Sir, – The use of taxation to guide the behavior of our real estate market has not been a complete success. The appalling view that greets the visitor at many of our traditional resorts is a convincing illustration of the downside.
Your main story on Wednesday is that the government is considering a stamp duty increase among a series of measures to deter bulk home purchases (“Housing crisis: stamp duty increase seen as deterring wholesale home purchases” , News, May 12).
If such wholesale purchases are really seen as a problem, it is to be hoped that the non-tax measures envisaged will be convincing.
An increase in stamp duty, even if it can be made to last, will have little or no impact.
Our politicians will, of course, respond to the strongest complaint, and the mass purchase of residential properties by domestic and international investors is now seen as an indicator of our housing failure.
In these circumstances, it must be considered imperative to do something in the short term rather than taking actions that will produce long term benefits beyond the current political cycle.
It is a recurring problem in democracies. It takes a visionary like Seán Lemass to bring about policy changes whose benefits would not be visible in his lifetime, but which we enjoy today.
The fundamental problem is that funds invested in bank deposits or government securities produce zero or even negative returns.
It saves money elsewhere in the search for yield.
Some major investments in infrastructure around the world are being made at returns of around 2%.
Irish residential property offers a gross return in the range of 5% to 8%. Applying a 7.5 percent stamp duty, as has been suggested, will reduce these yields from 4.65 to 7.4 percent.
The result may be that the marginal deal becomes unattractive, but so will the magnitude of it.
If we agree that we have a problem that needs to be resolved, we must recognize that the solution lies in the housing case, not in taxes.
Impose appropriate conditions for any granting of building permits.
If it requires a constitutional change, make it.
And while we’re at it, let’s legislate for the long-awaited implementation of the 1973 Kenny Report so that our young people no longer have to take out 30-year mortgages to pay for windfall gains that are accruing to landowners through land zoning. land and granting of the building permit. – Yours, etc.,
Sir, – It is shocking to see this next phase of the national housing crisis unfold.
A new urgency is palpable as the government notes that “people who get up early in the morning” are now excluded from the housing market.
It will take all the talent the government has to solve the problem. I hope he finds some somewhere, one day. – Yours, etc.,
Sir, – All this nonsense about the fact that the stamp duty is a deterrent does a wonder. It must be obvious that the developers are just going to increase the rents to recoup any increases. House and apartment prices will skyrocket and put them out of reach again.
Why not limit what you can borrow and what developers will be forced to keep prices more reasonable? – Yours, etc.,