Alternative Financing for the Property Market?

smellyoldboot

Cyrus wrote: »

The only depraved greed I’ve seen in this thread is the recession cheerleaders to be honest, how anyone could a) be happy about this and b) assume they will be unaffected and able to buy the house they want is beyond me.

So, we are currently funding via the Exchequer the HTB scheme, the only barely functioning Rebuilding Ireland scheme, Obscene HAP payments and paying "market" rates for social housing often in upscale private developments.

And worse is to come, remember you are not only paying over the odds for your own house, you are also paying by proxy(taxation) for the all the other wacky schemes.

And somehow all of this is more acceptable than letting developers who overstretched themselves fall on their swords, or enacting a legal system that actually punishes people for making terrible financial decisions.

The Belly

KnowingWind wrote: »

Anyone have any stats on just how much residential property is held by big investors?

I really think this is a big factor in discussing future prices.

How many investors may move elsewhere, leaving particularly Dublin drastically effected.

Don't have the figures but the councils and housing agencies who are effectively cash buyers pay the market rate for houses to provide social housing and they have a blank cheque. So buyers are competing with government funding which is nearly endless. I have said this before it's done to keep house prices inflated.

Wanderer78

smellyoldboot wrote:

And somehow all of this is more acceptable than letting developers who overstretched themselves fall on their swords, or enacting a legal system that actually punishes people for making terrible financial decisions.

....behind every bad borrower, is a bad lender!

The Belly

Wanderer78 wrote: »

....behind every bad borrower, is a bad lender!

The government should be lending, not the banks. It all amounts to the same thing just cheaper in the long run. People have to be housed one way or the other.

Wanderer78

The Belly wrote:

The government should be lending, not the banks. It all amounts to the same thing just cheaper in the long run. People have to be housed one way or the other.

The state should be funding it via its own methods of money creation, partially anyway

cubatahavana

Claw Hammer wrote: »

What would you expect to be asked for that in Mount Merrion?

No idea. I really have no clue of what is considered a good (or even acceptable) garden by Ireland standards. I grew up in an apartment, so for me 80sqm is perfect

The Belly

Wanderer78 wrote: »

The state should be funding it via its own methods of money creation, partially anyway

It should it can borrow money for nearly free. Credit unions sitting there if they were used they could do what they were set up to do.

What happens now is some loses their home council go out and buy in the private sector at inflating prices to rehouse. The bank takes the home eventually and now we the tax payer fund the rehousing. For basic living be it a starter apartment or 3-bed semi government should be directly involved.

If you want a nice house in Dalkey then deal with the banks.

Very similar to health or the old-age pension it not perfect but if you want something better go to the private market for it but for basic, the gov should be involved and housing is about as important as it gets.

Wanderer78

The Belly wrote:

It should it can borrow money for nearly free. Credit unions sitting there if they were used they could do what they were set up to do.

All these methods are valid, and should be done, but our government is primarily economically conservative, so are hard wired towards idiotic things such as balancing budgets etc. We could also create our own public banks to partially fund our infrastructure needs, but again, as above......

MacronvFrugals

The Belly wrote: »

It should it can borrow money for nearly free. Credit unions sitting there if they were used they could do what they were set up to do.

What happens now is some loses their home council go out and buy in the private sector at inflating prices to rehouse. The bank takes the home eventually and now we the tax payer fund the rehousing. For basic living be it a starter apartment or 3-bed semi government should be directly involved.

If you want a nice house in Dalkey then deal with the banks.

Very similar to health or the old-age pension it not perfect but if you want something better go to the private market for it but for basic, the gov should be involved and housing is about as important as it gets.

But but but economic religion

Wanderer78

MacronvFrugals wrote:

But but but economic religion

Its a cult!

The Belly

Wanderer78 wrote: »

All these methods are valid, and should be done, but our government is primarily economically conservative, so are hard wired towards idiotic things such as balancing budgets etc. We could also create our own public banks to partially fund our infrastructure needs, but again, as above......

