May 12, 2016

Let’s join the 21st century with an easy fix for housing crisis, once and for all

Posted in Irish Independent · 131 comments ·
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When I was a kid, the coolest thing you could do when you grew up was to go on the Magic Bus from Dublin to Greece. All the hip older brothers of my mates did this. They worked in London for the summer on the sites and then spent the lolly on PLO scarves, massive spliffs, a copy of the Little Red Book and a one-way ticket to Mykonos to lose their virginity to a German hippy with hairy armpits.

The Magic Bus shuttled all around Europe and took thousands of Irish teenagers on the initial Dublin to London part of the odyssey.

Nobody got the plane from Dublin to London because, before Ryanair, it was too expensive. Before the Ryanair Generation, there was the Magic Bus Generation. The cost of the flight to London was £280. Are Lingus said it couldn’t be done for less, until it was by Ryanair, who came along and started slashing costs.

Today, no one thinks air travel is out of his or her league, as evidenced by Ryanair flying 100 million people last year.

Ryanair changed the model and came at the business via a different angle and also did what many thought impossible – it cut prices and made more revenue and profits. Normally, businesses think that if you cut prices, revenues will fall and so will profits, but Ryanair did the opposite.

Now consider accommodation in Ireland, where it was revealed yesterday that average rent is now €1,000 per month.

At the moment, we are told that it is far too expensive to build houses. Does this not sound a bit like Aer Lingus management of old?

Let’s examine how the State could involve itself in financing a housing trust using the international financial markets to massively reduce housing costs in Ireland.

Currently, the markets will finance any good opportunity. When interest rates are zero, the obvious thing to do is borrow for infrastructural projects and housing is the most significant infrastructural development that one can think of right now.

Let’s look at the numbers.

Builders will tell you that building costs are around €120/130 a square foot. For a large scheme, this could be lower and could move towards €100.

Now let’s say that the average unit in Dublin or any urban centre in Ireland is 1,400 square feet. This means that the average building cost of a house/apartment of this size is €140,000. Add to this VAT of 13.5pc and we get €158,200.

Now on top of this there are professional fees for architects and surveyors and the like. These could be 12pc of the contract price plus 23pc VAT. So this is close to €19,000 on top of this price, bringing the €140,000 initial cost, up with all the fees and taxes to around €166,000.

Then on top of this are development levies which are the costs per unit that are added by the council to pay for new roads, water pipes and sewage. These are typically €9,000 per unit. So we are now up to €175,000 per unit.

Now we have the cost of the build with all the charges and taxes before we talk about site cost.

In 2011, Dublin probably had enough houses to deal with the population. However, there should have been 60,000 built since to keep up with population growth but only 8,000 have been built, so we have a shortfall of around 50,000 for the sake of argument.

Imagine the State was to build or fund the build of 50,000 houses. At €175,000 each, this would cost €8.7bn. This is a big number but the Irish State can borrow for 10 years at 1pc, according to Bloomberg yesterday. Therefore, the State could issue a Housing Executive Bond, which it could sell to Irish residents who are sitting on €94bn of deposits in the Irish banking system. Servicing this debt would cost €87m per year.

Traditionally, countries don’t pay back the principal of their national debts, they simply roll it over.

So it would be prudent to suggest that we would do the same for this Housing Executive Bond.

Now we have a situation where the total annual cost of 50,000 units is €87m. This means that the annual cost per unit is €1,740. The implication is the rent that would be needed to be charged per unit per year to pay the cost of this build, funded by a Housing Executive Bond, is €1,740 per year. Let’s round this up to €2,000 per unit per year, to include maintenance.

So total rental cost of a new house or apartment is not €12,000 per annum, as is the case right now, but €2,000 per annum or €38 a week.

This is feasible. You have seen the numbers. The major cost omitted is the site cost and this is where we come into the land issue.

At a density of 60 units per hectare, this would mean about 833 hectares of development land, or about 2,000 acres, is needed. There are 28,000 acres in Dublin in total but just one bank, Ulster Bank, put a portfolio of 1,850 acres of development land up for sale this year. So the development land portfolio of just one bank could almost cover this total city requirement! Now we are talking.

The State could simply CPO this land at cost and be done with it. You could add the repayment cost of this land to the annual rent. This would bring up the annual cost of the rent needed to cover everything to €3,000 per year or a quarter of present average rent paid.

Thus, the great Irish housing crisis is solved for less than €60 per week for a family of four in return for a new house, fixity of tenure and peace of mind!

That’s how it’s done in proper countries. The choice is ours.

Let’s join the 21st century and stop gouging each other for the basic right of a roof over our heads.

Unlike the lads on the Magic Bus, these are the numbers, no one is smoking funny stuff, just seeing things clearly through the haze of vested interests and inertia.

Problem solved.

 


  1. mike flannelly

    25000 pay 500 mth in a mix of social/affordable development.

    150000m yr. Cover site costs etc.

    The simple maths work.

    Sonetimes the line down the middle of a blank sheet of paper supersedes all political economics.

  2. Colm MacDonncha

    Your last line there about “Vested (perhaps ‘suited’ would be more accurate!)interests” pretty much explains exactly why we have a housing crisis.

  3. Paris101

    A giant council house ghetto. Lovely!

  4. Ross Killen

    This problem is very tractable if you only need to pay out 1% of the true cost. Adding the principal to our national debt and rolling it over further down the line is surely the type of thinking that got us into trouble a decade ago? What happens if the bond markets start to view us less favourably or if we can’t re-finance at those low rates indefinitely? It’s a great idea but why not issue a 30-year bond at 2% and pay down the principal as well so we’re not solving one problem whilst creating another.

    • E. Kavanagh

      I completely agree Ross. While McWilliams says that “it would be prudent” not to pay back the capital, I think that would be extremely poor financial planning. Wouldn’t prudence dictate the opposite i.e. we ought to have some kind of plan to pay back such a bond.

      An extra €6K per annum would pay of such a noted over 30 years at 2%. Still 25% less than the current €12K rent.

      • pat greene

        I agree that we should pay back the principle building up debt has already lead to financial slavery, I think that economists rely on inflation to eat into the pain repayments! think of Japan. The basic idea is great and David’s article is akin to a back of the envelop explanation, a more detailed explanation should give better answers. The release of the money on deposit might cause liquidity or other issue even with QE.

    • Sideshow Bob

      There is no mention of adding anything to the national debt he talks about using a REIT.

      • McCawber

        Money raising financial instrument.
        ie debt let’s not play silly buggers.

        • Sideshow Bob

          Right there McCawber I can only think of one truly massive government social housing program ( that is still ongoing ) that didn’t use debt.Can you name it? Or what country? Or even which continent? Perhaps you will also be able to tell me why something similar won’t happen in Ireland?

          It is difficulty to fund capital expenditure without involving debt, particularly in a developed country.

          There is key point here that the EU and financial markets will react badly to an increase in debt so REITs if National Debt is off the table seem like a plausible option.

          • McCawber

            Can’t say I know the answer to any of your questions but if you live beyond your meabs it ends in two ways.
            Misery for you and misery for the people left carrying the can.
            Speaking personally I’ve had enough of the second type of misery and based on that experience I would not trust any government to not misnanage any increase in debt regardless of what the snake oil charmers call it.
            We all need to very clear about this.
            Debt is debt, it will show somewhere and never in a nice way.
            Bear in mind “Out of sight is out of mind” and that’s exactly the politicians and financiers attitude – not their problem.

          • Sideshow Bob

            The answer is Brazil and the program is called Minha Casa, Minha Vida ( My home, my life )…there is good debt and bad debt as has been argued on here before…plus you must remember that money can be an illusion as well as a reality.

          • McCawber

            And there is TOO much debt.

  5. Deco

    Dublin – how not to plan a city.

    Dublin – a vertically challenged city.

    And Dublin, the centre of paralysis ( a quote attributed to James Joyce). By paralysis he was referring to the endless inability to get anything done.

    David has hit the nail on the head. Stop trying to plan Dublin like as if it was Roscommon town. If you want a city, then build one. Even six stories high in Suburban Dublin is not a massive ask. Adamstown is three and four stories – and it is seen as a massive improvement.

    There is a corridor alongside the main SW train line into Dublin that consists of fields. Another corridor on the NW train line into Dublin that is a rural as Offaly.

