affordable housing offer

SkepticOne

CelloPoint wrote:

I am completely anti-affordable housing. I don't own a home in Ireland (nor do I want to in 2007). The whole scheme stinks of corruption and people who are well able to afford a good lifestyle should not be subsidised. Ownership is a privilge, not a right.

I agree with this. There's two aspects to the issue of affordable housing (scheme, initiative etc) that I think gets confused in discussions like this.

From an individual point of view it makes sense to go for a subsidised house if it is available. I can't understand why anyone would pay for a one-bed shoebox with no sound insulation when for the same price they can get a house at the expense of others.

But the fact that it benefits some people at the expense of others (e.g. those on lower wages) does not mean it is a good thing or the correct solution to generally over priced housing.

Those who criticise the scheme/initiative are normally coming from the second angle.

The_Conductor

SkepticOne wrote:

But the fact that it benefits some people at the expense of others (e.g. those on lower wages) does not mean it is a good thing or the correct solution to generally over priced housing.

Those who criticise the scheme/initiative are normally coming from the second angle.

Thats true. But when you benefit one group of people, there will always be a second group of people who do not benefit, or who end up helping to fund the benefit for the first group of people.

So- clerical staff may be able to get a nice 3 or 4 bed house with a nice garden, while their boss on 15k salary more than them, may be stuck in a 2 bed apartment with a higher mortgage than their staff in far better accommodation. Naturally the latter group of people will feel miffed.

The scheme really is legalised Robin Hood- only its not the rich who are being robbed to give to the poor- its those who are slightly better off being fleeced to give something to those who are marginally worse off than they.

podge018

So what do you propose? Get rid of affordable housing and just have social housing for single mothers with a heap of kids? Or do you suggest upping the bar to 60k incomes? There has to be a limit somewhere?

The_Conductor

podge018 wrote:

So what do you propose? Get rid of affordable housing and just have social housing for single mothers with a heap of kids? Or do you suggest upping the bar to 60k incomes? There has to be a limit somewhere?

Well- in one Fingal development, affordable housing was available for those on a combined salary of 70k- which is ludicrous in my opinion.

Yes, I do think that affordable housing should be abolished. I also think the following:
I think that stamp duty should be thoroughly reformed, to reflect the costs associated with registration of deeds etc- as was originally intended.
I think that mortgage interest relief should be abolished for all.
I think that investors should not be able to write off interest paid as an expense.
I think that there should be an annual property tax, incrementally higher, based on the value of the property- charged at a higher rate for second and subsequent properties, be they for investment purposes or otherwise.

I think that the government should quit meddling in the property market altogether. All they have succeeded in doing is stoking a soaring property market which is increasingly burning people as they encounter more and more difficulties in paying their mortgages back.

You cannot offer a carrot to someone (or a group of people) without accepting that someone has to grow the carrot for you. At the moment- its the taxpayer who are funding the carrot, and ultimately there is no-one other than the taxpayer who can/will pay for the carrot.

The current system has introduced massive inequities into the property market. People have to accept that simple fact. Removal of all the wonderful schemes we have will deflate property prices like nothing else. But- there really is no other solution. Property is not affordable- hence it will have to fall to meet a point where supply meets people's capacity to pay for, and demand for, property.

SkepticOne

podge018 wrote:

So what do you propose? Get rid of affordable housing and just have social housing for single mothers with a heap of kids? Or do you suggest upping the bar to 60k incomes? There has to be a limit somewhere?

No people on 60k incomes should not be subsidised although I believe some of the initiatives cater to people on these types of salaries.

The affordable housing initiative/schemes don't really solve any social need. They are a cynical political move designed to placate people's feeling left behind as house prices race ahead without addressing the reasons why there's been runaway house price inflation.

I think it should be fairly clear now why there's been house price inflation. People (not just speculators) bought houses, not because they were good value, but because prices were rising. But this buying forced prices higher and dragged in more people including speculators which in turn forced prices higher - a classic bubble scenario.

