Fixing the housing crisis without massively increasing tax or borrowing

golfwallah

We all know about the conventional and expensive ways to fix the housing crisis that are aimed mainly at private market and will take a long time to implement. These include the NAMA development plan, massive water infrastructure, savings through public service re-structuring, new funding models that depend on private sector investment, etc.

For more public sector spending, there is the possibility of EU funding, but this usually has to be matched by more government spending on new build, which is expensive. Small scale schemes for pre-fabricated housing and housing co-operatives help show the way but will make only a little difference.

A much simpler and novel way to make a significant immediate difference in public sector supply has been put forward in today’s Sunday Independent, by Master of the High Court, Edmund Honohan SC (brother of Patrick Honohan) – “nationalise repossessed homes”:

The Master of the High Court has called on the Government to "nationalise" repossessed homes and buy-to-lets that banks have sold to speculators and investment trusts and use them as social housing.

Sounds like a good, workable solution to me – he has put out this challenge to political parties in advance of the general election – will tell us something about political will in this country of ours as to whether our politicians will rise to the challenge – or even come up with more workable initiatives.

worded

Yeah, free gaffs for everyone

golfwallah

worded wrote: »

Yeah, free gaffs for everyone

As things stand, many repossessed homes are being sold off below the cost of building, often to what Edmund Honohan reportedly likened to "Maple 10 Golden Circles", thereby enriching a chosen few.

Mr Honohan's proposal is merely about making cheap housing available for public sector renting - not "free" as you suggest.

Nowhere in this article is there mention of "free gaffs for everyone".

It's easy to be cynical and bang out a response without much thought. Have you another suggestion to free up money being spent on housing people in hotel accommodation, as is currently happening, and spend it instead on a better long term solution?

Godge

golfwallah wrote: »

We all know about the conventional and expensive ways to fix the housing crisis that are aimed mainly at private market and will take a long time to implement. These include the NAMA development plan, massive water infrastructure, savings through public service re-structuring, new funding models that depend on private sector investment, etc.

For more public sector spending, there is the possibility of EU funding, but this usually has to be matched by more government spending on new build, which is expensive. Small scale schemes for pre-fabricated housing and housing co-operatives help show the way but will make only a little difference.

A much simpler and novel way to make a significant immediate difference in public sector supply has been put forward in today’s Sunday Independent, by Master of the High Court, Edmund Honohan SC (brother of Patrick Honohan) – “nationalise repossessed homes”:


Sounds like a good, workable solution to me – he has put out this challenge to political parties in advance of the general election – will tell us something about political will in this country of ours as to whether our politicians will rise to the challenge – or even come up with more workable initiatives.

How does that not cost money? The government would have to compensate the bank who owned the property.

Victor

golfwallah wrote: »

A much simpler and novel way to make a significant immediate difference in public sector supply has been put forward in today’s Sunday Independent, by Master of the High Court, Edmund Honohan SC (brother of Patrick Honohan) – “nationalise repossessed homes”:

The state already owns most of the banks. Repossessions are already nationalising the repossessed homes.

Importantly, any such 'Rob Peter to pay Paul' arrangement wouldn't deliver any extra homes.

golfwallah

Godge wrote: »

How does that not cost money? The government would have to compensate the bank who owned the property.

Nobody is saying that it won’t cost money. The point is it will make social housing available at a lot lower cost and a lot quicker than new builds and take homeless families out of B&B hotel arrangements. The capital costs associated with providing the additional infrastructure required to make available building sites viable will run into many hundreds of millions if not billions, as opposed to the relatively small cost of this suggestion.

If you read the article you will see that, according to Edmund Honohan who is witnessing what is happening in the courts on a regular basis, profits from the present spate of house repossessions is going into private 3rd party funds, at a loss to both the previous owners and the banks (some of whom are currently state owned):

the State could address the housing crisis by passing new laws to allow it to compulsorily acquire properties that "the banks dump into the market for speculators".
The outspoken senior official of the High Court and brother of former Central Bank governor Patrick Horohan said "the State simply steps in and takes them [the properties] back. The entities paid a small amount of money for them and they get that amount of money back. They are eliminated from the equation".
Mr Honohan issued a written judgment last week that touched on Danske Bank's bulk sale of more than 400 repossessed homes and properties to a trust fund last year. He likened the transaction to "a Maple 10 golden circle" - a reference to the investors who were offered loans by the former Anglo Irish Bank to buy shares in the bank.
Speaking on foot of his judgement, Mr Honohan said: "You can say, all right, let's go out and build houses. But if you can go out and pick them up for less than the cost of building, then that's what you should do.
"It is open to the legislature in the Oireachtas to pass emergency legislation this side of the new year to incorporate a new body which would compulsorily acquire the property overnight at the stroke of a pen."
Mr Honohan said "there is a well-worn mechanism for compulsory acquisition" and it is a "cut and paste job to produce legislation".
His proposal is that the State would buy the repossessed properties from the investment funds that bought them from banks rather than from the banks directly - as it could be difficult to establish their market value.

