Daft Property - Irish Property News

Varadkar says it’s ‘not the worst thing’ that Ryanair is buying up homes for staff

2024-03-09T19:08:00.000+00:00

25 of the 28 units in a new development at Fostertown Place in Swords were purchased by Ryanair for their cabin crew. TAOISEACH LEO VARADKAR says he does not have any issue with Ryanair or other companies buying up almost entire housing estates for their staff.

He said there is a big difference between companies like Ryanair bulk-buying houses and apartments compared to investment funds.

“We are building over 30,000 new homes now every year,” he said.

“If you think about it, that’s 70,000, 80,000 or 90,000 bedrooms every year so we are finally seeing housing being built on scale,” Varadkar said.

“We want to scale that up this year and next year as well because we do have a rising population and family sizes are getting smaller, so we need more housing and we are making progress,” he said.

“In relation to Ryanair specifically, I don’t think it is the worst thing that a company would buy accommodation for their staff. It’s not the first time this has happened, it has been happening for centuries,” the Taoiseach added.

“I think it is different to an investment fund, for example, buying up houses that could be bought by families.”

He was responding to criticism after 25 of the 28 units in a new development at Fostertown Place in Swords were purchased by Ryanair for their cabin crew.

The Taoiseach was speaking in Athenry where he opened BIA Innovator campus where €8 million has been provided in funding to assists start-up, micro and small food businesses in three state of the art buildings on the Teagasc complex.

He said these workers would also need housing and that some companies had been proactive in sourcing accommodation for generations.

“A lot of the people who work for Ryanair are local people and they are people living around Swords and living around towns around the airport and some of them live in my own constituency. The fundamental thing we need to ensure is there is enough housing for everyone to buy,” Varadkar said.

“A huge amount of housing is being built in Swords, the Fingal area, affordable schemes, cost rental schemes, a lot of that coming through and what we need to do when it comes to housing is instead of having people fighting over the pie, it’s about making sure the pie is big enough for everyone,” he said.

“One of the things I was delighted to see today was the number of first-time buyers drawing down their mortgage is at levels we have not seen since 2007. I was in my 20s in 2007 so it’s great to see we are back to that stage again where so many people are able to buy their own homes,” he added.

People Before Profit Fingal has condemned Ryanair’s purchase of the homes.

“Bulk purchasing by corporations and vulture funds must be banned from our society,” People Before Profit Swords representative Ollie Power said.

With reporting by Hayley Halpin, The Journal ie

Fund buys 46 out of 54 houses in Dublin estate for private rental

2024-03-09T18:54:00.007+00:00

The properties are now being advertised for rent at €3,175 per month.

AN INVESTMENT FUND has purchased 85% of the homes in a new housing estate in north Dublin.

Forty-six of the 54 units in Belcamp Manor in Balgriffin, Dublin 17 were sold last month for over €21.5 million.

A filing on the Property Price Register shows that the properties were purchased for €21,585,904 in December 2023.

Sources in the industry have confirmed the houses were bought by an investment fund, but the name of the firm has not been revealed. The Land Registry has not yet been updated to reflect the new owners.

The houses, which were launched by estate agents Knight Frank in December 2022, are fully furnished and located on the Malahide Road.

Occu, a private rental sector company owned by Sw3 Capital, is now advertising the four-bedroom properties for rent at €3,175 per month.

In a statement, Occu – which has properties for rent at 15 other locations in Dublin – made clear it does not own the property, describing itself as an “Irish SME solely focused on property management services in the residential sector”. Occu also said that its parent company, SW3 Capital, “does not own, or have any involvement whatsoever, in the properties”.

It added: “Occu is an Irish SME solely focused on property management services in the residential sector. This involves the professional rental and management of properties on behalf of a range of clients. Regulated by the Property Services Authority and as a small local employer, Occu operates properties across the State on behalf of long-term institutional landlords such as pension funds and insurance companies.”

>Stamp duty

The Government introduced a 10% rate of stamp duty on bulk purchases of 10 homes or more in June 2021 in an effort to tackle so-called cuckoo funds buying up housing developments before first-time buyers.

It came a month after the Business Post reported that Round Hill Capital and its partner SFO Capital had completed a deal to purchase 135 of 170 houses at the Mullen Park estate in Maynooth in Co Kildare.

The two companies, both headquartered in the UK, also bought 112 homes at the Bay Meadows estate in Hollystown, Dublin 15 the previous month.

However, in July 2021, the Government passed a controversial amendment to allow funds to side-step the 10% stamp duty if they lease back homes to the State for social housing.

The Journal ie

Fewer car park spaces and smaller gardens under new house building rules issued to local authorities

2024-03-09T18:25:00.004+00:00

The new rules mean more bike storage options must be made available in developments.

NEW HOUSING DESIGN guidelines issued to local authorities sets out that some housing developments should have fewer car parking spaces, smaller gardens, and increased bike storage facilities.

Housing developments in city centres will see an increase in density under the new rules, which sets out that minimum distances between homes should also be reduced with the option for planning authorities to disregard them entirely if they were satisfied residents would not be unduly affected.

Alongside changes to housing density, there are proposals to reduce the number of car parking spaces in urban areas where public transport facilities are accessible.

The guide sets out that in city centre locations and urban neighbourhoods car-parking provision should be “minimised, substantially reduced or wholly eliminated”.

It also sets out that it is now to be a specific planning policy requirement that all new housing schemes include safe and secure cycle storage facilities.

In the case of residential units that do not have ground level open space or have smaller terraces, a general minimum standard of one cycle storage space per bedroom should be applied, the directive states.

Gardens will also shrink under the new rules which set out “a more graduated and flexible approach” is now required that supports the development of compact housing.