    Surely, higher density settlement after Clonsilla, with a DART to Leixlip would be a serious problem solver for housing and traffic. Likewise the like to line the Adamstown.

    Of course, the problem is the idiots running in the local authorities in Dublin. What happened to that proposal to have a 18mph speed limit in the city centre ?

    • Deco

      The last sentence was sarcasm. DCC + 3 are good at coming up with ideas that are nonsense.

    • Sideshow Bob

      Right there McCawber I can only think of one truly massive government social housing program ( that is still ongoing ) that didn’t use debt.Can you name it? Or what country? Or even which continent? Perhaps you will also be able to tell me why something similar won’t happen in Ireland?

      It is difficulty to fund capital expenditure without involving debt, particularly in a developed country.

      There is key point here that the EU and financial markets will react badly to an increase in debt so REITs if National Debt is off the table seem like a plausible option.

      • Sideshow Bob

        Goddamn tablet!

      • Truthist

        Ref.
        “… truly massive government social housing program [ that is still ongoing ] that did not use debt.”

        Firstly, mention should be made to some previous examples :

        Cromwells “Concentration Camps” of starving Irish

        “Official” Gulags under the Bolsheviks’ & Mensheviks’ USSR.
        60 million Russians & other Rus. ethnicities were genocided by the “Dreadful Few” through the Gulags.

        And thus I mention some present-day examples ;

        Favelas & Shanty Towns
        Specifically, they are “Let them eat Cake” examples.

        The “Bedsits” & “Flats” & socalled “Apartments” in the Private Rented Housing Sector of the Irish State.
        As above, they are each & all “Let them eat Cake” examples.

    • Mike Marketing

      Deco, to be successful we need to be very courageous and do 4 things well:

      1. Flush Irish arrogance (“we know it all.”) down the drain.

      2. Isolate and identify ‘Best World Practice’ in building effective cities, within the 195 countries round the world.

      3. Study and interpret this in the light of our local knowledge and finally

      4. Finance efficiently and build it.

      Anything less than this is what the Irish are greatest at – lots of waffle ands action that are always too late.

  6. Deco

    There are several elements to the housing list. Welfare is not a good incentive to stay out of the labour market. And the minimum wage, plus tax allowances encourage people to get working.

    But lack of market affordable housing, and the potential for a place on the queue for social housing is an incentive to stay out of the labour market.

    And that is a big problem with Dublin’s current housing shortage – it is encouraging people to not progress in the labour market.

    The market has been bottlenecked to bail out the banks. People cannot afford to buy, on their current wage levels. And there is a shortage of apartments for transient workers in central and coastal Dublin.

    In other words the market is mismanaged. Disaster comes as a result.

    • Deco

      In other words, it is a perverse outcome of bailing out the banks that they are in effect instigating deliberate bottlenecking to rebalance their balance sheets and thereby create more cost for the welfare state.

      The banks are getting a second bailout from society. The first one was obvious. The second one is toxic, and it stinks.

  7. Deco

    We need to build upwards. Problem solved.

    • Mike Lucey

      I agree Deco. This vertical movement should also apply to Cork, Galway (in particular) and Limerick (to some degree).

      I wonder did Ballymun experience leave a deep scare in social planning?
      ‘Ballymun Flats Demolition, Dublin, Ireland. NEW HQ DESTRUCTION!!!’
      https://www.youtube.com/watch?v=HqZRJ_dDx8w

      It is possible to get it right. All that has to be done is to look at how others have done it successfully.
      ‘Quality Living in a High-Density Environment’
      http://www.mfa.gov.sg/content/mfa/overseasmission/kuala_lumpur/news_of_interest/01/01/20130807_01.html

      • Deco

        If Ballymun rules out high rise, as a source of social failure, than can somebody please explain why Manhattan has been a success ?

        Southill in Limerick is not high rise. Neither is Jobstown. Or Corduff.

        The real problem in Ballymun was at a more human level. Substance abuse, inadequate policing, welfare dependency, and failed state initiatives that sound great on paper, but which reward delinquency and punish success.

        And let’s not forget the Irish criminal justice system. Jail is for people who refuse to pay state charges.

        Criminal offences, and threatening behaviour is regularly excused, and therefore effectively rewarded. Aggression, a lack of law, a disrespect for others, substance abuse, and intimidation always precede disaster areas like the rough areas of West Dublin and Limerick.

        • Sideshow Bob

          Ballymun was low density housing. It had a lower density than Drumcondra. Height doesn’t matter if you surround it with loads of open space.Density figures are obtained by dividing the number of dwelling in a place by the area and expressing it in terms of dwellings per hectare. Ballymun had prairies in the middle of it and around it. Worst of both worlds.All the disadvantages of building to a height and low density life prevailed.

          There are many many reasons for why it failed but residents were on record as being happy to have moved in originally as living conditions were a marked improvement on tenement conditions in the center of Dublin.

          • Mike Lucey

            @Sideshow Bob. I agree and disagree at the same time with what you say.

            Yes, Ballymun was low density when one took units per acre but quite high density when the number of units per single ‘footprint’ was taken into account.

            I would also imagine that the first folks to move into Ballymun from the tenements thought they were in heaven when it came to habitable room / area and ‘in flat’ facilities but all the ‘open space’ did not make up for the lack of ‘community’ they enjoyed in the tenements.

          • Sideshow Bob

            Mike

            You don’t have to imagine or take it from me there is a good account here http://www.brl.ie/pdf/ballymun_a_history_1600_1997_synopsis.pdf

            The way density is measured is as I described – you can’t pick and choose the boundary you work with to alter the picture. If the council had X land and puts Y units on it the equation is Y/X for density.

      • Sideshow Bob

        Good stuff Mike.

    • McCawber

      I don’t agree or I would agree if six storeys was the limit.

      • Deco

        I have lived in 20 storey buildings and I am baffled at why it cannot happen in Ireland.

        Dublin cannot provide housing for working people, without them becomming debt-ridden for life. So the same working people then end up leaving.

        Public policy madness.

        Build UP the city. Like everybody else does.

        • McCawber

          I’m much more in favour of building a new city from scratch rather than mucking around in the fountain.
          Let’s take a big picture long term solution planned properly.

          • Truthist

            Agree

            Proper “Bedsits” or “Flats” & “Apartments” CANNOT be harnessed from buildings that were originally planned & built for to be sole residence of 1 household.

            Gulags or Reservation Teepees are what most people dependent on SW exist in ;
            But, for the Irish State’s illusory purposes the “Rent Allowance” bedsit dwellers “officially” live in private rented housing.

          • Sideshow Bob

            + 1

            The best you can do is make an adaptation that compromises both situations.

    • Mike Marketing

      Just like the original Ballymun project Deco?

      When you fly over Ireland it is a mass of green fields from coast to coast.

      The so called “planners” just need to do their job and receive full government and legal backing.

  8. bren

    I’m surprised at this article , are you advocating a government interference in the housing market ?? Great for all those people who dont want the inconvenience of a 400k mortgage around their neck , just sit tight and let the govt. provide.!

    Will this fanciful idea cause a drop in house price for owners and rental income for landlords ? Of course but dont let that get in the way of our social responsibility for the minority ! , but then again , with the drop in both values maybe the minority will become the majority .
    Rather than the govt. providing these houses in the guise of social responsibility , why not offer them to private investors or tenants in the form of a pension scheme.
    Any realistic capped rent (NOT THE SUGGESTED €3000 pa) can go to service the interest and the balance paid into a tax free pension for draw down at 65 . These properties can be passed on at no capital gains tax on condition that the agreed terms are continued.
    Thus we will not have a state interferance in the market , tenants can rent long term with an added value of passing on a modest asset and investors will be able to fund a tax free pension thus relieving the state coffers in the future .There will be no reponsibility on local council for maintainence , thus saving considerable money to the tax payer
    But will this happen , probably not , as the silent majority will remain silent and the minority will remain vocal and refuse to pay the water charge on their govt provided house while surfing the net looking for the next departure date for the magic bus this time to the more relavent orlando……..

    • Deco

      The state already is interfering in the residential housing market.

      And making a complete dogs dinner of it.

      And now the solution – more state intervention…..