Still sounds like a workable solution to me!

mickdw

So take the house from struggling working family and make it available to welfare family with full rent supplement.
Great plan.
I agree that the way nama properties are being sold off is a disgrace. They are bundling properties in a manner that only mega funds can buy them.
A suitable portion of homes should be released to the home buyer market and another portion released to social housing.

golfwallah

Victor wrote: »

the state already owns most of the banks. Repossessions are already nationalising the repossessed homes.

Importantly, any such 'Rob Peter to pay Paul' arrangement wouldn't deliver any extra homes.

True the state owns AIB, BOI and the former Anglo-Irish – but not all banks, e.g. Danske, Bank of Scotland, etc., that were trading here during the boom. And repossessions to the state owned banks may put such houses into state ownership temporarily but all are ultimately being disposed of at discount prices in the private market, bringing in huge profits to bulk-buying, unaccountable entities.

The Sunday Independent reports:

In his written judgment, Mr Honohan said: "Given that we now have a public housing shortage, it is sobering to realise that the State could have - probably should have - bought up this distressed housing stock at the time, at knock-down prices, instead of losing them to the unregulated and sometimes unaccountable private investment funds.

Nobody is claiming, either, that the proposed scheme would deliver more houses but it would provide a greater pool of social housing. It would also bring an end to the only “rob Peter to pay Paul” arrangement in place right now by preventing profiteering at the expense of former owners and banks (in many cases, state owned).

golfwallah

mickdw wrote: »

So take the house from struggling working family and make it available to welfare family with full rent supplement.
Great plan.
I agree that the way nama properties are being sold off is a disgrace. They are bundling properties in a manner that only mega funds can buy them.
A suitable portion of homes should be released to the home buyer market and another portion released to social housing.

You need to consider that the struggling working family, in whose plight I would greatly sympathise, might very well themselves become the welfare family to whom you refer.

The differences would be that:

the pool of social housing available to house them after getting out from under an un-repayable mortgage would now be greater.

a private vulture fund would no longer profit from their misfortune as is happening now.

hmmm

How is this going to fix the housing crisis? It does nothing about supply, just moves the ownership from one group to another.

We need less of a focus on giving out free houses to people who couldn't be bothered paying for one, and more attention paid to those people who pay their way in society and want to buy their own house. The only solution is supply - that means more zoned land, less NIMBYism and far fewer levies taxed on the developers of new houses.

Silverbling

There is a middle group of people, the working homeless.

Due to circumstance I am on the list for social housing but will never get one and do not need one. As a single parent I can not afford the very high rents so am paying privately to live in 1 room with my kids.

Due to my divorce and age I have had no choice but to rent as I can't get a mortgage but rents in some cases are higher than a mortgage.

There are thousands and thousands of single parents in this situation, having no home of their own but not on the streets so do not count in the homeless figures.

The sad reality is becoming homeless can happen to anyone in the blink of an eye when landlords can move a family member in with 112 days notice.

Instead of saying the repossed properties should all be for social housing they should reverse the figures, 20% of them should be given to families at a capped affordable rent because if things get too difficult to manage then the easy option is to stop working and go fully into the system to put a roof over their kids heads, which no one who has worked for years wants to do but the priority is our children not the government that we have paid taxes to for many years

Silverbling

A quick solution would be to bring the rent a room scheme to rented houses, any landlord can earn €12,000 a year completely tax free.

Over that amount it is all taxable, it will not benefit all landlords with larger mortgages but would make more housing available from landlords with smaller mortgages.

That limit should be applied to every property and not to the landlord personally

Victor

hmmm wrote: »

The only solution is supply - that means more zoned land, less NIMBYism and far fewer levies taxed on the developers of new houses.

I don't think there is a shortage of zoned land. Development costs councils money and the developers should pay for that.

There is a shortage of banks willing to lend for residential property.

Silverbling wrote: »

A quick solution would be to bring the rent a room scheme to rented houses, any landlord can earn €12,000 a year completely tax free.

And who will pay for that? Assuming 25% of the population rents, that's about 360,000 properties or a cost of €4,320,000,000 per year - that would build 20,000-30,000 units per year.

