Until recent years, First Time Buyers (FTBs) were predominantly young couples forming families and trying to buy their first home, rather than making a property investment.
Nowadays, the majority of FTBs are actually property investors and it is their buying activity which is the primary driver of house price inflation.
The easy availability of 100% finance, combined with low interest rates and ever-rising house prices, has made residential property a virtually risk-free investment, where the buyer may put up 0% of the capital cost but gets to keep 100% of the capital gain, tax-free.
If these FTB Investors were treated in the same way as other property investors, then the FTB concessions relating to stamp duty and mortgage interest relief would be confined to those involved in family formation.
This would take much of the heat out of the housing market and make homes more affordable for young families (however that family unit may be legally defined).
This Government's 1999 Tax Individualisation measures effectively illustrated their view that the family is now to be regarded as an economic rather than a social unit. I believe it's time to rebalance the equation in favour of families. Focusing the First Time Buyer reliefs on families would be a very good place to start.
Ultimately, deflating the residential property bubble will benefit all those who wish to buy a home, though not necessarily please those who regard investment in houses as an easy source of profit.
Footnote: Published as a letter in the Irish Independent and the Irish Examiner
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