      • E. Kavanagh

        So your suggestion is that where private industry completely fails, government should also abrogate its duty to its citizens, and leave them at the mercy of the failed housing market.

        Frequently government intervention is much better than nothing, especially good intervention. Do we really need another Famine to prove that proposition?

        • Deco

          The private sector failed, largely in part due to the controlled low interest rate policy of Trichet in the middle of the last decade – which was completely inappropriate for Ireland, Spain and Greece, but helped Germany resturcture it’s cost base.

          Ireland’s 1700 – 1900 era of hardship and misery, also came about as a result of state intervention – the plantations that took the land off the people and gave it to a sliver of insiders and loan sharks in Britain, in the 1600s.

          There is demand but the state sector is preventing Dublin build upwards like other primary cities in the Western world.

          • Truthist

            Ironic that u mention Monsieur Jean-Claude Trichet of European Central Bank [ E.C.B. ] & also the Plantations of Ireland by the British proxies for the Banksters [ Even the initial invasion of Ireland by Strongbow was financed by the Banksters ].

            Per the Plantations of Ireland ;

            The 1st Plantations of Ireland started in 1556 ;
            These were the Plantations of King’s County / Co. Offaly, & Queen’s County / Co. Laois.

            The 1st mass Plantation of Ireland started in the 1580′s.
            This was the 1st Munster Plantation.

            Above is redacted by Truthist from ;

            https://en.wikipedia.org/wiki/Plantations_of_Ireland

            And, Wikipedia.org would be customarily biased against the truth when there is for example a grievance from Ireland against the British.

            I note that a certain GCHQ Cheltenham Warehouse, & / or Hasbara, type opinion writer — Dame Ruth Dudley Edwards — on a notorious aul Blue-Shirt rag has the chutzpah to tell Mr. Jerry – “compromised” – Adams that he did not grow up in a Plantation when in fact he most certainly did.

            Of course, Dame Ruth is always at pains to come across as equanimous.
            As was a previous Antagonist from that rag ;
            Lord Conor Cruise 0′Brien.

            And, we are all meant to think of Jerry Adams as a principled Irish Nationalist.

            So, why did not either, or both, of Dame Ruth or Jerry “Compromised” not make a Citizen’s-Arrest of Jean-Claude Trichet when he breezed into Dublin soon after he had threatened to “b..mb” Dublin if Irish State followed David McWilliam’s implored advice — much seconded by most of the regular contributors on this Blog also — to “burn the Bondholders” ?

          • Sideshow Bob

            If you are talking about Social Housing provision since the advent of Part V i.e. 2000)onwards, then I would say the private sector was set up to fail. And very large failings at County and City Council level are obscured by this simplistic scapegoating viewpoint ( you in particular seem to enjoy pointing fingers in a way that doesn´t allow or admit a counter argument).

            Part V was very flawed by design, so a successful ending was never on the cards. If you want to see how just flawed just find a country ( or some countries) that has had success in the area of social housing and compare them to Ireland and you will find they do key things very differently.

          • McCawber

            I’ve never recieved a clear answer to this question.
            Who are the bondholders that would have been burnt?
            Because I didn’t get an answer, I was against the burning.
            Why? Because the bondholders might include my pension fund for example.
            Underlining this thought process – never give anyone a blank cheque if you can avoid it.

          • Sideshow Bob

            McCawber,

            This is one face you might recognise…http://www.independent.ie/business/irish/bondholders-finally-faced-down-by-lenihan-just-ask-abramovich-26693620.html

            He got his money in the end, I believe…I think he bought up the debt at a discount if memory serves me correctly and correctly bet the Irish Government would relent…so there were two losers in the transaction…the Irish people who were ineptly represented and ironically the original subordinate bondholders who panicked and sold up too early…

    • Mike Lucey

      @bren, your suggestion makes a lot of sense to me. To put it bluntly, I feel the ‘working payers’ would play along with things if they could in some way securely guarantee that they would have an intact pension at 65 when they have completed their 40 odd year’s work!

    • EugeneN

      The housing market is subsidised anyway. NAMA sits on land banks. State owned banks dont repossess unpaid mortgages, there are still landlords in arrears. The rental sector is paying for this, time for the bailed out to pay.

  9. Sideshow Bob

    Mr McWilliams!

    Big improvement on the last installment on this topic!

    I think your cost numbers are a bit off still, and there are macro economic consequences to initiating an increase in activity which would definitely kill off the cost forecasting presented here, but that aside the article in on the right track in my opinion.

    Key to this is your linkage of density issues at an urban level and the need for a mass program with government backing regarding financing you suggest the REIT as a way forward. This is great we need to think about this in a joined up way.

    Significantly you didn’t mention PPP/PFI nor increasing Government debt as being the way forward. The REIT approach may well be more palatable than state debt and less expensive than PFI’s ( depends on detail) and offer the possibility of the average citizen investor benefiting too.

    Anyhow here is something that might be of interest on the topic of social housing by a Chilean Architect and winner of the 2016 Pritziker Prize ( a sort of global recognition for architects ) and the first five minutes are of huge relevance and touch on the topic from similar points of view to yours He identifies the difficulty in terms of what he calls the 3 S’s – Scale , Speed, & Scarcity.

    https://www.ted.com/talks/alejandro_aravena_my_architectural_philosophy_bring_the_community_into_the_process?language=en

    The 1st and 3rd S’s you attempted to address in the article. The third is clearly your forte Scarcity is the domain of Economics. The first scale is the domain of Architecture and Urbanism but needs to be enabled by Financing the Domain of Scarcity so you ventured correctly into this. The second S Speed is the domain of Construction Economics i.e. procurement and has is related also to the other two S’s.

    One of the reasons that I think social housing and housing in general possibly is so messed up here is that these domains are not connected enough to each other.

    I will try to post tomorrow in more detail on the article as I’m really busy today…but in concluding let me say well done David on the piece!

    • Mike Marketing

      An excellent contribution to an important Irish debate Sideshow Bob.

      The interesting 15 min Alejandro Aravena video had 1,323,137 total views on YouTube

      https://www.youtube.com/watch?v=o0I0Poe3qlg

      “When asked to build housing for 100 families in Chile ten years ago, Alejandro Aravena looked to an unusual inspiration: the wisdom of favelas and slums. Rather than building a large building with small units, he built flexible half-homes that each family could expand on. It was a complex problem, but with a simple solution — one that he arrived at by working with the families themselves. With a chalkboard and beautiful images of his designs, Aravena walks us through three projects where clever rethinking led to beautiful design with great benefit.
      Alejandro Aravena aged 47 is a Chilean architect from Santiago, Chile. He is executive director of the firm Elemental S.A. He won the Pritzker Architecture Prize in 2016. He is also the director and curator of the Architecture Section of the Venice Biennale 2016.

      Aravena works inside paradoxes, seeing space and flexibility in public housing, clarity in economic scarcity, and the keys to rebuilding in the causes of natural disasters.

      Why you should listen
      Throughout his career, Alejandro Aravena has grappled with what he calls the “double condition of cities.” Attracting people, knowledge, development and opportunities on one hand, the Chilean architect says cities also concentrate and magnify social pressures.
      Through Elemental, the firm he founded in 1994, Aravena has devoted as much time to the design of iconic structures like the San Joaquin Universidad Catolica’s “Siamese Towers” and Santiago’s Metropolitan Park as he has to the design of flexible and beautiful low-cost housing for low-income families. The firm’s work is not just about buildings, but about shaping lives.
      What others say
      “Aravena’s plans extend far from the standard considerations of building and line, into theories of social organisation and civic engagement. He’s designing buildings, but he’s also designing cities they will occupy and the livelihoods of the people who will live in them.” – Bruce Watson, The Guardian

      We need to embrace radical ideas like this.

      • McCawber

        So building a brand new city designed for people to live in is radical.
        My ar $e, it’s plain downright common sense.
        The only radical bit for Ireland would be doing it right.

        • McCawber

          Particulaly if we really want a Utopian state because now is the time to start planning for it.

        • Sideshow Bob

          He dosen´t advocate building new cities at any point. To say that shows you listened to nothing of what he had to say.

          He does do a simple calculation to show that globally sufficient housing units to house 2,000,000 million people need to be completed per week and attempts to visualises that by asking the audience to imagine a new city of that size emerging on the planet every week.

