Danger of Welfare State re housing?

Graces7

https://www.breakingnews.ie/ireland/inability-of-young-people-to-buy-homes-could-lead-to-welfare-state-says-auctioneer-group-931119.html

Any thoughts.

Gatling

We almost there with a welfare state ,but sooner or later something will give and we will see a backlash

Xterminator

yep, it is a time bomb.

it is a concentration of wealth in the hands of a few, and because young renters have to spend a very high % of their income on rent, they cannot save a deposit, to make the leap to owning their own property. No single income family i know can possibly qualify for a mortgage.

So what happens when they get older? tick tock.

Diceicle

He's not wrong and something big needs to change.
Look at the noises being made in relation to how MNC tax will be managed going forward.
People in Dublin(mainly) paying 50%+ of their net pay on a 1 or 2 bed apartment.
At the same time we give the work-shy too easy of a ride IMO.
HAP is headed for a bill of €1BN a year - that's not sustainable.
Site Valuation tax needs to come in yesterday.
A conversation needs to happen around taxing Landlords heavily - the idea that you can get lucky and buy a couple of properties and have the money roll in (passive income) isn't sustainable and needs to be tackled.
At the same time - irresponsible tenants need to be turfed out - you miss your payments you've broke your contact,m out you go.

Lackadaisical

We're well on the way towards creating a largely intergenerational gap where the aspiration to own a house is put beyond reach and where a large % rent for their lives, propping up multinational property investment funds.

The government seems to have no interest in actually increasing supply of homes and pushing the costs of homeownership down because this will upset a support base who enjoy the feeling over inflated asset values and paper wealth.

I would also suspect they the upwards only house price momentum suits the banks with their large books of pre 2008 bubble homes that were in negative equity. A second bubble means they can pretend their book value is more than it really should be.

Basically, we're all going to continue to pay for the pre 2008 crash by many of us never being able to aspire to own property. You'll have a two tier society of renters who's money simply vanishes and those with a bit more who FF and FG like, who will be able to make it to they holy grail of being able to buy an asset and see it inflate.

They gap will annoy people and eventually you get the rise of populists and political instability like you're seeing in the US, UK, France etc due to a perception that living standards or opportunities are shrinking for the average punter.

This stuff isn't unique to Ireland. It's the unravelling of post 80s economic system that was built on asset speculation instead of real economic output.

Sorry if I sound cynical but we seem to be building the next crisis by our continuous obsession with asset speculation over stability and real economic growth.

Unaffordable housing is not good for any economy.

godtabh

Diceicle wrote: »

He's not wrong and something big needs to change.
Look at the noises being made in relation to how MNC tax will be managed going forward.
People in Dublin(mainly) paying 50%+ of their net pay on a 1 or 2 bed apartment.
At the same time we give the work-shy too easy of a ride IMO.
HAP is headed for a bill of €1BN a year - that's not sustainable.
Site Valuation tax needs to come in yesterday.
A conversation needs to happen around taxing Landlords heavily - the idea that you can get lucky and buy a couple of properties and have the money roll in (passive income) isn't sustainable and needs to be tackled.
At the same time - irresponsible tenants need to be turfed out - you miss your payments you've broke your contact,m out you go.

You have no idea how the vast majority of private landlords operate in ireland. Given that the over whelming majority of private landlords have 1 or 2 units there isnt a 'money roll in (passive income)' coming in. While case is coming in their deductibles aren't inline with other business.

Factor in capital costs and a marginal tax rate of 50% the average landlord (and particularly the 'accidental' landlord) probably have made a tiny return that isnt worth it when you consider the risk involved.

As soon as I can sell up i'll be gone. I no longer want to be a sub contractor for government.

Also bear in mind, when the next recession comes (and it will come) how quick will we see RPZ reverse when the narrative suits. Will we see landlords bailed out as quick as tenants are now?

westcork67

Shock Horror - President of Auctioneers and Valuers Association says we are not buying enough property!!! The issue is supply and peoples understandable but unrealistic expectations of how and where they want to live

All major cities where people want to live develop high density accommodation for rent or purchase - if you want to live in Dublin then forget about your back garden, 3-bed semi etc - would you expect the same in any major international city?!?

