Media: New Semi-state body proposed to drive house building

The_Conductor

jimmycrackcorm wrote: »

There's an argument to say that the state should actually become a property developer. After all a property developer gets someone else to do the actual building and then creams the profit.

If there is a loss then the state picks it up anyway so, given access to low interest cash, the state could build their mix of private and social housing, making a profit on the private sales to held fund the social housing.

No need for a new quango, just adjust Nama to become an active developer.

The whole purpose a new quango- was to try to keep the borrowing necessary, to drive this sort of development- off the state's balance sheet- i.e. it would have to be run on at very least a cost recovery basis- and be open to external EU auditing etc- to prove this.

This was the hurdle on which Irish Water fell- it failed to show it was being run on a commercial basis- even after hoovering up 17 billion in assets from the various local authorities nationally- and indeed- it was in general meaningless- as they had to get the local authorities to undertake the day to day running of the facilities they had just handed over- only now, they didn't own them anymore...........

The whole proposal was a kite flying exercise- however, it smacks of the government not having any idea where to go from here.

There was a very interesting interview on Newstalk yesterday afternoon- where the hotel industry body- was lambasting the government- stating there was no way on earth they could deliver the 5,000 hotel rooms the government is saying they are going to construct between now and 2020. 3,000 rooms- would be a big ask- primarily- because its impossible to find builders and tradespeople to construct them. Obviously the hotel sector- are fighting for the same builders, craftsworkers, tradespeople etc- as are the residential developers. The point was made that during the boom- we could go to Poland and mop up builders there- but not anymore. We are stuck. We don't have the builders to build- and while we have problems accessing finance for construction (to the extent that residential developers can only access finance for housing- if they can show they have sold a minimum of 20% of the development off-plans in advance).

We have a few different bottlenecks- and playing around with the Help to Buy Scheme, VAT rates for the hospitality sector etc etc- is poking around with a stick, without a clear idea of what you're poking. Offering more money to developers- is like giving an alcoholic a few bottles of wine- you'll make them feel good for a few hours- but they'll be right back looking for more as soon as the effects have worn off- and you'll have achieved absolutely nothing, save another bit of debt for the taxpayer to put on the never-never...........

Its almost like the government are tired, they're not even trying anymore- fly a few kites- get a couple of junior Ministers out in front of the media- lob a few press releases out during the week, and hold back any bad news for 5PM on a Friday evening- preferably, the Friday of a bankholiday weekend.

We are rudderless.

Villa05

@ the conductor

How much of this is representative bodies turning the situation where they can extract the maximum benefit from government spending

Hard to believe that we could build 90k houses plus a plethora of hotels in 2006 and in 2017 we can't build a third of that

The_Conductor

Villa05 wrote: »

@ the conductor

How much of this is representative bodies turning the situation where they can extract the maximum benefit from government spending

Hard to believe that we could build 90k houses plus a plethora of hotels in 2006 and in 2017 we can't build a third of that

The implication (given in the interview) was that in 2006 we were able to nip over to Poland and hoover up vast numbers of Polish construction workers, who were only too happy to come over here and ply their trades. These workers- for whatever reason (there wasn't a reason given) are no longer available or willing to come here.

There were never a sufficient Irish contingent of construction workers there during the boom- to service demand- the bulk of the demand was satisfied with Polish construction workers- however, the Irish contingent- have also emigrated- and the traditional schemes- such as the various apprenticeship programmes- have ground to a halt (and this is wholly ignoring the appalling snobbery Irish people have about apprenticeships).

Its a sort of a perfect storm- and its not the sort of storm that simply throwing money at- is going to resolve.

wordofwarning

The_Conductor wrote: »

There was a very interesting interview on Newstalk yesterday afternoon- where the hotel industry body- was lambasting the government- stating there was no way on earth they could deliver the 5,000 hotel rooms the government is saying they are going to construct between now and 2020. 3,000 rooms- would be a big ask- primarily- because its impossible to find builders and tradespeople to construct them. Obviously the hotel sector- are fighting for the same builders, craftsworkers, tradespeople etc- as are the residential developers. The point was made that during the boom- we could go to Poland and mop up builders there- but not anymore. We are stuck. We don't have the builders to build- and while we have problems accessing finance for construction (to the extent that residential developers can only access finance for housing- if they can show they have sold a minimum of 20% of the development off-plans in advance).

The biggest issue hotels face is that they can't actually get finance to construct new hotels. If you want to build a new hotel, even in a decent market like Dublin. You need to have your own capital to about 50% of the project, as Irish Banks will not lend a hotel more than 50% of the project's value to you. It is nice to see that the banks are being more strict with the finance they hand out.

Yet on the other hand, how is the hotel industry seen as so risky that you need to have a cushion of 50% on a potential default of the debt? Banks have gone from handing anyone with a pulse excessive amounts of credit from 2000-2007, to still refusing credit to decent businesses in 2017.

We have hotels full to the brim even midweek in low season. Yet the Government still is going to allow them to have 9% VAT to "help the industry"?

The Government wants token gestures like reducing VAT rather than refusing to address the fact despite pouring tens of billions into our banks. That our banks are still incredible dysfunctional when it comes to lending to construction projects unless you are a PLC company. If you a PLC company like a REIT, you can expect cheap and easy credit. But even then, our PLC are not leveraging up on ultra cheap like pretty much every other European country which is a bit bizarre.

Mickiemcfist

I think a fairly simple solution would be for the state to give tranches of state owned land to quality developers (say valued at 100k per plot) then recoup the 100k upon sale of each house. I'm sure there's administrative and legal issues surrounding it, but in theory sounds fairly simple. The builders don't need to finance land acquisition, then can build at a low up front cost. Cuts a lot of barriers to entry for housing.

The government could also input timelines and increase cost of plot based on time between handover and sale, that way builders price relatively competitively & build an fast as possible.