We have learnt nothing .. Labours social housing obligation

What Nonsense. Mind you it could have been a crap piece of Irish Times ‘property’ journalism or a crap plan …or both. We will never know.

irishtimes.com/news/social-a … -1.1807225

This is complete nonsense. Let me explain simply.

Toupée Tommy (yer only bildin man) has 2 sites in Galway. One in Castlegar and a small one in Taylors Hill.

Tommy can build 100 units in Castlegar and 10 units in Taylors Hill. This is an aggregate of 110 units across both locations.

Tommys profit margin in Taylors Hill is huge and is less so in Castlegar. Way it is. Way it always was.

So Tommy should be able to offset his Taylors Hill ‘obligation’ by supplying 11 of his AGGREGATE obligation across both sites…but in Castlegar only.

There are ways to do this, Toupée can be forced to pay a higher development contribution in Taylors Hill to be offset against contributions when he starts to build Castlegar later on…or whatever…but forcing every development of 10 houses to incorporate a social housing ‘element’ is crap, nothing more or less than that.

And if ever builder is forced to allocate 1 in 10 homes to social, no matter where, then they won’t build them at all in many cases and Jan O’Sullivans so called ‘plan’ will be stillborn. And those families will be just as likely to sleep in their cars as they will be to sleep in either Taylors Hill or in Castlegar.

Whatever about TT anyone with Junior Cert economics it’s knows a tax on the buyer - a FTB or aportment trader upper.

No chance Labours core vote the comfortably middle aged types who benefitted most from the bubble should ever pay

Plus ca change

I don’t really understand the objections. NIMBY? As described it sounds a bit clumsy, but the idea is to sprinkle social housing around rather than creating vast ghettos with attendant social problems.

Describing it as a tax on the buyer assumes everything else is equal. Won’t it just depress prices of development land?

next to nothing new is going to be built so that isn’t going to solve any social housing problem.

it costs more to build to current specs vis-a-vis existing house stock.

government policy at the moment is to inflate house prices enough to let those who made imprudent choices in the mid 2000s to get out from the debt they are under by selling on to greater fools and not to stimulate additional building.

the current building regulations make building shoebox 3bed townhouses and semis much more expensive than 10 years ago as the houses need to be well insulated and incorporate some sort of renewable/energy efficient heating solution. On top of that under-occupied people in the councils will be onsite ensuring that houses are built to spec and ensuring that development levies are collected.

Apart from the attempt to legislate for social engineering, there are some other interesting suggestions in the article;

Blue Horseshoe

That’s not how it’s ever worked before, as far as I can see. Any time you give an incentive to buyers or impose costs on the developer, it drives prices up.

If the extra 10% cost is too much for the buyer to afford, the land price doesn’t come down, instead the size of the dwelling comes down so that more shitbox apartments can be squeezed onto the one field in Dublin 18.

What has to be placed in people’s minds is that, whatever costs are imposed on property by the government, is effectively borrowed from the purchaser.

So people end up paying a multiple of the tax over the lifetime of the mortgage.

There’s no VAT on food, as it’s deemed a necessity.
Surely shelter comes under the same category ?

Normally, I’d say it makes no difference.
However, given we’re at 50% cash buyers and mortgages are hard to get, many buyers simply cannot stretch to cost+VAT.

This will not affect the market initially, as there are sufficient cash buyers who can afford it.
The problem arises when supply begins to equal demand.
Prices will begin to slip again.
Builders will need to reduce their build cost in order to sell the property.

I would expect to see a lot of developments of less than ten houses…or have they thought of that one?

The CIF were very vociferous in making a similar argument when the original part V legislation was introduced in 2000. They predicted the collapse of house building, the end of the industry etc etc. What happened? An explosion in house building.

We have a choice - either build social housing in ghettos like Ballymun and pay a fortune to regenerate them after they fail spectacularly or mix social housing in with private developments.

So if one in 10 properties must be allocated to social housing then the remaining 9 houses will be 11% more expensive than they otherwise would be to subsidise the social housing. This is not a tax on developers. It is a tax on house buyers.

The rancid, mindless, dogmatic stupidity of the left would be amusing if it were not going to have real consequences.

The current shortage of rental properties and the increases in rents are obvious consequences of a sequence of actions taken by an incompetent government. It not that these are unintended consequences of policies: it is that anyone capable of performing the simplest of analyses would have easily anticipated them and been able to take corrective action.

What is happening now is the directly foreseeable outcome of a combination of actions:

  1. Removal of low-cost rental units through pre-63 changes without any planning/support/transition arrangements – this resulted in (1) a reduction in overall number of units to rent; (2) removal of low-cost rental units; (3) increase in the number of tenants at the lower-end of the market looking for replacement accommodation. This was analysed in detail here some time ago but this analysis and its forecasts of problems were ignored.The tenants at this low-end of the market cannot afford to pay the increased rent for most expensive units and so are at increased risk of homelessness.

  2. Changes in rental income margins achieved by landlords though reduction to 75% in the amount of mortgage payments that can be claimed, application of PRSI and USC to rental income and property tax – the net effect of this is to increase by at least 20% the amount of rent a landlord needs to charge to make the same return before these changes.

  3. Changes in rent allowance which stopped tenants offering an additional payment to cover the difference between rent allowance and the cost of the rent.