While traditionally the house size minimum for private open space was set at 50sqm for a 1-2 bedroom house and 50-75sqm for a 3+ bedroom house, the new guidelines set out a new minimum standard as follows: 1 bed house 20 sqm 2 bed house 30 sqm 3 bed house 40 sqm 4 bed + house 50 sqm A further reduction below the minimum standard may also be considered acceptable where there semi-private open space is provided.

The guidelines, which were previously out for public consultation, have now been signed off on by the housing minister and sent to all local authorities and planning bodies.

Local planning authorities and An Bord Pleanála must show regard to the new ministerial guidelines in the performance of their functions, as set out in legislation.

Housing Minister Darragh O’Brien said today that the new guidelines will provide a broader range of housing options to meet the needs of a growing population. He said the guidelines are timely particularly in light of the government’s overall objective to increase housing supply. “While progress continues to be made on housing delivery, the greater flexibility oﬀered by these guidelines will help in achieving our aim of providing a broader range of housing options to meet the needs of a growing and more diverse population,” he said.

The Journal ie

House prices outside Dublin to increase by 4.9% in 2024

2024-03-09T18:17:00.002+00:00

Kerry will see the sharpest spike in prices – as much as 15% – while prices in Kilkenny and Laois could see an increase of 10%.

HOUSE PRICES OUTSIDE Dublin are to increase by an average of 4.9% in the next 12 months.

Kerry will see the sharpest spike in prices – as much as 15% – while prices in Kilkenny and Laois could see an increase of 10%.

That is according to The Sunday Times Nationwide Property Price Guide.

Monaghan, Louth and Westmeath are the only counties where prices are expected to remain the same.

In some counties, such as Wexford, Waterford, Mayo and Offaly, it is now generally cheaper to buy than it is to build a home.

Ballinlough and Model Farm Road in Cork (both €490,000), are among the most expensive areas for three-bed semi-detached houses. Greystones, Co Wicklow, is also on the pricey side (€605,000), as a popular commuter town.

The three most affordable areas for the same house are Mohill (€155,000) and Ballinamore (€160,000) in Co Leitrim, alongside Castlerea, Roscommon (€160,000).

Below are the predicted price increases for each area: Waterford – 10% Kerry – 4-15% Kilkenny – 8-10% Laois – 5-10% Roscommon – 7-8% North Co. Tipperary – 7.5% North Co. Cork – 6-7% Galway City – 5-7% Co. Longford – 6% Co. Cavan – 5% Cork City North – 5% East Co. Cork – 5% Co. Leitrim – 5% Co. Mayo – 5% Co. Offaly – 5% Sligo town – 5% South Co. Tipperary – 5% Co. Wexford – 5% Co. Meath – 4-5% Co. Carlow – 3-5% Co. Donegal – 3-5% Co. Kildare – 3-5% Limerick City – 4% South Co. Wicklow – 4% Co. Galway – 2-5% Co. Westmeath – 0-7% Cork City – 3% West Co. Cork – 3% Co. Limerick – 2-3% Co. Louth – 0-5% North Co. Wicklow – 2-3% Co. Monaghan – 0%

In recent years, the government has introduced a number of schemes to make home ownership more achievable.

The age of the average first time buyer is now higher than ever at 35 years old and with house prices on a steady incline, many people still feel locked out.

Meanwhile, a chronic shortage of housing has pushed rents upwards leaving many renters in a position where they struggle to save enough for a deposit.

The Journal ie

House building in Ireland is at a 15-year high. This is the truth, but it’s also Government spin

2024-03-09T17:05:00.002+00:00

Although the Government certainly isn’t lying when it says that the 32,695 new homes completed in 2023 represents the largest annual delivery in 15 years, it shouldn’t try to insult people’s intelligence

“There are three kinds of lies: lies, damned lies, and statistics.” As lines go, it’s one that’s been attributed over time to American writer Mark Twain and British prime minister Benjamin Disraeli among others. Given its essential truth, it’s unsurprising that the saying continues to be employed to this day whenever someone is suspected of playing fast and loose with the facts to suit their own agenda.

Although the Government certainly isn’t lying when it says that the 32,695 new homes completed in 2023 represents the largest annual delivery in 15 years, it shouldn’t try to insult people’s intelligence. Rather, its representatives should have the decency to put the statistics into an appropriate context by acknowledging that the level of homebuilding dropped off a cliff after 2008 and has remained in the doldrums ever since. This despite the fact that our population grew 8.1 per cent to 5,149,139 in the six years leading up to 2022, having already swollen by 3.8 per cent in the period between the previous censuses of 2011 and 2016.

To put it another way, the Government’s claim of a 15-year high for housing delivery means little or nothing when the supply for the 14 years that preceded it fell hopelessly short of the corresponding requirement.

Similarly, the Government’s statements in its most recent Housing for All update that the pipeline of new-home commencements in 2023 was up 22 per cent on 2022, and that last year’s new-home completions exceeded the Housing for all target of 29,000 by almost 13 per cent, are equally redundant.

It’s important to set the target for the delivery of new homes at the right level but the land to accommodate them must be there

A cursory reading of the analysis provided to The Irish Times for today’s new-homes supplement by those directly involved in the construction and the sale of new homes points to the inconvenient truth that when it comes to the thorny issue of housing delivery, the Government has set the bar way too low.