          • McCawber

            I extrapolated and to be clear I wasn’t having a pop at him.
            His thinking is clear headed.
            I was being sarcastic in the sense of trying to imagine our lot doing it right.
            The first thing our lot, in general, think about is “What’s in it for me”

          • Sideshow Bob

            Ok.

            Still a key point in all of his work is not to build in a way that that displaces or extinguishes or limits existing communites. His projects are very much about this.

            Building whole new cities, or even towns or large suburbs, is a serious and complicated and risky business, but a it is a very different one to what he does.

      • Sideshow Bob

        Cheers Mike.

        He is a succinct speaker, a clear thinker and most importantly a do-er. For me it is significant thing is that he is trully socially motivated in an area and industry that sucks up to the vested ( rich or state ) property interest. Seems to have an idea about economics too which is unusual for an Architect.

        There is loads of stuff including picture galleries and drawings and more interviews if you google him and in particular click on results from archdaily.com

        His firm ELEMENTAL have a good site with an English section too.

        Plans from ELEMENTAL´s social housing projects plans for download and use ( AutoCad ) only so he has freed his work in this area from copyright and made it available to all. They are available on the ELEMENTAL Site.

        I would put up links but the post goes into quarantine!

  10. Sideshow Bob

    Sorry – I’m writing off a small tablet and punctuation is hard to do!

  11. hasbeen

    As long as housing policy is left in the hands of landlords and developers nothing will change. There needs to be a new approach based on the needs of the population
    we actually have and the rents they can actually afford in the post recession economy.

    • bren

      @hasbeen . As social housing is in the hands of the govt.since the beginning of the state , how have they performed ? Not very well I think.
      One thing I agree with DMW is we must move into the 21 century and more like a European model.

      A type of Public Private Partnership with everyone govt ,landlords and tenants having an interest in their HOME not thier house

    • Truthist

      The Housing Problem needs a Henry Ford genius to solve it.

      He would also have to publish a “Dearborn Independent” newspaper exposing the corruption that is rife among Institutional State of the Irish State.

  12. Sideshow Bob

    Pat Flannery – are you out there? Looks like our conversations on this are bearing a little fruit here! It is a nice feeling!

    • Pat Flannery

      Sideshow Bob:

      I refrained from commenting on David’s ‘’Magic Bus’’ suggestion of the State issuing a Housing Executive Bond because he is not suggesting a REIT. I wish he had. Here is what he actually said:

      ‘’Imagine the State was to build or fund the build of 50,000 houses. At €175,000 each, this would cost €8.7bn. This is a big number but the Irish State can borrow for 10 years at 1pc, according to Bloomberg yesterday. Therefore, the State could issue a Housing Executive Bond, which it could sell to Irish residents who are sitting on €94bn of deposits in the Irish banking system. Servicing this debt would cost €87m per year. Traditionally, countries don’t pay back the principal of their national debts, they simply roll it over. So it would be prudent to suggest that we would do the same for this Housing Executive Bond.’’

      That is a long way from a REIT. We still have a way to go in educating David on the ”Magic” of the private markets.

      • Sideshow Bob

        Hi Pat,

        I think some clarification would be needed from David.

        I jumped the gun here a bit I have been quite busy the last few days and didn´t give the article my full attention before commenting I have to admit. I didnt notice that he said the government would issue the bond.

        However, David did refer to a housing trust, which would also be an interchangeable name for a housing association, take the Iveagh Trust in Dublin or The Guinness Trust.

        “Let’s examine how the State could involve itself in financing a housing trust using the international financial markets to massively reduce housing costs in Ireland.´´

        So, I took this to be a type of REIT that he was advocating supporting a new national housing association, with government underwriting such an association the highest level. Holland has many such housing associations and together they are joined to form an umbrella group with oversight powers and a common emergency ( bailout ) fund should an individual housing association have deep problems by accident or negligence and these are not picked up in the oversight function. The Dutch Government is then a final line of backup should both of these fail or the problem be too big. The Government are the last line, the final net only, and there is accountability in the system. So the Housing Association system can benefit from the lending credibility of the Dutch State. The UK is trying to copy and create a system like this at the moment by turning council housing areas into regional housing associations. We are also ( according to the last policy document on Housing issued in 2014 attempting to copy ( ineptly I think ) the UK, not to mind Holland.

        This was my line of thought, which is contradicted by the idea of the Government issuing the debt directly.

        So, David, if you are reading, I would like you to invite you to clarify what you mean.

        • Pat Flannery

          Hi Sideshow Bob:

          ‘’Let’s examine how the State could involve itself in financing a housing trust using the international financial markets to massively reduce housing costs in Ireland.’’

          So, let’s give David some credit for the above.

          I agree with him that a State Housing Trust might be a way to access the international financial markets. But it is fraught with difficulties. Here’s why.

          The EU (correctly) puts limits on fiscal borrowing. The US goes one better and requires each State to balance its budget every year. In other words no US State can run a fiscal deficit. Only the US itself can do that. The EU does not go quite so far, but some limit is clearly necessary otherwise individual States like Ireland would go hog-wild.

          As to whether the US or the EU should be similarly limited is a hot political issue on both sides of the Atlantic.

          Given those (necessary) constraints David’s suggestion of the State accessing the financial markets is fraught with difficulties.

          There is a better way, apart altogether from REITs. I think Ireland should do what individual States in the US do – issue ‘’Revenue Bonds’’. This concept seems to be unknown in Ireland, perhaps even in Europe I don’t know.

          I do know that any local government in the US can issue Municipal Bonds (known to US investors as ‘Munies’) that do not count as fiscal debt because their revenue is secured by a dedicated revenue stream. They are tax-free to the investor! They are a marvellous source of money for any kind of capital infrastructure e.g. school bonds. Without them California would look like Tijuana.

          If the Americans know anything they know how to finance things. Ireland has a lot to learn, particularly its economists, who generally know very little about finance. But perhaps David is willing to learn. If so, he would be unique among Irish pundits.

          • Sideshow Bob

            Thanks for the reply Pat.

            You raise a few points and questions above that I would like to reply to. I will try to do so here later on.

        • Pat Flannery

          Sideshow Bob: I look forward to it. A debate on how the State finances its public services could be very constructive.

          As I said to Mike and McCawber below, because we cannot pile everything onto general taxation we must create service-related revenues in order to issue specific ‘Revenue Bonds’. For example restrictions on general fund borrowing limits State borrowing for public housing.

          That is where I would like our discussion to go, in addition to how we might form REITs made attractive to domestic investors perhaps by making them tax free as in the US.

          • Sideshow Bob

            Hi Pat,

            There are some replies towards the bottom of the thread. They got a bit big and the good weather interfered a bit.

  13. Deco

    Actually, the more I hear from the media in this country, the more I realise the true predicament of this entity of profiteering and lying that we pretend to still call a “society” (at enormous expense to those that actually do the productive work in the same entity).

    I listened to Pravda radio 1, this morning talking about Frances Fitzgerald representing the institutional state at a “corruption conference”. A TD in a political party that is crooked. Part part of a government that contains a former minister who was fingered by a corruption tribunal. And getting assistance from the Bertie Party.

    And the entire solemn tone was addressed to the public like as if we were officially opposed to funny business in Ireland (in a very solemn manner).

    I think I will give the state propaganda machine a break for the rest of the month.

    It pays to be wide awake and sceptical of the Irish media.

  14. McCawber

    Let’s reintroduce another elephant.
    It’s called the “Never Never”.
    When I was a kid growing up people acquired their TVs on the never never ie they rented their TVs. It was eextremely expensive. It was mad economics. People did it because they couldn’t afford to buy a TV outright.
    I totally 100% disagree with the figures for servicing the debt trotted out because they are based on the false premise of not paying off the principle.
    Do us all a favour David and redo the numbers with principle being paid off.
    You are advocating more debt when the opposite is exactly what we should be doing.

    • Truthist

      Very important point elaborated at this juncture by u McCawber.

      And, per “the Never, Never” ;

      Who is the richest of “the Never, Never” syndicates in Irish State ?
      Probably, its Scion is also the richest man in Ireland over the last 30 years.
      Involved in at least 1 major narcotics shipment into the Irish State ;
      The one that is definitely known about was seized by Irish Customs.
      Oh Golly !

