O Cualann housing 'modal' and Eoin O Broin

Good loser

For ages now everytime there's a radio/TV discussion on Housing Sinn Fein - invariably through E O Broin - are adamant that the 'O Cualann modal'

is the solution. This was a scheme in the Ballymun area where a bunch of subsidised houses were built and sold by a Coop Housing Alliance; the subsidies were site costs reduced from 30k to 1k by LA and LA charges of €8.5k were waived. The houses were sold for 165k and 170k. Last week one of the 165k houses was sold on the open market for €325,000 (asking price €250,000). Leaving a 'profit' of €160k for the vendor. From the proceeds the seller has to surrender 60k to the LA; he/she pockets €100,000 tax free.

Given the trivial political matters that continuously outrage Sinn Fein it's amazing there has been no questioning of their housing guru (tsar?) on this scandal.

Atlantic Dawn

It could have simply been handled through taxation if the whole scheme wasn't set up with similar rules to buying a lucky bag down the local shop.

expectationlost

https://www.boards.ie/discussion/2058206983/o-cualann-housing-modal-and-eoin-o-broin

how much over the price they bought it for should they be able to sell it for?

Good loser

https://www.boards.ie/discussion/comment/117837804#Comment_117837804

How about nothing? Their 'gain' would have been free housing for 4/5 years.

Even if CGT was charged on such houses it would be something. It would be interesting to know how the first day buyers were selected.

The 'modal' is absurd.

markodaly

I agree. Anyone who avails of a subsidised house should NOT be able to sell it privately on the open market. PERIOD!

Did EoB comment on the matter, or was he too busy plugging his new book?

Peregrinus

Ah, but look at it this way:

The buyer invested 165k in the project and netted 265 (325-60), which translates to a gain of 61% on his investment.

The local authority invested 37.5k in the project (29k site value plus 8.5k fee waiver) and netted 60, which translates to a gain of 60% on its investment.

So it looks to me as if the rise in value in the property was shared between the buyer and the local authority in proportion to their respective investments. Is that so terrible?

Sam Russell

I know someone who bought a 'shared ownership' house in the UK. They qualified by whatever scheme existed, and when they came to sell, they had to find a buyer that also qualified under the same rules, and the price of the deal was set by the scheme. No profiteering, but maybe some profit in line with the general change in house prices over the time.

A similar set of rules would work if properly applied here. However 'shared ownership' is a nonsense designed to raise house prices while providing a fig leaf for first time buyers that cannot afford to buy, but allowing them to think they can. If the 'shared ownership' is not an open market scheme, then it is not really ownership - a bit like sheltered housing that can only be sold to other 'sheltered housing' buyers.

An old fashioned 'council house' rented at a suitable subsidised rent to qualifying tenants is a better solution, but with the caveat that the house cannot be sold.

Peregrinus

The thing with the council-house-for-rent-but-not-for-sale model is that, because the occupier acquires no stake in the house, he contributes no capital. The purchase of the land and the construction of the house (or the purchase of an already-finished house) have to be funded entirely by the local authority. And, then, they have to let it out at a below-market return indefinitely.

All of which means that it's very expensive for taxpayers. Which is fine as long as you recognise that, think that it's a good trade-off, and have identified the people whose taxes you are going to raise to fund it.

Shared ownership models aren't perfect, but I think it's unfair to describe them as a "nonsense" which is "not really ownership". The participants in those schemes really do own their houses. Their houses are subject to restrictions (as to who can occupy them) which makes that ownership less valuable but, then, precisely for that reason it costs less to buy, so they are buying a less valuable asset for a lower price, which on the face of it is a fair trade-off. And it has the advantage of allowing people to acquire a real asset, while at the same time not depleting the supply of housing available for social purposes. And of course it costs the taxpayer less, because the scheme participants contribute a significant amount of the capital required.

The problem as I see it with the O Cualann scheme, as outlined in the OP, is that, while the gain was divided between the participant and the local authority in proportion to their financial contributions, a part of that gain only arose because the house was transferred from social housing stock to unrestricted stock. It seems unfair, or at least a poor scheme design, that a participant who qualifies for social housing should be able to profit by having his house removed from social housing stock; people should not be incentivised to deplete social housing stock.

It seems to me you could tackle this in one of two ways:

1. As with the UK scheme that you mention, allow the owner to sell only to other qualified purchasers. Presumably then the house wouldn't fetch 325k, but if it did nevertheless sell at a gain, that gain could be divided between the owner and the LA in proportion to their contributions.
2. Allow the owner to sell to anyone, but he only gets a share of the gain over the open market value of the house at the time he bought it. So if he bought it for 165 and, at that time, it would have fetched 250 on the market, the LA gets the first 85k of any gain (and is required to reinvest it in new social housing), and anything over that is shared in proportion to financial contributions.