It's by design. IF they did the right thing then house prices would fall. Too many vested interests. In oz car insurance is a gov thing here well it depends on the insurance companies mood and we get 40% increase or no car insurance. I said early that I don't believe in too much state intervention but with certain basic key needs, there should be.

What baffles me is why the gov arent borrowing when rates are practically zero and why they are not putting the economy on steroids to keep the ship going and ready for the rebound.

The Belly

MacronvFrugals wrote: »

But but but economic religion

Its all bo..oclolgy economics is good for the post mortem only but f..k all good for the here and now.:)

MacronvFrugals

The Belly wrote: »

It's by design. IF they did the right thing then house prices would fall. Too many vested interests. In oz car insurance is a gov thing here well it depends on the insurance companies mood and we get 40% increase or no car insurance. I said early that I don't believe in too much state intervention but with certain basic key needs, there should be.

What baffles me is why the gov arent borrowing when rates are practically zero and why they are not putting the economy on steroids to keep the ship going and ready for the rebound.

At near negative rates a serious consideration should be given to a sovereign wealth fund.

hometruths

The Belly wrote: »

The government should be lending, not the banks. It all amounts to the same thing just cheaper in the long run. People have to be housed one way or the other.

Rather than borrowing billions to lend I'd rather see the government borrow billions to establish a social housing REIT - i.e borrow to become a landlord not a banker.

Keep HAP, Scrap all HTB, long term leases with landlords, and other costly supports and start establishing a stock of social housing, building and buying, that can be used for generations.

Take a long term view of it, rather than all this short termism band-aid meddling, that is just making things worse.

Wanderer78

The Belly wrote:

What baffles me is why the gov arent borrowing when rates are practically zero and why they are not putting the economy on steroids to keep the ship going and ready for the rebound.

Its ideological based, they and their advisor's don't realise there wrong doings and the serious failures in their thinking, they re not doing it in spite, or to screw people over

The Belly

MacronvFrugals wrote: »

At near negative rates a serious consideration should be given to a sovereign wealth fund.

Money tied up in the banks no return and the banks are shaky at best. I do agree with you. Last time we had a pension reserve fund though it was raided. It would have to be ring-fenced and take a referendum to be touched.

The Belly

schmittel wrote: »

Rather than borrowing billions to lend I'd rather see the government borrow billions to establish a social housing REIT - i.e borrow to become a landlord not a banker.

Keep HAP, Scrap all HTB, long term leases with landlords, and other costly supports and start establishing a stock of social housing, building and buying, that can be used for generations.

Take a long term view of it, rather than all this short termism band-aid meddling, that is just making things worse.

i don't disagree with you at all what I was trying to say was you need to take the vested interests out of the market up to a certain level.

Wanderer78

MacronvFrugals wrote:

At near negative rates a serious consideration should be given to a sovereign wealth fund.

Swf's should be created for many reasons, but this is ireland!

Wanderer78

The Belly wrote:

Money tied up in the banks no return and the banks are shaky at best. I do agree with you. Last time we had a pension reserve fund though it was raided. It would have to be ring-fenced and take a referendum to be touched.

Deposits aren't used directly in the process of lending, but are required for it

The Belly

Wanderer78 wrote: »

Deposits aren't used directly in the process of lending, but are required for it

Yes, fractional lending was and is the cause of banking crises. A smarter way would be if you have 10k or 500k you can invest in housing with a gov backed rate of return no different the solidarity bond. I can't remember off the top of my head the amount that is on deposit.

Wanderer78

The Belly wrote:

Yes, fractional lending was and is the cause of banking crises. A smarter way would be if you have 10k or 500k you can invest in housing with a gov backed rate of return no different the solidarity bond. I can't remember off the top of my head the amount that is on deposit.

Fractional reserve is a myth, it's not how our system works at all, deposits are not used as a part of lending, but are a critical function of the banking system as reserves, loans are backed by our promise to repay.

Graham

Mod Note

Thread Split

MacronvFrugals

The Belly wrote: »

Money tied up in the banks no return and the banks are shaky at best. I do agree with you. Last time we had a pension reserve fund though it was raided. It would have to be ring-fenced and take a referendum to be touched.