      And, that syndicate is a major, major player in the rented sector — private & commercial — of Ireland ;
      Perhaps, the largest single player of the indigenous players.

      And, embedded in the Institutional State of the Irish State too.
      Spooky stuff.
      The careers of certain top Civil Servants are on a knife-edge now.

      • Antaine

        For us not in the know will you give us a clearer hint please?

        • Truthist

          No ;

          But, for there would be a sizeable core of persons from Biz, Journalism, & the Apparatus of the Irish State, who would know immediately whom I am referring to.

          The bulk of Irish Citizens, & of course nearly all foreigners here, would not know the name of that individual or family or syndicate’s companies.
          They are most discreet.

  15. mike flannelly

    In ten years time you still have the debt of 50000 houses @ todays build costs.
    You also have 50000 houses at the market value of 2026.
    Strict rules are needed to keep these developments from becoming gettos. A mix of social and affordable.

    The median household wage in Ireland is 45000 with a net of 3000 mth according to the daft trinity guy that writes in the Sunday papers.
    House insurance, house tax plus mortgage repayments can only max @ about 900 mth. The median households cant afford 250000 mortgages @ 4%.

    The private market should also get 25yr fixed mortgages @2.5% like the France and Germany.

    Irish people are still bailing out failed Irish bankers that overvalued land banks by

    900%

    • McCawber

      Another elephant for you.
      You can get a 20 year mortgage fixed at less than 2.0%.
      Why are you saying 4%.
      Because our banks are still in never never land and yet are proposing to pay out dividends next year instead of getting their rates in line with the rest of Europe.
      The ECB and our own CB should be fining them.

    • McCawber

      Don’t forget ongoing maintenance costs including taxes etv

  16. mike flannelly

    Sorry

    The DEBT on land .

    Grossly overvalued FALSE VALUE debt.

  17. http://www.bregsforum.com/2015/01/27/developer-led-sales-price-for-a-typical-apartment/

    Developer-Led projected Sales Price for a Typical Apartment (multi-unit)

    Base build cost= €1751 x 85 sq.m. = €149,000

    plus 8% for professional fees (+€12k)= €161,000

    plus SI.9 Professional + specification Costs (+€15k)*= €176,000

    plus legal, marketing, sales and other costs of 5% (+€9k)= €185,000

    plus developer’s net sales profit of 20% (+€37k)= €222,000

    plus vat @ 13.5% on sales (+€30k)= €252,000

    plus carparking cost (+€20k)= €272,000

    plus planning levies (+€6k)= €278,000 Projected sales price

    (The above cost calculation excludes site purchase costs.)

    This is the real cost of producing 1 1000 sq ft 2 bedroom apartment. 100,000 higher than the fantasy project for a supposed 1400 sq ft apartment proposed.
    Plus add the cost of the land. Which one is reality.

    There is a reason no housing is being built. Simply because it is not profitable.

    • Sideshow Bob

      Neither Tony.

      The price of building is what you build it for.

      This is CIF propaganda, notice where professional fees are double counted specifically referring to the BCARs system…

      “plus SI.9 Professional + specification Costs (+€15k)*= €176,000´´

      how accurate it is I don´t know but this crew are still in boom mode… and expecting a new wave boom level activity to sort them out financially…

    • Mike Marketing

      Look Tony Brogan, Ireland has become a far, far too expensive a country to manufacture anything in.

      The recent report of the Irish Competitiveness Council indicates that our costs are 20% above the EU average. If that was the athletic track in Rio it would be plain madness to send a team there. We would win nothing. See: http://www.competitiveness.ie/Publications/2016/Cost-of-Doing-Business-2016.pdf See Page 4 Summary. “Between January 2000 and April 2008, Irish cost competitiveness (the real HCI) deteriorated by over 32% (while the nominal HCI deteriorated by 22.5%). This reflects a strong appreciation of the euro against the currencies of our trading partners (nominal HCI) and higher price inflation in Ireland. This confirms the loss in relative price competitiveness experienced throughout the mid-2000’s in Ireland.”

      Last year we were warned by the NCC “despite the recent recession taking a bite out of people’s wages and property prices, Ireland is still an expensive place to do business.
      That included the weak euro, record-low interest rates from the ECB and cheap oil prices all driving down business costs across the eurozone.
      But the annual Costs of Doing Business in Ireland report said new pressures were emerging – like rising property prices and calls for wage increases. That would jeopardise the ability of companies to compete internationally and create jobs, it said.
      Despite improvements, Ireland remains a high-cost location – third-highest in the euro area, for example, for consumer goods and services.”
      The council’s report noted workers’ average total earnings were below the eurozone average, but take-home pay was 11.6% above the region-wide rate.

      ‘A virtuous circle’
      Council chair Peter Clinch said the country shouldn’t rely on “benign currency movements” to protect its international competitiveness.
      “It is vital that we continue to take action to address unnecessarily high costs wherever they arise,” he said.
      In this regard, there is a role for both the public and private sectors alike to manage pro-actively their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage expectations, productivity and cost competitiveness.”

      Just look at the Luas fiasco. The benchmark here on labour cost is Berlin and Hamburg in Germany. Light Rail Drivers there work for a wage range of €20 – €25,000 per annum. Here we threaten employers with SIPTU. What sort of intelligent thinking is this?

      Ask yourself how Ronald Reagan in 1981 was able to sack all the striking Air Traffic Controllers in the US. Because airtravel was deemed a strategic industry and was protected by law.

      Something similar needs to be done here.

      Also, on costs, we need as a society to go into reverse. We urgently need cost accountants with sharp pencils to take costs out of the system and not be adding cost. That is the route to protecting jobs and encouraging new businesses to set up.

  18. Onda

    The private development sector, the banks and the public sector have failed to provide a sustainable housing market. A new way must be created. High housing prices are bad news for any economy.
    Those who control the land control the house building sector and Industry estimates suggest that New Generation has over 100 sites around Dublin with capacity for more than 10 years of construction,
    http://www.independent.ie/business/the-man-behind-the-biggest-irish-land-gamble-31118323.html
    Perhaps there should be regulations to prevent any single company / vested interests controlling more than 10% of the available development around Dublin.

  19. KealanFlynn

    Will it work in theory?

  20. Mike Lucey

    Wouldn’t going up combat the costs involved in site purchases? I don’t know what the cost of a house site is currently in the Dublin suburbs but around Ireland’s large towns we are looking at €50K(ish) for a small house site.

    If ten of these sites were amalgamated into one apartment site costing €500,000 and four storey well designed apartment blocks were erected on same we would be looking at a unit cost per site of €12,500!

    I say four storey blocks as it is felt that four flights is as much as a reasonably fit person can handle. The Netherlands for example has a rule (in most cities) of 4 floors without an elevator.

    I would of course think that an elevator should be installed but maybe it could be more of a service type elevator or even a pay per use elevator as they are expensive to instal and maintain.

    The ground floor units with small gardens would be for the elderly and incapacitated, the 1st and 2nd floors could be duplex units with large balconies for families and the 3rd floor units with reasonable sized balconies for the young fits or older fit folks that want to stay such.

    This type of arrangement would also led itself to mixed occupancy which is ‘natural’ and to be desired. ‘Granny’ on the ground floor might be quite happy to look after ‘little johnny’ living in the duplex above while his parents are out working and in turn heavy lugging could be done by the ‘young fits’ on the 3rd floor for ‘Grand Dad’ (on ground floor) and in turn ‘Grand Dad’ could water plants and look after pets while the ‘young fits’ are holidaying in foreign parts. With proper design and occupancy management it could be ‘happy families’ all round.

    I am aware that in parts of the US, apartment dwellers interview folks seeking to rent / buy in their apartment blocks. If they don’t approve of the prospective buyer/ tenant its a no deal situation.

    This may sound hard but IMO it would lead to a more civil community and lessen the risks of creating a ‘getto’ if these apartment where under public ownership.

    • Tony

      But the canny land owner gets the PP before selling the site and then we’re back at 50k per unit site cost

      • Mike Lucey

        You have a good point Tony.

        I do however think there could be restrictions put in place that would only make this type of permission available to housing co-ops and the like also local authorities.

