Should First Time Buyers buy before the Budget?

Brendan Burgess

Brendan Burgess

Founder
Messages
53,455
An interesting article by Fiona Reddan in today's Irish Times

What we know about the new first-time buyers package

I did not know that any scheme will be backdated.

"3) It will be backdated to July 19th. Announcing the scheme on July 19th, Mr Coveney said that any incentive will be backdated to this date, which should reassure FTBs who are hoping to buy before the budget. However, it is not yet clear what this date actually means – ie, does it apply to property buyers who go sale agreed after this date? Or does it apply to mortgage drawdowns? This could potentially exclude FTBs who bought a property in June, and drew it down in August."

That would argue strongly for a FTB who is thinking of buying to buy before the Budget. Any such scheme will probably push up house prices, all other things being equal.

If it's limited to newly built houses, as it should be, then it would have less of an impact on second hand houses.

Brendan
 
Thinking a bit more about this, if someone is buying now and are trying to decide between a new house and a second hand house, they should probably go for a new house. I would hope that any incentive would be restricted to new houses.

Brendan
 
Well, the old FTB scheme only applied to new-builds and that certainly pushed up the price of pre-existing homes to the extent that they were a close substitute for corresponding new-builds.

Who knows what daft scheme the Government will dream up? The (inappropriately named) "help to buy" scheme in the UK is thought by some commentators to have pushed up house prices there by over 8%.
 
Well my wife and i are hoping to become FTB soon but the area where we live, where i was born and would like to settle, has had no new builds in the past 10-15 years due to restrictions with the local sewage system. There are however plenty of second hand homes in the area and this scheme would really benefit us if it were to include them...
 
Just heard Minister Coveney on Prime Time.

The Budget will help first time buyers of new homes only. It won't help any buyers of second hand homes.

That's great. I was concerned that they would give the grant to people to buy second hand homes which would be pointless.

Brendan
 
What about houses that no one is living in and are vacant? Surely an incentive for FTB's to do these up would be good and would add to the housing stock?
 
noproblem said:
What about houses that no one is living in and are vacant? Surely an incentive for FTB's to do these up would be good and would add to the housing stock?[/QUOTE

Good point but I think the owners have them vacant for a reason and may not be willing to sell.
Click to expand...
 
Could make it awkward/expensive for people to hold on to them though, wouldn't take a lot of imagination so FG might find it easy enough to think of something?
 
Why would it be pointless giving incentives to second hand buyers. This should be also available for buy to let properties. We have a housing crisis where we have homeless people on the streets, living in hotels, crammed into bedsits because of shortages of property in the right areas.
Multiple Property owners get a terrible time about lording it up with 2/3 houses etc, well, where what kind of problems do think we would have today without these properties available to rent.
This is not about good Landlords/Bad Landlords, or the get rich quick merchants. This is about the availability of good quality property to rent.

Landlords provide a much needed necessity in today's times, and it should be recognized, its for that reason, I think there should be incentives.
 
Hi LS

Giving an incentive to the buyers of second hand properties would just push up the prices without increasing supply.

Restricting it to new properties will probably mean that more new properties will be built.

I agree that the incentive should be paid to any buyer of a new property, FTB, second time buyer or landlord.

Brendan
 
Cabinet apparently at odds over the scope of the new FTB grant:-

[broken link removed]

This particularly bad idea now seems to be turning into a political fiasco. Quelle surprise?
 
Sarenco said:
Why not just pay the subsidy directly to the builder and be done with it?

It's going to end up in his pocket anyway.
Click to expand...

My first preference would be if they simply set the VAT rate on new homes to zero.

Then we wouldn't be arguing about subsidies to builders, grants to first time buyers etc.

Brendan
 
Sure.

Alternatively, the Government could just use the same money to reduce the tax burden more generally.

I really don't understand the Irish policy instinct to subsidise certain industry sectors (whether that's builders, newspaper proprietors or hoteliers).
 
Hi Sarenco

There is a housing crisis at the moment. A massive lack of housing for people to buy and rent.

Reducing the cost of building new houses is a priority. Removing VAT is the removing of a levy, not the granting of a subsidy.

Brendan
 
Sorry Brendan but I don't see how reducing the VAT rate on new builds is any less of a subsidy than a straight grant. You are still giving preferential treatment to a particular commercial activity.

A properly structured site value tax would be far more effective in delivering affordable housing supply.
 
Very interesting.

I see that the Independent Alliance agrees with the VAT refund scheme.

But the scheme seems to be aimed at helping people with the deposit.

So if I am buying a new build, I will be able to reclaim €15,000 tax which I paid in the last three years.

I can see the following being challenged:

“We are not doubling up for a couple versus an individual. That is not the way it will work.”

It couldn't be challenged if it were just a VAT refund.

Brendan
 
Brendan Burgess said:
“We are not doubling up for a couple versus an individual. That is not the way it will work.”
Click to expand...

Is he saying a jointly assessed couple will receive half the rebate of a single purchaser with the same income? That's hardly fair.

The rebate looks regressive to me - if a FTB had a higher income (and therefore paid more income tax) over the previous three years, s/he will presumably be eligible to receive a larger rebate.

FTBs will be able to leverage the rebate at a time when the Central Bank is already concerned that we are seeing a return to aggressive lending practices:-

http://www.irishexaminer.com/ireland/ireland-at-risk-of-another-banking-disaster-423715.html
 
You must log in or register to reply here.
Back
Top