When Dermot Desmond is piping up about housing

emo72

then things are really getting out of hand.

https://www.irishtimes.com/opinion/dermot-desmond-everyone-has-a-right-to-a-home-here-is-how-it-can-be-done-1.4195439

i can add anything new to the housing conversation, its a national catastrophe when people can no longer strive to own homes. i have 2 ideas...

1. cuckoo funds/international investors no longer able to buy whole tranches of houses.

2. the state borrows money at low rates currently available and build.

thats 2 simple things that if the government was interested in solving the issue would be simple.

When did he join sinn fein :pac:

jam_mac_jam

If investors buy apartments then they will rent them out. We currently have a shortage which is why rents are so high.

pure.conya

jam_mac_jam wrote: »

If investors buy apartments then they will rent them out. We currently have a shortage which is why rents are so high.

did you read the article?

Yurt2

pure.conya wrote: »

did you read the article?

There's a lot of people caught up with self-serving dogma when it comes to the housing issue in this country.

tigerboon

jam_mac_jam wrote: »

If investors buy apartments then they will rent them out. We currently have a shortage which is why rents are so high.

The shortage being caused by the investors buying up huge percentage of the new builds.

Eric Cartman

"– 5 per cent of apartments built were available for purchase; 95 per cent were sold to institutions."

the largest two of those institutions being local authorities and cluid housing.

Dún Laoghaire Rathdown County Council (DRCC) entered into a 25-year lease for social housing in Dundrum at twice the cost of building on State land, effectively borrowing money for rented housing at an effective cost of 5 per cent when the State could have borrowed to build it at almost nil cost.

half the cost of building is the cost of land..... "at twice the cost of building on state land" is just a kneejerk reaction dogwhistle.

emo72

when one of the billionaires in the country is saying we are being too tough on the "serfs". thats another level.

remember the rich want the economy and social cohesion to be good to protect their own agenda.

jam_mac_jam

tigerboon wrote: »

The shortage being caused by the investors buying up huge percentage of the new builds.

The shortage is caused by not enough houses and apartments being built to meet demand.

emo72

jam_mac_jam wrote: »

The shortage is caused by not enough houses and apartments being built to meet demand.

Yes, obviously. And the few that are being snapped up by investors is killing things also

jam_mac_jam

emo72 wrote: »

Yes, obviously. And the few that are being snapped up by investors is killing things also

Well if it's obviously why are you arguing.

If there are no investors then there are no homes to rent. Another problem.

We need to build enough to reach demand.

emo72

jam_mac_jam wrote: »

Well if it's obviously why are you arguing.

If there are no investors then there are no homes to rent. Another problem.

We need to build enough to reach demand.

Well it's actually Dermot Desmond that's arguing that. I agree with it. Banning investors isn't the only solution. It's part of it.

jam_mac_jam

emo72 wrote: »

Well it's actually Dermot Desmond that's arguing that. I agree with it. Banning investors isn't the only solution. It's part of it.

I would restrict the tax breaks but i don't think they should be banned. There is a huge shortage of rental property in this country. Not everyone owns or can or wants to. We have to cater for them too

emo72

jam_mac_jam wrote: »

I would restrict the tax breaks but i don't think they should be banned. There is a huge shortage of rental property in this country. Not everyone owns or can or wants to. We have to cater for them too

Yes we need rental houses in a normal market of course. There was an estate near me where over 270 houses were bought by one investor. That's skewed too much.

54and56

Corporate buyers have access to cheap capital. Average Mary and John buying their first home are higher risk than corporate buyers and have zero economies of scale so not only are they paying a much higher cost of capital but they are also paying a much higher price for their apartment/house than a corporate buyer who can buy 25/50 at a time thus negotiating a bulk discount from the developer and lowering costs all round as the developer only has to pay one set of legal fees for 25/50 units off a professional buyer who won't have any emotional wobbles Vs 25/50 seperate legal fees with buyers who'll dither, break up, not have the finance they thought they'd have etc etc.

As long as residential homes are an open market corporate buyers will always have a tremendous advantage over young (or not so young) buyers looking for a home.

In a free market economy this is just the law of the jungle.