The advantage of the rent a room scheme is that it better utilises otherwise under-used properties. Applying it to all rental properties would be a poorly focused use and not value for money.

golfwallah

hmmm wrote: »

How is this going to fix the housing crisis? It does nothing about supply, just moves the ownership from one group to another.

We need less of a focus on giving out free houses to people who couldn't be bothered paying for one, and more attention paid to those people who pay their way in society and want to buy their own house. The only solution is supply - that means more zoned land, less NIMBYism and far fewer levies taxed on the developers of new houses.

Nobody is suggesting this proposal will fix the housing crisis in its entirely or that it will fix the supply problem.

But it will help by taking a lot of ineffectiveness and profiteering out of the current practice of bundling repossessed houses for sale to vulture funds, which only serves to enrich a privileged few. Surely, you’re not proposing ignoring this issue by doing nothing about it?

I’m a house owner myself and my kids have had to work hard to buy for themselves, unlike a very small number of their relatives and friends, who have benefited from social housing. So I have no vested interest in social housing (although I was a director of a voluntary housing agency for a couple of years). I am a great believer in self reliance and, thankfully, most of the people I associate with are of the same bent.

That being said, and without trying to fix all the world’s problems, we have to live in the world as it is, rather than as we would like it to be. And in our world, in this country at least, there is a general acceptance that some people will never own their own home, leaving us with a dependence on social housing.

I agree that the biggest part of the housing problem concerns supply. But also, putting back on my realist hat, this problem is taking and will continue to take lots of time and truckloads of money to solve. Zoned land is not the problem – there’s loads of that. What is in short supply is zoned land that is serviced with public utilities (for water, waste water, etc.) and the funds to correct the current infrastructure deficit in waste water treatment, etc.

I also agree with your point on NIMBYism, that is, if you are referring to “spoiling” peoples’ views with the higher rise developments that have been used in other countries to solve housing supply problems. And I agree with the need to make it less expensive to bring developed sites on stream by easing up on development levies, etc. But there are prices to pay, through higher density, higher rise, etc.

In the final analysis it’s about choice and strength of political will to solve very human problems, which is impossible without upsetting some or other of the population!

Victor

golfwallah wrote: »

But it will help by taking a lot of ineffectiveness and profiteering out of the current practice of bundling repossessed houses for sale to vulture funds, which only serves to enrich a privileged few.

I think you're fundamentally misunderstanding what is happening. those funds are ultimately owned by investment and pension funds, in which many people have invested. So it isn't just the privileged few.

Imagine Tom lost his job in the recession and has fallen behind in his mortgage. With no repayments for several years and no immediate prospect of things improving, the bank repossesses the property. The bank then sells the individual property. Typically, it will be bought by a family or a landlord willing to rent it out.

Meanwhile Dick, a former developer, has 10 sites and a number of semi-complete estates in Laois that are selling slowly, due to their poor location. He profoundly overpaid for the sites, is having difficulty repaying his debt. The bank bundles Dick's debt with other similar debt and sells it off. It is then up to the buyer of the debt to manage the debt.

Finally Harry, another former developer, has 10 sites and a number of semi-complete estates in Leitrim that are effectively unsellable. He profoundly overpaid for the sites, can't repay his debt and is failing to maintain the part-occupied housing estates. The bank repossesses the property. The bank bundles Dick's former properties with other similar properties and sells it off. It is then up to the buyer of the develop or not the properties.

Silverbling

Victor wrote: »

I don't think there is a shortage of zoned land. Development costs councils money and the developers should pay for that.

There is a shortage of banks willing to lend for residential property.

And who will pay for that? Assuming 25% of the population rents, that's about 360,000 properties or a cost of €4,320,000,000 per year - that would build 20,000-30,000 units per year.

The advantage of the rent a room scheme is that it better utilises otherwise under-used properties. Applying it to all rental properties would be a poorly focused use and not value for money.

It may not be a long term solution but it would help with the immediate crisis and has to be a cheaper option than paying rent allowance or paying for emergency homeless accommodation

Something needs to be done and fast, I am in South Dublin so only see the problems here, if the govenment do not do something soon it will become so big a problem it might not be able to be fixed for years.

Value for money is not a factor, all long term warnings were ignored, it is having a massive knock on effect, the Dubs move down the country which pushes up the rents which makes more people unable to pay their rent which puts them at risk of being homeless, I looked into moving, there are no school places available so you have to homeschool

This situation is about more than economics, we are coming out of the recession slowly, I can see it in my sales but the focus should be on the next tax paying generation, home schooled homeless kids are not the way of the future

golfwallah

Victor wrote: »

I think you're fundamentally misunderstanding what is happening. those funds are ultimately owned by investment and pension funds, in which many people have invested. So it isn't just the privileged few.

