New State agency to free up land for ‘150,000 homes over 20 years’

jon1981

https://www.irishtimes.com/news/ireland/irish-news/new-state-agency-to-free-up-land-for-150-000-homes-over-20-years-1.3627335

It is claimed the agency will seek to remove land speculation and drive down the cost of land, which it is hoped will lead to cheaper house prices and increased availability. It will “smooth the peaks and troughs of Ireland’s land and housing market”, the Cabinet was told.

The agency will, however, demand that almost a third of homes built on its sites must be affordable houses.

The price of an affordable home – or the income of those who would qualify to purchase such a property – is yet to be defined by the Government.

Sources pointed to other State housing schemes that roughly allowed a single person on up to €50,000 a year or a couple with a joint income of up to €75,000 a year to qualify for affordable housing.

I reckon this will be welcomed by most people, though I think certain groups of people are of the expectation that social housing means free or at least available to long term social welfare recipients.

I think the target income earner is spot on. 20 yrs is alittle on the long side but the next effect might be bringing down housing costs sooner than that as supply increases.

tom1ie

So an affordable house is now at 320000.
Eoghan murphy states that a couple earning 75000 combined income will be able to afford an affordable house.
Central bank rules are a mortgage is limited to 3.5 times combined income.
75000x3 = 225000.
So 320000-225000= 57500.
So that couple has to have a deposit of 57500.
That's pretty unaffordable.
It's even worse on a single income.......
Plus you can bet houses won't be as "affordable" as 320000 in 2020 by the time they're built.

jon1981

I guess we have to wait for all the details, something has to be relaxed i.e. the deposit. That's the limiting factor for most people caught in the high rent trap.

tom1ie

jon1981 wrote: »

I guess we have to wait for all the details, something has to be relaxed i.e. the deposit. That's the limiting factor for most people caught in the high rent trap.

The cost of an affordable house in this instance is too high.
I'd love to see where they got 320k from. I'd love to see the breakdown of costs.

Fann Linn

tom1ie wrote: »

So an affordable house is now at 320000.
Eoghan murphy states that a couple earning 75000 combined income will be able to afford an affordable house.
Central bank rules are a mortgage is limited to 3.5 times combined income.
75000x3 = 225000.
So 320000-225000= 57500.
So that couple has to have a deposit of 57500.
That's pretty unaffordable.
It's even worse on a single income.......
Plus you can bet houses won't be as "affordable" as 320000 in 2020 by the time they're built.

This Govt just can't stop cocking up when it comes to sorting out this problem. Your figures clearly illustrates the mess this shower continue to cause.

jon1981

Are we assuming the houses will be priced at 320k? I didn't see that in the article.

It's likely they'll have to be sold below market value to be affordable or reduce the deposit combined with lower interest rates.

Which then opens this up to abuse as you need to protect against house flipping and fake income returns of people declaring less income than they actually make....

Samsong

Ah stop. Has April fools Day come early.

Wheeliebin30

Jesus do the whingers ever stop?

What a horrible life been so negative all the time.

Let’s wait and see the full deltails before calling for the decapatation of Eoghan Murphys head.

Samsong

Wheeliebin30 wrote: »

Jesus do the whingers ever stop?

What a horrible life been so negative all the time.

Let’s wait and see the full deltails before calling for the decapatation of Eoghan Murphys head.

Realists or whingers.
You must be new. welcome to Ireland

tom1ie

Wheeliebin30 wrote: »

Jesus do the whingers ever stop?

What a horrible life been so negative all the time.

Let’s wait and see the full deltails before calling for the decapatation of Eoghan Murphys head.

Who exactly is calling for eoghan Murphy's head?
Maybe you are overreacting?

tom1ie

jon1981 wrote: »

Are we assuming the houses will be priced at 320k? I didn't see that in the article.

It's likely they'll have to be sold below market value to be affordable or reduce the deposit combined with lower interest rates.

Which then opens this up to abuse as you need to protect against house flipping and fake income returns of people declaring less income than they actually make....

Yeah seen the 320k figure here:

https://www.irishtimes.com/news/politics/affordable-homes-in-new-scheme-would-cost-320-000-minister-says-1.3628555?mode=amp

It just doesn't make much sense to me to be honest. How can the house be affordable if you need more than 50k deposit?
I hope they publish exactly how much an affordable house costs to build and where extra costs come in to account for the 320k figure.

MayoSalmon

Fann Linn wrote:

This Govt just can't stop cocking up when it comes to sorting out this problem. Your figures clearly illustrates the mess this shower continue to cause.