In a quasi free market economy a government could easily impose an additional tax on buyers who won't be permanently living in the property they are buying or conversely (with the same outcome) give live in residential buyers a tax break which would wipe out the advantage corporate buyers otherwise enjoy.

FAILSAFE 00

Hard to believe the article doesn't once mention Airbnb and its impact on housing.

Eric Cartman

FAILSAFE 00 wrote: »

Hard to believe the article doesn't once mention Airbnb and its impact on housing.

because its impact is minuscule and only removes a small number of usually very very high end properties out of the market. The airbnb apartment operators have all just started doing corporate medium term lets instead,

wfdrun

Dermot says
1 use the tax code to stop institutions foreign or local make excess profits

2 plan and build communities centrally so that they work in the future and don't overburden police, education, health resources

3 use the tax code to help renters/first timers buy a roof over their heads

Next time I serve him his drink or clean a property of his. I will tip my cap to the good man.

lawred2

Is it not true that his missus had lodged a successful appeal against an apartment block across the road from her gaff in D4?

omicron

lawred2 wrote: »

Is it not true that his missus had lodged a successful appeal against an apartment block across the road from her gaff in D4?

Not successful yet but the sindo have an article that she’s taking a court case against the whole concept of fast track planning to try stop the development near their house.

lawred2

omicron wrote: »

Not successful yet but the sindo have an article that she’s taking a court case against the whole concept of fast track planning to try stop the development near their house.

That's it. And if she wins, there's a fear that it'll stop dead all projects that were granted fast track planning permission.

Too many vested interests.

Its the same problem a lot of cities in wealthy developed nations have.

We have unique cultural ideas about land, homeownership and wealth so change is hard.

Another very Irish thing, Developers are seen as celebrities lots of gossipe stories in the papers.

Muahahaha

Eric Cartman wrote: »

"– 5 per cent of apartments built were available for purchase; 95 per cent were sold to institutions."

the largest two of those institutions being local authorities and cluid housing.

When he says 95% of apartments were sold to insitutions he is not talking about housing charities, who are charities and not institutions. He is clearly talking about investors, aka cuckoo funds-

As noted above, in 2019 about 95 per cent of the apartments built were sold to institutions. Only 5 per cent of the new apartments were available for purchase. This trend has continued into 2020 in predominantly small, high-rise, minimum standard blocks. In fact, thousands are being fast-tracked through planning, even though Dublin already has a five-year pipeline of planning permissions for homes.

Why has this happened and what are the implications? I will focus on the financial reasons.

Given the very low rates of interest available, institutions are searching for investments that give a positive yield. Irish apartment blocks represent one such opportunity.

Currently institutional investors can acquire apartment blocks in Dublin with an initial return of about 3.6 per cent. Given that the current return on deposits is at best zero, the institution receives a substantial premium to cover any risk of delayed occupancy. The institution will borrow at less than 0.5 per cent. Depending on the amount of debt the institution is prepared to use, the institution can readily earn 12 per cent to 15 per cent on its equity

Anyway when a billionaire property developer is calling our housing market dysfunctional because government policy has been to financialise the market as a commodity for American funds to profit on you know something is very wrong.

Tough03

What do people think about his solutions to address the housing issues? Do you think they could work?

Eric Cartman

I think banning foreign residential property ownership would certainly help, not that we'd piss of Kennedy Wilson after handing them half of the city anyway..

Muahahaha

Eric Cartman wrote: »

I think banning foreign residential property ownership would certainly help, not that we'd piss of Kennedy Wilson after handing them half of the city anyway..

Those lads have made an absolute killing out of Dublin. Their first purchase was the entire Gasworks apartment complex right next door to Google. They picked up the 200 apartments at a bargain 110,000 each. Would imagine that each unit is now worth 500-600k but why sell when you're getting 3,000 a month rent. Their initial investment was paid back within 3-4 years of rental income and since then its been serious profits for them with huge capital appreciation if they ever do sell.