Imagine Tom lost his job in the recession and has fallen behind in his mortgage. With no repayments for several years and no immediate prospect of things improving, the bank repossesses the property. The bank then sells the individual property. Typically, it will be bought by a family or a landlord willing to rent it out.

Meanwhile Dick, a former developer, has 10 sites and a number of semi-complete estates in Laois that are selling slowly, due to their poor location. He profoundly overpaid for the sites, is having difficulty repaying his debt. The bank bundles Dick's debt with other similar debt and sells it off. It is then up to the buyer of the debt to manage the debt.

Finally Harry, another former developer, has 10 sites and a number of semi-complete estates in Leitrim that are effectively unsellable. He profoundly overpaid for the sites, can't repay his debt and is failing to maintain the part-occupied housing estates. The bank repossesses the property. The bank bundles Dick's former properties with other similar properties and sells it off. It is then up to the buyer of the develop or not the properties.

This report in today's Sunday Independent article doesn't sound like a sale to a pension fund to me:

a bulk sale to Finsbury Circle Nominee Ltd, a fund set up by Davy Stockbrokers on behalf of a client.

All Edmund Honohan is saying, based on his considerable experience as Master of the High Court, is that there are ways of disposing of such re-possessed houses that would better serve the public good - and I still think he is on the right track. He has displayed considerable courage by speaking out - pity there aren't a few more like him in high positions!

hmmm

golfwallah wrote: »

But it will help by taking a lot of ineffectiveness and profiteering out of the current practice of bundling repossessed houses for sale to vulture funds, which only serves to enrich a privileged few. Surely, you’re not proposing ignoring this issue by doing nothing about it?

You could have saved us a lot of time at the start by saying this was a left-wing soapbox about capitalism and nothing at all to do with "fixing the housing crisis".

Personally I'd much rather have large professional landlords renting hundreds of houses, rather than putting up with every gob****e Tom Dick & Fintan and their bloody "buy to let pension". But whether it's them or a company renting properties makes no difference to the stock available.

Villa05

golfwallah wrote: »

A much simpler and novel way to make a significant immediate difference in public sector supply has been put forward in today’s Sunday Independent, by Master of the High Court, Edmund Honohan SC (brother of Patrick Honohan) – “nationalise repossessed homes”:


Sounds like a good, workable solution to me – he has put out this challenge to political parties in advance of the general election – will tell us something about political will in this country of ours as to whether our politicians will rise to the challenge – or even come up with more workable initiatives.

Something similar suggested here back in April

There is a complete lack of supply of council housing. If the government are to pay the mortgage. Let the state be the owner of these properties
Solve the council housing issue and keeping people in there homes (within reason of course, no mansions)

Plus these mortgages are highly distressed, they should be purchased at way below mortgage value. 40 cents on the Euro. Something similar to NAMA.
State gets housing at a fraction of there build cost and spread all over the country not in one big estate which caused issues before.

http://www.boards.ie/vbulletin/showpost.php?p=95091035&postcount=464

BoJack Horseman

If I had the choice of paying my mortgage vs surrendering it to the government and paying them rent at social housing rates I would chose the latter.... as would a great many people I imagine, it would work out a helluva lot cheaper for us.

And doing this will not increase the amount of available properties at all.

Villa05

BoJack Horseman wrote:

If I had the choice of paying my mortgage vs surrendering it to the government and paying them rent at social housing rates I would chose the latter.... as would a great many people I imagine, it would work out a helluva lot cheaper for us.

Social housing rates are income dependent plus the state becomes the owner of the property.

Villa05

BoJack Horseman wrote:

And doing this will not increase the amount of available properties at all.

Outside of Dublin, do we have a shortage of property?

Is it rather the supply of affordable property rather than property full stop?

BoJack Horseman

Villa05 wrote: »

Outside of Dublin, do we have a shortage of property

In some places, yes..
Where I am there certainly is, especially in the rental sector.

Godge

golfwallah wrote: »

Nobody is saying that it won’t cost money.

You said in the thread title that it wouldn't increase tax or borrowing, yet I do not see how it cannnot.

It looks to me like an overly simplistic solution that costs a lot more than the proponents say it will.

BoJack Horseman

Villa05 wrote: »

Social housing rates are income dependent plus the state becomes the owner of the property.

Yup.... I know that... And it will certainly save us a lot of money.
I've no issue with the government taking the house.
Its in about 200% negative equity... they would be welcome to it.