Why do you think the Government would be good at delievering houses especially on this scale?! Like what do the Government do well that makes you inclined to think that they will be able to house it citizens. The sooner people realise the Government are not going to provide for them in life the better off they will be.

Cookie_Monster

Taking a leaf out of Aucklands book. Make a big song and dance about affordable homes and then set the level so high that 50% of people are already excluded...
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12081733

fret_wimp2

The price has to be low enough to include some people who currently can't get a mortgage due to salary level, but not so low that it causes everyone who managed to buy to to wonder why did they bother saving like crazy and working long hours** to buy a house, when they could have gotten it cheaper/easier if they took the lower pressure job, didn't bother saving so much and just waited for the scheme. It's a balancing act the government need to play to keep many demographics from grumbling too much.

Unfortunately for many, even this figure is too high to reach.
It needs to be remembered however, buying a home is not realistic for everyone, so this scheme, along with the massive build to let scheme announced a week ago will work together to house a lot of people, be it via purchasing or renting long term. these schemes, working together don't seem so unrealistic and have a chance bring genuinely useful, dependant of course on the specific implementation details.

The need is now however, not In 3 years so the biggest failure is the government not heeding the warnings back in 2012 and having this underway now.


**I'm in no way saying people who can't currently afford don't work and save hard. I'm just describing the knee-jerk reaction the probably want to avoid .

Fann Linn

Pat Kenny and Co ripping holes in this plan now.

jon1981

I may have picked it up wrong. But on newstalk this morning it was said 43% of mortgages under the last affordable home scheme are in arrears.

Amirani

Why do they have to be affordable houses that are sold? That creates all sorts of issues with house flipping as well as cost of raising deposit etc. How long do the people have to stay in the affordable houses that they purchased before re-selling?

Why not just build them and rent them out at an affordable level with secure tenancies? Why does everyone have to own a property? Renting them out also means that if the occupier in future gets rich and moves out, the Local Authority can still own the property and give it out to a person who needs it. Selling it just means that the now wealthy occupier can make a large profit on it when moving to a new house.

jon1981

Amirani wrote: »

Why not just build them and rent them out at an affordable level with secure tenancies? Why does everyone have to own a property? .

I presume the agency building the house wants an instant return on the development. If they were rented out the government agency wouldn't get the money back on it for 30 yrs...not that this should be a problem but it probably is. Not sure the government/local councils want to be in the landlord business if they can avoid it.

fret_wimp2

Amirani wrote: »

Why does everyone have to own a property?

-Because this is Ireland and everybody must own a home in the exact location of their choosing.


More Realistically:
-Because extreme lefty views pushed by the media convince people that owning a home is a right.

- Because long term letting is not the done thing in Ireland. Laws are not in place and it does not sit well in the public mindset.

Current rental prices help enforce this. Imagine being 75 years old, renting and the rent can be increased by 4% per year, and you only have your state pension.

Landlord is running a business, they are entitled to get market value for their property, but tenants have a price ceiling. Depending on the market to set prices has brought us here. Structures will need to be in place to make long term letting attractive.

Hopefully this will come with the large build to rent developments coming in the next few years, but it will unfortunately take time.

jon1981

The rental sector here is wild west, mortgage repayments are cheaper than rent and you own an asset eventually. Until the rental sector is improved, home ownership will be the preference. To the previous posters point, imagine being in retirement and renting under the current conditions ?!

Riskymove

tom1ie wrote: »

So an affordable house is now at 320000.

Eoghan murphy states that a couple earning 75000 combined income will be able to afford an affordable house

I don't see either of these things in the articles

Are you sure you are interpreting the details right

If we look at Rebuilding Ireland, if we look at the affordable purchase scheme, they talk about an individual earning up to a maximum €50,000 or a couple earning up to €75,000.

So under the affordable purchase scheme these are who the scheme is aimed at

“And then when we talk about house prices, we talk about €320,000 generally in the greater Dublin area, Cork and Galway and €250,000 in other parts of the country.”

This is a separate quote talking about the average house prices at present

jon1981

Riskymove wrote: »

I don't see either of these things in the articles

Are you sure you are interpreting the details right





So under the affordable purchase scheme these are who the scheme is aimed at



This is a separate quote talking about the average house prices at present

https://www.irishtimes.com/news/politics/affordable-homes-in-new-scheme-would-cost-320-000-minister-says-1.3628555

Homes classified as “affordable” and provided through the new Land Development Agency (LDA) would cost some €320,000 in Dublin, Cork and Galway under current market prices, Minister for Housing Eoghan Murphy has said.