I think the likes of Kennedy Wilson were needed back in 2012-16 but the problem now is the policy has gone on for too long and ordinary people cannot compete with these institutions in the market. They dont even get a chance to compete when 95% of new apartment builds last year in Dublin were bought up by institutional investors to rent out. These are all off market sales between developer and institution so they never actually come onto the market via Daft or Myhome. In a normally functioning market new apartments are supposed to be starter homes for first time buyers with maybe 10 or 15% of them going to landlord investors. Now thats flipped on its head completely and 95% of new builds are going to investors. Its a mess.

New Zealand banned the sale of property to foreign investors because Kiwis were also getting priced out of the market and the sky didnt fall in. Though Im not sure if the Irish constitution or EU law on free movement of capital would allow such a ban here, even if it was just to be short term.

Eric Cartman

Muahahaha wrote: »

Those lads have made an absolute killing out of Dublin. Their first purchase was the entire Gasworks apartment complex right next door to Google. They picked up the 200 apartments at a bargain 110,000 each. Would imagine that each unit is now worth 500-600k but why sell when you're getting 3,000 a month rent. Their initial investment was paid back within 3-4 years of rental income and since then its been serious profits for them with huge capital appreciation if they ever do sell.

I think the likes of Kennedy Wilson were needed back in 2012-16 but the problem now is the policy has gone on for too long and ordinary people cannot compete with these institutions in the market. They dont even get a chance to compete when 95% of new apartment builds last year in Dublin were bought up by institutional investors to rent out. These are all off market sales between developer and institution so they never actually come onto the market via Daft or Myhome. In a normally functioning market new apartments are supposed to be starter homes for first time buyers with maybe 10 or 15% of them going to landlord investors. Now thats flipped on its head completely and 95% of new builds are going to investors. Its a mess.

New Zealand banned the sale of property to foreign investors because Kiwis were also getting priced out of the market and the sky didnt fall in. Though Im not sure if the Irish constitution or EU law on free movement of capital would allow such a ban here, even if it was just to be short term.

NZ I think had the right idea, Im not one for ever stepping on the market, but what the chinese , kennedy wilson and all of the other funds have done for transforming dublin into a buy to let corporate ghost town is insanity. We needed rentals but not like this.

Muahahaha

Yeah well it seems to have been deliberate government policy than began with Noonan circa 2013. He basically made two big interventions into the property market that completely changed the game and how it is played. One was to make investment hugely attractive to institutions by allowing them to benefit from Section 10 charitable status which means they pay less than 2% tax on rental income. This made investing here vastly attractive to pension funds because not only were they getting rents more expensive than Tokyo, they're also getting healthy capital appreciation and then to top it all off they pay next to nothing in tax on the rental income. If you're a pension fund manager then investing in Irish property must feel like a deal of the century type scenario. High rental yields, good capital appreciation and virtual tax free status is like the Holy Grail of property investing. They literally get to have their cake, eat it all and then more free cake comes along.

Then the second thing the government did was deliberately squeeze the individual investor/landlord out of the market with a tax policy that is completely the opposite to golden deal that the institutions got. Govt. increased taxation on rental income by bringing in PRSI and USC the equation and landing local investors with tax bills of 50% of rental income. This made many leave the market and it took away a segment of the market that was providing housing to lots of middle income workers. People living in normal low and mid range apartments all over the city suddenly found their landlord was selling up due to being hit with 50% taxation.

Whats more frightening is the Dermot Desmond article says that the institutions are now purposely sitting on empty apartments that they wont release to the rental market until rents rise even further. I presume their strategy is to get rents to rise even further and then to offer them onto the market but only on 5 or 10 year leases. This way they can lock tenants into top of the market rents for the next decade. In the absense of a Rental Commision of sorts then even if market rents fall they'll still be getting premium rents once the contract is signed. The fact they are leaving apartments empty just goes to show how much control they have over the Dublin market now and they can restrict supply to increase rents even further. They're exhibiting monopolistic behaviour. Potential first time buyers are being screwed in the market, they've next to no chance of buying an apartment in Dublin because of these institutions and then their rents are rising because the same institutions are restricting supply.