        This way the suburban land owner only get the value of single / two storey units, say 16 per acre for semi-detached houses and the co-ops and local authorities benefit with ability to build higher density for the betterment of society.

  21. tony_murphy

    Wow, sounds like Ireland needs a proper socialist/communist government to take over and sort out the housing problem..

    To hell with Private Property rights, CPO the land. Let them eat cake and live in Tiny flats compliant with Agenda 21

  22. Meanwhile the central banker owners and minions control the world and Kissinger knows it as do anybody else taking the trouble to investigate.

    If you want to solve your problems you have to start with the money system and close down the central bankers. Case solved.

    “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.” … Henry Kissinger

  23. McCawber

    A real 21st century solution to the housing problem.
    http://www.gizmag.com/hadrian-brick-laying-robot-fastbrick/38239/

  24. Grzegorz Kolodziej

    When I listened to this video by Mr Schiff on buying v renting:

    https://www.youtube.com/watch?v=iMw0PCte4dA

    it dawned on me that the only variables that are different in the Irish buy v rent equation are, by and large, limited supply + NAMA

    Remember those alarming articles that it will take us 43 years to fill the empty houses?

    http://www.independent.ie/business/irish/itll-take-us-43-years-to-fill-all-empty-houses-26863864.html

    and

    https://namawinelake.wordpress.com/2011/09/30/ireland-%E2%80%93-a-country-with-over-300000-vacant-homes-but-100000-households-on-state-housing-lists-a-joke-or-an-opportunity/

    But then the Minister of State for Housing and Planning, Mr O’Sullivan, solved the problem by bulldozing those houses (would it not have been cheaper to employ healthy, bored and unqualified 20 year olds in tracksuit bottoms roaming the streets and bookies to finish them up and move out of their mummies? I thought we had unemployment).

    We will wait and see what will the new minister do, but I do not think – looking at the past – that the goal of the government is to s o l v e the housing problem as such, that is provide for increased supply of cheap accommodation (sure if they wanted it, they would not have been imposing those Monthy-Pythonesque laws on height restriction in Dublin).

    It would appear that their real aim is:

    1. Keep the houses EXPENSIVE in order to keep the GOOD FEELING factor (based on the ILLUSION OF WEALTH) within the middle class (and for the low-income class, keep the rent allowance which helps to achieve the goal of expensive houses – obviously the working poor find themselves outside of the system) in order to doctor the recovery statistics in what has been a BALANCE SHEET RECESSION.

    2. Keep the POWER of AWARDING the big public contracts (hatched in golf courses and in rooms with mushrooms clouds coming out) for their pals in banks, in trade unions, and other social partnerships – according to the fascist economy formula).

    As I said in the past, in his “Politics” (Par. 1, Chap 4, Book 3) Aristotle defines a political system as “powers being put into a certain order”, which leads him to the conclusion that changing a political system means attempting to include or exclude some of the population from the citizenship category.

    In our case the included citizens are

    - people awarded with big contracts (just check the figures of the cost of financing for developers inside and outside of NAMA) at the cost of small entrepreneurs,
    - home owners with no mortgages on them (inherited wealth or being born at the right time – i.e. I know a guy who bought a house in Dublin for 175,000 old Irish pounds, sold it for over a million, bought a house in Carlow for 300,000, another one for his daughter, opened a business, and still had money left),
    - supposedly single mothers in social housing programs (at the cost of the real single mothers waiting),
    - drug addicts – apart from having your life fucked up due to your own choice, being a drug addict means receiving a first class care,
    - TDs,
    - trade-unions high echelon,
    - people sheltered from the real world, like President Higgins and his Wife (on Mr Adams using the “n…” word – while I do not condone it, what about President Higgins calling – on record – his political opponent “a wanker” – no outrage about THAT in our free media during the run to the Presidential election?)

    The losers are:

    - renters
    - the working poor
    - the really sick and unemployed outside of the rent allowance/fake single motherism scam
    - unconnected small business people

    So among the younger people, the losers form their vast majority. But you see, you do not need the majority to win the election – all you need is the balance-sheet minority + shouting lobbies (given free run in state media). Stupid population would also do no harm, so people are being constantly dumbed down in all western countries via commercials, state education and chemicals in order to be easier to manipulate (remember swine flu?)

    In the light of Aristotle, the emergence of a new political system would precipitate the change in habits.

    In our case, these new habits would be:

    1. A house is a place to live, not gambling
    2. If you have cash saved, you would make more money employing people than buying a fungi leaking kip for a money that would buy a mansion in Spain and sitting on y…r ass waiting for someone stupid to pay even more, making money parasiting on people who do something productive.

    But that would be unnacceptable for the winning minority within the system. What, no 1,500 a month coming from those low-class funny people who use buses and wake up early, instead of buing a racehorse? Keep the rentier culture going – on that all major parties agree.

    Then people give out about China. Up till around 5 years ago (when they started repeating our mistakes), China (and even more Taiwan, Hong-Kong and Singapore) had been doing the opposite of all what I said – so why anyone should be surprised that all the jobs went over there?

    • Truthist

      Grzegorz,

      A major reason that Ireland has seemingly intractable problems is that the Institutional State of the Irish State :

      know that “there is money in dirt”

      are exercising control over the sub-classes through maintaining these very “seemingly intractable” problems.

      We are a problem country ;
      Sure, u knew that before u came here.
      And, u no doubt had aims of helping us.
      But, when u try, u encounter all sorts of subterfuge :
      belligerence & sabotage ^& other forms of skull-duggery from vested interest
      treachery from the core of persons that u are trying to help
      inter alia.

      Intellectual Snobbery & the Frankfurt School “building block” diktat are some of the parameters underlying much of the above.

  25. mike flannelly

    Fair affordable debt costs for housing needs.

    In a zero % interest rate zone it is only right and fair that Irish citizens avail of market interest rates for their housing needs.

    McCawber

    May 12, 2016 at 6:08 pm

    “Another elephant for you.
    You can get a 20 year mortgage fixed at less than 2.0%.”

    Historically variable mortgage interest rates went up and down in line with market interest rates. There was no tsunami of reposessions, mortgage arrears, firesales, mental health anxiety( normal value debt causes anxiety but FALSE VALUE DEBT causes CARNAGE).

    Today Philip Lane tells us that if we cap variable interest rates with market interest rates we will DISTORT the market.

    Our Mission (CENTRAL BANK BULLSHIT)

    Our Mission Statement ’Safeguarding Stability, Protecting Consumers’ is at the heart of all that we do and encapsulates the dual priorities for the Central Bank in delivering on its mandate.

    Irelands Consumer Protection Commission describes an Irish variable rate mortgage as –

    Standard variable rate – when European Central Bank (ECB) rates rise, your lender can pass on the increase in whole or in part. If ECB rates fall, your lender may pass on some or all of the reduction to you. The variable rates offered by a lender also depend on the lenders’ costs and the level of competition in the market. Lenders are not obliged to pass on any rate reduction in full or in part and can increase rates if they decide to do so. – See more at: http://www.consumerhelp.ie/mortage-interest-rates#sthash.HBIh8b1U.dpuf

    UNFAIR BARGAINING POWER FOR CONSUMERS

    RUSSIAN ROULETTE INTEREST RATES

    VAGUE AND UNCLEAR CONTRACT COSTS FOR CONSUMERS

    UNFAIR RATES FOR STRONGER PARTY TO CONTRACT

    BONUS PAYMENTS, SUPER PENSION POTS, PAY RISES, GENERALLY IGNORING BASIC BANKING PRINCIPLES ARE “COSTS” .

    The person in charge of the consumer rights of our children is a lady called
    ISOLDE GOGGIN.
    You would be forgiven in thinking that
    their description of mortgage product rights could have been written by a banker like Brian Goggin from the bad old days.

    Just name your own profit.

  26. Pat Flannery

    Mike & McCawber,

    The mistake the Irish people are currently making is in thinking that the State can fund all public services out of general taxation. That notion is widespread in Ireland but it is wrong because the financial markets set limits to how much a State can borrow and if it joins a larger grouping like the EU that larger group sets disciplinary limits.

    Ireland must embrace the idea of ”fees for service”. The abolition of property rates in 1997 crippled public finances/services in Ireland by creating a false reliance on general taxation for everything.