Riskymove

Yes that is the IT opener but look at the actual quotes published. he doesn't say "Affordable houses will cost €320,000"

I think they have misinterpreted the quotes


here is what it says in the other IT article

The price of an affordable home – or the income of those who would qualify to purchase such a property – is yet to be defined by the Government.

Sources pointed to other State housing schemes that roughly allowed a single person on up to €50,000 a year or a couple with a joint income of up to €75,000 a year to qualify for affordable housing.

This is much clearer

jon1981

Wouldn't be like the media to twist the words

Amirani

fret_wimp2 wrote: »

-Because this is Ireland and everybody must own a home in the exact location of their choosing.


More Realistically:
-Because extreme lefty views pushed by the media convince people that owning a home is a right.

- Because long term letting is not the done thing in Ireland. Laws are not in place and it does not sit well in the public mindset.

Current rental prices help enforce this. Imagine being 75 years old, renting and the rent can be increased by 4% per year, and you only have your state pension.

Landlord is running a business, they are entitled to get market value for their property, but tenants have a price ceiling. Depending on the market to set prices has brought us here. Structures will need to be in place to make long term letting attractive.

Hopefully this will come with the large build to rent developments coming in the next few years, but it will unfortunately take time.

My suggestion here though is the local authority act as the affordable housing landlord. Rent increases can then be tied to inflation/increases in state pension.

Government/Local Authorities tender for private developers to build a development made up of Affordable and Market Price properties. Local Authorities take ownership of the Affordable properties at cost rate, and the developers make money on the Market Price properties, with the scheme being underwritten by Government. The properties now in possession of the Local Authority are rented out to low-income households for a rental amount that is affordable and loosely based on the cost of the properties.

With this model, the local authority maintains ownership of the properties and they can be used in perpetuity. If at some point an occupant wants to purchase their property, then maybe allow them to do this at the Market Price. Allowing them to purchase upfront for the Affordable rate is a lifetime subsidy from the local authority to the tenant, regardless of how wealthy they become. If it's rented out, then it's just a subsidy for as long as they're in need of it.

I personally know an executive on a couple of hundred grand who is living in a house he bought from the council for peanuts. He needed affordable housing at the time, but he certainly doesn't anymore.

cruizer101

Tbh when I hear a 20 year plan like this it doesn't give me much confidence in it.
20 years just means the government can put it on the long finger until its not their problem anymore and the new incumbants just blame not getting it done on the previous government.

Amirani

Amirani wrote: »

My suggestion here though is the local authority act as the affordable housing landlord. Rent increases can then be tied to inflation/increases in state pension.

Government/Local Authorities tender for private developers to build a development made up of Affordable and Market Price properties. Local Authorities take ownership of the Affordable properties at cost rate, and the developers make money on the Market Price properties, with the scheme being underwritten by Government. The properties now in possession of the Local Authority are rented out to low-income households for a rental amount that is affordable and loosely based on the cost of the properties.

With this model, the local authority maintains ownership of the properties and they can be used in perpetuity. If at some point an occupant wants to purchase their property, then maybe allow them to do this at the Market Price. Allowing them to purchase upfront for the Affordable rate is a lifetime subsidy from the local authority to the tenant, regardless of how wealthy they become. If it's rented out, then it's just a subsidy for as long as they're in need of it.

I personally know an executive on a couple of hundred grand who is living in a house he bought from the council for peanuts. He needed affordable housing at the time, but he certainly doesn't anymore.

What you're describing is the 'old' council estate. The issues with this are that the house is never taken back, meaning generation after generation get the house.

The tenant is not the home owner and generally speaking, doesn't care about the house. The Council are the landlord, and are responsible for maintenance. A mixture of Council responsibility and Tenant attitude results in Council spending going through the roof to keep the houses in order.


Or the Council run out of cash. As has happened in Louth recently:

https://www.pressreader.com/ireland/drogheda-independent/20180911/281595241425607



The problems that arise are generally related to anti social behaviour. The reason you see cars being burned out, joyriding, garda attacks, etc. is because you end up with a lot of people in these estate who will never pay for anything or appreciate anything. Will never, ever work, and will claim social welfare forever (usually with some 'disability' on the cards, too).

In louth there are rent arrears of €5million. People just taking the piss (rent is as low as €25 per week for a mother and two children). Council can't evict and are blamed if they don't maintain the house. Lose-lose situation.

By people being responsible for their own house costs, and the legitimate risk of being turfed out if you don't pay, people are much more likely to work, earn, and pay off their mortgage. Their kids see this and grow up in a better environment.



