Should there be a distinction between first time buyers and second time buyers?

Brendan Burgess

Brendan Burgess

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I am not sure about this.

It's hard for a first time buyer to get the 20% deposit together to get their foot on the housing ladder.

People trading up will find the 20% much easier to get.

Does this give the trader-upper an unfair advantage?

Brendan
 
Hi 44B

OK, maybe it's not an unfair advantage, but it's an advantage.

While it's a good idea from a prudential point of view, to restrict the amount of lending over 80% LTV, maybe they should make it 70% for trader uppers?

I am trying to figure out a way to allow first time buyers to get on the property ladder while making sure that the banks don't become at risk again.

Brendan
 
If somebody trades up, that involves releasing a property on to the market - possibly a 3-bed semi in Dublin 14 when they buy a 4-bed semi in Dublin 6. In general, a 3-bed semi in Dublin 14 is a more realistic target for a FTB.
 
In a more normal market people trading up free up suitable housing stock for first-time buyers. In the current market loads of people who would like to trade up are still in negative equity so will find it just as hard as first time buyers to come up with a 20% deposit. If prices stay steady or fall people can't escape negative equity except by paying down capital.
This could really create a log-jam where very few people can raise a 20% deposit - from either equity or savings.

In a normal market - people selling a house to trade up are at a disadvantage to first time buyers who don't have to tie a sale into a purchase. It's impossible to creat a completely level playing field.
 
Butter is right to mention negative equity. Surely those in negative equity will have an even harder time than first time buyers. I'm not sure that they should be completely written off and forgotten about. They haven't gone away you know.
 
Also is the market not completely skewed at the moment. Families with growing families trade up, but few people who bought in the last 12-15 years will have equity so that rules out the growing family market. Anyone who bought a 3 bed family home in Dublin 14, over 12 years ago is hardly going to up root their 12 year old kids so that the surprize peri-menopausal baby will get to grow up in a 4 bed in Dublin 6.
(Sorry its late and I'm tired).
 
phileasfogg said:
Surely those in negative equity will have an even harder time than first time buyers. I'm not sure that they should be completely written off and forgotten about.
Click to expand...

They are specifically catered for in the new proposals.

They will need to have 20% of the price of the new house they wish to buy.

But they will be able to transfer their negative equity to the new house.

See this thread: How will this apply to negative equity mortgages?
 
The concept of a "starter home" is very flawed. It was a marketing term to sell undesirable property to one cohort, namely the FTB. The sooner we stop pigeon-holing certain buyers in particular housing brackets, the better.
 
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