The normal response to asset bubbles (I don't think there are many now who would deny there's an asset bubble) is to raise interest rates - try to cool the market before it develops into a full scale mania. Of course, we gave up our right to set interest rates however fiscal measures were still available to us.

Unfortunately, instead of using fiscal measures to cool down the market, we did the opposite. We created tax incentives for people to buy houses and adjusted stamp duty bands in order to pump more money into the overheated market - exactly the opposite of what should have been done.

What they should have done back in 1999-2001 was

1. implement the Bacon recommendations and stick to them.
2. Also make renting a more attractive option like it is in Germany and other countries.
3. Encourage the creation of higher density but at the same time higher quality where people want housing, not half way across the country from where they work.

We did nothing about supply at the time it was needed back in the late 90's when people could not find even basic rooms to rent in Dublin and other cities. Now, of course, there is loads of building, but now we are heading into a crash and we'll have a vast oversupply of unsellable/unrentable shoe boxes.

What will happen is the crash. All bubbles crash and people will have a lot more to worry about than buying houses. People will boast about not having an enormous mortgage around their necks. The affordable housing schemes/initiatives will become an irrelevancy.

starky

smccarrick wrote:

I think that there should be an annual property tax, incrementally higher, based on the value of the property- charged at a higher rate for second and subsequent properties, be they for investment purposes or otherwise.

Well I am a supporter of affordable housing, that said I will be honest and hold my hands up and say that the reason is I would very much like to avail of it, I am one of those people that never got around to buying when I should have, my own fault!! So yes I have a vested interest in it, naturally obscuring my opinion on the subject, but I have no interest in trying to make any money out of it, if I get a place through AF, and I would prefer not to as I think it would tie me to Ireland, and that is not a good thing when I may have to uproot and work elsewhere if things get worse, It would be for the long term as a home to live in.
But I totally agree with what you said Above, this measure alone, if implemented would have helped to stop the situation getting to the critical levels they are at today. No one likes to have to pay more tax, but this measure is how things are done in other countries and I would totally support it. This would discourage people from dabbling in a market and messing it up. A capitalist solution to a capitalist problem!

jdivision

iguana wrote:

So someone who bought an affordable house has no incentive to get the highest price possible in a falling market. And if they really want to sell that apartment (say they've lost their job but have been offered another one abroad) what is to stop them just putting it on the market for €155k to get a quick sale and their money back even though there might be a few willing buyers at €200k? So the council is down €65k. That can't be right.

No it's not. Read Podge's post.

gurramok

podge018 wrote:

If I sell it for 280k (most likely!) nobody makes a loss.

If I sell it for 155k nobody makes a loss.

Someone here on boards did find something about protection from negative equity for AH buyers before though it was ambiguous

There is just a problem with it in that 2 councils which i contacted about it looked at me with 2 heads saying no such protection exists.
That would be 15k loss to both purchaser and council for 280k market sale.

Not a single council in the country has indicated that there is protection from negative equity publicly in that situation, it ain't a vote of confidence in protecting the buyer.

podge018

Fingal County Council indicated it to me.

ro2

podge018 wrote:

If I sell it for 155k nobody makes a loss.

That's only after 20 years. If you sell it now the council will want their 50% clawback ie 77.5k.

podge018

They don't. How hard is it to understand.

ro2

Very hard. It is the government we're talking about

Afuera

gurramok wrote:

Not a single council in the country has indicated that there is protection from negative equity publicly in that situation, it ain't a vote of confidence in protecting the buyer.

The Housing (Miscellaneous Provisions) Act 2004 has something in place to cover the situation where paying the clawback would put the seller into negative equity. I think basically it just specifies that the council will waive some or all of the clawback to prevent this happening. This legislation does still leave open the slim chance that the property could go below the value of the mortgage on it, in which case the seller would still encounter a loss.

podge018

this was posted by Afuera in another thread that covers the whole thing.

No, that's not what I'm saying. Sorry if I wasn't clear in the post.
I'll use some figures to show you how I think it works:

A buyer purchases a property worth 300k for 150k (i.e. clawback of 50% will be expected if they sell within 10 years). If they sell for 200k then technically they would owe the council 100k and they would receive 100k for themselves. The original purchase was 150k so in this case the council will only demand 50k clawback instead of the full 100k. This means that the buyer will receive 150k for themselves which will cover the original purchase price.

