New taxes could damage both the market and a whole host of those simply struggling to survive

New taxes could damage both the market and a whole host of those simply struggling to survive

Most people would be in agreement that a healthy economy requires a healthy property market.

After all, one of the major things that fuelled the Celtic Tiger was the housing and construction boom. Obviously we don’t want to get back to a stage where there is reckless lending and we’re building homes simply for the sake of it but there is a need to get back to some form of market normality.

As many houses as there are lying idle around the country, there will be a need for some construction to take place in the coming years due to stock shortages in certain key areas, particularly in the capital.

The government are only too well aware of the importance the property market can play in reviving the economy, hence the incentives they introduced in last year’s Budget such as additional mortgage interest relief for first time buyers.

However, as we head towards this December’s Budget they need to be mindful of the damage they could cause to the industry as well.

This week alone we learnt that more than one in three mortgage applications were being turned down, while another report from Karl Deeter of the Irish Mortgage Brokers found that families were being deducted €50,000 from any potential mortgage per child they had.

That is deeply worrying at a time when the traditional model has reversed. In the past, usually what happened was that people settled down, got their home and then started a family.

Nowadays though, many people already have children before they go looking for that family home.

Yes, banks have to take into account that having children is costly but likewise anyone who becomes a parent will also reduce their spending elsewhere such as on social activities.

With a property tax looming and the potential for water charges to follow, there is a real fear that people may be driven away from the market, while those who have already purchased may be pushed closer and closer to breaking point.

We all know there is a serious mortgage arrears issue in Ireland at present and a recent Irish League of Credit Unions finding that over 1.8 million people are left with €100 or less to live on after essential bills are paid is a clear indicator that many more, whether they be homeowners are renters, are dangerously close to the breadline.

The government could do well to heed that warning as they go about putting their proposals together for Budget 2013.

If, as expected, they introduce a property tax of 0.25%, that would mean people would be paying €250 per year per €100,000 borrowed, with that figure only likely to rise in the years to come. Other concerns, such as an increase in fuel costs, must also be taken into account for those forced to commute to work as it is having an increasingly bigger impact on those who either drive or

With that in mind, we’d like to get an idea of your financial situation and try to gauge what potential impact any new taxes would have on your circumstances.

Please take the time to vote in our poll and have your say below:

[poll id=”82″] [poll id=”83″] [poll id=”84″]

There are 19 comments for this article
  1. Brian at 9:06 pm

    What happened to the principle of inability to pay. I have no earnings, unemployed and not entitled to social welfare as I was self employed. My savings run out next year and I am 4 years away from entitlement to state pension. This will just accelerate my and my wifes fall into abject poverty.All we will have then is our modest home. If inability to pay is not a factor then lets have big wage increases for the employed, state funded employment schemes to get all the unemployed back to work, dole and medical cards for everyone,etc etc. That will fix it in cloud cuckoo land.

  2. Liam at 10:20 pm

    The main players in the property market played more than their fair share in creating the property bubble which has impoverished a whole generation of young Irish people. Given a chance the same players will do exactly the same again by engaging in shady practices like lying, gazumping and distorting the market. Sorry, but the property market professionals deserve all the hardship they get.

  3. Noel Leinnonahanan at 11:30 am

    The most corrupt and incompetent set of politicians has bankrupted Eire while themselves continuing to reap the benefits of their egregious behaviour. Nauseating.

  4. John at 10:16 am

    @ radically , while yes the country could really do with the monetary savings from cutting the number of TDs and their entourages ,
    Think the real benefit of having less TDs is it strangles the parish pump politics , where glorified county councillors who spend their times pulling strokes with medical cards and LA housing lists are involved in national government .
    Less likely to get a seat coz they were a teacher in the local school
    Played Hurley for the parish
    Couldn’t put a price on those savings

  5. Phil Pidgeon at 7:28 am

    I would hope that all of the unfinished apartment buildings in Dublin (Ballinteer, Sandyford, Tallagh for example), would be completed first before any further new apartments/houses are built in these areas.

  6. Maire Roche at 10:21 pm

    I dread the increased property taxes as Im retired having taken up the early retirement just over 50 yrs and still have a large mortgage and many bills and can barely pay my bills with almost nothing for myself. I am left to barely be able to pay for food with no social life or any treats anytime. I feel with increased gas and electric and also property taxes I just wont be able to make ends meat and cant see any way out of it.

    I have a disability of arthritis so wont get a job to help me financially. I wish the government would take your income into consideration when considering the taxes. You could have property but no money. They cost alot of money to keep and maintain and they should consider this.

    People on the dole get more benefits than people on very low pensions with lots of commitments.
    I pay the VHI and will have to get a hip replacement. I dont like taking state handouts even though I really need them.

  7. harry at 9:42 pm

    what’s the point of comments, there will be no changes for the better for poor. Emigrate asap is the only solution. Let all those fat boys and girls in the Dail pay the taxes they introduce, as they can afford them. Full stop.

  8. Breda Fallon at 6:09 pm

    When is the waste going to be tackled, a country the size of Manchester with 34 county councils, 160 T.D’s. a Senate, a President, enough Quangos to sink the Titanic, enough Administrators to run a country four times it’s size. Councillers paid for doing very little. Planners sitting in their offices with very little planning going on. What Oh What can be done, our property tax and water tax etc will just go down the same black hole as all the other taxes. No accountability and the politicians are unable to see what a mess they have us in, shame on them.

  9. JJ Toner at 5:11 pm

    “Yes, banks have to take into account that having children is costly but likewise anyone who becomes a payment will also reduce their spending elsewhere such as on social activities.”

    Anyone who becomes a payment? That sounds like science fiction to me.

