my proposal without actually reading it might want to go back, re-read it and understand why it is different from the Bacon proposals from the early part of this decade. But hey, why let the facts stand in the way of a decent debate. It's a lot easier on the brain to just dismiss the ideas out of hand, ain't it.


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## ubiquitous (21 Apr 2005)

I presume this is what you mean?


			
				RainyDay said:
			
		

> Of course, the Govt could simply even the playing field - and cap or restrict mortgage interest relief for investors in the same way that it is capped for residential buyers.



If so can you please explain:
1. how exactly this proposal would operate 
2. what you see as the consequences of such a move for the tenants who depend on private rented accommodation for a roof over their heads - especially those who are not in a position, or who don't necessarily want, to buy their own homes in the foreseeable future.
3. how it can be implemented without repeating the mistakes of Bacon.

(Btw, in seeking to 'even the playing field' I presume you don't propose to remove the current Stamp Duty and CGT concessions that currently discriminate against investors?)


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## Unregistered (22 Apr 2005)

Would your "evening of the playing field" include reducing stamp duty rates for investors, and eliminating CGT on any gains made on the sale of the property, or is it the old socialist mantra of tax the hell out of the land owning classes ?


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## Fly (22 Apr 2005)

Hi Billy
I really meant that when the houses prices stop rising at 5% plus per year, houses are still attractive to people who want somewhere to live, but an investor has different priorities and will probably be looking elsewhere.
I know there's always some risk but if you need somewhere to live and want to know that your monthly outgoings are going to be steady over the next 20 years, then buying is still the way to go.  And even if house prices actually go down, as opposed to a slowing of the growth rate, it won't effect people living in them, unless they want to sell, in which case the house they aim to move to has probably also gone down in value.


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## 3GConsumer (22 Apr 2005)

foxylady said:
			
		

> When are the government going to clamp down on investors if at all because they are really making life even harder for us first time buyers as if it wasnt already hard enough. I recently was to view a house and got a call back off the auctioneer to say it was sold to an investor who offered 10k over the asking without even looking at the place. Two days later i tried to look at another property that had just gone on the market and same thing had happened.Talk about frustrating



hi foxylady ......... my heart bleeds...

FTB are exempt from
1. stamp duty up to 317,000
2. Can avail of rent a room scheme .... tax free up to 6.000( approx.)
3. Have TRS on the property ............

Oh how tragic oh maybe you want the gov .....to give you an interest free deposit on your house .
I was an FTB  when the stamp duty was exempt up to 190.000
and no I am not an investor I have decided against it for similar reasons as FLY said and the grief of being a landlord in an over saturated buy to let market.....


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## Unregistered (22 Apr 2005)

Labour have always had a bit of an ambivalent attitude towards the bin charge protesters: they've never quite come out and condemned the tax evading tactics outright.


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## ajapale (22 Apr 2005)

If people want to debate tax evasion, bin charges or indeed the Labour Party they are free to start another thread. In the meantime can we keep this debate to the point. 

Investors make it hard on FTB's and why doesnt the governement do something about it?

Thanks
ajapale


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## RainyDay (22 Apr 2005)

Why not cap the relief for investors at the same level as the cap for residential buyers? A fairly simple and not too drastic approach to even out the playing fields and help some FTB's to get a foot on the latter. Why not increase the threshold for the rent a room scheme in line with rental inflation each year - this should take it up €10k or €12k now - Allow an FTB to rent out 2 rooms without risking going over the threshold.

I've seen two 30-something family members 'emigrate' (one down the sticks, one down under) in one month as a result of their inability to buy a half-decent house in Dublin. We can't allow the current situation to continue.


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## Unregistered (26 Apr 2005)

*Re: Investors*



			
				daveco23 said:
			
		

> tax them higher .
> Why do that? I understand your frustration, but why punish people for showing some initiative and entrepreneurial get up and go?



I don't see it so much as a punishment but more as a protective disincentive. Anything that moves investors (particularly the amateur johnny-come-lately ones) away from the property market is probably for their own good given the way things are looking..

I mean seriously who is buying propery now in Dublin with a view to big profits in asset appreciation ??  Can't be the smart money, can it ?


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## Unregistered (27 Apr 2005)

Lots of not very bright people out there in Dubbellin though. 

Look at all the support that Labour and the Shinners get


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## KingofCork (29 Apr 2005)

The world doesn't begin and end in Dublin, ye know


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## Purple (29 Apr 2005)

While I don't have a problem in principle with rainydays proposal (even though I am a landlord) I really don't see how it would work in practice. A company is taxed on its profits. Interest payments on business loans are an expense and so are deducted from income when calculating tax liability. There would be all sorts of grey areas if you tried to bring in this law. For example would it apply to commercial properties? If it didn't apply what would be the situation where a shop with living accommodation was let out on a single lease? 
It strikes me that the only people who would by effected by this would be the small time investors as large companies with good accountants and lawyers would find a way around it. This might help first time buyers in the short term but those big players would fill the gap faster than the FTB's. It would also not sit very well with those holding socialist views of how the world should work.


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