Government to pursue permanent price/rent increases?

antoinolachtnai

antoinolachtnai wrote: »

............

3. Sorry, I had the impression you were Rory Hearn. So you are not?.....

As did I until he clarified he isn't.

beauf

Villa05 wrote: »

Building affordable accommodation apparently costs 250k+ per unit, yet the Government through NAMA is selling at 100k

Public transport is cheaper than running a car especially with most services at your doorstep

Its still expensive. If considering social housing.

KomradeBishop

antoinolachtnai wrote: »

1. I never said that the dichotomy was false. Those are words you put in my mouth.

2. I never said you were advocating low quality housing. Those are words you put in my mouth. (You do appear to be advocating the building of smaller units with lower quality finishes which is what social and affordable housing actually is when you strip away the politics and snobbery, and I personally have no problem with that view.)

3. Sorry, I had the impression you were Rory Hearn. So you are not?

4. I am sorry if it seems like these are red herrings or putting words in your mouth, but I am trying to work out what your issue is and what you are calling for. Now you say it is a question of degree rather than of nature, which makes things a little clearer. You are ok some 'financialization' (which is a word I only understand in general terms and which i think you understand in a very broad sense) but your problem is that there is too much of it.

Your focus is not the cost of labour and materials to build a building, but I can assure you that it is a big issue. Building high-density is a very expensive undertaking and it is years before the investor sees any money back. That is fine, but if there is not a very high degree of 'financialization' there will be very few homes built. There just isn't anybody sitting around Dublin with billions in their back pocket ready to sink into building homes.

As a result, less 'financialization' (which is what you are calling for) = fewer homes built.

You also say that the cost of land and profit share is your focus. That is fair enough, but I cannot understand what exactly your point is in relation to this. The government and local authority take a big share of land value increases and of rents. You think they should take more?

1: If you're claiming that dichotomy is true, you're lacking an argument to back that.

2: That applies to social housing, but when I say affordable housing, I mean housing where the price is not encumbered by inflated non-construction costs. These can have any level of furnishing quality.

3: No.

4: I don't want increasing financialization, such that it becomes predominant in the market - which seems to be the way it is headed for the future.

The assertion that increased financialization is necessary, is false - arguably it will exacerbate the problems in the housing market, not fix them, and push the market more towards rentals instead of homeownership, and push the property market and renting towards being a greater and greater cost burden, increasing cost of living relative to wages, permanently into the future (with associated gentrification etc.).

beauf

antoinolachtnai wrote: »

...Building high-density is a very expensive undertaking and it is years before the investor sees any money back. That is fine, but if there is not a very high degree of 'financialization' there will be very few homes built. There just isn't anybody sitting around Dublin with billions in their back pocket ready to sink into building homes....

A return to chasing investors, I think has to be managed carefully. It has the potential to make the problems worse.

http://www.theglobeandmail.com/report-on-business/economy/housing/empty-homes-foreign-buyers-fuel-resentment-in-london/article24030223/

Graham

beauf wrote: »

A return to chasing investors, I think has to be managed carefully. It has the potential to make the problems worse.

http://www.theglobeandmail.com/report-on-business/economy/housing/empty-homes-foreign-buyers-fuel-resentment-in-london/article24030223/

Absolutely right and given we have the advantage of seeing what has happened in London there should be financial disincentives to make sure the same doesn't happen here.

Maybe the disincentives could be coupled with (some limited) incentives to offer long-term, secure rental-only accommodation with rents tied to inflation.

Villa05

beauf wrote:

Its still expensive. If considering social housing.

What's expensive
Buying at 250k+ or selling at 100k

It's downright stupid

The_Conductor

Villa05 wrote: »

It's downright stupid

Selling at all- is downright stupid.
Thats at least one plank in the current mess- the manner in which local authorities divested themselves of their residential housing stocks.

beauf

Well its all stupid. Selling at a discount. Giving control of the housing to commercial interests. Not using unused property sitting idle to solve (at least temporarily) a housing crisis. Putting pressure on a over stretched, under resourced infrastructure. Its just difference perspectives of the same problem.

