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

The_Conductor

Its being reported in today's Irish Times- that the government are giving strong consideration to the establishing a new semi-state body- which would take away a lot of functions from local authorities- and have a specific remit to drive residential property construction in Ireland.

Story here

It is understood that the finances of how such a body might be structured- has already been explored- the obvious intention is that it would be kept off the state balance sheets- which are already stretched to creeking point- with over 50 billion due to be restructured by the end of 2019.

In my opinion- I don't think we need a new national semi state body. The vast bulk of the issue- is in the Dublin and hinterland areas- and the 7 local authorities in these areas- need to be coordinated under the one umbrella- we do not need another Irish Water- which is apparently the model the government are currently looking at.

Could such a body drive construction in the Dublin areas? Arguably- not. Its already riven with rules, by-laws and restrictions (including height and density restrictions)- which simply handing control over to a new quango- isn't going to do anything for.

We need reform. We don't need another quango.

wordofwarning

The problem is that if the state sets up anything Dublin centric, it is a hot mess. Every rural TD feels that their county has the same issues and problems. If Dublin is getting social housing, why isn't Longford or Kerry?

There is probably no need for this housing authority at all. Some of the housing associations have the desire to actually deliver social housing and they are doing a pretty good job at it. Some of them appear to be delivering value for money. I don't see how a ton of people sitting around an office in a semi-state building overpriced housing is the best option

There is no point developing new bodies etc if the likes of IRES wants to build new apartments can't as the LA is dragging their heels. Go to the root of the cause of the housing shortage ie ridiculous planning laws etc rather than trying to build to compensate for the ones not being built

jamesthepeach

wordofwarning wrote: »

The problem is that if the state sets up anything Dublin centric, it is a hot mess. Every rural TD feels that their county has the same issues and problems. If Dublin is getting social housing, why isn't Longford or Kerry?

There is probably no need for this housing authority at all. Some of the housing associations have the desire to actually deliver social housing and they are doing a pretty good job at it. Some of them appear to be delivering value for money. I don't see how a ton of people sitting around an office in a semi-state building overpriced housing is the best option

There is no point developing new bodies etc if the likes of IRES wants to build new apartments can't as the LA is dragging their heels. Go to the root of the cause of the housing shortage ie ridiculous planning laws etc rather than trying to build to compensate for the ones not being built

It's about optics until the minister moves on.
Look at Coveny. Made things a hundred times worse and then moved on.
Nothing is going to improve. They dont care if it gets worse in a few years, as he looks like he's doing something while he is accountable. As soon as he moves he is not accountable anymore.

That merry go round will just continue with the next person. People should be out burning posters of Coveny as a message that they haven't forgotten the damage he did just because he is under a different bush now.

Sad Professor

NERI institute proposed this earlier in the year. They suggested it would non-profit and create 10k rental housing a year. Seems like a positive and necessary development in order to get around EU rules about borrowing. And since it wouldn't technically be creating "council houses", FG would be able to keep its voters happy and the department of housing would presumedly stop holding everything up.

Askthe EA

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

jamesthepeach

Askthe EA wrote: »

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

Only if it invested in other countries instead of Ireland. As soon as it started to make a profit in Ireland people would be crying to have that money given back into housing for free.

_Kaiser_

The fact that this proposed new agency is being compared to Irish Water tells us everything we need to know - another completely unnecessary and hugely expensive superquango that will still rely on existing agencies to do the actual work, but which no doubt will provide lots of well paid positions for FG hangers-on and allow them to claim they've "done something" about the crisis while washing their hands of further responsibility.

BillyBobBS

Askthe EA wrote: »

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

"Looming pension deficit"?? We are borrowing billions per year just to pay outrageous PS pensions right now today. For example Gardai retiring at 52 years of age with half their salary until the day they die and a huge lump sum.

Villa05

_Kaiser_ wrote:

The fact that this proposed new agency is being compared to Irish Water tells us everything we need to know - another completely unnecessary and hugely expensive superquango that will still rely on existing agencies to do the actual work, but which no doubt will provide lots of well paid positions for FG hangers-on and allow them to claim they've "done something" about the crisis while washing their hands of further responsibility.

Irish water was not a bad idea it's execution was. Do you have electricity infrastructure managed by 30 odd councils and would that be a good idea

Again with the housing agency is how it will be set up. Good idea with the major caution on how it will be delivered

Askthe EA

jamesthepeach wrote: »

Askthe EA wrote: »

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

Only if it invested in other countries instead of Ireland. As soon as it started to make a profit in Ireland people would be crying to have that money given back into housing for free.