    Reinstating an ‘ad valorem’ property tax is the first step in curing our public services. We get what we pay for.

    • McCawber

      I agree but the real problem is we have no guarantee that we’ll get what we pay for.
      Hiw come the civil servants are so efficient at collecting taxes but there is nothing like the same efficiency on the spending side.
      I don’t think this happens by accident either.
      There may not be a conspiracy but there is a collective mindset.

  27. McCawber

    I’ve touched on this before but how can any of our banks be allowed to pay dividends when they are charging interest rates that are out of step with their peers in the EU.
    Regulation is there to stop excessive behaviour.
    Once again we are seeing the lack of prudent regulation.

  28. McCawber

    Go on RTE web site.
    Select one of the sports threads.
    Scroll to the bottom of the thread.
    You will note that it is possible to post comments.
    Now go to one of the news or business items.
    Scroll to the bottom of the thread. NADA.

    Why is this one would wonder?

  29. mike flannelly

    REAL VALUE

    Pat

    As John Moran(cherry picker) has stated on rural Ireland,
    We need a ” Mature Debate ”

    BUT ON

    FALSE FINANCIAL REPORTING by Irish Banks.
    REAL VALUE DEBT for mortgages, rent and generally all housing needs.

    I have asked the simple junior cert question as to what is a FAIR rent for a single worker, a couple and a family with two kids.

    To me a fair rent or mortgage would be based on a ratio of your income. No free market BOLLIX.

    Time to call a spade a spade.

    Tony Brogan has supplied a red line 30% income MAX from previous posts for housing shelter need costs.

    Banks say that rent should be 130% to 150% of mortgage costs to cater for expences. In that case the rent on a 2008 THREE BED investment property in Cork,Limerick or Galway with a 250,000 mortgage should be 1700 euro or more based on 130 % of 1280 mortgage payments.

    Mature Debate Required

    on

    REAL VALUE DEBT
    and

    FALSE VALUE DEBT.

    “Give it a go Pat.”

    Water

    Median wage families thought that they would get a FAIR user allowance based on their family numbers. Paid for by general taxation.
    Rich families would pay for their excess usage on gardens and cars etc.
    Poor families must also pay for excess usage.
    Median income Irish families cant pay for IRISH PLASTIC LEFTIES waste.

    Mike Marketing tells us,

    “The recent report of the Irish Competitiveness Council indicates that our costs are 20% above the EU average.” 

    I can believe it based on our nurse numbers per 1000 population.

    Simon Harris has no choice but to offer our health machine up against a better operating health machine from another EU country. NO EXCUSES.

    The same for,
    EDUCATION MACHINE
    SOCIAL WELLFARE MACHINE
    PENSION MACHINE

    It is an economists duty of care to make real value comparisions with all EU and OECD countries.

    • Truthist

      The Health Machine, & the Education Machine, are very worthy of exposing for the wholesale incompetence & corruption of all types.
      However, be braced for the responses alluding to the magnificent expertise of the bulk of the Civil Servants & co-opted Professionals involved in those 2 sectors.

      The Social Welfare Machine is a different animal ;
      The payments to individuals are not worthy of being reduced given the cost of living for the Irish Citizen.
      Certainly, a person on Social Welfare would find it extremely difficult to save up the funds for to pay for Passport so as to emigrate from the Land of Raints & Rholars.
      But, most of the salaries & roles of the Civil Servants & co-opted Professionals involved in this sector are definitely due exposure for corruption.

      • McCawber

        The investigation could start with the benchmark deal and an impeachment of Bertie.

        • Truthist

          Always considered Bertie to be “a bad ‘un”.

          When u refer to “benchmarking deals”, u would must go further back to the 1st such deal.

          In fact, why not go through the sequence of Ministers per each department since the foundation of the Irish State so as to rate them against certain common critical criteria, & other relevant criteria as would be relevant to the time in question ?
          Also, insert extra notes according as u see fit ?

          Please do not involve the Judiciary or their comrades “the Members of the Bar” & “the members of the Legal Society” in any investigation as to the truth.
          Anyways, u are sure t

        • Truthist

          Always considered Bertie to be “a bad ‘un”.

          When u refer to “benchmarking deals”, u would must go further back to the 1st such deal.

          In fact, why not go through the sequence of Ministers per each department since the foundation of the Irish State so as to rate them against certain common critical criteria, & other relevant criteria as would be relevant to the time in question ?
          Also, insert extra notes according as u see fit ?

          Please do not involve the Judiciary or their comrades “the Members of the Bar” & “the members of the Legal Society” in any investigation as to the truth.
          Anyways, u are sure to get the rape of justice with such a circus if it involved such personages ;
          Unless, they were the Defendants presumed Guilty.

          • Truthist

            Typo ;

            Legal Society = Law Society

            Apologies for premature sending of the main post ;
            Troublesome hardware & software issues.

  30. Sideshow Bob

    Hi Pat,

    First of a few…

    On Local Authorities and Borrowing:

    Local authorities (councils) have the obvious power to control their banking affairs but any borrowing would have to be sanctioned by the Minister. The Local Government Act 2001, PART 12, controls Financial Procedures for local authorities and it says the following:

    (2) Subject to subsections (3) and (8) and any regulations made under subsection (5), a local authority may borrow money in any manner which it considers suitable for the effective performance of its functions.

    (3)(a) Borrowing by a local authority under this section shall only be with the sanction of the appropriate Minister.

    (b) Paragraph (a) does not apply to borrowing which the appropriate Minister may exempt for the purposes of this subsection.

    The LAs rely on the Dept. of Finance for funding and they have income from planning contributions (which can be quite large at 10K or so per housing unit in a speculative development) and any other charges or fees payable to them. Some motor taxes are redistributed to them and there is also the new local property tax. There is some background information on funding here:

    https://en.wikipedia.org/wiki/Local_government_in_the_Republic_of_Ireland

    However, I think that Wiki entry was perhaps written by a civil servant as it fails to mention the huge increase in income that the councils had for many years due to the building boom and their inability to manage their financial affairs or balance budgets.

    Many have financial problems going back to overspending in the days of the boom and are basically financially inept living on overdrafts. If they were businesses they would have had to shut down a long time ago. Because they are state backed they can get loans out to subsidize current spending. So the banks must be happy to lend to them, it is an absolute cash cow for them. And of course it is the Irish public are subsidizing the ineptitude.

    If you want examples of such just google “overdraft´´ or “debt´´ and “councils´´ and a large amount of articles on a wide variety of councils across the country will appear. I will put up some sample links immediately after this piece.

    There is no apportioning of taxes, and still no significant direct local taxation and consequentially their is no relationship for residents between taxation paid and the quality of service obtained. Also, with no no obligation to balance a budget and no real accountability for mismanagement the LAs can rumble on wards for years with no sanction or consequence for inefficiency and ineptitude. Council meetings regarding budgeting seem to involve one gombeen Councillor after another getting up and harr-umph-ing a lot, possibly pretending to be indignant, and of course being generally mystified for the why of it all and offloading any responsibility to everyone else involved regardless if they had just been recently elected or had been there for 20 years. The Healy-Rae´s seem to have this act down to a fine art and it can now be seen at a national parliament near you. Remember too and bear in mind that the the major parties select their talent pool of new TDs from this particular finishing school. Perhaps the training for the Dáil isn´t the best.

    Of course there are far too many councils, I think there are 31 in total at the moment, and the geographic lines are still mainly based on Norman / Tudor age divisions of Ireland and medieval corporate boroughs, the very last one created, Wicklow, having being formed in 1607. So these does not reflect the needs of a modern economy and society and on a time period when the sword was the main weapon of choice and the fastest transport was a horse. The division of Dublin into four administrative counties was the first significant change in 400 years. It is time to move on.

    This area is way past needing serious reform. For me, it has been a failing key player in terms of planning, housing and the built environment in general that most people can perceive as not being up to scratch but which rarely gets outed by people working in these areas as being at fault probably because of a fear of angering the powers that be or being labelled “trouble makers´´.

    Serious reform at this level could could do a lot for Ireland, but that would mean politicians voting for Christmas, which is unlikely to happen.

  31. Sideshow Bob

    Local Authorities and Social Housing

    Coming back to Social Housing provision, this is obviously dispersed across the councils and a total lack of provision has occurred in every single one of them.