  10. Paddy at 4:53 pm

    If a ‘normal’ property market is one in which a 20-year mortgage of 2.5 times an average middle class salary and a 20% deposit is sufficient to buy a 120 square meter house or flat in a well serviced area, lets move to normality now.

    High priced real estate is a drug, just like cocaine. It appears attractive and the dealer promises no bad side effects as he pockets your cash, but in reality wages increase, factories move to lower cost countries, personnel debt skyrockets and exports shrink.

    The key to reasonably priced housing is an end to land speculation, but as land deals are the traditional source of so much wealth for the few and the principle source of brown envelope money for politicians, ending land speculation will take a stronger leadership than Irish PR voting produces.

  11. liam at 4:25 pm

    Vested interests.
    This government has set in stone the vested interest class. You will note that all proposed changes only apply to “new entrants” be they Public servants ( pensions & allowances ) Consulants etc. If a change is valid it is valid for all those who belong to a particular category not just the new entrants. If new entrants are to be given less favourable terms it implies that those on existing terms have been over paid for the job but rather than recognising that & saying – you were overpaid in the past, that is over as we cannot continue to pay such inflated salaries- the government is in essence saying – you were overpaid in the past, we all know that – we are going to ensure it stops but not for you but for the new entrants who were never overpaid. So top Civil servants & public servants will retain their inflated salaries ,pensions & allowances but the newcomers will be punished. It is also know as – when you are up kick the away the ladder- I’m all right jack ! Let’s take it from those lower down the scale because they are not as well connected or influential- how about the old, the sick, the unemployed, the disabled – yea I’m sure we could trim some fat from these !

  12. Paul Browne at 3:35 pm

    “Tackling” the CPD is nto the panacea for all ills. Sure it may give many a wry smile of satisfaction to soothe the pains of hate they may hold for Public Servants, but are TD’s (who’s pay is linked to the AP Grade in the CS) going to vote to cut their own pay and will the top boyos get real cuts? No. If they cut more from the lower paid, it’ll push many onto different forms of welfare. No blood froma stone where the lower paid are concerned. Another 1 Billion next week to unsecure bondholders anyone?

  13. REDHAT at 2:44 pm

    Hi there,

    One thing I don’t understand why a mortgage of €200,000-00 cannot be approved for me because I have two kids & one wife dependent whereas I can easily pay same monthly premium for my mortgage what I’m paying in rent now. Although I have permanent job having enough savings for advance/deposit money (8% plus) I already have.

    I have no loan outstanding and no bad credit history.

    I also have €1,000/- monthly saving which is spare after paying all bills, rent, & food etc. and Mortgage approver can see that from my bank statements and bills but they still saying only €100,000- could be approved which doesn’t make sense.

    Any idea why is that?

    Regards.

  14. Rory at 12:46 pm

    Property tax is totally necessary and prudent. It was the same lobby of estate agents and builders, who convinced the government to scrap the sensible recomendations of the bacon report and led to the crash. This article is more of the same.

    Celtic tiger??!!! Celtic Bubble more like…

  15. whistlingjacksmith at 12:45 pm

    This country will shortly be divided into two categories. The EMPLOYED who will have a reduced standard of living but at least some disposable income, and the UNEMPLOYED who will be forced to accept temporary low wage contract work occasionally – or emigrate. The priveliged few will remain in secure jobs at home and the others can go to the UK, Canada etc if they are allowed in. The same scenario as the 1940’s and 1950’s.

  16. Radikelly at 12:03 pm

    What this country needs is a complete overhaul of the political system. We have at least twice as many TD’s as the country needs or can sustain. Reduce the number of elected representatives to 78 (or approximately 3 per county) and then look at the savings that would be made to the economy. Not just the TD’s salaries and (unvouched) expenses, but their advisers, secretaries, press secretaries and other office staff. This is the first saving to be made that would benefit the whole country.

  17. teodoro at 11:28 am

    Is a robe that this government qualition the two politics parties did promise that no more over taxes no more over cuts no more of the rubbish that the politics of before did and that their was going to try of maintain in this level to establishes the economy and is the first their do up taxes cuts in every were up prices in everything down wages and still in this day for the new budges more up taxes more up prices more less wages and more cuts is time to the country get up their ass and protest for this is time to push the government is time to say to the politicians that the country is of the people no of the government is time to strike or will continue the same more and more squeeze the poor and giving more and more to the rich telling to the government that this is in ought telling to the government this stop now no more

  18. Dan at 11:12 am

    I don’t think there is a choice where property tax/water tax is concerned. Not unless the CPA is revisited.

    Problem is we’re adopting the taxes of other European countries, but keeping all the Irish ones too.

    e.g. Property Tax + Stamp Duty
    I mean, just compare the level of motor tax we pay to the UK. There is no comparison.

    The government are not just going to strangle the property market (and NAMA!), they’re going to strangle what remains of the domestic economy.

    The government are playing a short game, trying to balance the books quickly by stop gap solutions.
    Tax Evasion is already becoming a problem.

    It’s time for the long game – look at the CPA, Social Welfare.

    Balance the books – yes – but do it in a sustainable way.

  19. Paul Browne at 10:35 am

    I can’t beleive that you still refer to the bubble as a ‘boom’ and use the term ‘Celtic Tiger’ which we all know now was a fake, a falsehood which lined the pockets of many whilst leaving an entire generation with huge debt and no future. Greed, recklessness and outrageous behaviour by individuals, financial institutions, regulators and politicians put ALL if us in this mire. We need a recovery, but firstly people need to be realistic. If you bought from 2004-2008, your property will NEVER in your lifetime get back to its purchase price. If lucky, we ‘may’ in a decade be able to sell these for what’s remaining on the mortgages and write off every cent you ever spent. Realism.

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