The sheer extent of the gaping chasm between the current Coalition’s ambition and the required reality is highlighted both by Ivan Gaine, managing director of Sherry FitzGerald New Homes and chairman of Property Industry Ireland, and by Knight Frank’s director of New Homes Ray Palmer-Smith. Gaine believes that supply targets need to be set closer to 60,000 new homes per year while Palmer-Smith, for his part, plumps for the more conservative 50,000 units agreed upon by various commentators – including Taoiseach Leo Varadkar. It’s important to set the target for the delivery of new homes at the right level but the land to accommodate them must be there. As it stands, this isn’t necessarily the case, according to developer Michael O’Flynn. He points to dezoning of land that has taken place on foot of the outdated data contained in the National Planning Framework. “Any serious attempt to address our housing deficit must include zoning and servicing sufficient land which is available for development,” says O’Flynn.

Also key to meeting the country’s housing targets is the issue of funding. While this is an area where the State can have a significant impact through financial and other supports, its resources are limited by its commitment to other areas of the economy.

Given that constraint, the Government of the day must ensure that the conditions are in place for State to attract additional funding from institutional investors to ensure that new homes are being built in sufficient numbers. Those conditions include a properly resourced planning system and a stable and competitive policy regime, according to Pat Farrell, chief executive of Irish Institutional Property, which represents numerous of the country’s foremost developers and real-estate investors.

Having said all of the above, there are still some bright spots to be found when it comes to the availability of new homes.

Article by Ronald Quinlan, Irish Times

I fear a very different kind of property crash

2024-03-08T18:49:00.005+00:00

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion

Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning.

The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”.

So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so.

IPAV has long articulated its views on how to improve supply and sustainability, including changes to rent pressure zones, tax treatment of private landlords, encouragements for SME builders and developers and much more.

But let’s look to an organisation that played a major role in our recovery from the last financial crash: the International Monetary Fund. In a report in November, the IMF recommended the removal of rent caps saying: “Reducing the complexity and restrictiveness of rent legislations, notably replacing rent caps with more targeted housing support for poor households, would help increase rental housing supply.”

It recommended increasing urban density, improving land use and enhancing construction productivity, as well as providing greater certainty to developers by improving the transparency and certainty about approval processes, and accelerating them.

Given we’re entering a series of elections, including a general election to be held no later than March 2025, will we be facing more heat than light on housing?

We’re snowed under with reports and inundated with State- and State-supported bodies, often with overlapping responsibilities, not to mention a Housing Commission of which we’ve heard little. Perhaps the best we can hope for from any new programme for government agreed following the next general election is a taskforce established with specialist expertise, with a tight time frame to implement a series of urgent actions.>

Irish Times Article by Pat Davitt chief executive of IPAV

The State is about to create another housing bubble...

2017-01-04T09:15:00.001+00:00

The Irish economy is set to repeat its old mistake of excess mortgage-lending...

The run-up to Christmas is always a good time for burying bad news and this year was no different.

On the Friday before Christmas, Bank of Ireland announced it was going to have to put more money aside to absorb possible losses on Irish residential mortgages.

Just how much more money was not very clear but it would appear to run into several hundred million euro.

The statement was extremely technical and did not actually talk about losses or defaults.

But the point is clear. The bank had already put aside some money to absorb losses that might occur as a result of people not being able to pay their mortgages. It now seems that more people than expected are going to default and the bank has had to put some extra money aside.

It is as timely a reminder as you could hope for that the Irish banks are still broken and still fighting their way through a mountain of problem mortgages as a result of their reckless lending in the run-up to the 2007 crash.

The banks have made huge efforts to get on top of their mortgage problems but – at best – there is substantial lingering uncertainty around the ability of a significant number of people to repay mortgages taken out during the boom.

At worst, the problems are much bigger than the banks are prepared to accept even at this stage.

Runaway property

We are in effect still paying the price for the moment when the traditional multiples linking mortgages to income were thrown out the window as banks and lenders chased a runaway property market.

It is scarcely believable that we are about to do it all again. Yet somehow we seem to have contrived a situation where the only way to put people in houses is to circumvent the rules brought in after the crash precisely to make sure we did not go down the same road again.

Here we are at the start of 2017 with property prices expected to roar ahead by 8 per cent and the Government launching a “Help-to-buy” scheme with no purpose other than to allow people to circumvent Central Bank rules aimed at stopping the banks lending people more money than they can repay (and in the process keeping a lid on house prices).

The reason for this madness would appear to be that builders will not build houses at current prices because they will not make enough money.

The main reason for this seems to be that they paid so much for the land in the first place.

We are again running the risk of being a construction industry with an economy attached to it.

It is hard to understand how we arrived at this state of affairs when, less than four years ago, the government was firmly in control of all the levers needed to dictate the cost of building land and the price of houses.

It had, through Nama, effective control of acres of building land nominally owned by developers, the bulk of whom where insolvent.

It also owned the banks and thus was in a position to exert influence over lending practices. It was a level of state economic control rarely seen these days outside of China.

Act of folly

It is starting to look as though the big mistake with Nama was to set it up as a standalone entity that had to make a profit, or at least cover its debts. As we face into a rerun of the reckless lending and rocketing house prices that characterised the previous boom and crash, .

Would it were that simple. Such wishful thinking belies both the economic reality facing the State in 2012 and the lack of bandwidth in our system.

It would have been a heroic move by the government to suggest to its creditors that it was planning to exit the bailout with Nama projected to make a loss of many billions in order to ensure that houses would be affordable in the coming recovery.

Instead, the Nama loans were sold off to the highest bidder and many developers were allowed refinance themselves out of Nama; the net result is that the price of building land remains at a level detached from the fundamentals of the economy.

But even if anyone had the foresight to suggest an alternative course of action, the ability of the system to bring it about has to be seriously questioned. This is, after all, a country that cannot collect water charges.

They could have done it in China, of course, but then again they are not so hot on democracy over there.

Report - Irish Times

Top property sales 2016 – who bought and sold...

2016-12-17T12:36:00.000+00:00

The year saw a shift from D4 to D6 while the country market slowed on the previous year...