The mentioned policy would just need to clarify how long it would take us to no longer pay our mortgage & we'd be set.

Zubeneschamali

golfwallah wrote: »

All Edmund Honohan is saying, based on his considerable experience as Master of the High Court, is that there are ways of disposing of such re-possessed houses that would better serve the public good

Edward Honohan is Master of the High Court. He is not a judge. He deals with procedural matters before cases get to a real judge. There is no reason to suppose he is an expert on what would best serve the Irish people.

He has also been slapped down by the actual judges for acting irrationally.

Is the title of this thread not massively misleading or am I just totally missing something?

How does the suggestion voiced by Honohan 'fix' the housing crisis?

golfwallah

hmmm wrote: »

You could have saved us a lot of time at the start by saying this was a left-wing soapbox about capitalism and nothing at all to do with "fixing the housing crisis".

Personally I'd much rather have large professional landlords renting hundreds of houses, rather than putting up with every gob****e Tom Dick & Fintan and their bloody "buy to let pension". But whether it's them or a company renting properties makes no difference to the stock available.

Godge wrote: »

You said in the thread title that it wouldn't increase tax or borrowing, yet I do not see how it cannnot.

It looks to me like an overly simplistic solution that costs a lot more than the proponents say it will.

Which is better:
– to deal with problems by putting left or right wing labels on them or face up and to try to solve them?
– To give up before even trying .... because of fear of the risks involved?

Sure, the one liner put down might make you feel good but it does nothing to deal with the real problem faced by a growing number of unfortunate families, who find themselves in a homeless situation.

My instinct is to look for solutions that are considered and measured – not reckless or driven by political ideology. There are enough smart people in this country to solve problems like homelessness. Certainly, there will be difficulties, but, at least, let us try to improve the current situation! There must be more options around than the current limited approach of below market housing allowance combined with putting families up in temporary B&B hotels.

Maybe we should look at this apparently “unfixable” homelessness problem from a number of different angles. The legal / legislative angle was put forward by Edmund Honohan SC in yesterday’s Sunday Independent and merits serious consideration, in my view. You can also look at the problem from a cost / benefit angle.

For example, cost of emergency B&B accommodation in Dublin in 2015 is running at about €9m / year http://www.echo.ie/news/item/emergency-housing-in-hotels-costs-4-5m-in-first-six-months-of-year. How much could be raised in government bonds to arrive at a break-even point and how many houses could be acquired for this cost? Simple arithmetic gives an answer of €180m @5% = 600 houses at average of €300K or €300m @3% = 1,000 houses at average of €300K.

OK, it does mean additional government borrowing but will save the €9m a year spent on B&B and produce rental income before accounting for the future hidden societal cost of temporary B&B.

I’ve no problem with large professional landlords gradually taking over more of the market (through buying repossessed houses), which may be happening right now. But what’s wrong with councils taking up a portion of such transactions on a purely cost / benefit basis.

Godge

golfwallah wrote: »

Which is better:
– to deal with problems by putting left or right wing labels on them or face up and to try to solve them?
– To give up before even trying .... because of fear of the risks involved?

Sure, the one liner put down might make you feel good but it does nothing to deal with the real problem faced by a growing number of unfortunate families, who find themselves in a homeless situation.

My instinct is to look for solutions that are considered and measured – not reckless or driven by political ideology. There are enough smart people in this country to solve problems like homelessness. Certainly, there will be difficulties, but, at least, let us try to improve the current situation! There must be more options around than the current limited approach of below market housing allowance combined with putting families up in temporary B&B hotels.

Maybe we should look at this apparently “unfixable” homelessness problem from a number of different angles. The legal / legislative angle was put forward by Edmund Honohan SC in yesterday’s Sunday Independent and merits serious consideration, in my view. You can also look at the problem from a cost / benefit angle.

For example, cost of emergency B&B accommodation in Dublin in 2015 is running at about €9m / year http://www.echo.ie/news/item/emergency-housing-in-hotels-costs-4-5m-in-first-six-months-of-year. How much could be raised in government bonds to arrive at a break-even point and how many houses could be acquired for this cost? Simple arithmetic gives an answer of €180m @5% = 600 houses at average of €300K or €300m @3% = 1,000 houses at average of €300K.

OK, it does mean additional government borrowing but will save the €9m a year spent on B&B and produce rental income before accounting for the future hidden societal cost of temporary B&B.

I’ve no problem with large professional landlords gradually taking over more of the market (through buying repossessed houses), which may be happening right now. But what’s wrong with councils taking up a portion of such transactions on a purely cost / benefit basis.

