Wednesday 22 May 2019

Fionnan Sheahan: Beware the backlash of negative equity generation

Fionnan Sheahan

Fionnan Sheahan

The Government acknowledged the plight of the negative equity generation last year when it implemented the promise in the Programme for Government to increase mortgage interest relief to 30pc for first-time buyers who took a mortgage at the height of the boom.

Implementing the commitment in the coalition agreement between Fine Gael and the Labour Party was a clear sign the Government felt the pain of the Celtic Tiger era house buyer.

Stuck in negative equity with their home worth vastly less than they paid for it, unable to sell as a result and lumbered with huge mortgages, based on Noughties wages, these homebuyers feel trapped.

None of them thought getting on the property ladder would lead to decades of debt with no end in sight.

After giving with one hand to the boomtime buyers, the question now is, will it take away with the other hand through the property tax?

The introduction of the property tax is fraught with difficulty.

In the Programme for Government, the section on the introduction of a property tax, described as a "site valuation tax" refers to how the tax "must take into account the significant number of households in mortgage distress".

Presumably, this means there will be some relief for those struggling to pay their mortgages. Exactly how this will work out remains to be seen.

But having paid large amounts of stamp duty, sometimes tens of thousands of euro, on regular-sized houses, they face paying all over again.

Worse yet, if these homeowners are now struggling to pay their mortgage, it's another bale of hay on an already broken camel's back.

The Government will have be to wary about ensuring the "particular problems" of this coterie of homeowners is still on their minds.

They'll be voting for some time to come.

Irish Independent

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