Eric Cartman

Muahahaha wrote: »

Yeah well it seems to have been deliberate government policy than began with Noonan circa 2013. He basically made two big interventions into the property market that completely changed the game and how it is played. One was to make investment hugely attractive to institutions by allowing them to benefit from Section 10 charitable status which means they pay less than 2% tax on rental income. This made investing here vastly attractive to pension funds because not only were they getting rents more expensive than Tokyo, they're also getting healthy capital appreciation and then to top it all off they pay next to nothing in tax on the rental income. If you're a pension fund manager then investing in Irish property must feel like a deal of the century type scenario. High rental yields, good capital appreciation and virtual tax free status is like the Holy Grail of property investing. They literally get to have their cake, eat it all and then more free cake comes along.

Then the second thing the government did was deliberately squeeze the individual investor/landlord out of the market with a tax policy that is completely the opposite to golden deal that the institutions got. Govt. increased taxation on rental income by bringing in PRSI and USC the equation and landing local investors with tax bills of 50% of rental income. This made many leave the market and it took away a segment of the market that was providing housing to lots of middle income workers. People living in normal low and mid range apartments all over the city suddenly found their landlord was selling up due to being hit with 50% taxation.

Whats more frightening is the Dermot Desmond article says that the institutions are now purposely sitting on empty apartments that they wont release to the rental market until rents rise even further. I presume their strategy is to get rents to rise even further and then to offer them onto the market but only on 5 or 10 year leases. This way they can lock tenants into top of the market rents for the next decade. In the absense of a Rental Commision of sorts then even if market rents fall they'll still be getting premium rents once the contract is signed. The fact they are leaving apartments empty just goes to show how much control they have over the Dublin market now and they can restrict supply to increase rents even further. They're exhibiting monopolistic behaviour. Potential first time buyers are being screwed in the market, they've next to no chance of buying an apartment in Dublin because of these institutions and then their rents are rising because the same institutions are restricting supply.

you forgot one trick there, labour introducing hap standards and banning bedsits, crippled the market for students and those on lower incomes.

FG had an oversupply issue and needed to do anything to kick start building again, it was a good plan but has worked too well but they didn't take the foot off the accelerator when the economy restarted and now we're all paying for it...literally. The irish government love the idea that kennedy wilson and google do a deal, an employee gets imported and goes to work for rates paying google, stays in an apartment paid for by google to rates paying kennedy wilson, the government gets double rates and lots of money for a person they don't have to give a single sh*t about who will go back to the states or india or wherever before they have to even sniff a pension for them.

Muahahaha

Eric Cartman wrote: »

you forgot one trick there, labour introducing hap standards and banning bedsits, crippled the market for students and those on lower incomes.

Yeah you're right, doing away with bedsits was a disastrous policy done on some notion that cutting the legs from the bottom 10-15% of the market would somehow improve things. All bedsits needed was better regulation and inspection to tackle a small minority that had things like damp and mould. Vast majority of them were fine and gave young people cheap accomodation in central areas. Bedsits were typically about 30sqm in size which is around about the size of a 4 star hotel bedroom. Absolutely nothing wrong with them as a way of serving the bottom 10-15% of the market Its funny now that we're back with bedsits except they've been rebranded as 'co-living', are only 15sqm and cost 1,400+ a month to rent.

FG had an oversupply issue and needed to do anything to kick start building again, it was a good plan but has worked too well but they didn't take the foot off the accelerator when the economy restarted and now we're all paying for it...literally. The irish government love the idea that kennedy wilson and google do a deal, an employee gets imported and goes to work for rates paying google, stays in an apartment paid for by google to rates paying kennedy wilson, the government gets double rates and lots of money for a person they don't have to give a single sh*t about who will go back to the states or india or wherever before they have to even sniff a pension for them.

Yeah measures that were brought in 2013 onwards were needed and fine at the time. But it has lurched too far now. Problem is now the market needs some kind of shock therapy like a rent freeze to go back the other way but even thats dangerous territory because developers might choose to sit it out.

Govt. housing policy is all over the place too. DCC gifted a developer a site worth 50 million (Devaney Gardens) and practically had to beg him to build there. Something is very wrong under the hood if that has to happen, be it costs of construction or the amount of taxes paid to the State just build units is too high. Same with the Dundrum debacle, local council locking themselves into a 25 year contract with 3,000 euro a month rents. Whoever the developer is there must be laughing their head off at the taxpayer who will now pay them millions and still not own the building at the end of it. Its absolute insanity.