The EU rules on fiscal surpluses don't allow for such measures.

golfwallah

Godge wrote: »

The EU rules on fiscal surpluses don't allow for such measures.

There are always problems and negatives.

How about getting into solution rather than problem mode?

It's usually a process of recognising step by step possibilities and then joining the dots (or looking for ideas as to how they can be joined)!

Godge

golfwallah wrote: »

There are always problems and negatives.

How about getting into solution rather than problem mode?

It's usually a process of recognising step by step possibilities and then joining the dots (or looking for ideas as to how they can be joined)!

Solution is to grow the economy to create the fiscal space for housing measures.

Villa05

Godge wrote:

Solution is to grow the economy to create the fiscal space for housing measures.

We are one of the highest paid contries in europe,
We had housing crisis in the past and solved them when we were amongst poorest in Europe.

The state is the largest property owner in the world, loads of construction workers under /unemployed. Capital is at it cheapest.

The state is a large part of the problem in housing

Victor

golfwallah wrote: »

But what’s wrong with councils taking up a portion of such transactions on a purely cost / benefit basis.

Quite a few councils are too small to run effectively and have difficulty managing housing estates (they are even refusing to take in charge hundreds of them). What makes you think they would magically be efficient at managing a large number of standalone houses?

hmmm

golfwallah wrote: »

How about getting into solution rather than problem mode?

It's usually a process of recognising step by step possibilities and then joining the dots (or looking for ideas as to how they can be joined)!

OK then. Instead of dumping random houses all over the country onto councils who wouldn't know how to maintain or even what to do with them, or instead of the banks and NAMA turning themselves into Ireland's biggest estate agent, how about we package up large quantities of the repossessed houses/NAMA housing, and sell them as a package to some company who has the ability and the will to sell these houses to end purchasers.

Even more obviously, how about we sell these houses to people such as working families who are paying taxes to support the welfare state and are probably renting in a far flung commuter estate, rather than handing them out to people "on the social"?

Villa05

hmmm wrote: »

OK then. Instead of dumping random houses all over the country onto councils who wouldn't know how to maintain or even what to do with them, or instead of the banks and NAMA turning themselves into Ireland's biggest estate agent, how about we package up large quantities of the repossessed houses/NAMA housing, and sell them as a package to some company who has the ability and the will to sell these houses to end purchasers.

Even more obviously, how about we sell these houses to people such as working families who are paying taxes to support the welfare state and are probably renting in a far flung commuter estate, rather than handing them out to people "on the social"?

hmmm Councils have not got the ability or the resources to do a bit of general maintenence on properties, yet they shove 1200 employees onto Irish Water to do nothing and have that situation protected through a union agreement for 12 years. Genius Resource Management.

According to your post, There are only 2 groups of people in Society

1. Hard working folk who earn loads of money and can comfortably afford a mortgage

2. Dole Scroungers.

Wonder if there are any people working very hard on low wages and cant afford a mortgage or the more expensive private market rent

Villa05

BoJack Horseman wrote: »

In some places, yes..
Where I am there certainly is, especially in the rental sector.

BoJack Horseman wrote: »

Yup.... I know that... And it will certainly save us a lot of money.
I've no issue with the government taking the house.
Its in about 200% negative equity... they would be welcome to it.

The mentioned policy would just need to clarify how long it would take us to no longer pay our mortgage & we'd be set.

Property in a rental hotspot and supply shortage in 200% negative equity. The crash must have been alot worse than that reported by the media

I would say that people were fleeced an robbed buying property during the boom but your post implies the house is worth 25% of the outstanding mortgage. Thats mad

golfwallah

Public sector housing is still a significant part of the entire housing stock. From the latest figures I could find for 2012, €954.8m is being spent annually on 136,000 houses (6.8% of the country’s entire housing stock of 2,003,000 houses). This is not an insignificant number and there are no excuses for not managing it properly.

That said, every time there are reports of public sector failings in carrying out their duties, there are calls to out-source provision of such poorly performed public services. And, indeed, maybe these poorly performed services should be contracted out either in part or in their entirety. But if this happens, what becomes of the public service and why don’t we call for a complete root and branch re-organisation of such inefficient service provision? Is it too much to ask for public services to be carried of effectively and efficiently? Who is responsible for poor performance and what is being done to improve it?

If private service companies perform poorly, they will lose customers to competitors and go out of business – i.e. there are consequences – people lose their jobs. This big driver of change is missing from public services. Why are there no consequences for poorly performing managers in the public sector, that is, other than contracting out such services (or parts thereof). Examples are waste collection to private contractors, water services to Irish Water, housing to Voluntary Housing Agencies and the private landlord sector. And yet, no one loses their jobs - they are “re-deployed” elsewhere in the public sector morass. Not only that, but with improvements in technology, council operations could be run from a single centralised location almost anywhere. Yet, our “protected” 31 local authorities continue with business as usual, each with their own county manager, admin, finance, IT, units, etc.