It's meant to make a profit. That's the point. The profit is used to fund pension costs.

Askthe EA

jamesthepeach wrote: »

Askthe EA wrote: »

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

Only if it invested in other countries instead of Ireland. As soon as it started to make a profit in Ireland people would be crying to have that money given back into housing for free.

It's meant to make a profit. That's the point. The profit is used to fund pension costs.

Askthe EA

BillyBobBS wrote: »

Askthe EA wrote: »

We have a looming pensions deficit. We have a huge need for rental stock in all the major cities. Is a national REIT actually a good idea?

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

"Looming pension deficit"?? We are borrowing billions per year just to pay outrageous PS pensions right now today. For example Gardai retiring at 52 years of age with half their salary until the day they die and a huge lump sum.

I was talking simply about the state pension not PS pensions.

jamesthepeach

Askthe EA wrote: »

It's meant to make a profit. That's the point. The profit is used to fund pension costs.

I was saying the profit will be diverted from it's original purpose as soon as it starts making one.

Askthe EA

jamesthepeach wrote: »

I was saying the profit will be diverted from it's original purpose as soon as it starts making one.

Ah, I see. Perhaps, perhaps not. Worst case it would help the rental sector and generate funds for public expenditure.

pwurple

I don't quite get this.... is it JUST for social housing? As in, a semi-state construction company who can develop away without oversight from planning and put another draw on our taxes?

Or is it a board who oversees residential planning on a national level, becoming a driving force to ease housing pressure, look at pain points caused by govt (red tape etc) and push root cause resolution?

Because if it's the first, it sounds bananas. A recipe for further disaster.

The second would be far more useful.

Askthe EA

pwurple wrote: »

I don't quite get this.... is it JUST for social housing? As in, a semi-state construction company who can develop away without oversight from planning and put another draw on our taxes?

Or is it a board who oversees residential planning on a national level, becoming a driving force to ease housing pressure, look at pain points caused by govt (red tape etc) and push root cause resolution?

Because if it's the first, it sounds bananas. A recipe for further disaster.

The second would be far more useful.

No, just for social I think.

Villa05

Askthe EA wrote:

No, just for social I think.

I'd doubt it, mix of affordable, social and student. A mix like that could pay for itself

The_Conductor

Askthe EA wrote: »

I believe one of the largest REITs is the Canadian pension fund. Is this a model we could use to kill two birds with one stone?

The Ontario Teacher's Pension Fund.
Coincidentally- they also own the National Lottery.
Why do we want another REIT- who don't pay tax here though (they lent their Irish operations the cash to purchase assets @ 15% interest rate- to ensure they would never ever make a profit- which sounds criminal- but apparently is entirely legitimate).

I'd be hesitant to point at the REITs and suggest its a good model to follow- it is the epiphany of the idiom- be careful what you wish for, you just might get it.........

paddyref

This thread has a distinct whiff of Tom Parlon about it.

Sad Professor

I assume such a body would build affordable rental for both private and social tenants. It would borrow a lot of the money itself and - if it followed the European cost-rental model - could eventually be self-financing. This kind of thing has worked well in other countries, but apparently the EU has tightened the rules for off-balance sheet borrowing so it would probably end up relying excessively on the private sector. It's also very late in the day to be coming up with more plans for plans. And the vagueness of the IT article along with the comparison to Irish Water makes me think its not a serious proposal.

The time for all this was 5 years ago. All they can do now is double-down on what options are available to them. Public house building being the main one as even if the private sector starts building it's unlikely to provide affordable housing on the scale needed. The problem is that FG might decide that the cost of doing so would be too great, kick the can down the road, go out on a high note with a "sweeties for all" budget, and let FF deal with the housing problem while they criticise them from the opposition benches. And as long as it doesn't turn into a full-blown political crisis before the election they might even get away with it.

Villa05

The_Conductor wrote:

I'd be hesitant to point at the REITs and suggest its a good model to follow- it is the epiphany of the idiom- be careful what you wish for, you just might get it.........

Simple solution
Fixed tax rate on all rental income

The_Conductor

Villa05 wrote: »

Simple solution
Fixed tax rate on all rental income

I suggested this in this forum several times before- and have been publicly slated for it.

Personally I think any rental income should be subject to a flatrate tax- with no allowable deductions- 25% sounds like a fair and reasonable level to me- and you go and organise your finances in whatsoever manner you choose- in the knowledge you are paying a flat 25% of the gross rental income to Revenue?

