Institutional Investors Hurting First-Time Buyers

Big time investors in the housing market are affecting first time buyers and their ability to purchase homes. Large scale investors are buying lots of hundreds of houses at a time and renovating them and re-selling them for profit. Home buyers are feeling the pressure and are unable to find homes in their price range. Fianna Fáil is calling on the current government to investigate the current tax incentives for investors and believes that could be a way to make significant changes.

The Department of Finance has agreed to do a review on how much institutional investors pay in taxes. However, Department of Finance has already begun releasing statements defending their current stance on taxes. They acknowledged that institutional investors only make up a small proportion of the housing market. A small proportion still can affect hundreds to thousands of people. According to Savills Estate Agents, approximately 3,000 properties were purchased in blocks by institutional investors last year. Many homebuyers searching for homes contribute large investment funds to increasing difficulty in getting a house.

Nicola McCann and her partner from Donabate, Dublin, are first time buyers looking for a property and are having a really difficult time. In order to afford a property, they moved in with their son to a family members house. They spent these two long, stressful years attempting to save about 2,000 Euros/Month to afford a house. Ms. McCann is quoted saying, “It has been pull your hair stressful, like our eight-year-old son is currently sleeping in a sleeping bag at the end of his grandmothers bed.” What is causing the stress and uncomfortable living in her family’s house is investors buying up all the properties. Ms. McCann also said, “In Donabate there are so many new houses and then you go and look online, and they’re all being sold to private investors.” Fianna Fáil Housing spokesperson, Darragh O’Brien, credits 2013 Finance Act brought in by the Fine Gael and labor government with the high foreign investor interest in Ireland. O’Brien is outraged with this act and stated, “They don’t pay capital gains tax, they don’t pay tax on their profits and they don’t pay tax on their rents so why wouldn’t you invest.”

A review of this acts and some restrictions and taxes need to be imposed on the institutional investors to level the playing field with homebuyers, especially first time one. Chief Economist with Sherry Fitzgerald Group, Marian Finnegan, does not agree with the previous sentence and instead believes investors are an important part of the property market. It does provide more suitable rental accommodations but that is not what Ireland needs or wants ig they are trying to avoid another depression.

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