It just seems like there's no imagination at all.

It gives every citizen in the state a stake in something.

The Belly

MacronvFrugals wrote: »

It just seems like there's no imagination at all.

It gives every citizen in the state a stake in something.

Returns rise and fall but a least your making a few bob and moving the country forward. Solve a lot of reliance on outside finance too, I wonder what yields would be then on the open market when a country finances itself. But as was said no stomach for it on the political front afraid for their lives that we just might be able to manage things ourselves.

Wanderer78

The Belly wrote:

Returns rise and fall but a least your making a few bob and moving the country forward. Solve a lot of reliance on outside finance too, I wonder what yields would be then on the open market when a country finances itself. But as was said no stomach for it on the political front afraid for their lives that we just might be able to manage things ourselves.

We probably will always be relient to some extent on partial funding from the markets, but it's disturbing that there's little or no interest in partial self funding, our economically conservative government is defaulting again to the usual, increasing private debt and encouraging the spending of savings, this is exactly what caused the crash in 08.

Claw Hammer

cubatahavana wrote: »

No idea. I really have no clue of what is considered a good (or even acceptable) garden by Ireland standards. I grew up in an apartment, so for me 80sqm is perfect

You defined what you think is an acceptable garden by your standards. I asked you what you would expect to be asked to pay for a house with such a garden in Mount Merrion. Given that it was proposed that €500,000 would be enough to buy a four bed semi in turnkey condition in any part of the country.

The Belly

Wanderer78 wrote: »

We probably will always be relient to some extent on partial funding from the markets, but it's disturbing that there's little or no interest in partial self funding, our economically conservative government is defaulting again to the usual, increasing private debt and encouraging the spending of savings, this is exactly what caused the crash in 08.

It just a wealth transfer. From those that don't have it to those that do.

Wanderer78

The Belly wrote: »

It just a wealth transfer. From those that don't have it to those that do.

but we currently cannot sustain our economy on our own, we require access to the bond markets, in order to survive, but we could help ourselves by creating our own financial institutions, and borrow from ourselves, but this to has limitations and introduces its own risks

The Belly

Wanderer78 wrote: »

but we currently cannot sustain our economy on our own, we require access to the bond markets, in order to survive, but we could help ourselves by creating our own financial institutions, and borrow from ourselves, but this to has limitations and introduces its own risks

There should be no need for the private bond markets ECB is there for that purpose. Outside of that domestic money be it pensions or savings should be used with gov backing for big projects rather than invested in foreign pension and investment funds. Basically recycle it in Ireland for the benefit of the country. Long term plan but far more sustainable.

Wanderer78

The Belly wrote: »

There should be no need for the private bond markets ECB is there for that purpose. Outside of that domestic money be it pensions or savings should be used with gov backing for big projects rather than invested in foreign pension and investment funds. Basically recycle it in Ireland for the benefit of the country. Long term plan but far more sustainable.

...but its not what we have, 100% self financing is currently not possible, but as said, we could produce some ourselves, by using our national assets and savings, as reserves, to produce some money ourselves, as credit, but it would be critical to try pay back these loans to ourselves, or face possible contagion

The Belly

Wanderer78 wrote: »

...but its not what we have, 100% self financing is currently not possible, but as said, we could produce some ourselves, by using our national assets and savings, as reserves, to produce some money ourselves, as credit, but it would be critical to try pay back these loans to ourselves, or face possible contagion

Yes well ECB is there for the long-term finance but the less we have to borrow the better. There is plenty of money here tied up in nothing deposits when it could be put to better use.

Wanderer78

The Belly wrote: »

Yes well ECB is there for the long-term finance but the less we have to borrow the better. There is plenty of money here tied up in nothing deposits when it could be put to better use.

true, but its important to remember, deposits are never loaned out, there just held as reserves, but we could put them to use via the creation of our own public banking systems, but theres no will for their creation

The Belly

Pensions are a classic example. Why don't they allow a person to buy their own home non investment and claim pension tax relief on it?

Not endowment rubbish that went on way back.

