Thursday, February 09, 2012
At least 270,000 homeowners are set to see their mortgage interest payments fall.
Finance Minister Michael Noonan suggested that prices in the property market could be bottoming out as he unveiled incentives for first-time buyers.
First-time buyers who bought during the boom and those who buy homes this year will benefit.
Mortgage interest relief will be raised to 30% for first-time buyers who purchased between 2004 and 2008. This is expected to benefit 270,000 purchasers.
First-time buyers who make the leap this year will still be entitled to 25% in mortgage interest relief, with an extension of that measure.
Revealing the Finance Bill as part of this year’s budget measures, Mr Noonan said: "What we’re trying to do in the budget is incentivise people to purchase in 2012.
"That seems to me like the kind of incentive that might work, especially if you’re coming to the bottom of the property market. I don’t know whether we’re at the bottom or not.
"If you look at actuarial figures, the replacement cost of houses now is either equal to or slightly higher than the market price. There’s a fundamental rule. If the bricks and mortar and building costs of a house is now higher than the actual price of the house on the market, things are bottoming out."
The further relief for first time buyers who bought during the boom was promised by Fine Gael ahead of the general election.
Mortgage holders will qualify for the increased rate of relief if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in the period 2004 to 2008
"The estate agents say there’s interest and people in other professions say the market price of houses is now about or slightly lower than the replacement cost of houses, in Dublin in particular," said Mr Noonan.
The minister said there had been delays on updating computer systems to process mortgage interest relief payments. Homeowners would receive retrospective payments though over the coming weeks as systems were fixed, he said.
The changes also mean that those who bought in Dec 2008 but did not make their first mortgage interest repayment until 2009 will qualify for the increased relief. Also, those who bought in Dec 2003 and made their first interest repayment in 2004 will also qualify for the increased relief.
There are different amounts of relief for those who purchased homes during the boom, depending on the year. Amounts of relief available range from €450 to €750 in a year for a single person. A married couple claiming relief will be entitled to amounts between €900 and €2,000, under the measures.
Non-first-time buyers who take out qualifying loans in 2012 will receive relief at a rate of 15%.
Days from eviction
The first family to switch from holding a mortgage on their home to renting it under a new scheme were "within days" of being evicted when the deal was struck, it has emerged.
The family, based in Dublin, will now rent the home they previously owned but which then became the subject of a repossession order from the bank after building up mortgage arrears.
The family came to be renting the property after being identified by the New Beginning group as fitting the criteria for the scheme, which was first outlined last November as a recommendation of the Keane report on mortgage arrears.
Founding member David Hall said: "They were in a situation where they were to be evicted within days."
Instead, under the scheme, voluntary housing association Cluid bought the property at an agreed price from the bank and the family is paying rent on an ability-to-pay basis.
New Beginning has said it knows of as many as 120 other families who would be interested in availing of the scheme, while Housing Minister Jan O’Sullivan’s department has said another 90 families might be suitable for consideration.
Anyone seeking to rent their home must agree to the voluntary repossession of their home after the lending institution has deemed their mortgage position to be unsustainable.
The family must also be eligible for social housing while the property must be valued at less than €220,000. Cluid, as the voluntary, not-for-profit housing association, must then reach agreement with the bank, allowing the bank or lender to effectively cut their losses on the property.
The rent is then based on a means-tested basis, so Cluid will not rent a six bedroom property when just two people are living there, for example, while the rental rate rises or falls depending on the individual’s circumstances.
Nick Sheward of Cluid said the association would consider buying properties at "a fair market price" and that the current pilot project was being monitored and was being rolled out to other areas.
— Noel Baker
Monday, February 13, 2012
Interest relief change set to benefit 270,000 homeowners | Irish Examiner
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