    On an economic level part v followed the doctrine of economic liberalization of letting the market provide. Socially Part V was meant to react to “residualisation´´ ( non-intentional creation of social housing “ghettos´´ which was created unexpectedly from right to buy provisions and inadequate maintenance levels by councils by spreading social housing in small amounts to all developments and creating new mixed income housing nationally. So a part of it was well intentioned but on many levels all it just an ill judged imposition on the wrong parts of the industry that created our built environment.

    Just to explain how this works; Part V demanded that for any development over 4 units 20% of the units had to be made available for social and affordable housing. As an alternative a developer could make a financial contribution instead . The financial contribution was often preferred and offered by the developer particularly on smaller schemes for some prejudicial reasons as well as for practical design and construction reasons.

    At this point council has a choice about want it wants to do, and any final decision is not in the developers hands ultimately. If a council decides to take up the option of a unit or units it has to pay reasonable (?) build costs to the developer before acquiring any unit. Sometimes a council could take a mix of money and options on units.
    However for as long as Part V has existed, but in particular since the crash Councils have preferred taking the money instead of taking up options on units. Not that there was that much being built and consequently offered they just “trowser-ed´´ what little money was going.

    So the money disappeared into Council budgets with little or nothing in the way of units materializing from Part V provisions for social housing. Basically Part V has completely failed at this point ( 2011 onwards ).

    Allied to this they weren´t building a whole lot themselves, because Part V was meant to do that for them. Or if you like the market was meant to do it for them. The market meaning developers took the risk and the public ended up pricing and paying for it, via exorbitant house prices and eventually the bail-out and economic collapse, etc.

    In the 70-80´s social housing completions ran on average at 6-8 thousand units of 25 thousand units produced in total ( 25% + ) , it dropped to 1 thousand from 20 ( 5%) under Charles “Charvet Shirt´´ Haughey´s cuts and came back up a bit during the boom at one time hit 6 K completions per year ( only if you include building by housing associations, etc) but rarely equaled even 10% of total output averaging at about 7-8%. At the end of the crash it got a shot in the arm as developers suddenly decided they liked it when no one else was buying and offloaded units to cash rich Local authorities. Social and affordable completions briefly hit 20% of output in 2009 before flat-lining in 2013/2014 at 5% of output and a pathetic 500 units per year.

    Hence, we had a long run-in to this particular housing crisis. The numbers tell the story about the inability of the market to provide. Since the introduction of Part V supposedly 20% of all housing should have been social or affordable housing about 9% in total has been delivered and a chunk of that (a percent or two) was because the normal market collapsed. This is stark contrast to the 70s and 80s where 25-33% of year on year housing completions were social and affordable was in this category. One generation was given a huge leg up while their own sons and daughters have been royally shat on. No other way to put it.

    Also since 2009 or so the affordable housing element of social provision schemes in the country has fallen apart with no uptake and massive arrears, so Part V has been recently trimmed back to just a 10% of units requirement. This is meant to be equal to the purely social element ( i.e. units that the council would own and rent out). However with virtually no speculative residential building occurring this makes little or no difference in reality.

  32. Sideshow Bob

    Hi Pat you asked about borrowing by municipalities in European countries so I wanted to reply by talking about the case of Spain.

    In terms of municipalities or similar borrowing in Europe the only other country I am aware of in detail is Spain where regional governments have mounting debt problems. Spain and Ireland have both many parallels for me and points of contrast in their attitude to property and in the nature of the related boom and busts in both countries since the advent of the Euro.

    Regional governments vary in size are in charge of populations between 8 million and 400,000 and are formed along boundaries which are historic, and often cultural or linguistic, too. Economically they vary also but the debt story is the same in all of them. Debts are often with the local saving banks cajas/caixas of which I think Bankia is the most famous, so a lot are internal in nature. Ineptitude is again common but this was normal in the past and to be expected. There is a real bread and circuses mentality in the cities and the regions with areas living beyond their means, financing white elephant projects and frequent fiestas with long holidays and this is allied to a stubbornness about equality of provision of many key services for free or near for free services like education, health, sanitation, etc which is simultaneously admirable for its sense of humanity and lamentable for its lack of financial reality. Historically, Spain even went bankrupt during the height of it´s empire when it was shipping gold and silver in bulk from slave mines from Latin America. This ineptitude is a long standing problem. Property boom and bust cycles are a big part of modern Spanish Economic history history. Spain before had the peseta to devalue, print and get out of any problems, which like the Italians they did frequently. So the cycles were short in nature, over in a few years.

    For this reason the exchange rate for the peseta to euro was 166 to 1. They even used NAMA style banks as a successful (?) part of these cycle, which as I mentioned, were shorter one than the post Euro one, which is still ongoing. Spain for me is clearly being strangled by being in and staying to the Euro, which doesn´t suit their economy its cycles or the culture behind it in the least way.

    But they have very pretty cities with good infrastructure, services and nice generous apartments everywhere, nice wine and food so perhaps even though they are debt ridden they have not spent their money badly, all other problems notwithstanding that is.

    http://spanishnewstoday.com/regional-government-debt-continues-to-spiral-throughout-spain_21078-a.html

    • Sideshow Bob

      For an insight into the Spanish love-hate relationship with the peseta:
      http://www.theguardian.com/world/2014/aug/31/spaniards-holding-pesetas-spain-bank-exchange-euro

      And in Spanish only, an article entitled “The Rags of the Peseta´´:
      http://economia.elpais.com/economia/2012/06/06/actualidad/1339014053_603209.html

      • Pat Flannery

        Sideshow Bob: it will take me some time to study your exhaustive research on this. I am impressed with your dedication on such a lovely day.

        • Sideshow Bob

          Hi pat,

          Sorry i went overboard! I could have summarized it probably. It has been a bugbear of mine for over 10 years, so I follow things on it when I can.

          As I mentioned I was trying to get to do a masters related to social housing here but things fell through for me…I had quite a bit of research and thoughts accumulated but not quite fully distilled or put succinctly. So i am venting I guess.

        • Sideshow Bob

          Hi Pat,

          Also…the Spanish one isn´t particularly well written, my apologies, I was nursing a tired and sore head yesterday.

          There is one further long post that I would like to make that would bring what I spoke about around to the final item you mentioned above about REITs or “munies´´. I would like to link together the various threads in to this discussion.

          I will post it on this thread when I get it done Wednesday afternoon at the latest.

          Actually Pat, can I ask is your San Diego blog email contact working? There is something else I could send you on there also…

          • Pat Flannery

            Sideshow Bob: yes that email is still working. In fact I get emails every day from it, mostly from media as it has a huge archive of historical documents and facts that are still relevant today.

  33. Mike Lucey

    OT but I came across an article which puts our nurses to population ratio in perspective.

    ‘File:Practising nurses and caring professionals, 2013 (¹) Health2015B.png’
    http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Practising_nurses_and_caring_professionals,_2013_(¹)_Health2015B.png

    Comparing Ireland and UK.

    Nursing Professionals per 100,000 pop.
    Ireland 1235
    UK 663

    Heath Care Assistants
    Ireland 497
    UK 1482

    So, to me at any rate it looks that we need more ‘Health Care Assistants’ and less nurses. BTW, I take the term ‘Health Care Assistants’ to mean ‘Nurse’s Assistants’. Training in the job is 31 weeks whereas nurses take 3 years plus to train.

  34. toner78

    In my opinion everyone in this country should be pointing the finger at our Unscrupulous and Vile Estate agents which are operating in this country. There is zero transparency and practically no regulation on these Gangsters! These are the scumbags who are causing a so called “Housing crisis” and talking up a false housing market so that they can squeeze any potential hard pressed working families off. Wake up!… The market is rigged!… It is as simple as that….

    • McCawber

      You don’t know the half of it.
      Our legislators could limit the the ability of estate agents to interfere with the property market and once again they choose not to.

  35. McCawber

    Yes Minister Ross.
    That wasn’t too hard now was it.
    http://m.rte.ie/news/2016/0514/788408-luas-dispute/

  36. [...] electorate tend to find the arguments of fiscal conservatives more intuitively appealing.  David McWilliams provides a simple yet powerful example of the case for borrowing to solve the housing problem.  It [...]

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