|Herberton - Herberton, Rialto, Dublin 8 €105,000 - New: A once in a lifetime chance to be part of one of Dublin City’s most dynamic and exciting new Home...The tree lined boulevards and landscaped village park offer plenty of strolling space for those looking for something less strenuous...The elevations of the buildings are a studied composition of brick, timber, terracotta and self-coloured render punctuated by glazing and external balconies while the extensive use of natural stone cladding adds to the overall quality of the development. Alluring? maybe! Life would be nice if there were no downsides.
Irish first time home buyers are set
to lose over €30k if they do not purchase a property before June when mortgage
interest relief for people buying their first home is to be abolished.
Currently mortgage interest relief is available to first time buyers (FTB) for
up to 7 years after a property is bought. Over a 7 year period a qualifying
first time buyer couple availing of the relief could save over €30k
The changes to mortgage interest relief, also known as Tax Relief at Source (TRS)
are outlined in the Programme of Government. The new measures include an
increase in TRS for people who bought properties between 2004 and 2008.
Angela Keegan, Managing Director of property website MyHome.ie, says many first
time buyers are unaware of the full implications of the June deadline and the
new measures should be delayed until next year when the relief was due to be
phased out on a gradual basis.
"Buying a house is the biggest and most important financial transaction
people make. Introducing drastic changes like this at such short notice is
particularly unfair to first time buyers who have already been hit by a range of
measures such as changes to stamp duty, more expensive mortgages and the
unavailability of ECB tracker and fixed rate mortgages," Keegan said.
Keegan also pointed out that it was also bad news for the property market as a
whole. "First time buyers were the one bright light in the property market in
2010 and so far that trend looks set to continue in 2011. Taking away this
relief in such an abrupt fashion will hit those buyers as well as the property
market and as a consequence the State’s coffers. Neither of the three can afford
this measure," she said.
Karl Deeter from Irish Mortgage
Brokers says cutting one of the few benefits available to future buyers in order
to improve the position of people who purchased during the boom is highly
"The rationale behind the introduction of this measure is flawed. Why punish
the prudent, the young and perhaps not so young who wisely opted not to buy
during the bubble? Why remove the small tax advantage we have traditionally
given people on their first home purchase - - from first time buyers grants to
TRS - - and instead transfer that advantage to those who have already bought?
Why penalise the only group capable of kick-starting the property market?"
Deeter also says the plight of the boom time buyers may not be quite as bad as
commonly thought. "An analysis of the introduction and draw down of tracker
mortgages indicates that the majority of buyers during the boom secured this
type of mortgage. This gives them a great advantage over first time buyers in
the current market, where only more expensive variable rate products are
available. A programme specifically aimed at helping distressed borrowers is
laudable, but it has to be targeted," Deeter said.
In November 2010, Karl Deeter was
one of 10 signatories to an article in The Irish Times calling for debt
forgiveness for bubble-time buyers.
The authors of
Mortgage debt forgiveness is essential to recovery, wrote: "If house
prices fall by 55% from the peak, half of buyers in 2004 and a quarter of those
in 2003 would enter negative equity and 200,000 households would face negative
equity of more than €50,000 and there would more than likely be 60,000
households in arrears.
Their arrears of €10bn would compare to total mortgage debt outstanding in the
Republic of €115bn. In the context of an overall bank bailout scheme of €50bn
and rising, it is relatively small but at the individual level and, equally
importantly, at the level of the real economy, it is a very large problem
indeed. We suggest that this makes full or partial debt forgiveness a viable
consideration. From an economic perspective the key question is: how would
partial debt forgiveness affect the Irish economy?"
Tom, an Irish Times reader commented - - "Nobel
prize-winning stuff from eight Irish economists, an actuary and a mortgage
broker (heaven help us!). I am not of any of these 'professions' but feel
somewhat qualified to offer a reality-check;
1. 'The bursting of the boom has
left tens of thousands with debts they will never be in a position to repay.'
So, had the 'boom' not 'burst' (thanks to those pesky Lehman borthers! - sic)
our ten learned friends are implying that mortgaging oneself to 5-times
principal and 2.5-times secondary income to buy a 3-room house in Cavan for
385,000 euros is prudent and sensible economic theory? Gentlemen, now is a good
time to consider your own career paths.
2. Any economist worth his or her salt can explain the finer points of
capitalism. Sadly, our ten learned friends seem to struggle with this simple
theory. Gentlemen, might I suggest a wonderful introductory text to the subject
by a chap called John Maynard Keynes entitled 'The General Theory of Employment,
Interest & Money'. It's tough going for the first couple of chapters but once
you get into it, it really is quite straight-forward.
3. Where were you all between the period of ~1995-2007?
4. Did you write this article using an algorithm whereby on each iteration, the
result 'bS', is automatically rounded up to the nearest whole 'POT 0/f sH1t' and
squared? One way of solving this is to set the maximum number of iterations to
0. The actuary will show you how this can be done.
If I wasn't so aghast I would be apoplectic!"
Back to the FTBs, if all the
potential buyers decided to buy, maybe it would be a a short-term macro positive
but individually, the better advice may be to rent -- of course some people
would say it's 'money down the drain' but that flow can come via many different