The only way your approach (aka the 'old' approach) would work, is if the Council, Gardai or Judicial service actually punished people for wrongdoings. But that never happens, and probably never will. So i can see why the proposal is to sell the houses cheaply from the word go. Less mess for everyone and hopefully a generation of responsible children grow up, instead of the feral scum that dominate the landscape.

fret_wimp2

Amirani wrote: »

If at some point an occupant wants to purchase their property, then maybe allow them to do this at the Market Price.

Its a good suggestion overall, apart from the above point. Selling off social housing to occupants is one of the significant reasons that there is a shortage now days.

Social housing should be for people who need it and should never become private.

land is at a premium, particularly in the capital and selling off a resource that is guaranteed to be needed in future & expensive & difficult to replace just does not make sense.

fret_wimp2

Deleted User wrote: »

The only way your approach (aka the 'old' approach) would work, is if the Council, Gardai or Judicial service actually punished people for wrongdoings. But that never happens, and probably never will. So i can see why the proposal is to sell the houses cheaply from the word go. Less mess for everyone and hopefully a generation of responsible children grow up, instead of the feral scum that dominate the landscape.

Unfortunately you're correct in saying there are no repercussions for the "feral scum" that although in the minority, cause the most hassle, but conversely, even if the homes are sold to people, this element will still exist, they still will want free everything, and will still destroy everything.

Enforcement of the laws that exist would stamp out a lot of this but until then, regardless of a housing solution, these "people" will need to be provided for, even if they dont deserve it.

Amirani

fret_wimp2 wrote: »

Its a good suggestion overall, apart from the above point. Selling off social housing to occupants is one of the significant reasons that there is a shortage now days.

Social housing should be for people who need it and should never become private.

land is at a premium, particularly in the capital and selling off a resource that is guaranteed to be needed in future & expensive & difficult to replace just does not make sense.

Yeah, it's not ideal, but I'm not sure people would completely support the plan if they have no option to buy the homes at some point.

At least if you allow people to purchase at the Market Price, that money could be used to build a new home elsewhere. I think a big problem in the past has been selling social housing to people at prices significantly below market prices.

Just to clarify, and to counter the previous poster; my thoughts here are for an Affordable renting scheme, not a Social/Council one. So it's not going to be a case of rents of €25 per week and making ghettos. Rents can be like €1k a month or whatever (enough to cover the costs of building over x number of years - it basically just helps people who can afford to pay a mortgage but can't afford to save for deposit), aiming at the same €75k household that was mentioned in the scheme.

It is not the worst idea it would give the government a leave to lower land prices and that is the crux of the matter, for example, if there was land say near the M50 and beside it empty factories industrial land or other lands with state involvement then this agency releasing it for housing will lower the value of surrounding land and that will lower house prices.


It would stop land hoarding and speculate because why buy an asset at inflated prices if the government can use this agency to lower the value of the asset.

The only issue is someone is going to have to take the hit all those empty factories and industrial land which in reality are worth very little but are an asset on someone balance sheet they could now be realised as an asset with very little value so who takes the loss. The same with all state-controlled land its an asset to whatever organisation owns it how will lowering the value of an asset be dealt with.

Geuze

tom1ie wrote: »

So an affordable house is now at 320000.
Eoghan murphy states that a couple earning 75000 combined income will be able to afford an affordable house.
Central bank rules are a mortgage is limited to 3.5 times combined income.
75000x3 = 225000.
So 320000-225000= 57500.
So that couple has to have a deposit of 57500.
That's pretty unaffordable.
It's even worse on a single income.......
Plus you can bet houses won't be as "affordable" as 320000 in 2020 by the time they're built.

75k x 3.5 = 262.5k

320k - 262.5 = 57.5k

Viscount Aggro

How will they stop someone buying an affordable house, then selling it on later for full market price?

jon1981

Viscount Aggro wrote: »

How will they stop someone buying an affordable house, then selling it on later for full market price?

One of many issues that will need to be trashed out.

As usual the government have released a plan with no details...probably to test public reaction

LirW

Viscount Aggro wrote: »

How will they stop someone buying an affordable house, then selling it on later for full market price?

I think the housing co-ops that are building in Ballymun have a clawback clause in the contract where the difference in price has to go to the council for the next X years.

ShaneC93

tom1ie wrote: »

So an affordable house is now at 320000.
Eoghan murphy states that a couple earning 75000 combined income will be able to afford an affordable house.
Central bank rules are a mortgage is limited to 3.5 times combined income.
75000x3 = 225000.
So 320000-225000= 57500.
So that couple has to have a deposit of 57500.
That's pretty unaffordable.
It's even worse on a single income.......
Plus you can bet houses won't be as "affordable" as 320000 in 2020 by the time they're built.

