NI: Just where do the first-time home buyers go from here?

The Nordies have reached the cap for spending on affordable housing. Unsurprisingly the media want the cap lifted, because how else will anyone ever be able to get on the ladder…


Re the announcement by Minister Ritchie:

I imagine that the ulterior motive for removing the original cap of property value was that it might be seen as a brake on further housing bubble price rises.

You say the “quickest, and simplest, solution is to put more funding into the Co-Ownership Association”.

That is one solution.

Another solution is to hand over (through legislation) all the tax benefits and deductions claimed by landlords to home-owners and potential home-buyers. A straight swap.

If the government was willing that could happen almost overnight, or at the most within the week. If they like, I could help draft the legislation.

The simple argument is home-buyers and investors are competing in a common market for a product called residential dwellings. Investors can lay no claim to any advantage over home-buyers/owners as there is something called horizontal equity at play in the world of tax legislation.

Horizontal equity means investors and home-owners/buyers should be treated equally in terms of tax breaks. However, up until now investors have had such a good run in terms of tax deductions that it is now the turn of home-owners/buyers to dodge taxes - a kind of catch up play.

What do you think?


Just to be clear, the bulk of my post above is a cut and paste from the BT article, not my words

I agree that the cap would be seen as a hindrance to those who would wish to propagate the bubble.

The whole ridiculousness of the article can be summed up in this statement

Does the author believe that the housing market exists in glorious isolation from the rest of the economy in NI, that prices will continue to rise way beyond the means of the ordinary people on ‘modest incomes’. The only way that this could happen is if there is some distortion in the market, such as the use of tax revenue to prop up prices, which is what he is advocating.

Over long periods of time the cost of housing should be closely correlated with average income, any deviation from this relationship will get removed by market forces as long as there is no intervention to distort the market.

As far as taxes are concerned, I’m no expert on the situation in the North but in my opinion they should be the same no matter whether it is a first time buyer, second time buyer, investor, flipper, whatever. The investors may have had a good run till now, but I don’t see that as a reason to tip the balance in favour of home-dwellers. It’s just more interference that will need to be undone by even more interference.

Agreed verbatim

I was exaggerating for effect. You are right there need be no interference in favor of home-buyers or investors. But current interference in favor of investors appears to me to be the key reason for the housing bubble at the moment.

Get rid of investor advantage and prices will stabilise.