Brussels Sprout

I can't seem to read that entire article but I'm going to go out on a limb and guess that the Auctioneers and Valuers Association think that the Central Bank mortgage rules are the source of all these ills and not the scarcity of housing.

Lackadaisical

You'd expect it in any decent city of under 2 million.
Dublin isn't an "international city". It's a small European capital. The comparisons with Paris and NYC that you see are nuts. It's comparable to the Nordic capitals, mid sized German cities, Brussels (and that's pushing it), Bordeaux maybe Lyon and even that's pushing it.

There was a UN report recently and it's actually a problem that's being repeated across the EU (except Finland) and across much of the developed world. There's a huge issue with housing speculation and we are not tackling it.

We just had a massive global credit market meltdown driven by this and from what I can see we just bailed out the banks and carried on more or else regardless.

godtabh

godtabh wrote: »

You have no idea how the vast majority of private landlords operate in ireland. Given that the over whelming majority of private landlords have 1 or 2 units there isnt a 'money roll in (passive income)' coming in. While case is coming in their deductibles aren't inline with other business.

Factor in capital costs and a marginal tax rate of 50% the average landlord (and particularly the 'accidental' landlord) probably have made a tiny return that isnt worth it when you consider the risk involved.

As soon as I can sell up i'll be gone. I no longer want to be a sub contractor for government.

Also bear in mind, when the next recession comes (and it will come) how quick will we see RPZ reverse when the narrative suits. Will we see landlords bailed out as quick as tenants are now?

factor in capital gains also

and, i dunno if you heard but we did bail out landlords, they were a not-insignificant element of the speculative borrowing that caused the 2007/8 disaster

Lackadaisical

If we don't deflate housing costs basically we are setting ourselves up for 2008 all over again and this time we don't have the credit available to bail out the system locally and the EU doesn't either.

So next time around it's going to be an absolute mess.

Forgetting about our debt to GDP ratio, which is based on a load of distortions in € per capita our public debt us the highest in the EU at over 42,000 for every man, woman and child.

If we have a major crisis again we are toast. So this stuff has to be gotten right.

That Fiscal Advisory Council report was bang on.

laradevire

Personally, I'm sick of the amount of money we spend on welfare.

I'm all for the state supporting people who lose a job, need medical care, and just need some support. But in all honesty, it should be for a limited period of time. I don't want to see us go the way of America, people need fallbacks. But something needs to give

Zenify

Diceicle wrote: »

A conversation needs to happen around taxing Landlords heavily - the idea that you can get lucky and buy a couple of properties and have the money roll in (passive income) isn't sustainable and needs to be tackled.

Is 50% not high enough? Most landlords income will be over the standard rate band so around 50%. It comes with a lot of risks. I think the tax is very high and I'm not even a landlord.

Lackadaisical

Our welfare spend by EU standards isn't that high btw.

We urgently need to get better value for money on major state expenditure like public health though. We are spending like Sweden and getting bad results all the time. So where's that money going?

Also things like the NCH overspend are beyond disgusting. That's money that has been sucked out of everyone's children's and grandchilrens pockets. The waste is just off the scale and the accountability for the poor decision making and constant changing of plans never came about. Instead, we had media and politicians attacking the contractors

It's not the only area where we are bleeding money and we failed to stem the flow. The Troika called for reform of massively high legal and similar overheads here as they're grossly out of line with peer nations and we did nothing. Instead we spent billions on a failed attempt to meter water...

All that aside thought the property speculation is a similar problem. We are allowing house prices to inflate and inflate and inflate which just sucks more and more money out of the economy and loads us with more debt risk that we need.

Also I don't agree with blaming private landlords but I also don't think the private rental sector should ever have been a major part of a solution to a housing crisis. It's just loading debt somewhere else.

