The Minister of Finance has been welcomed by IPAV to extend the Help-To-Buy Scheme. They say it is extremely important to boost people’s confidence in a market that is “extraordinarily difficult for first-time buyers and for smaller builders/developers, as opposed to the few dominant strongly capital backed players”. An extension to the scheme has been called by IPAV in its pre-Budget submission.
The Help-To-Buy Scheme has been highly commended by Chief Executive Pat Davitt. He says it is a really important inclusion to the market which allows first time buyers to acquire a suitable home in a very challenging market.
Mr Davitt says “WE very much welcome the fact that the Minister has listened. Young people are severely disadvantaged in the current market. At a time when they are but starting their careers, large numbers are paying rents at levels way beyond the price of servicing a mortgage and are trying to save for a mortgage deposit at the same time, an impossible task for many.”
According to Mr Davitt, the Help-To-Buy-Scheme has currently been a huge success with the majority of the 30,875 applications received purchasing quality homes in urban areas in the €226,000 to €375,000 price range but he would have preferred if the scheme was extended to second-hand homes as well. “Such would have created greater movement in the market, benefitting new and existing home owners, and would have had a knock-on effect in freeing up more homes for rental.”
When Stamp Duty on non-residential property transactions increased from 1.5% to 7.5% on October 8th at midnight. Pat Davitt said it would be unfavourable in country areas where commercial market was yet to pick up. He said “In these areas this increase will merely add to a market already in difficulty.”
The fact that no effort was made to attempt to equalize the situation between private and commercial landlords deeply disappointed Mr Davitt.
“Consequently, the existing drift of the private landlord from the market is set to continue and is likely to escalate. Latest figures from the Residential Tenancies Board (RTB) show the number of tenancies registered by private landlords fell by nearly 6,000 or 1.8%, to 307,348 in 2018. Previous RTB figures for Q 3 2018 found there were 1,778 fewer landlords than three years previously and tenancies had declined by 8,829.”
Mr Davitt compared the commercial and private landlords by stating that commercial landlords in the build-to-rent sector are having to pay little to no tax in comparison to the 55% tax on rental incomes along with Stamp Duty and Capital Gains Tax on sales that private landlords are having to pay. Despite record high rents, many private landlords believe that investment in the private renting sector has become a severely unappealing proposition.
“Private landlords should be treated like other commercial and farming landlords who get write offs and against tax for long term leases. This has proved very successful in the farm renting business and encourages farmers to rent longer term. It would help stem flow of private landlords from the market.”