B2021M

How was the person who got the house originally 'selected'? Isnt this the key issue?

Sam Russell

Well, yes, saying shared ownership is nonsense is a bit of hyperbole.

However, to say a council house tenant has no investment as they are only tenants is not borne out by looking at established council estates of old where all were tenants. The houses, in general, were very well kept by their occupiers and the gardens were very well kept, almost competitively. Generally, there was a strong community on those estates.

The problem with the council house model was the sale at discounted prices and non-replacement of those houses leading to the total absence of council houses. Thatcher sold off the council houses for half nothing and never built another one. This resulted in a shortage of social houses that led to a constant rise in house prices that was a gift to the politicians as everyone who owned a house saw a rise in its value, and therefore their perceived wealth and could attribute it to the politicians. Any politician who could cause a drop in house prices would get their reward in the next election.

What is needed is a constitutional referendum that recasts the property rights in the constitution. Owners, currently, have absolute rights and tenants have none. That needs changing such that tenants that pay their due rent, and are not antisocial or damaging the property cannot face eviction, with obvious caveats.

We also need a planning system where new construction is planned in detail by the local authority and not by the developer.

beggars_bush

You shouldn't be able to turn a profit when selling a state financed/subsidized home

expectationlost

https://www.boards.ie/discussion/2058206983/o-cualann-housing-modal-and-eoin-o-broin

heres the article

Affordable house in Dublin sells at 90% above original price

https://www.irishtimes.com/news/social-affairs/affordable-house-in-dublin-sells-at-90-above-original-price-1.4656931

Mr Brennan has said he would prefer for the houses to be sold directly back to the co-op, if the original buyers wanted to move on, so they could be resold to other eligible affordable housing purchasers. However, he said, mortgage lenders were not willing to agree to this restriction on future sales.

expectationlost

https://www.boards.ie/discussion/2058206983/o-cualann-housing-modal-and-eoin-o-broin

EOB's response https://twitter.com/EOBroin/status/1431129739033522177

the CEO of O'Cualann's response https://twitter.com/RMcGreevy1301/status/1430995854270291975

he wrote an article too https://www.irishtimes.com/opinion/we-must-stop-a-slow-motion-privatisation-of-public-land-1.4662201

Another mechanism, a community land trust (CLT), is used with great success in the European Union and the United Kingdom but, has yet to be tried in Ireland. Households purchase their home, but the land remains in the ownership of the CLT.

expectationlost

even the FG Housing minister at the time was praising them.

Housing Minister Eoghan Murphy handed over the keys to the first five homeowners of a new affordable housing development in Ballymun.The development will consist of 49 houses when full complete, with prices starting at €160,000 for a three-bedroom up to €219,000 for a four-bedroom house.

It is operated by the Ó Cualann Cohousing Alliance (an approved charitable housing body) and is specifically aimed at families with yearly income thresholds of €36,000 to €80,000.

Speaking in July, Murphy said he wanted to see more of these kinds of developments.

“These are affordable homes in our capital city and this is something I, as minister for housing, want to see more of,” he said.

https://www.thejournal.ie/affordable-housing-3-3689696-Nov2017/

Good loser

https://www.boards.ie/discussion/comment/117842829#Comment_117842829

EOB's four line twitter response is pathetic - note the respondents' comments. Why didn't he make a proper press statement. Or address the matter on one of those radio/TV shows he seems to have open access to.

Up to now the O Cualann 'modal' (simpliciter, no ifs or buts) was touted as THE SF way to address the housing 'crisis'. The thing was flawed from the start as the €30,000 supposed site cost was imo a gross underestimate of the open market value of the site especially if all the services were on site and ready to go; wouldn't be surprised if the figure of 8.5 k for devel charges was also dodgy. The major flaw in the 'modal' though was the farcical notion that it was a 'modal' - the idea that this once-off scheme with all these special features could be reproduced and multiplied all over the place. Furthermore think of all the spin and air-miles (uninterrogated by journalists) this got on the mainstream media!

markodaly

https://www.boards.ie/discussion/comment/117840421#Comment_117840421

If someone gets a subsidy and a hand up, they should not be allowed to turn around to the next person and pull the ladder up after them after they net a big profit on selling a house they got on the cheap. It is more a matter of principle and one of the reasons why we are in a housing mess in the first place.

expectationlost

https://www.boards.ie/discussion/comment/117844951#Comment_117844951

think its on the CEO Hugh Brennan, they did an article on Dublin Inquirer who proposed ask what the model was and whether it could be replicate, they didn't even get to the bottom of what the model was and how they achieved it https://dublininquirer.com/2017/06/07/how-did-a-co-op-build-affordable-homes-in-ballymun-and-can-it-be-done-elsewhere where did they get the financing from?