Has this country learnt anything?
What are the incentives and why are they wrong in the current climate?
If we flog the builing industry into the ground for a generation we actually will end up with the same frantic activity following years of under supply that we had before.
In short (this is not a discussion on price) we need to differentiate sustainable activity (and sustainable tax revenues from that activity) from the previous madness and encourage it.
People quickly forget that this state was blighted with chronic under supply of adequate housing for most of its existence which created the damaging pschye of owning at all costs. It would be an equally damaging national pschye to discourage any form of property market activity for a generation.
There is a 6% stamp duty on commercial property purchases that is generating nothing beacuse no one is buying property. A 2% rate and some transactions would be far superior, it doesn't mean we'll go on a building orgy but it just might attract someone foreign multinationals or encourage indiginous expansion.
There is nothing inherently wrong with encouraging the use of some of the property overhang that is currently lying idle. We've built these things at a huge cost. Anything that salvages something out of this already sunk cost cannot be bad.
Would it not be better to see money and investment targetting both export led and tourism companies that bring money into the country rather than to something that adds no value at all and simlpy ties up capital?
But what is the net effect of these moves?
Surely bringing in foreign investment is of value?
Where's the evidence you have to support the argument that this is going to cost money that could have been spent elsewhere?
As with much in taxation, an incentive like this will have a return. The direct cost is estimated at €64M for 2012, but how much will the Government gain on sales of assets held by NAMA that would otherwise remain unsold. How much will they gain from commercial rates on buildings that would otherwise have been unoccupied? Tax on salaries on jobs created as a result, etc., etc..
In the grand scheme of things, €64M isn't much.
What are the incentives and why are they wrong in the current climate?
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When you have scarce resources and put property developers ahead of post grad students.......
What's so special about post grads? For God sake if you haven't had the state pay enough towards your education by the time you're 22 you may as well throw your hat at it.
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Can't believe property breaks are back while students, fuel dependent and the disabled are hit.
Has this country learnt anything?
God is not creating any more land
Firefly is absolutely right. This will end up tying up very scarce resources (money) in totally unproductive assets (property). It will reduce the capital available to viable firms that are exporting and bringing money into the country. Very dumb idea.
So how much is it taking off the table?
That depends on how much more real estate will be bought as a result of this move, but it will result in more houses being bought than otherwise would have been, as some people will be enticed by the offer.
Yeah, but if someone buys property doesn't it free up capital for the person selling it?
In particular if Google buys an office block from NAMA that surely increases capital and decreases the housing stock owned by NAMA (and therefore us!).
Less unproductive housing stock, more capital - Win win surely?
But the majority of property transactions are done by Irish residents using mortgages. This means that more credit is tied in property (again) and less is available for productive businesses.
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