Villa05 wrote: »

What's expensive
Buying at 250k+ or selling at 100k
It's downright stupid

Public transport

athtrasna

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Villa05

handlemaster wrote:

The government needed to get the property prices up to sell the NAMA stock and also bring back confidence in the economy.

I'm sure PayPal and other employers are delighted with this "confidence". It must be great to have our hard won competitiveness eroded again.

Idbatterim

Could there be a scheme initiated where low income couples/families living and working in Dublin be given the opportunity to purchase these.

ok, so they get this winning lottery ticket! and the people slightly above them on still lowish - average wages, where are they left? Paying an insane chunk of their salary (which the vast majority are unlikely to do) to live in the same accommodation?

Villa05

Idbatterim wrote:

ok, so they get this winning lottery ticket! and the people slightly above them on still lowish - average wages, where are they left? Paying an insane chunk of their salary (which the vast majority are unlikely to do) to live in the same accommodation?

I gave a menu of options. My main point is why is the state selling at a 100k knowing the replacement can be 250k plus and that the state has to subsidise accommodation costs for those on low incomes

antoinolachtnai

Well it is NAMA which isn't quite the state. NAMA or its receiver has to get the market value though. I have no idea why it is so low in this instance. It really depends if they are selling the actual building or just the loans. It may well be that the building has some construction or other issue that needs to be sorted out.

Graham

antoinolachtnai wrote: »

Well it is NAMA which isn't quite the state. NAMA or its receiver has to get the market value though. I have no idea why it is so low in this instance. It really depends if they are selling the actual building or just the loans. It may well be that the building has some construction or other issue that needs to be sorted out.

I vaguely recall the apartments were sold in a bundle with other assets which may have effected the overall price and the chunk of which was apportioned to the apartments. I'll see if I can find the details.

I do remember a specific quote that said the market price had been achieved.

gaius c

Graham wrote: »

I vaguely recall the apartments were sold in a bundle with other assets which may have effected the overall price and the chunk of which was apportioned to the apartments. I'll see if I can find the details.

I do remember a specific quote that said the market price had been achieved.

Very easy to claim this when you deliberately restrict the market to which you're selling to.

Graham

gaius c wrote: »

Very easy to claim this when you deliberately restrict the market to which you're selling to.

IIRC it went for a few million over asking and the expected yields for the development weren't excessive.

I didn't realise the market had been deliberately restricted, any further details?

gaius c

The only parties able to avail of these tasty bargains are institutional buyers. Joe Soaps need not apply and should form an orderly queue to rent them instead.

Graham

gaius c wrote: »

The only parties able to avail of these tasty bargains are institutional buyers. Joe Soaps need not apply and should form an orderly queue to rent them instead.

I'm sure any Joe Soaps with a spare €80million+ knocking around would have been welcome to throw their hat into the ring.

Personally I'd rather 1 institutional landlord renting out the apartments than 400 amateurs but that's just me.

I understand Boeing are similarly restricting the market with their 737's, us ordinary Joe Soaps being limited to renting a seat in one for a few hours at a time.

gaius c

Being facetious doesn't wave away the fact that "loose" assets are being bundled with the bulk assets and that individual sales (which would achieve higher returns) are extremely difficult to achieve. There are threads on this here forum about the difficulty of dealing with NAMA as individual buyers. Basically, they don't want to know about you. I tried it for one particular property myself and gave up in frustration. It's still unsold btw.

It's a rather lazy way of disposing of assets and if you were working as a receiver, you wouldn't last long in the business if you only entertained bids from a small segment of potentially interested parties.

Mind you, Enda Farrell seemed to have no problems buying his gaff out in Lucan...

Graham

gaius c wrote: »

Being facetious doesn't wave away the fact that "loose" assets are being bundled with the bulk assets and that individual sales (which would achieve higher returns) are extremely difficult to achieve. There are threads on this here forum about the difficulty of dealing with NAMA as individual buyers. Basically, they don't want to know about you. I tried it for one particular property myself and gave up in frustration. It's still unsold btw.

It's a rather lazy way of disposing of assets and if you were working as a receiver, you wouldn't last long in the business if you only entertained bids from a small segment of potentially interested parties.