Add to this a PRTB that adds more costs to landlords and whose policies and actions favour tenants just to make being a landlord more expensive and unpleasant.

The recent media outbreak of sob stories about women and children sleeping in cars because they cannot afford to rent where they want to live is a consequence of rent allowance changes. Previously the rent allowance was just an amount of money that could be supplemented by an extra payment to get subsidised desirable accommodation. It put other renters not receiving rent allowance at a disadvantage as it created a hurdle that they has to overcome to match the rent those in receipt of the allowance could afford.

This was a symptom of a social welfare system that was more of a lifestyle choice that a safety net.

Now that the lifestyle element is being slightly reduced, it has led to this unquestioning media-supported howls of sense of entitlement.

So more people chasing a smaller number of rental properties whose costs have increased results in even greater increases and a section of renters at the low-end being priced out of the Dublin market. As Locke wrote in the late seventeen century “The price of any commodity rises or falls by the proportion of the number of buyer and sellers”.

All this was obvious to anyone who performed even the most superficial and nugatory of analyses.

Any balanced, functioning and effective property market needs to include a private rental sector. This fact appals many who see landlords as evil exploiters.

The lessons from previous interferences in the private rental sector that occurred when the nonsensical recommendations of Peter “Rashers” Bacon were implemented were there for all to observe and learn from. Irrational dogma prevents any such learning.

Landlords are being demonised and are being treated as intrinsically evil. This reduces the number of new entrants caused by a reluctance to get involved in buying and renting properties.

This situation is going to get a lot worse before there is any improvement.

There are too many adherents of anti-landlord dogmas pushing their stupid agendas for any change to happen quickly. These are passively assisted by incompetent and listless policy makers and implementers. A simple reversal of some of the changes would stabilise the market while options are explored. This is improbable as it would necessitate those who took the actions admitting their errors.

Apart from the primary impact on the rental market, there is then the secondary consequence of current and former renters looking to buy properties in order to exit the increasing troublesome rental market that then adds to property price increases. And so on.

I am not and have never been a landlord.

Our post is a mix of contradictions, falsehoods and straw man arguments.

On the one hand you are railing against the so called sense of entitlement of social welfare recipients while arguing for extra tax subsidies for landlords and more rent supplement for landlords. The former are pictured as spongers while the latter just need to cover their costs. No sense of entitlement there then.

Your claims that the private rented sector needs to play a strong role in housing people is just a straw man argument. No one is arguing it shouldn’t. The issue is whether it should be the only source of accommodation. My view is that it shouldn’t, among other reasons because subsidies such as rent supplement for those who qualify simply skew the market for those who font. Far better to put low income people into social housing and not bid up rents.

Your claim that taking one house in 10 for social housing will increase the price of the private houses by 11 per cent is baseless. For one the houses are not ’ taken’ for free from the builder. He receives the cost price of the dwelling in return, unlike the houses sold on the open market he us at least guaranteed to get the costs of the social houses back. Also the Social housing obligations drive down development land prices. How could they not do? Surely only an idiot would not take account of their existence when bidding for land?

Finally apart from changes to stamp duty practically none of Peter Bacon’s recommendations for discouraging investors from buying dwellings were implemented. What a pity they were not. Bacon reported in 1999/2000 and by the latter date the property market was cooling on the back if the IT bust. If Bacon’s recommendations were actually implemented it might have stopped the buy to let boom which kicked off in 2002 and was the central driver of the bubble.

when bidding for land?

I think I see a flaw in your reasoning… The Irish developer has shown in the past a fantastic capacity for hubris bordering on idiocy when bidding on land in the past.

Sure it can only go up !

The FF/PD government of the time very quickly rolled back on Bacon when rural TDs realised that work for locals in their constituencies was drying up and this would affect votes in the 2002 election. There were three Bacon reports in the late 90s, they tried to bury the third report but it leaked. In addition to the extension of the tax relief schemes (section 23, section 50), the Euro currency integration and access to easy credit due to low interest rate policy pursued by Greenspan to bailout the New York banks (their balance sheets had been holed by the dotcom collapse - Citi was bust), capital had also flowed to Europe from Asia (that led to the 1997 crisis) in anticipation of the Euro and ECB rates were kept low to suit the Germans who were in recession at the time. There was also the Yen carry trade. With all that easy money sloshing around the system some of made it’s way into the Irish banking system and flowed out again, eventually collapsing the banking system. There were many factors involved in the boom and eventual bust.

Social Housings main failing in Ireland, is that the person receiving it, has no stake in it, & as a result they don’t give a shit about the state of it, beyond they’re own narrow self interest.

Any future policy has to tie the interests of the tenant, to the property, & make the state of the Estate & the Property the concern of the tenant. My preferred solution would be to allow the tenant to pick a trade between the rent they pay, & a dividend they get per year based on the capital value of the property; so they can choose to pay 110% of a market linked rent level & get 0% of a payment back per year, or pay an 80% rent, & get a % back of the value of the property.

All of a sudden the council tenants will give a crap about anti-social behavior beyond whether they’re kept awake at night, because while it continues their dividend will be non-existent. The other part is that it’s self policing; as the few bad tenants who make everyone elses life miserable will be driven out, as if the estate improves around them, their rent will increase, & because they aren’t benefiting from the divided & are paying the adjusted market rate, because everyone else is buying in, they’ll be priced out of the property, if they don’t knuckle down.