Why the fascination with first time buyers?

First time buyer’s grant (thankfully gone)
Different stamp duty rules.
Different mortgage interest relief
Possibly new initiatives in the budget.

What’s the big deal with helping first time buyers.
Of course, I know, I know, first time buyers are the important ones, everyone else moving from one house to another has no effect on the number of empties. FTB’s are new entrants into the market.

Also in theory anyone who has owned a house should have equity putting them at an unfair advantage over FTB’s. The government just wants to level the playing field.

But both these arguments make less sense than you’d think.

People who have jointly bought a house in the past and now want to go their seperate ways (e.g. siblings, friends, seperating couples) all have the same effect on reducing empties as a first time buyer.

And the equity argument isn’t as clear cut as it used to be. Anyone who bought a house in 2006 as was forced to sell may actually have come away with negative equity in the form of an unsecured loan, large credit card bills etc.

A FTB with even a small deposit is in a much stronger position than someone like that.

So, instead of initiatives for FTB’s, why don’t we figure out what we really wan’t to achieve. E.g. if you want to take equity into account then instead of government loans for FTB’s wouldn’t it make more sense to give loans to people in negative equity?

If the goal is to fill empties, shouldn’t any incentives available to FTB’s be available to anyone who is buying a house to live in, but not selling an exiting house. E.g. a sibling buying while the other sibling remains in the existing home that they jointly owned.

I’m not saying I like these ideas, I think at the moment we probably don’t need any incentives at all, but the whole FTB mania has me confused.

-Rd

Think it’s nothing more complicated than the fact they are the developers’ core market now the investors are savaged. Lobbying, Fianna Fail, envelopes, pork etc.

I agree, people in negative equity are the ones that need the most help. Labour mobility is going to be a key factor to reducing localised effects of the recession, aside from the social consequences already alluded to with couples who have split up unable to divest themselves of a joint asset, but also unable to afford to keep it.

I think it is unlikely that the banks will give unsecured personal loans to the level required to buy out the negative equity, so I would suggest a government backed scheme secured on pension entitlements/private pensions. I would be very reluctant to allow private companies access to pensions as security, which is why I think this is an area that the government could step in.

Stamp duties have a stiffening effect on labour mobility. If someone is to sell the same house in Bray in order to move jobs to Swords he or she is penalised to the order of 25k Euro. This is a major disincentive to move unless one is trading up or down. I believe a lot of individuals end up either not taking the job opportunity or commuting which has a negative effect on traffic, energy consumption, etc.

The government are helping their mates. First time buyers buy new houses.

The reason there is fascination with FTBs is that they are no longer buying.

The government is trying to do everything it can to get them pack into the pyramid scheme

…I meant help improve FTB affordability by giving them loans.

I think it’s pretty universally agreed on here that large transaction costs are bad, and when you get into the realms of 25k that’s pretty much the average annual take home salary after tax and is nothing short of extortion. Having said that stamp duty will be much more manageable when house prices are.

I personally would support some sort of property tax instead of stamp duty, ideally one that’s targeted at unoccupied or underoccupied housing (unlet second homes, buildings being let go to rack and ruin by developers so they can be knocked and redeveloped, holiday homes, and grannies living alone in 5 bed gaffs), because ultimately that will lead to much more efficient utilisation of the housing stock.

I don’t think FTBs should get any particular help and I really don’t think those in negative equity should get anything, because it creates a moral hazard.

Exactly, if you’re building a Pyramid, you have to keep stuffing blocks in at the bottom. Those are FTBs.

There is also a kind of religious tenet amongst Politicos that Home-owners vote for the ‘establishment’ so FF thinks the more people they can get in houses the better off they are.

I’d say there is a lot of fear that the CC elections next year are going to see a massive hit to FF numbers in favour of SF, Lab etc. Right now FF wants the FTBs to come inside the tent & start pi$$ing out rather than be outside the tent when the General Election comes around, which at this rate will be a lot sooner than most people think with the budget coming up.

Do the wrinklies out there remember 3 GEs in 18 months of the 80s ?

Yes, it’s all about getting new entrants into the market, not about encouraging switchers.