DUBLIN...

Dublin 6 dominated top-end sales this year and, in particular, Dartry. Whereas in other years coastal south Co Dublin and Shrewsbury and Ailesbury Roads have dominated, Dublin 6 and the area around Temple Road have become hot property.

Top of the list was the purchase in May of Alston at 19 Temple Road for a whopping €10.225 million when former Paddy Power boss Patrick Kennedy traded up from his home on nearby Palmerston Road. In a quiet off-market deal, the Victorian property, on one acre, was sold by barrister Vincent Foley and his wife, Helen, who have lived there since the late 1980s.

Around the corner at 5 Temple Gardens, €6.5 million exchanged hands when the detached redbrick house on a third of an acre owned by the late barrister and former attorney general, Rory Brady, sold in another off-market deal.

Not long after Subiaco at 1 Temple Gardens sold for €5.85 million shortly after coming on the market. It’s believed that the buyers of both properties are Irish families planning to live there, however the Sherry FitzGerald broker facilitating the deals, Geralyn Byrne, refused to comment.

And if three of the top five sales weren’t enough for Byrne – aka the “Queen of Dublin 6” – she was also behind the sales of Helen Dillon’s famed Georgian home and garden at 45 Sandford Terrace, Ranelagh for €4.5 million; 1 Richview Park in Dartry for €3.075million and St Philip’s at 42F Palmerston Road for €3 million. Not a bad year’s work and presumably a very merry Christmas awaits Byrne.

Sherry Fitz completed a clean sweep of the top five Dublin sales when its other star agent, Simon Ensor, brokered the sales of Beulah in Dalkey for €6 million and 51 Ailesbury Road for €5.9 million. Beulah, a fine 465sq m (5,010sq ft) Victorian, on 1.7 acres, was the family home of the late Finn O’Sullivan, founder of transport and logistics firm Irish Express Cargo.

The sale of 51 Ailesbury Road for €5.9 million only closed recently and its buyer remains something of a mystery as the property was bought in trust. Even the vendors don’t know their identity. Certainly one to watch when the removal trucks roll up.

COUNTRY...

The seeming never ending on again, off again sale of the late Tony Ryan’s former Lyons Demesne estate in Kildare came to a conclusion when it appeared on the Property Price Register as sold for €12 million in October. Factoring in the 600 acres on which the lavish Georgian mansion stands, the total sum paid is closer to €18 million. The property had been on the market for €25 million with Knight Frank when it was withdrawn in 2014 just as it looked like it was about to be sold close to the asking. It seems the ultimate buyer emerged from within the Ryan family, with Shane Ryan understood to have bought out the other members’ share, further bolstering his substantial prime property portfolio.

Report from Irish Times

Where are the incentives for the negative equity generation?

2016-12-17T12:24:00.000+00:00

Looser Central Bank rules, generous Help to Buy grants for first-time buyers - but trader uppers are being left out in the cold...

They paid too much for their home during the boom; their wages are stagnant; their mortgage is still underwater; they may have a cheap tracker but have ended up renting their own home and leasing another family friendly property at a hefty rent themselves. They’re the negative equity generation and now they want to trade up – but any help form the Government is going towards first-time buyers and not them. Why?

It’s a question many people of a certain age may be asking themselves following last month’s revisions to the Central Bank’s mortgage rules. For first-time buyers, the requirement to have a deposit of just 10 per cent – or as low as 5 per cent on a new build thanks to the help-to-buy scheme – means getting the funds together to buy a first property, particularly in Dublin, has become a good deal easier.

But what about second-time buyers looking to trade up? What has been done for them?
An uneven playing field

Until October, buying a house was a difficult endeavour for all; yes, it was easier perhaps, for first-time buyers, particularly outside of Dublin, as they only needed a 10 per cent deposit on a purchase price of up to €220,000, but the introduction of the help-to-buy scheme in October, plus the relaxation of the 20 per cent rule, has been a double bonus for first-time buyers.

In effect it means that a first-time buyer will now only need to come up with a deposit of just €12,500 themselves (thanks to the 5 per cent via a rebate of income tax paid from the help-to-buy scheme) when buying a new property valued at €250,000 – down from €28,000 previously.
But what about those trading up?

Well, someone chasing this same property valued at €250,000, who already owns a house themselves, will only get a mortgage of €200,000 – 80 per cent of the property’s value – so they will have to come up with €50,000 in cash to buy. So it is just €12,500 for one cohort and €50,000 for the other – is this fair?

Joey Sheahan, head of credit with MyMortgages.ie, doesn’t think so, and he argues that those trading up should “at least be put on a level paying pitch” with first-time buyers.

“A second-time buyer in a lot of cases may have bought an apartment or small house back in the boom times when prices were far higher and may now be in negative equity, or may have outgrown their current property due to an expanding family. Some of those people would argue that they require a preferential deposit more than a first-time buyer,” says Sheahan, “In a lot of ways it’s the second-time buyer that needs the break more than the first-time buyer”.

He’s not alone. Eamonn Foley, a director with Sherry Fitzgerald, argues that help should also be forthcoming for those looking to trade up, noting that many who bought during the boom have since become “an unwilling landlord – and an unwilling tenant as well”.

“It’s something the Government should be looking at in terms of helping these people along the way,” he says.
Central Bank approach

The Central Bank has opted to differentiate between first-time buyers and those trading up on the grounds that allowing first-time buyers to purchase a house with a loan-to-value (LTV) of 90 per cent is a more prudent approach, as the default risk of a first-time buyer is lower than that for someone trading up.

“Evidence confirms that the differential treatment of first-time buyers and ‘second and subsequent buyers’ remains appropriate with the default risk of first-time buyers lower than that for second and subsequent buyers, and this result holds across all property values,” the Central Bank says.