Using different figures, I'll show you how it's still possible for the buyer to lose though:

Same buyer purchases a property valued at 300k for 150k. They end up selling it for 100k due to changed circumstances. They should pay a 50% clawback to the council of 50k but since the selling price is below the original purchase price the whole clawback will be waived. If the 100k that they receive from the sale doesn't cover their outstanding mortgage, they will be in negative territory.

This part of the housing act basically covers your arse:

(d) Where the amount payable under paragraph (a) would reduce the proceeds of the sale (disregarding solicitor and estate agent's costs and fees) below the price actually paid, the amount payable shall be reduced to the extent necessary to avoid that result.

podge018

ha ha, speak of the devil

Afuera

podge018 wrote:

ha ha, speak of the devil

Just pipped you to it

gibo_ie

Does anyone else not see the unfairness to the owner of the site which the property is being built? For every 5 properties being built, the council take one (I will explain the take part in a minute).

Now people may say that the developers can afford it and maybe they can but is this fair? Example is that i built two houses three years ago which i rent out. On a site near it i intended to build three more as it is in a village in need of some housing. The council told me that one would be theirs as i did not qualify for exemption.

Take = They pay you the actual build cost, their value on the land used (NOT market value!!) and a small profit (in the region of 5-10k max i was informed by the housing dept.). Now this may still seem fair enough to some people but it certianly does not help me make a living in any way. (5-10k for a years work....??)

Anyway with clawback by council if the person sells the house...do you think the council will then give some of the clawback to the guy they took the house\land from in the first place??

Anyway i withdrew my plans and am going again for one less, so council get none of my hard earned money!!! Ba$tard$!!!!

Note: I am not a developer, was just lucky to have some land in a village. I even have a real job!!

Bring on the noise....

podge018

I thought that developer's had to sell 10% to the county council.

Looks like you should have only had to give half a house.

jdivision

gibo_ie wrote:

Now people may say that the developers can afford it and maybe they can but is this fair? Example is that i built two houses three years ago which i rent out. On a site near it i intended to build three more as it is in a village in need of some housing. The council told me that one would be theirs as i did not qualify for exemption.

Anyway i withdrew my plans and am going again for one less, so council get none of my hard earned money!!! Ba$tard$!!!!

How big is the site? Below a certain size there is no requirement to provide social and affordable housing. Where is the site?? In certain areas you don't have to provide any social and affordable units because there is already a certain amount of social housing in the area.

gibo_ie

jdivision wrote:

How big is the site? Below a certain size there is no requirement to provide social and affordable housing. Where is the site?? In certain areas you don't have to provide any social and affordable units because there is already a certain amount of social housing in the area.

It is above the .20 ha size limit, but this is only part of the conditions anyway. In all areas you must provide houses or cash, and the cash part is now being removed and this goes for all councils.
20% is the amount not 10%!

jdivision

The percentage depends on the council. 10 per cent affordable and 10 per cent social is the standard. Gibo you could apply for a social housing exemption certificate which is granted a lot in Dublin at least on small developments.

gibo_ie

jdivision wrote:

The percentage depends on the council. 10 per cent affordable and 10 per cent social is the standard. Gibo you could apply for a social housing exemption certificate which is granted a lot in Dublin at least on small developments.

Yeah, i applied after speaking with planners who assured me it would be exempt, 6 weeks later they had "lost" my application, two more weeks later they inisist i had never a hope of being exempted!!! Some of these guys are on a huge power trip, especially after what i hear from some other people dealing with them.

For me it is just though luck but my point is that the council can make a lot of money if people sell these houses but nothing gets given back to the person who owns the site originally, i think this is hugely unfair. Why should I have to loose money and wages just cos someone else cant afford a house in Ireland due to the extortionate house prices?

Ces't la vie....

iguana

podge018 wrote:

They don't. How hard is it to understand.