Buying in overpriced property through state rental support schemes for people who can't afford housing is just driving the market even higher. All it is is a state subsidy flowing into an already overheated market.

We need to be driving the supply up and the prices down but we're locked into an ideology that sees soaring house price as a positive thing rather than a huge risk and drain on the rest of the economy.

I'd be in favour of things like social housing but maybe also public private partnership for development of quality affordable housing, alternative schemes like maybe share ownership in development companies by residents to develop housing they intend to live in, the use of state lands, rezoning to drive down pricing, building upwards way more than we do and trying to get quality and density in urban areas.

We aren't even scratching the surface of it and we've a government who seem to be unwilling to do anything radical to deal with it.

All FG and FF seem to want to do is keep applying ever increasingly expensive Band-Aid plasters to a system that is both over priced and delivering poor quality and laying the foundation for future social and economic crises.

Diceicle

laradevire wrote: »

Personally, I'm sick of the amount of money we spend on welfare.

I'm all for the state supporting people who lose a job, need medical care, and just need some support. But in all honesty, it should be for a limited period of time. I don't want to see us go the way of America, people need fallbacks. But something needs to give

Welfare, all of it, needs to be capped at ~€20-24k total. Simplify the payments and cap it.

Diceicle

Zenify wrote: »

Is 50% not high enough? Most landlords income will be over the standard rate band so around 50%. It comes with a lot of risks. I think the tax is very high and I'm not even a landlord.

50% of what though?
On the property that costs €500 a month in mortgage but we're charging some young worker €2000 a month to live in it?
Rents and the cost of living need to be brought down by Government policy - it won't happen because we don't have a Government with the brains to think it through or the balls to implement it.
Don't get me wrong - I'm broadly sympathetic to Landlords on an individual level - but allowing an over-inflated rental sector to exist is not good for the economy.

Graham

Diceicle wrote: »

On the property that costs €500 a month in mortgage but we're charging some young worker €2000 a month to live in it?

€500/month on a buy-to-let mortgage is going to get you a mortgage of approximately €80k.

Where are you finding €80k properties that rent for €2k a month?

Diceicle

Graham wrote: »

€500/month on a buy-to-let mortgage is going to get you a mortgage of approximately €80k.

Where are you finding €80k properties that rent for €2k a month?

Are there no properties bought decades ago on the market? Do properties not be transferred via wills etc?

Graham

Diceicle wrote: »

Are there no properties bought decades ago on the market? Do properties not be transferred via wills etc?

I'm not sure that's a particularly representative example rental property for your sweeping generalisation.

Looking at current rental yields a property with a monthly rent of €2,000 would have a value of around €350,000.

Graces7

Lackadaisical wrote: »

Our welfare spend by EU standards isn't that high btw.

We urgently need to get better value for money on major state expenditure like public health though. We are spending like Sweden and getting bad results all the time. So where's that money going?


There seem to be compensation payouts almost weekly from lawsuits against HSE for errors etc.

Yurt2

The Singapore housing model is basically the only thing that will stop this cycle. But it won't be done - Paddy won't have it.

State takes a more active role in land management via Land Value Taxes that gives a disencentive to land hoarding and speculation, and an incentive to efficient land use. This would be a tough one for Paddy to swallow and would lead to immediate howls of communism. Yet the Singaporeans are anything but communist.

State builds housing and sells it at cost. Citizens / permanent residents are entitled to purchase one apartment and may not resell it for a fixed number of years. There's a clawback percentage for the state when it is resold. Nobody gets anything for free and it's cost-neutral for the government, but housing is accessible and affordable pretty much for all.

People may buy on the open market, but these units tend to be much more expensive.

Dawido

yes that's true, the state failed. where adult workers are not able to rent house by themselves when they are working it's a sign of state failure, but it's not the only place where the state has failed - police force, hospital, public transport are all on their knees and it's only going to get worse