But those who have clung onto their properties during the crash may argue that this is a harsh assessment.

Others suggest that first-time buyers should be incentivised, because they could well be spending an inordinate amount of their income on rent, while the trader upper may have a very manageable tracker mortgage on their property. Moreover, the trader-upper already has had their chance of getting on the property ladder (and possibly a first-time buyer grant too, before it was abolished in 2002).

Another point to consider is that the 20 per cent deposit is not an extra cost the trader-upper must face; it’s actually building up additional equity in their home, given that they’re borrowing just 80 per cent compared with the first-time buyer’s 90 per cent.

The problem perhaps, is that a generation of would-be trader-uppers in their late-30s and 40s bought at a period of peak prices – and there is a debate about whether this should be recognised in how they are treated today.
Underwater mortgages

Historically, second-time buyers have been able to use equity in their home to fund a deposit on the purchase of their next home. But for a large cohort of buyers who purchased in the years leading up to the crash, this is simply not possible.

Yes, the number in negative equity continues to slide, thanks to a combination of people paying down their loans and rising property prices. But in some cases prices are still 30 per cent off the peak, and some 15 per cent of homeowner mortgage loans – a significant chunk – were still in negative equity at the end of 2015, albeit down from 20 per cent on the previous year.

Since the introduction of the Central Bank mortgage lending rules in February 2015, borrowers in negative equity have been exempt from the requirement to meet the loan-to-value element, it is not always that easy for people in this situation to obtain a mortgage at all. According to figures from the Central Bank, only 240 negative equity loans, worth €37 million, were drawn down in the first six months of this year.

A negative equity mortgage means that someone embarking on buying a new home and selling their existing property, could, in effect, borrow on a LTV even above 100 per cent given that they are carrying debt with them from their current home. But they also have to comply with the mortgage multiple rules, of 3.5 times their income – a difficult task if they have to add on another €30,000-€40,000 in debt from their current property.
In equity . . . but not enough of it

And even if those trading up aren’t in negative equity, it may be the case that they won’t have enough equity in their current property to finance the purchase of a new home. If they bought their property in 2006/07, particularly if it was a house rather than an apartment, their mortgage may no longer be underwater. But selling their house is unlikely to give them a cash injection either, as they may just break even on the deal, leaving them to find as much as €80,000 for a deposit on a €400,000 sale price.
Selling first to get the deposit together

Another challenge for second-time buyers comes in the form of getting the property chain to work for them. Some banks will want you to sell your home before they will approve another mortgage for you. Even if they do approve it, you may still have to wait until your own home is sold before you can successfully complete the purchase of your new property, as you’ll need the funds for a deposit on the new property.

“It puts them in a far weaker position than someone who is fully mortgage approved,” notes Sheahan,

In a competitive bidding situation, a trader upper may be more constrained in making an offer, as every €1,000 they offer will mean an extra €200 towards the deposit – money they will have to have readily available to complete the deal.

“It puts them at a disadvantage,” agrees Foley.

Another issue is that a typical trading up home may be a 1970s/1980s semi-detached property; but these homes may need to be upgraded. Scrambling for a 20 per cent deposit may not leave much, if anything, left over for an upgrade.

In the absence of bridging finance, selling and buying a home as part of a property chain has also become next to impossible.

“It’s extremely difficult,” says Foley.

This means that, if you want to trade up, you may have to sell and move into a rental property while you search for a new home – and finding a short-term property in the current rental crisis is either impossible or exorbitant.

“What we’d often try to do is when someone has gone ‘sale agreed’ and has the contract out on their property, we’d say now is the time to try and find the next house. Where we possibly can, we dovetail the two to come together,” says Foley.
New allowances

But if the housing market incentives are skewed towards the first-time buyer at present, remember that trader uppers also got something in last month’s changes to the rules.

At present, banks are allowed lend more than 80 per cent to 15 per cent of applicants, which means that this cohort could need a deposit of as little as 10 per cent, whether they are buying for the first or second time.

Fast forward to January, however, and the Central Bank has amended its rule on allowances to allow banks to offer LTVs of more than 80 per cent to 20 per cent of second-time buyers. This means that one in five of those trading up will not need a 20 per cent deposit. This is a significant improvement on the current arrangement, which applies to both first-time buyers and those trading up.

But if you want to be one of these one in five, what do you have to do? A good place to start, perhaps, is examining who has already received such exemptions.

According to research from the Central Bank, allowances for trader uppers are typically associated with younger couples (average age of 39 compared to 42 for those without an allowance), who have higher incomes, and a larger loan size.

Sheehan notes that banks are tending to give exceptions to people with ample savings, in professional, pensionable jobs.

Report from Irish Times

Tantrum from landlords ignores need for reforms in rental sector

2016-12-17T12:17:00.000+00:00

It is hard to know whether the threat by landlords to withdraw from State rental schemes and pass on a raft of charges to tenants is posturing, or a reality the Government will have to face.

Housing Minister Simon Coveney's rent control measures outlined this week, which are expected to become law before Christmas, have certainly raised the hackles of the Irish Property Owners Association (IPOA), which has 5,000 members across the State.

It said some members have threatened to withdraw from State-sponsored rental schemes, despite in many cases signing legally binding leases with local authorities. It has also proposed charging a payment to collect keys, imposing service charges and registration fees, obliging tenants to pay for parking and documents, and even asking tenants to contribute towards the Local Property Tax - which the Revenue Commissioners have said must be paid by owners, and not those renting.

The IPOA's claims that its members are "hard-pressed" and "victims of the newest onslaught on the sector" ring hollow. As far back as 2009, it was saying the same thing, yet the number of people renting and the amount being charged has since increased. The fact that tenants living in almost 150 locations across the State have experienced double-digit hikes in recent years means there is little or no sympathy for landlords. But the IPOA appears to be of the peculiar view that throwing a tantrum is the best course of action to stop these measures from becoming law.