Ain’t it great to have it both ways – duplication of overhead activities, little or no accountability, re-organisation, or performance management, no radical change and the safety net of re-deployment (even if to do nothing) when work is out-sourced.

I sincerely hope this kind of inefficiency and lack of accountability and consequences for poor performance in the public sector, particularly, the crisis hit housing sector soon becomes an election issue! But, then, this is Ireland and the best we seem to be getting offered is “we have our faults but we’re not as bad as the other crowd”. Why do we have such low expectations of our politicians?

macraignil

I sincerely hope this kind of inefficiency and lack of accountability and consequences for poor performance in the public sector, particularly, the crisis hit housing sector soon becomes an election issue! But, then, this is Ireland and the best we seem to be getting offered is “we have our faults but we’re not as bad as the other crowd”. Why do we have such low expectations of our politicians?[/QUOTE]

The main reason I have such low expectations from our politicians is the 200billion euro debt they have left on the shoulders of tax payers in this country. And there are many examples of how politicians have made this situation worse.

I just read an article in the Sunday Times about Derek Nolan from the labour party who has got approval from the labour parliamentary party for a compulsory purchase order bill. It will allow "large tracts of land for housing" be ceased by the council for 1.25 times agricultural price. Just like the suggestion at the start of this thread the result would be disastrous for commercial property development in this country.

How can we have a functional housing market if developers could have their lands ceased by the council at below market value in this way? How can we have a functional market that allows companies that might want to develop a group of homes (they buy at a discount so they can invest in and improve in order to sell or rent) for a profit, if councils can take them off them like Ed Honohan suggests?

andrew

It seems like he hasn't paid attention to the opportunity cost of doing this.

The state has 2 options for NAMA houses. Sell them, or give them away as social housing, so the opportunity cost of doing this is selling them. If you were going to give them away, you'd have to be able to show that selling them isn't preferable. It might be preferable if you can sell the NAMA houses for more than it would cost to build the same number of social housing units, for example. Which, given NAMA's mandate is to recoup as much money as possible, is clearly what they're going for.

There are also probably some planning considerations when it comes to social housing which weren't taken into consideration when building NAMA houses, too.

Godge

andrew wrote: »

It seems like he hasn't paid attention to the opportunity cost of doing this.

The state has 2 options for NAMA houses. Sell them, or give them away as social housing, so the opportunity cost of doing this is selling them. If you were going to give them away, you'd have to be able to show that selling them isn't preferable. It might be preferable if you can sell the NAMA houses for more than it would cost to build the same number of social housing units, for example. Which, given NAMA's mandate is to recoup as much money as possible, is clearly what they're going for.

There are also probably some planning considerations when it comes to social housing which weren't taken into consideration when building NAMA houses, too.

If the state takes over NAMA housing as social housing, that counts as expenditure and an increase in debt and has to be at market prices.

The only possible way to do it and remain within the budget criteria is if the construction cost is greater than the market price and there is a capital budget for constructing social housing that can be reduced and the social housing is not built. Even then, the economics is questionable as the multiplier effect of the construction jobs is lost.

For Reals

More Council housing at manageable realistic rates. There would be no quick windfall, but money spent would be drawn back over time.
Rent based on a percentage of income for people earning under a certain rate.
I know if goes against the short term quick fix, money fast philosophy of FF/FG but it would work.

BoJack Horseman

For Reals wrote: »

Rent based on a percentage of income for people earning under a certain rate.

that is how council rent is assessed already.

Your suggestion is simply the status quo....

For Reals

BoJack Horseman wrote: »

that is how council rent is assessed already.

Your suggestion is simply the status quo....

No. It is how it's carried out but we have to make up for the shortfall after selling off public land and property to private investors and failed and abandoned rejuvenation projects.
A great part of the solution is investment in public housing at affordable rents. The state will get its investment back over time.

golfwallah

For Reals wrote: »

No. It is how it's carried out but we have to make up for the shortfall after selling off public land and property to private investors and failed and abandoned rejuvenation projects.
A great part of the solution is investment in public housing at affordable rents. The state will get its investment back over time.

Rents for social housing are set well below market rates. They are loss making and will never produce a return on investment solely from the point of view of resources allocated to housing.

The return is purely a societal one - agreed this is a long-term payback, for example from housing families at subsidised rates, that will ultimately provide an educated and productive workforce.