But somebody does make a loss. The council - and at the root of that the tax payer.

If what you're saying is correct, which it might be, then a seller in a falling market has no incentive to get more than the max they paid for the property. Why would they care if the property sells for 155kor 280k if either way they will get 155k?

If you lost your job next month but were offered a new job in another country but they needed you to start in two weeks. And there were other apartments in your building for sale for 280k on the market for the last 4 months. Wouldn't it make a huge amount of sense to put your apartment on the market for 155k to get rid of it fast and get your investment back?

CelloPoint

iguana wrote:

But somebody does make a loss. The council - and at the root of that the tax payer.

And so we get to the crux of affordable housing: an ingenius way of getting taxpayers to counteract serious cracks in the housing market.

Isn't it amazing that it's only in recent months that the affordable housing scheme (God, doesn't it sound great?) has really got off the ground? A few years ago it wasn't being implemented at all because the developers were - surprise, surprise - creaming it.

Why is it near impossible to get accurate, detailed and up-to-date information on affordable housing from the county council? It's like something out of George Orwell. I sometimes wonder if the CoCos purposely put idiots on the end of phone lines.

I'm thinking of scanning in all documentation I received from the Affordable Housing Scheme. The unproffesionalism and patronising tone in the brochures/letters I received is startling. And this coming from a country who demands tax from me in almost everything I do.

patrickolee

CelloPoint wrote:

And so we get to the crux of affordable housing: an ingenius way of getting taxpayers to counteract serious cracks in the housing market.

Isn't it amazing that it's only in recent months that the affordable housing scheme (God, doesn't it sound great?) has really got off the ground? A few years ago it wasn't being implemented at all because the developers were - surprise, surprise - creaming it.

Why is it near impossible to get accurate, detailed and up-to-date information on affordable housing from the county council? It's like something out of George Orwell. I sometimes wonder if the CoCos purposely put idiots on the end of phone lines.

I'm thinking of scanning in all documentation I received from the Affordable Housing Scheme. The unproffesionalism and patronising tone in the brochures/letters I received is startling. And this coming from a country who demands tax from me in almost everything I do.

Ahhh you're getting a cut price house, you should be grateful. Now bend over.

jdivision

iguana wrote:

But somebody does make a loss. The council - and at the root of that the tax payer.

You still don't seem to realise that if buy a place on the affordable housing list for e155k and sell it for 155k the council does not lose any money. The council buys the units at cost price and then add an administration fee to cover their costs and sell them to affordable home buyers for that price. They DO NOT pay say e240k and then sell it to somebody for e155k. What usually happens is they pay say e153k and sell it on for e155k.

SuzyS1972

Who's had a final interview with Fingal and how did ye find it ?
Was it a grilling process - how long dod they take after the interview to give you the go ahead
I am in a tizzy worrying about it !!!!

If you have 3 times the minimum deposit do you think this would count towards the approval too ?

iguana

jdivision wrote:

They DO NOT pay say e240k and then sell it to somebody for e155k. What usually happens is they pay say e153k and sell it on for e155k.

But they would have brokered that deal with an understanding that they would get back money. This money would have been earmarked for something else.

Also with no incentive for the property owner to get the best price possible for their property, any crash comes faster and harder. How the hell is someone else who needs to sell expected to sell for more than €200k if the guy in the affordable house just sold for €155k.

The_Conductor

The other way of looking at it- if Mr. A who bought an affordable house at E155 goes on to subsequently sell it at E155, so he did not make a loss (take the councils finances out of the equation) he is back where he started. What happens when he goes to try to buy another house? He is no longer a FTB, and does not get favourable stamp duty treatment. In addition- does anyone genuinely believe that you would qualify for an affordable house a second time? So- he now has made no profit on the disposal of his principle primary residence, is no longer a FTB and no longere qualifies for assistance under either council housing schemes. Mr. A is up the creek......

iguana

smccarrick wrote:

Mr. A is up the creek......

Though less far up it than Mr B who bought in the same building for €310k as a regular punter and had his up for sale for €280k but now sees that his neighbour has just sold for €155k.