But here's a wake-up call. Fianna Fáil and Fine Gael have agreed the measures, so they are coming into force. Threatening to impose a raft of additional charges as a means to circumvent the rules is counterproductive.

While many TDs are landlords - including Housing Minister Simon Coveney, Foreign Affairs Minister Charlie Flanagan, Government chief whip Regina Doherty, as well as John McGuinness and Timmy Dooley from Fianna Fáil - to say our politicians are in thrall to landlords is a stretch. If so, why introduce the concept of rent pressure zones and effectively cap rents for the next three years?

There's little doubt that the rental market as it currently exists is dysfunctional, serving neither the landlord nor tenant well, and changes are needed. There is no security of tenure, and landlords are not treated fairly by the taxation system - a point acknowledged in the Government's 'Strategy for the Rental Sector'. There are not enough inspections of rented properties, and landlords who breach the rules are rarely punished.

But this cohort are in the minority. Most landlords are far removed from the greedy money grabbers they are often branded, but the actions of those who seek to increase rents at the first available opportunity paint them all in a bad light.

The majority own one, two or three properties, and many are servicing hefty mortgages. Many are accidental landlords, stuck with a house or apartment which their family has grown out of but which they cannot sell because it is in negative equity. Others have been left high and dry by tenants who refuse to pay but won't leave the property. And there's no doubt that many renting are paying less than the market rates, because their landlord is happy to keep them in the property. Some have genuine concerns about the cap being introduced, and a major bone of contention is the 4pc limit on all tenancies, which will leave many out of pocket.

"I didn't realise the extent of the controls which would be assigned to new lets too," said Fintan McNamara (inset), from the Residential Landlords Association.

"If you have a tenant where you didn't put up the rents and they paid below-market rents, that rent applies to new lets too. It means landlords will have to charge 4pc every year just to keep up. The ones charging large rents will be rewarded.

"It wouldn't be so bad if it only applied to existing tenancies. It's very rigid. If they don't relax on that I could see a problem."

The measures will be subject to further Dáil debate next week, but major changes are unlikely.

While the focus has been on the imposition of the rental caps in Dublin and Cork, to be followed by the other cities and commuter towns early in the new year, there's a raft of other proposals in the strategy which must be implemented to improve the lot of landlords and tenants alike.

But the rental strategy only forms one part of the overall package of measures needed to return rents to sustainable levels. The basic problem is one of supply. There are not enough houses and apartments being built to keep pace with demand from those hoping to purchase or rent a home.

So far this year, fewer than 12,000 have been completed - not even half the number needed to meet demand. A more telling figure is the number of properties on which work has commenced. So far this year, that stands at fewer than 10,000.

Unless the other strands of 'Rebuilding Ireland' start to bear fruit, rent controls may end up being in place for longer than the three years envisaged. And that could pose a bigger headache for government than a tantrum from the landlord sector.

Report from Irish Independent

A New Bubble ?

2014-08-02T21:25:00.002+01:00

Rising house prices lift 45,000 out of negative equity...

Rising property prices, particularly in Dublin, are lifting thousands of households out of negative equity, according to new research.

A study by the Economic and Social Research Institute (ESRI) calculated that recovery in house prices last year alone reduced the number of mortgage loans in negative equity by 15 per cent.

Based on mortgage data obtained from the Department of the Environment and theIrish Banking Federation, the institute estimated that the total number of mortgage loans in negative equity peaked at 314,000 in late 2012.

Coalition can meet deficit target with adjustment of only €200m, says Ibec

Property price growth last year – which saw values rise by nearly 16 per cent in Dublin and 6 per cent nationally – reduced this number by approximately 45,000.

At this rate, the ESRI is predicting the number of households in negative equity will have fallen by 43 per cent by the end of the year from its peak in 2012.

The study found Dublin accounted for more than 40 per cent of mortgages in negative equity at the height of the financial crisis, equating to 125,000 loans.

However, the number of negative equity households in the capital has fallen more steeply than in the rest of the country over the past two years.

According to the ESRI, the number of negative equity mortgages in Dublin fell by 35,000 last year, which equated to three-quarters of the improvement experienced nationally, reflecting the stronger house price growth in Dublin.

Nonetheless, the study indicated there were still a large numbers of borrowers in negative equity greater than 20 per cent of the house value at the end of last year, the majority of which were first-time buyers. “Negative equity can have harmful effects on an economy through its impact on a household’s consumption, savings and labour market mobility,” the report’s author, David Duffy, said. “The combination of property price increases and mortgage repayment has reduced the extent of negative equity in Ireland in recent times which is positive for the economy overall.

“The expectation is that, with house prices continuing to increase in 2014, we should see a further decline in negative equity numbers.”

The reduction in negative equity should in theory also improve the balance sheets of the country’s main lenders with less provisions having to be put aside for anticipated loan losses, which in turn should lead to more lending.

Despite the improving outlook for indebted homeowners, figures from the Central Statistics Office (CSO) released yesterday suggest many households remain under the cosh financially with disposable income continuing to fall. The CSO said gross disposable income of Irish households was €22.2 billion in the first quarter of this year, representing a fall of €1.1 billion or 4.8 per cent on the previous quarter.

The figures suggest the increase in disposable income from more people being at work is being offset by the downward pressure on income from new taxes and charges associated with the Government’s long-standing austerity drive.

Minister for Finance Michael Noonan has vowed to do something for hard-pressed middle-income households in the upcoming budget.

Most indications suggest that he is likely to widen the income tax bands in an effort to take more people out of the higher tax bracket.

