Budget 2017 - First Time Buyers Income Tax Refund

From the article: Looks like it’s for NEW ‘homes’ only (so, yeah, a ‘home’ could be an apartment, they do use the term loosely)

"First-time homebuyers are to be given a refund on income tax to help them accumulate a mortgage deposit under proposals expected to be included in next month’s Budget.
It is understood the level of the refund, which sources expect to range between €5,000 and €15,000, will be linked to the price of the home rather than the earnings of buyers.

Encourage developers
The scheme is aimed primarily at newly-built properties priced between €220,000 and €320,000.

The scheme will be designed to ensure couples and single people are treated equally.
The grant will be awarded as a “bullet refund”, a lump sum discharged in one go, to help buyers meet the Central Bank requirements in relation to mortgage deposits.
Earlier this week, Mr Coveney indicated couples and individuals seeking to buy new homes will be treated equally.
However, final figures will not be arrived at until Mr Noonan’s overall tax package is agreed in advance of the October 11th Budget."

This will ensure the gap between those who can and those who cant will grow wider. It’s a bailout for developers paid with your tax. FG are FF nua. Short-term / self serving country wreckers!

So this is openly, and blatantly trying to fudge the CBI rules (paid for by the taxpayer of course)

CBI should announce that this element doesn’t count towards deposit requirements

To think, in 2011 I advocated a vote for FG as we needed to erase FF from memory once and for all. FG = FF end of

How can this apply to new homes only, didn’t home choice fall over on the same basis?

That makes no sense.

The point of the CB regs is to constrain leverage of the banks’ loan books. It’s not a savings test.

This is a simple tax break/fiscal stimulus aimed at an overheated market. Like pouring petrol on a fire.

Is there Devil in the detail:
Are these new homes or homes which were never sold to an owner occupier?
Could it be that most of the NAMA stock sold to international vultures rented at present who never sold it on will be eligible?

If so though then small time property magnates like Luan would or should be incandescent with rage(more so than all the rest of us) as their properties are no longer competing on a level playing field.

This is being reported by pol corrs who are slapdash and innumerate, so it’s hard to know if the details are right.

But if they are, it is not the worst kind of subsidy you could have.

  1. The CBI rules mean that buyers won’t be able to use it to look like they’ve saved more. Buyers won’t be stretched and it doesn’t make balance sheets worse.
  2. So the subsidy will go direct to the developer
  3. At the margin, this may make SOME development more viable. The impact will be pretty small and there will be plenty deadweight
  4. Impact on 2nd-hand market will be negligible though

This was the model for most of the 70s by the way. First-time buyer couples wrote into the Department of Environment who gave them a grant. Construction - mainly monoculture semi-Ds of course - was far higher than it was today.

Of course there are FAR better ways of encouraging building but that would require an overhaul of the planning system (no Part V). It would also mean local authorities pro-actively CPO-ing land, putting the services in place and then auctioning the sites to developers. All of this is extremely unlikely of course.

Small time “property magnates” have gotten over the fact that the market in which we operate is is not a level playing field.

Regardless the reason this scheme is limited to new builds is to allow the government offset the cost of grant against an associated VAT receipt. Least we forget circa 20% of the price of a new build goes to the government.

At a personal level, I view as no different to any of the other social housing schemes dreamed up by the lads in government buildings to help those on lower incomes to buy a house.

If the vultures are able to exploit this on the stuff they bought below market rate then no units of new property will be built until they clear their backlog at below the cost of construction of the new units.
It might be a conspiracy theory but they certainly used special vehicles to purchase these properties and the status of these properties which they bought isn’t the same as a conventional property sold to the great unwashed or small time property magnate.
It’d be nice to have some proof that the vultures wouldn’t find some way to exploit it.

What makes you think (other than your paranoia) that the properties brought by the Reits and other funds are classified as anything other than second hand properties?

Because they were able to demand and given anything they demanded up until now.
I remember it being mentioned here and elsewhere that a lot of the property being rented at the high end of market rate in big Dublin apartment blocks were never sold.

You can feign offence but it has been shown time and time again that “the system” in Ireland exists purely so that it can be gamed and that isn’t paranoia.

No one in power is listening Ronan, pointless shouting about it at this stage

Why first-time buyers need no Budget help - says economist
independent.ie/business/budg … 98113.html

To be fair, it seems like this is more or less equivalent to a VAT reduction (albeit targeted specifically at first time buyers, rather than across the market).

Still agree that it would make more sense to target actual costs, rather than mess around with another messy and expensive-to-administer scheme, but I don’t think this as far away from the “correct” policy as has been made out.

(For clarity: still don’t think it’s a “good” idea)

It’s only the equivalent of a VAT reduction for the developer. Sale price of unit goes up to factor in increased buying power of FTBer. Developer makes more margin.

FTBer sees zero benefit as their mortgage amount is likely to be the same as before (based on LTI), but with a slightly better LTV amount.
But now that more of the FTBers will meet the LTV ratio limits, there will be more of them competing above a certain threshold.

Everyone’s a loser… apart from the developer.
Ah, Ireland - is there anything you can’t f#ck up?

Yesterday RTE was continuing the campaign for a FTB grant with an interview with some poor girl who was trying desperately to buy a house in Celbridge for 300k+. It really shed a bit of light on the main problem; the unrealistic expectations that people have about what a ‘starter’ home should be.

It was heartbreaking to be be out-bid in Celbridge. She said she could get a house in Kilcock, but it wasn’t a runner because it would be a bit smaller and “when sitting on the toilet of one of the ensuites your feet would touch the side of the shower”.

People need to read up on how other countries addressed their own housing crises over the years. A good start would be to read up on the ‘Minimal Traditional’ housing of the US after the Great Depression and WW2, and the FHA loan insurance system.

The one thing that would make a real difference would be teh introduction of a SITE VALUE TAX. Some of us have been banging on about it for years, but I get the sense that it is finally starting to enter the political discourse, or at least it’s about to.

Was that the same girl who welcomed the FTB grant but felt the best thing the Govt could do would be to put a cap on the price of houses!

That’s the very one! I wasn’t sure how that was going to work. I think she wanted the asking price to be an actual sales price (like in a shop?).

Yet another reason why I stopped watching or listening to most RTE news or current affairs programs about 10 years ago. It’s just nonsense, often with an agenda, often just sheer stupidity, always misleading.

Balance is not having two talking heads of opposing views where one head’s view is based on undeniable fact and the other head’s view is based on “the feels”.

Or two heads representing balance where 95% of fact is behind one head, and 5% behind the other. John Oliver memorably tackled this on climate change on The Daily Show i think it was?

Or a lady wants changes to a marketplace because the current state of it doesn’t fit with what she “feels” she should be able to buy. Now I have no love for the high cost, low quality, constricted supply Irish housing market - but I’ve zero tolerance for a lady who wants the market further distorted just enough so that she can get what she feels entitled to, and has no interest in trying to actually solve the fundamental underlying problems.

Or, as I sometimes hear: having two talking heads, neither based on facts/logic, and both based on conflicting “feels”/prejudices/assumptions.

Last Week Tonight actually: youtube.com/watch?v=cjuGCJJUGsg
(one of my favourites)