Top up mortgages, Housing Agency Finance, Affordable housing. It’s a multi-pronged strategy to target Johnny and Mary still with Mammy. “No matter what your situation, it’s never been a better time to be a FTB, we’ve got a package that’s just right for you”.

New entrants are needed to fill the empties and get the property chains moving again.

It’s the opposite of what should happen, which is a series of targeted measures to accelerate the return to economically sensible prices.

But what government is going to tell its electorate: “We’re taking action to bring down the value of your house, and by the way, some banks will probably go bust as a result. But it’s all for the best.”? Never happen. The sheeple wouldn’t stand for it.

This is just going to drag out the pain, Japanese style. 1978-1987 all over again. Unless the FTBs have the smarts to see through this. Do they?

I have no issue with supporting FTBs. Changes to stamp duty particularly are attractive because prior to those changes, FTBs were effectively precluded from SH houses. This is no longer the case. That change, incidentally, probably precipitated the crash as it meant that the FTB stamp duty allowance had a value that was not worth wasting any more; you could use it on most other types of accommodation. Hence, I was less likely to buy a starter home and more likely to keep the allowance for something better. It’s a gamble as that allowance might go…but still.

For me the problem with FTBs and supporting them was the lack of joined up thinking on the planning front. The tiny apartments that are not fit for purpose anyway.

I’d stop trying to bash allowances to FTBs. We don’t appear to have a mature way of looking at accommodation here, and if you read this thread, you still get the impression that it would all be fine if we fixed prices and everyone could afford anything they wanted. We will always need investors providing rentals. This tends to get forgotten.

You could go a long way towards sorting out this mess - it will be painful - if you

  1. taxed holiday homes with a wealth tax
  2. had a sliding scale of property tax on investment properties to incentivise pro-landlords and get rid of smalltimers who think they’ll make a killing/their pension on it.
  3. flatrated stamp duty
  4. effectively regulated the banks which in my view was the huge failing of the last 5 or 6 years
  5. applied planning regulations such that all property was fit for purpose and made it illegal to sell properties under 55sq to owner occupiers, for example.

The issue is that both the investment and owner occupier markets are in trouble now not because of FTB allowances but because of the euro signs in people’s eyes.

FTB’s prop up the market since they provide the equity for the people trading further up the ladder, the bubble cant survive without finding new ways to give FTB’s more purchasing power.

The more people comment on this, the dafter it sounds. I can’t believe they are putting out feelers on such a crazy scam and its impossible to see how they can sell it as a subsidy to FTBs. Maybe I’ve been reading the pin too long but even on mainstream radio the property market is openly talked about as being in free fall. The people in trouble are the ones with property, not the ones without it so how can they sell it as a favour to FTBs? If journalists don’t hop on this like a pitbull on a poodle then this country is absolutely screwed. Even Irish society isn’t this thick.

Like any pyramid scheme the people at the top can;t get their money out unless more people at the nbottom keep buying in.

irishtimes.com/newspaper/opi … 55118.html

Alan Aherne today in the Irish Times. Apologies if its been posted already. Not on board with market intervention.

John Gormley is the new champion of the FTBs. He’s going to take our pension money from the NPRF, and lend it to FTBs so as they can buy property from Country Tom. He reallly knows what’s best for FTBs.

All the things people say above about FTBs are equally true of anyone who buys a house without vacating an existing one. If two brothers jointly buy a house they both lose their FTB status, but when the time comes for one of them to buy another house and move on, while one remains in the old house, then it is no different than an FTB buying his first house.

If there are incentives for FTBs, and it looks like those incentives could soon be increased, why aren’t the same incentives offered to anyone who’ll hoover up empties?

I actually think the facination with FTBs is damaging. Even if the incentives are relatively minor, the focus on FTB’s in the media and from politicians and lobbyists creates an impression that FTB status should be guarded carefully.

So, it’s one more thing making people reluctant to “buy the wrong property”. Why buy a 200K place now and use up your FTB status? It’s worth more if you rent until you can afford somewhere that you’ll love longer term.

Any increase in the value of FTB status, creates a greater incentive to wait and use it wisely. Abolishing all incentives to FTB’s would probably be more likely to get things moving.

-Rd