The CSO figures also show that during the same period there was also a decrease in quarterly household expenditure, which dropped €138 million to €19.6 billion.

Irish Hope to be Bankrupt for Christmas...

2013-12-25T11:24:00.000+00:00

‘Hope to be bankrupt for Christmas’: Irish mortgage debtors see insolvency as way out...

With one in five mortgage payments being overdue in Ireland and families across the country having their homes repossessed, some of the debtors are hoping for bankruptcy to do away with their endless fear of losing their properties.

Julia Godsill, a Dubliner, can hardly hold back her tears, when retelling her not uncommon mortgage saga to RT’s Tesa Arcilla. When she bought her house the Irish economy was still the “Celtic Tiger” enjoying its boom time. After the credit crunch of 2008, Julia could only watch as her mortgage became too high for her to be able to pay, while the value of her house itself went down.

“I ended up with a cash offer for 500,000. This was in 2011. And I was delighted. But the banks refused to accept the offer because the mortgage was 800,000 climbing with arrears. They preferred to bring me to court, and repossess the house instead.”

The Central Bank of Ireland figures, released on November 28, show Julia could be one of at least 141,520 homeowners in arrears on their residential mortgage loans. That means roughly 20 percent of Irish mortgagees are living in fear of losing their homes.

“I could barely put one foot in front of the other because I couldn't sleep at night,” Julia describes her mortgage distress. “I thought about things, I got up and then I went back to bed again, and I couldn't do anything at all. All I could think about was this debt! And I had no way out,” Julia Godsill tells RT.

Homeless organization, Focus Ireland, estimates that 16 families are losing their homes each month in the capital.

Finding oneself out in the streets is particularly bitter as Ireland is officially recovering. The country’s three-year-long EU-IMF bailout came to an end in December. The Irish prime minister, Enda Kenny, acknowledged in his address to the nation, that “the recent improvements in the economic situation have not yet been felt” in everybody’s daily lives.

He urged the banks to review their policies.

“We will require the banking system to become a contributor to the economy, rather than a huge drain on it. The banks must do more to deal with mortgage distress and to provide access to credit for small business,” Kenny said.

Much tougher criticism of the banks came from the Irish Mortgage Holders Association, an NGO, trying to help in-debt homeowners not to lose their properties.

“The banks have had a catastrophic effect on day to day activity in Ireland, on business,” David Hall, NGO’s director, told RT. “They've paralyzed the entire nation. They have failed to deal with the mortgage debt crisis by coming up with creative solutions.”

The bursting of the Irish real estate bubble in 2008 was a real blow to Irish banks heavily dependent on property lending. Although the banks’ policies had been widely criticized, the major ones were eventually bailed out by the government.

“We can measure how much the bailout has cost us in monetary terms, we have never evaluated how much this has cost us in emotional and mental health terms,” Hall said.

The emotional cost appears to be high enough to make Julia Godsill actually wish for bankruptcy, simply to put an end to her mortgage nightmare.

“I’m hoping to be bankrupt for Christmas. [Laughs.] I know it’s mad. And the reason why I’m hoping to be bankrupt for Christmas is that I can start again. Let me become what I was before.”

Bankruptcy might indeed now become a way out for Irish homeowners. According to a new law, which was passed in December under the Personal Insolvency Act, a person would automatically be discharged from bankruptcy after three years, as opposed to the current 12-year term. Bankruptcy thus becomes less punitive and costly and is a glimmer of hope for those caught up in the mortgage trap.

Report from RT

A Video Of Ireland's Prettiest Ghost Estate...

2013-09-19T10:42:00.001+01:00

A Souvineer of the Irish Property Bubble...

Not all of Ireland’s ghost estates are half built and ugly - some have a certain charm...like this scheme in rural Waterford.

No attention to detail was spared by developer Pat McCoy whan he built the estate in the village of Stradbally, Co Waterford. Tucked away at the top of a hill leading up from the village green are 15 chocolate-box thatched cottages.

Enjoy this video of Ireland's prettiest Ghost Estate !

See the "Pretty Ghost Estate" story !

(Thanks to David for sharing this video)

Thousands Face Repossession Under New Law...

2013-07-31T09:48:00.000+01:00

A NEW law allowing banks to repossess homes and investment properties comes into operation today.

Thousands of homeowners and investors are expected to be threatened with having their properties seized.

Justice Minister Alan Shatter signed a statutory instrument which puts the provisions of the Land and Conveyancing Law Reform Act 2013 into operation.

Banks had been unable to threaten repossessions following a ruling in the High Court in 2011. The new legislation overcomes the so-called Dunne judgment that put a block on repossessions.

Now many of the more than 54,000 residential homeowners who are more than a year in arrears face the real threat of repossession.

Banks are likely to try to take ownership of around 30,000 buy-to-lets that are in arrears. Almost half of these mortgages are having only the interest payments made on them.

Davy Stockbrokers has estimated that up to 43,700 letters threatening repossession have been issued by banks, despite their being unable to pursue cases over the past two years.

David Hall, director of the Irish Mortgage Holders' Organisation (IMHO), said he expected a flood of repossession applications.

NIGHTMARE

"There will be chaos," he said. "I expect banks to take advantage of this, which will only add to the nightmare experienced by mortgage holders in the past few years."

He added that the Land and Conveyancing Act allowed for a repossession case to be adjourned so a homeowner and the bank can negotiate a personal insolvency arrangement through a personal insolvency practitioner (Pip).

But he said the new Personal Insolvency Service had yet to approve Pips, and it would be next month before it was in a position to accept applications for debt deals.

Mr Hall called on banks to direct anyone facing repossession to his organisation to see if a deal to keep families in their homes could be reached. IMHO has 1,700 distressed mortgage holders on its books.