Mind you, Enda Farrell seemed to have no problems buying his gaff out in Lucan...

I originally asked the question about deliberate restrictions quite genuinely because I thought there may have been some put in place.

I have no issue with Nama selling developments en-masse particularly where it leads to the introduction of long-term rental accommodation/professional landlords. Something that has been needed for quite some time.

I do think it's a little unfair to tar an entire organisation because of the actions of one individual (who I understand was charged). At the same time I can understand why you'd be frustrated with NAMA if you'd had no luck buying a property off them yourself. Perhaps it's a case of taking care of the larger lots first.

Villa05

Marcusm wrote:

I don't know if you are familiar with large mixed use developments but they are generally designed from the beginning separating the social and full price housing. Often, as I suspect here, the social housing will be a separate block or it will be incorporated into the development in such a way as few management charges arise - for example lots of own door ground and upper floor units. Few if any indoor spaces or lifts to service and maintain. This is all perfectly normal and not as egregious as the "poor door" type arrangements which are often highlighted in London. Generally, landlords such as Tuath look to have few ongoing maintenance costs or similar ones to semis or terraced houses, certainly not ongoing management charges and large reinstatement bills.

The particular development being discussed appears to be all comercial on the ground floor. If this is the case, management charges would be the same for all similar units.

This was in NAMA, so how it was designed had very little regard to social housing, I suspect

Marcusm

Villa05 wrote: »

The particular development being discussed appears to be all comercial on the ground floor. If this is the case, management charges would be the same for all similar units.

This was in NAMA, so how it was designed had very little regard to social housing, I suspect

This is a multi block development, commercial is on the street side only which I suspect (from an overhead view) is about 1/8th of the total ground floor space; from 10 seconds research, it is very clear that there are many ground floor apartments. Nama has nothing to do with the layout of the building. At the planning stage, a portion will have had to be set aside for social/affordable housing. They will have been built to specifications acceptable to a housing board/association which will have few if any lifts, indoor corridors or other items requiring significant ongoing maintenance charges. The balance will have been built as full price flats with facilities considered suitable to the price range of the flats. Irrespective of the current estimated value of the flats, most social landlords will not take on responsibility for management charges or facilities (daily or weekly common area cleaning etc) as these can't be recovered in the rents.

The build cost of the social units would have been expected to have been partly subsidised by the full price units (planning/development gain). The ongoing maintenance charges would not.

Selling the units individually would have been costly and in short time, I would have expected the management company to fail. Generally if you pay €100k for a unit, you don't have the free cash to pay €2-3k per annum service charge. Ultimately, like a lot of block sales, this block looks particularly good for a long term rental proposition and the city needs good long term rentals to provide flexibility for people to have decent homes and build up deposits for what will be their long term home. The whole property ladder concept is a crap one and particularly hard on those who bought 1/2 bed apartments in the boom. They never expected to live in them long term and the costs of buying/selling for a 3-4 year time horizon are horrific.

handlemaster

Im glad Nama have been selling these investments off in blocks. There was a time in the early crises there was a peep out of boards for it Why? Because no one seen the value. If Nama were selling one apt at at time they would still be selling in 20 yrs time...And costing us the tax payer more money. Dont begrudge the investors who bought at the right time. They took a risk as there is no investing without risk.

The_Conductor

I think it was more the case that you had a myriad of onlookers on the sidelines- who were bitching and moaning about the prices that institutional investors were getting when buying them wholesale- because they imagined that every Tom, Dick and Harry deserved to get the same prices and be treated in a preferential manner- as though they too were buying units by the thousand.

NAMA is not supposed to be in the property management business- nor is it interested in dealing with anyone who walks in off the street. They simply want shot of their assets- at the best possible price and least hassle. And they have been successful- no matter what anyone might say.......

Personally- I believe there is an argument for trying to keep as many Irish assets in Irish ownership as possible- as any taxes the transactions and ongoing use of the assets generate- will vest in the country. Its akin to the Central Bank buying up Irish government bonds- and paying the interest due on them back to the government as a dividend- a zero sum game........