Askthe EA

The_Conductor wrote: »

The Ontario Teacher's Pension Fund.
Coincidentally- they also own the National Lottery.
Why do we want another REIT- who don't pay tax here though (they lent their Irish operations the cash to purchase assets @ 15% interest rate- to ensure they would never ever make a profit- which sounds criminal- but apparently is entirely legitimate).

I'd be hesitant to point at the REITs and suggest its a good model to follow- it is the epiphany of the idiom- be careful what you wish for, you just might get it.........

Except, the difference is we are the investors. All taxes paid here, profits to the exchequer.

Villa05

The_Conductor wrote:

I suggested this in this forum several times before- and have been publicly slated for it.

I'm with you 100%. There is so many anomalies and tax avoidance practices it's the only way to go

It also allows the taxpayer to recoup some of the value added to a property where public works has increased its rental potential

murphaph

The_Conductor wrote: »

Its being reported in today's Irish Times- that the government are giving strong consideration to the establishing a new semi-state body- which would take away a lot of functions from local authorities- and have a specific remit to drive residential property construction in Ireland.

Story here

It is understood that the finances of how such a body might be structured- has already been explored- the obvious intention is that it would be kept off the state balance sheets- which are already stretched to creeking point- with over 50 billion due to be restructured by the end of 2019.

In my opinion- I don't think we need a new national semi state body. The vast bulk of the issue- is in the Dublin and hinterland areas- and the 7 local authorities in these areas- need to be coordinated under the one umbrella- we do not need another Irish Water- which is apparently the model the government are currently looking at.

Could such a body drive construction in the Dublin areas? Arguably- not. Its already riven with rules, by-laws and restrictions (including height and density restrictions)- which simply handing control over to a new quango- isn't going to do anything for.

We need reform. We don't need another quango.

We need a Greater Dublin Council. Fracturing Dublin County Council was an act of vandalism by a worried Dail. Instead Dublin Corporation and Dublin County Council should have merged and since then even absorbed parts of the surrounding counties (small parts, eg Leixlip, Bray, Clonee). The traditional county boundaries can be maintained for GAA purposes only. They have no function in the governance of the country in 2017.

The mayor of this GDC would have powers akin to those of other executive mayors around the world. The Dail however would not like this one bit. That's the problem.

wordofwarning

Sad Professor wrote: »

The time for all this was 5 years ago. All they can do now is double-down on what options are available to them. Public house building being the main one as even if the private sector starts building it's unlikely to provide affordable housing on the scale needed.

Except 5 years ago, there was no need for such a plan. We had such excess supply of property, that you could get a luxury 2 bedroom apartment in Dublin City for €1,200-1300 per month.

It would interesting to see the level of housing building, if developers actually had access to cash that was affordable. The commerical banks here are not keen to lend to developers still. If want to build a hotel in Dublin City that you can nearly been entirely sure that will be full 90% of the time. Good luck borrowing more than 50% of the value of it from the banks

The NAMA is making cash available to developers who have a greater proportion of social housing in a development. Maybe that is the way forward. Instead of dreaming about 100% social housing blocks, encourage new developments to be 25-35% social housing by giving developers cheap and easy access to cash as a lot of blocks are now being sold as entire lots for pension funds, insurers etc

Colonel Claptrap

This is dead in the water according to the Housing Minister on Pat Kenny this morning.

It was never a real consideration.

He indicated that the story was leaked and that no firm plans were ever made for a housing quango.

The_Conductor

I.e. Kite flying- ahead of the budget...........
Sigh- it really isn't appropriate to use the public as guinea pigs.

wordofwarning

Colonel Claptrap wrote: »

This is dead in the water according to the Housing Minister on Pat Kenny this morning.

It was never a real consideration.

He indicated that the story was leaked and that no firm plans were ever made for a housing quango.

Leaks like this are often testing the water to see the public's opinion on something like this. "Leaks" around Budget time (we are close...) that never make into the budget, were because the public response was luke warm.

The state has been exploring/engaged in off balance sheet construction. So it is not far fetched to think it was a viable option killed off by the public response

Villa05

Interesting how much talk there has been over the past few weeks on the lack of student accommodation there.

If the state were to build this accommodation on or near campuses surely even this state could not make a loss on it.

Guaranteed income for 9 months of the year plus scope for making them holiday villages during peak summer months.

There is "low hanging fruit" and there are solutions that are slapping you in the face

jimmycrackcorm

Villa05 wrote:

If the state were to build this accommodation on or near campuses surely even this state could not make a loss on it.

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_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.