At the end of the day, its the biggest asset anyone will ever own and it's a home. Rules apply of course. But instead its equity funds and the stock market fund charges and the like.

Wanderer78

The Belly wrote: »

Pensions are a classic example. Why don't they allow a person to buy their own home non investment and claim pension tax relief on it?

Not endowment rubbish that went on way back.

At the end of the day, its the biggest asset anyone will ever own and it's a home. Rules apply of course. But instead its equity funds and the stock market fund charges and the like.

interesting idea, but shur housing is a complete mess, and looks unresolvable at the moment. other eu financial institutions, such as the eib, could easily be used to create eu wide infrastructure projects, but theres also little or no will there either

The Belly

Wanderer78 wrote: »

interesting idea, but shur housing is a complete mess, and looks unresolvable at the moment. other eu financial institutions, such as the eib, could easily be used to create eu wide infrastructure projects, but theres also little or no will there either

If there was any joined-up thinking your home would form part of your pension. Buy it with a state-backed loan and tax relief at source like any pension and available to all.

Cant sell until paid off and retired and if it's worth more then the pension threshold you pay some tax.

Instead money flows into the 1000 different pension funds managed for-profit and most not here.

Wanderer78

The Belly wrote: »

If there was any joined-up thinking your home would form part of your pension. Buy it with a state-backed loan and tax relief at source like any pension and available to all.

Cant sell until paid off and retired and if it's worth more then the pension threshold you pay some tax.

Instead money flows into the 1000 different pension funds managed for-profit and most not here.

definitely for state backed loans for home building, this is why i advocate for public banking systems, these could be used for such things

The Belly

Wanderer78 wrote: »

definitely for state backed loans for home building, this is why i advocate for public banking systems, these could be used for such things

Remove PS pensions all of them and last count there are 4-5 types. One universal pension for all relative to your income the more you earn the bigger it is. No special deals for anyone just straight and fair. You see less messers enter politics if it was done.


Self-funded and can be used for housing. Take the private sector out of it. If someone wants more then use the private sector.

Wanderer78

The Belly wrote: »

Remove PS pensions all of them and last count there are 4-5 types. One universal pension for all relative to your income the more you earn the bigger it is. No special deals for anyone just straight and fair. You see less messers enter politics if it was done.


Self-funded and can be used for housing. Take the private sector out of it. If someone wants more then use the private sector.

im not sure id completely take the private sector out of it, but offer the public option along side of it, its seems to work in other countries reasonably well, including some european countries

The Belly

Wanderer78 wrote: »

im not sure id completely take the private sector out of it, but offer the public option along side of it, its seems to work in other countries reasonably well, including some european countries

Always need enterprise my point is there should be a set basic standard for all.

Certain functions as I have said before should not left to the open market. Key functions from housing to health to retirement should not be left to the open market completely.

If you take housing. You have a job you apply for your loan it may be a state built house or private and up to a limit, you make your payments and receive tax relief for it as it forms your pension. What good is a 25-year-old paying into a pension when are renting.

Wanderer78

The Belly wrote:

Certain functions as I have said before should not left to the open market. Key functions from housing to health to retirement should not be left to the open market completely.

Completely agree with this, the market is not absolute, it has inefficiencies, in which we do not truly understand, the relationship between the state and the market is a symbiotic one, they need each other in order to survive, leaving such critical needs entirely to the market has caused mayhem, and the markets have no clear solutions to these problems

The Belly

Wanderer78 wrote: »

Completely agree with this, the market is not absolute, it has inefficiencies, in which we do not truly understand, the relationship between the state and the market is a symbiotic one, they need each other in order to survive, leaving such critical needs entirely to the market has caused mayhem, and the markets have no clear solutions to these problems

In the bigger scheme of things, it actually does the private sector more harm than good the way it is. Before this covid the big concern was MNC's could not find housing for employees. This should not be the case. It stifles growth and makes Ireland uncompetitive.

mcsean2163

schmittel wrote: »

There is a huge range of measures which would make up quite a long post but in a nutshell it would involve 180 degree turn in change of focus and strategy to reallocate housing budgets and resources.