The only crux of the argument about sale of houses owned by banks is whether they should be sold only to private investors (whom some would argue are better performers at managing property than councils have proved to be) or whether councils should be enabled to buy them.

Failed and abandoned rejuvenation council projects are part of the reason why councils are regarded as incompetent property managers. But such properties tend to have been built in big public housing schemes with social deprivation problems. The argument for estates with a greater mix of private and public housing is that they have less vandalism than large council developments. This argument would be helped if councils could buy a proportion of the privately owned houses being sold by banks right now.

Victor

golfwallah wrote: »

This argument would be helped if councils could buy a proportion of the privately owned houses being sold by banks right now.

There is no impediment to councils buying random lots of property. They just don't want to, as it doesn't serve their needs.

riclad

There was an article in the sunday times about this .
We need to increase housing density in urban areas,
allow 5 storey plus buildings .
The councils could put up a contract in the eu ,
advertise it on a website .
Contract to build 1000,units on a site in dublin. or cork .
eu companys wont bid to build 50 house ,s in kerry.
The private market will not solve our housing crisis .
it needs a long term plan.
We need more competition in the building industry .
build 30 thousand social housing units .
some for single people, older people ,people on disability allowance .
many people rent who cant get a mortgage,
Single people who are working , have no choice but to rent .
you need to be working maybe 5 years before its worth asking for a loan.
this is not 2004,
when banks were giving 100 per cent loans to joe bloggs who works in dunne stores .
There are 100,s of council flats empty ,
they have a small staff to do minor repairs .
There,s some rule if soemone leaves a council flat ,
it has to be completely rewired .
Before it is rented out again.

Private builders are taking nama to court to stop them building social housing .
As they say nama can borrow money at a cheaper rate than a private company .

IF we rely on the market we,ll just get higher rents ,
a few houses built in certain area,s .
And the crisis will get worse .
And we will have 1000,s of syrian immigrants ,on the way.
where will they live .
Theres only a limited amount of space in hotels .

KingBrian2

golfwallah wrote: »

Rents for social housing are set well below market rates. They are loss making and will never produce a return on investment solely from the point of view of resources allocated to housing.

The return is purely a societal one - agreed this is a long-term payback, for example from housing families at subsidised rates, that will ultimately provide an educated and productive workforce.

The only crux of the argument about sale of houses owned by banks is whether they should be sold only to private investors (whom some would argue are better performers at managing property than councils have proved to be) or whether councils should be enabled to buy them.

Failed and abandoned rejuvenation council projects are part of the reason why councils are regarded as incompetent property managers. But such properties tend to have been built in big public housing schemes with social deprivation problems. The argument for estates with a greater mix of private and public housing is that they have less vandalism than large council developments. This argument would be helped if councils could buy a proportion of the privately owned houses being sold by banks right now.

For some reason the people in need of accommodation find great help with the community churches or those in the community that have reached out to the homeless and have helped people out of difficult situations. The resources should go to these places where the money would be for good accommodation for these people.

Victor

KingBrian2 wrote: »

For some reason the people in need of accommodation find great help with the community churches or those in the community that have reached out to the homeless and have helped people out of difficult situations. The resources should go to these places where the money would be for good accommodation for these people.

People need homes, not patronage.

KingBrian2

Victor wrote: »

People need homes, not patronage.

A lot of people have very difficult situations to deal with. They need the help and apparently these guys are willing to help them for free or more rather because it is right to do so. I agree though patronage is not the answer.

golfwallah

Victor wrote: »

There is no impediment to councils buying random lots of property. They just don't want to, as it doesn't serve their needs.

Quite! They prefer to serve their own needs rather than the needs of their customers (voters, and the homeless). It’s a handy way out for politicians and bureaucrats, as opposed to finding innovative ways to solve the housing crisis – that’s just more work, hassle, etc.

I’m saying this from experience of attending a meeting with a large local authority as one of the directors of a voluntary housing agency a few years ago. We were informed that any new developments would have to be funded out of the voluntary agency’s budget, if necessary with loans personally guaranteed by the directors themselves. Government policy was no more loans (to keep debt / GDP ratio down).

No wonder there is a housing crisis – when politicians and local authorities have dumped their responsibilities onto volunteers. I mean, how many volunteers in their right mind are prepared to put their own houses on the line as a guarantee to repay bank loans?

And now we hear that housing is an election priority – see Irish Times article.

Indeed! Talk is cheap – what about doing something about the problem?

golfwallah

golfwallah wrote: »

Indeed! Talk is cheap – what about doing something about the problem?

Such as?