While the property sector may be disappointed with the outcome of the recent Budget for 2017, the fact that it provided assistance for first-time buyers of new homes with an income tax rebate of up to €20,000 on homes valued up to a maximum of €600,000, is some consolation.
Limerick Auctioneers and Estate Agents say it is regrettable though that it does not apply to second hand homes which would normally be the first choice property for a lot of first time buyers. Often when on a tight budget buying a second-hand house is a wise decision as some or all furnishings may be included in the sale which means the house is immediately livable on receipt of the keys – cutting out many large purchases having to be made.
Buying a second-hand home makes sense for many where they are purchasing a property in or adjacent to the area in which they were brought up. They may wish to be surrounded by family and friends or may need to be close by their old area to look after elderly relatives or to avail of parental childcare.
Buying a second-hand home often means moving into a settled area which has many advantages – plenty of local amenities already in place and access to an existing public transport system. The reasons for desiring a second-hand property are wide and varied and apart from the fact that there is a severe lack of supply of newly built houses the fact remains that if people want to live in some of the more sought after areas they have no alternative but to buy a second-hand property. Now the incentive is not there. It is not just in the larger cities like Dublin, Cork, Limerick, Galway, and Waterford that this situation applies. People are prepared to buy second hand in rural areas too so any incentive to encourage people to inhabit the outlying areas also would be welcomed and should be introduced.
With no reduction in the level of VAT and levies on construction, Limerick Auctioneers think it is difficult to see a major growth in the construction industry any time soon. Building costs will have to be brought down. In Northern Ireland and the UK, there is no VAT on housing so it is obvious to see why the Republic of Ireland is suffering. There is a housing crisis and it needs to be rectified.
A clear example of how the situation can be remedied is Hungary. The Government there recently cut the VAT rate from 27% to 4% – immediately there was a surge in building. Surely the same could happen here if an incentive was put in place.
In recent times there has been an alarming exit of private landlords from the rental sector. Perhaps the 5% increase in mortgage interest relief in the budget may help. Though small it is a start in bringing about more equality between private and commercial landlords over the next number of years. The Institute of professional auctioneers and valuers have been calling for the vulture funds that invest in residential property to be subjected to the same tax regime as private landlords. The Minister for Finance has proposed changes to Section 110 reliefs which have been used by these funds so the results may soon be seen.
Finally, one piece of good news to emerge from the Budget was the increase in the Capital Acquisitions Tax Thresholds in regards to inheritance tax/gifts in all categories. It is likely that this will assist the housing market – something that is very welcome at this present time.