The short version:

Scrap all Help to Buy/Shared Equity etc etc measures designed to make housing more affordable to private buyers. Reallocate these funds to HAP/Social Housing budgets. Set a more modest limit on HAP rates than current market rates.

Scrap all rent controls. Let private landlords charge what they think the market will bear. Scrap all long term leases for social housing with landlords, offer them tax incentives to offer longer leases in private rental market. Generally improve tax risk/reward for landlords.

Although no rent controls keep designated RPZs as a marker of where problems are greatest.

Hammer any Airbnbs hard in current RPZs to get them either on market for sale or market for rent. Enforce it properly in the future.

Introduce vacant property register in RPZs. (Give the job to the CSO, not Fingal CC!)

Reduce CGT on sale of long term vacant property if sold within next 6 months.

Introduce some sort of planning permission type system for vacant property in RPZs - i.e no tax if you wish to keep a property vacant but you need to have a good reason. Enforce it properly. Monitor it. If a property is listed as a rental, check it regularly.

Increase CAT allowances within a near term timescale specifically for pensioners downsizing properties in RPZs.

Introduced government backed bridging loans for downsizers.

Do a deal with banks/vulture funds whereby the government pledges a change in policy and to promote change in public opinion on arrears - i.e if you are not paying your mortgage we will repossess you.

In exchange banks/vulture funds hand over the loan books of those who are genuinely the poorest in need of most help, and every property that is suitable for social housing.

So basically if Vultures Inc have an unemployed family of four living in a modest house, or modest buy to let, it becomes the governments problem.

And if they have a celebrity chef and model living in a 1m house in Clontarf they have the green light to fast track the repo and get it on the market.

Clear all this overhang and then scrap CB lending limits. Allow banks to lend as much as they wish based on their risk analysis of individual borrower BUT with non recourse loans and fast tracked repos after 6 months.

I could go on and on and on but you get the idea, basically the opposite of everything we are doing now!

And this government have the perfect excuse with which to protect themselves from some of the negative fall out from the above - they can blame covid impact on the economy.

non recourse loans

That would change a pot! In itself!

hometruths

mcsean2163 wrote: »

non recourse loans

That would change a pot! In itself!

Banks would police themselves in lending limits. Would be no need for CB limits.

hometruths

Timing belt wrote: »

I don't agree with this as this is the only thing that is preventing the housing market from generating another bubble and if this was lifted banks would go on a credit binge especially at the moment when they have so much cash sitting on there balance sheet attracting negative interest. It would be a feeding frenzy!!!

If banks want to take the risk let them at it - with the warning that there will be no bail out next time.

They are not going to lend 100% at 500k to some no hoper who clearly cannot afford it, if he can throw back the keys at them say "meh, that didn't work out, your problem now".

They will lend 80/90% to solvent sensible buyers, who are not going to suddenly stop paying the mortgage if they know they can be hauled out in 6 months.

It will also introduce competition and interest rate cuts.

Timing belt

schmittel wrote: »

If banks want to take the risk let them at it - with the warning that there will be no bail out next time.

They are not going to lend 100% at 500k to some no hoper who clearly cannot afford it, if he can throw back the keys at them say "meh, that didn't work out, your problem now".

They will lend 80/90% to solvent sensible buyers, who are not going to suddenly stop paying the mortgage if they know they can be hauled out in 6 months.

It will also introduce competition and interest rate cuts.

Banks will lend to anyone that they can and will lend 120% mortgages if they were legally allowed to do so.

Banks have to be bailed out or at least the systemically important banks not bailing them out is not an option you may as well turn the lights out on the country.

hometruths

Timing belt wrote: »

Banks will lend to anyone that they can and will lend 120% mortgages if they were legally allowed to do so.

Banks have to be bailed out or at least the systemically important banks not bailing them out is not an option you may as well turn the lights out on the country.

With all the money the government will save on HAP payments they can stockpile generators. Letting a bank or two or their creditors go bust seems perfectly fine to me.

Timing belt

schmittel wrote: »

With all the money the government will save on HAP payments they can stockpile generators. Letting a bank or two or their creditors go bust seems perfectly fine to me.

