First-time investors shut out young couples

UNTIL recent years, first-time house buyers (FTBs) were predominantly young couples forming families and trying to buy a home rather than making a property investment.

Nowadays, the majority of FTBs are actually property investors and it’s their buying activity that is the primary driver of house price inflation.

The easy availability of 100% finance, combined with low interest rates and ever-rising house prices, has made residential property a virtually risk-free investment, where the buyer may put up 0% of the capital cost but gets to keep 100% of the capital gain, tax-free.

If these FTB investors were treated like other property investors, the FTB concessions on stamp duty and mortgage interest relief would be confined to those involved in family formation.

This would take much of the heat out of the housing market and make homes more affordable for young families (however that family unit may be legally defined).

The Government’s tax individualisation measures in 1999 effectively illustrated their view that the family is now to be regarded as an economic rather than a social unit. I believe it’s time to rebalance the equation in favour of families. Focusing FTB reliefs on them would be a good place to start.

Ultimately, by deflating the residential property bubble, it will benefit all those who wish to buy a home while not necessarily pleasing those who regard investment in houses as an easy source of profit.

Peter Molloy

9 Haddington Park

Glenageary

Co Dublin