The ability to get a mortgage up to €250K/€320K without adhering to the 3.5 times income rule is under a new government scheme anounced earlier this year:

https://www.irishtimes.com/business/personal-finance/mortgage-scheme-who-is-eligible-and-how-will-it-work-1.3363921

“The new scheme however allows buyers to sidestep this rule (3.5 times rule), by offering mortgages on the ability to service their debt. Local authorities are able to do this because, as unregulated financial providers, they are not subject to Central Bank rules.

For example, a single person on a salary of € 40,000 will be able to borrow up to €198,000 (ie 5 times income), as with repayments of €858 a month, their mortgage would account for 33 per cent of disposable income. Aa couple on € 75,000 can borrow € 288,000 in Dublin – ie multiple of 4.1 per cent”

Calculate how much a person can borrow under the scheme: http://rebuildingirelandhomeloan.ie/calculator/

jon1981

ShaneC93 wrote: »

For example, a single person on a salary of € 40,000 will be able to borrow up to €198,000 (ie 5 times income), as with repayments of €858 a month, their mortgage would account for 33 per cent of disposable income. Aa couple on € 75,000 can borrow € 288,000 in Dublin – ie multiple of 4.1 per cent[/I]”

Calculate how much a person can borrow under the scheme: http://rebuildingirelandhomeloan.ie/calculator/

Ahh ffs are we back in 2005 now...

So 3.5x is ok for higher earners but the vulnerable of society will be allowed 5x with higher % of their income going towards mortgage repayments... i give up

tom1ie

ShaneC93 wrote: »

The ability to get a mortgage up to €250K/€320K without adhering to the 3.5 times income rule is under a new government scheme anounced earlier this year:

https://www.irishtimes.com/business/personal-finance/mortgage-scheme-who-is-eligible-and-how-will-it-work-1.3363921

“The new scheme however allows buyers to sidestep this rule (3.5 times rule), by offering mortgages on the ability to service their debt. Local authorities are able to do this because, as unregulated financial providers, they are not subject to Central Bank rules.

For example, a single person on a salary of € 40,000 will be able to borrow up to €198,000 (ie 5 times income), as with repayments of €858 a month, their mortgage would account for 33 per cent of disposable income. Aa couple on € 75,000 can borrow € 288,000 in Dublin – ie multiple of 4.1 per cent”

Calculate how much a person can borrow under the scheme: http://rebuildingirelandhomeloan.ie/calculator/

I see. So it'll be only a short time before we get the next housing bust then.
This country is beyond belief.

https://www.irishtimes.com/news/environment/arrears-on-dublin-city-council-mortgages-top-13-million-1.1640864.

That is from 2013.

The fact that anyone who needs to get a subsidiary or needs support to circumvent central bank rules have a higher rate of default seems to be ignored.

Nobody seems to be able to answer the question of how to provide a housing for those who won't get social housing but are in a vulnerable position if they take out a mortgage.

Affordable housing is a bit of an oxymoron because all housing should be affordable.

If the agency worked property it would gradually decrease the value of most property and make most housing more affordable because it would decrease the value of land, however, there are too many people invested in property to let that happen.

Geuze

mariaalice wrote: »

Affordable housing is a bit of an oxymoron because all housing should be affordable.

If the agency worked property it would gradually decrease the value of most property and make most housing more affordable because it would decrease the value of land, however, there are too many people invested in property to let that happen.

x100.

syndrome777

https://www.independent.ie/business/personal-finance/property-mortgages/couples-earning-up-to-90000-may-avail-of-new-affordable-housing-scheme-after-budget-37335667.html

is that is?

I wonder how many houses a year will be available through this scheme

lawred2

mariaalice wrote: »

https://www.irishtimes.com/news/environment/arrears-on-dublin-city-council-mortgages-top-13-million-1.1640864.

That is from 2013.

The fact that anyone who needs to get a subsidiary or needs support to circumvent central bank rules have a higher rate of default seems to be ignored.

Nobody seems to be able to answer the question of how to provide a housing for those who won't get social housing but are in a vulnerable position if they take out a mortgage.

Affordable housing is a bit of an oxymoron because all housing should be affordable.

If the agency worked property it would gradually decrease the value of most property and make most housing more affordable because it would decrease the value of land, however, there are too many people invested in property to let that happen.

not sure what that's supposed to mean..

all houses are affordable to someone..

just because someone can't afford to buy a property doesn't make it unaffordable. Just something that someone can't afford.

I can't buy a house on Shrewsbury Road. But someone else can.