The thing is that if a bank goes bust so to does the economy. Think about if tomorrow you could not use an ATM or pay for purchase with card or have nowhere to lodge cash/cheques or make payments. They are systemically important for a reason because the economy can not function without them and the banks know this so will lend whatever they can if they were allowed.

It's like saying the country can function without electricity!!!!!

hometruths

Timing belt wrote: »

The thing is that if a bank goes bust so to does the economy. Think about if tomorrow you could not use an ATM or pay for purchase with card or have nowhere to lodge cash/cheques or make payments. They are systemically important for a reason because the economy can not function without them and the banks know this so will lend whatever they can if they were allowed.

They will still have to maintain their capital ratios. Introduce rules to ring fence them, and the deposit guarantee scheme.

If they want to go on a lending spree they will have to raise funds from elsewhere - bond market for example. Put this lending into non systemic business. Let them go wallop if they cock it up.

The empty ATM scenario should not be an insurmountable problem.

Timing belt

schmittel wrote: »

They will still have to maintain their capital ratios. Introduce rules to ring fence them, and the deposit guarantee scheme.

If they want to go on a lending spree they will have to raise funds from elsewhere - bond market for example. Put this lending into non systemic business. Let them go wallop if they cock it up.

The empty ATM scenario should not be an insurmountable problem.

Yes I agree that you should ring fence the banks like they do in the UK and prevent them from lending to Financial institutions where most of there risk sits these days.

Yes regulation exists so they need to maintain capital ratios but that is meaningless if they know they will be bailed out. Look at how long Irish banks failed the ECB stress tests and a situation like covid can come along and deplete the capital reserves very quickly and then no-one will invest in the bank or buy its debt and the bank goes bust and with it the economy because it can not function.

Even if all the Irish banks have fully implemented the bank bail in regulation (MREL). Whereby if a bank fails all the holders of the MREL Debt gets converted to equity and it recapitalise the bank it would not work as the bank would not be functioning for a period of time and the economy would ground to a halt. As I said before they are systemically important for a reason.

The last bit thing to throw in is in regards to the CBI rules of income x lending limit. This is already in the pipeline to be delivered to all banks worldwide as part of the banking regulations.

hometruths

Timing belt wrote: »

Yes I agree that you should ring fence the banks like they do in the UK and prevent them from lending to Financial institutions where most of there risk sits these days.

Yes regulation exists so they need to maintain capital ratios but that is meaningless if they know they will be bailed out. Look at how long Irish banks failed the ECB stress tests and a situation like covid can come along and deplete the capital reserves very quickly and then no-one will invest in the bank or buy its debt and the bank goes bust and with it the economy because it can not function.

Even if all the Irish banks have fully implemented the bank bail in regulation (MREL). Whereby if a bank fails all the holders of the MREL Debt gets converted to equity and it recapitalise the bank it would not work as the bank would not be functioning for a period of time and the economy would ground to a halt. As I said before they are systemically important for a reason.

The last bit thing to throw in is in regards to the CBI rules of income x lending limit. This is already in the pipeline to be delivered to all banks worldwide as part of the banking regulations.

Ok fine - scrap lending limits for non pillar banks. Allow building societies to form, I.e financial services companies solely in the business of mortgages, the likes of which already exist. you can go and get your non recourse mortgage from pepper money.

The point is not to be giving pillar banks enough rope to hang themselves and the economy but to allow greater access to finance for buyers, and greater access to security for lenders.

Timing belt

schmittel wrote: »

Ok fine - scrap lending limits for non pillar banks. Allow building societies to form, I.e financial services companies solely in the business of mortgages, the likes of which already exist. you can go and get your non recourse mortgage from pepper money.

The point is not to be giving pillar banks enough rope to hang themselves and the economy but to allow greater access to finance for buyers, and greater access to security for lenders.

I get where you are going on this and understand what you are saying but the cost of getting a banking licence and the fact that any new entry would need to be a agency bank of one of the main settlement banks means that they will always be more expensive to run. Just look at the credit unions and the trouble they have at the moment. Its a non-starter.