The new legislation comes only months after Ulster Bank sent out letters threatening to take back their homes. It has claimed that more than a third of its mortgage-holders are making no payments.

Earlier this month, it told investors in London that it saw much evidence of "strategic defaulting". This is where people can meet their home-loan payments but choose to use the money for something else. The bank said it was going to the courts to seek repossessions.

Report by CHARLIE WESTON - Irish Independent

Home Repossessions To Surge...

2013-06-22T18:50:00.000+01:00

A surge in the number of home repossessions is on the cards after the Central Bank decided to change the rules.

Debt-ravaged homeowners will no longer have one year's protection from having their houses repossessed.

The 12-month ban on banks taking back properties from homeowners in arrears is being cut to two months.

The move and other changes to regulatory rules for how struggling borrowers should be treated by lenders have been condemned by David Hall, of the Irish Mortgage Holders Organisation, as a "banker's charter" that will lead to a spike in repossession.

He claimed: "The banking dogs are set to be unleashed on mortgage holders in arrears."

The move to change the Central Bank's code of conduct on mortgage arrears – a rule book for how banks are to treat borrowers behind on their payments – is to be radically changed.

The revised code is set to come into operation from next Thursday with a number of changes that banks have lobbied to have put in place.

The most controversial change is the dropping of the 12-month moratorium on repossessions of homes if borrowers are in arrears but are co-operating with their lender.

Distressed

The one-year period starts 31 days after the homeowner goes into arrears.

Instead, the moratorium will effectively be just two months.

Homeowners who are in arrears and are made an offer by the bank but turn it down will be given just two months' protection from legal proceedings.

And distressed homeowners who have no offer made to them by their bank – because the lender feels they can no longer afford the mortgage – will also get just two months' protection from repossession proceedings being issued.

Those who have an arrangement in place with their bank will have nothing to fear, a regulatory source said.

Other changes to the revised code include giving banks the power to take trackers off homeowners who are given a debt write-off.

Banks will no longer be restricted to three unsolicited contacts to those in arrears, according to Mr Hall, who attended a briefing on the new code.

Banks will also get to define who is an uncooperative borrower – allowing lenders to take repossession action against these homeowners.

The grounds for appealing a restructuring offer from the bank will also be restricted.

The move to lift the 12-month moratorium on home repossessions was advocated by Brendan Burgess of Askaboutmoney.com. "Some people will use the 12-month moratorium to bury their head in the sand and not face up to their responsibilities," he said.

The Central Bank had no comment yesterday.

The moratorium was extended from six to 12 months for those in arrears early in 2011.

Report by CHARLIE WESTON - Irish Independent

Property Prices Fall Again...

2013-04-25T13:11:00.001+01:00

Property prices fall again but pace eases...

PROPERTY prices fell again last month, new figures out today show.

Prices were down 0.5pc in March but this was a slower fall than in the previous month, according to the Central Statistics Office.

In the year to March the fall was 3pc nationally.

Dublin prices were 1.4pc higher than a year ago, despite a 0.8pc fall in March.

Prices have now halved countrywide since the peak of the housing boom in 2007.

Dublin prices are down 56pc, with those in the rest of the country down by 49pc.

Although the pace of price falls have eased, the latest figures mean recovery in prices is still some way off.

Report by CHARLIE WESTON - Irish independent

Billions Lost In Property Crash...

2013-04-01T10:30:00.000+01:00

Property crash wipes €257bn off value of homes in six years...

IRELAND'S homeowners have collectively lost an estimated €257bn in property value in the six years since the market began to crumble, the Irish Independent can reveal.

The 50pc collapse in value since the peak of 2007 also means that by the Central Bank's own estimates, Ireland's crash has now become the worst experienced by any country in the world.

The combined loss to the owners of Irish residential properties since the bubble burst equates to almost four times Ireland's total bailout sum of €67.5bn and more than half the total amount of money first set aside in the European Union's €500bn Financial Stability Facility.

The PTSB/ESRI Index, Ireland's former national price barometer, showed average house prices standing at €310,632 at the start of 2007.

An estimated drop of 50pc in value puts the average loss to an Irish household at €155,316.

With 1.6 million households across the country, that is a combined loss of more than €257bn.

Not everyone who owned property suffered anything near the same scale of loss in value. While those renting out their homes avoided a hit, multiple property owners, such as landlords and local authorities, experienced the biggest losses on residential values.

This time last year, the Central Bank marked Ireland out as having suffered the second worst crash in the world after Japan's, which stood at 49pc.

The year since the report was published has seen some house prices stabilise or even increase in parts of Dublin, but most continued to fall. It means we have now overtaken Japan's 1991 collapse.

However, if some critics of the Central Statistics Office (CSO) system are correct, then the average property capital value losses per household could be even higher.

Some say the price-measuring system has built in delays because it tracks sales from the point of mortgage draw-down rather than when the sale actually takes place – often a three-month gap – and it does not factor in cash transactions, which are likely to be cheaper.

Conall Mac Coille, chief economist with Davy, recently claimed that Irish values could have already shed as much as 60pc. If this were true, then the average property has lost €186,379 in value, and the nationwide equivalent loss in property value is, in fact, €310bn.

Prices first began falling in parts of Dublin in the second half of 2006, though the lack of a publicly accessible property price register meant that the phenomenon was not widely known or reported until early in 2007. However, it took until 2008 before falling prices became a reality throughout all rural locations.

Many experts believe that the recovery will spread out gradually from Dublin in the same way the crash did.

The latest figures show Dublin prices up 2.5pc on the year to January, though nationwide prices were down 3.3pc.

This compares with 4.5pc down for the year to December 2012 and with 17.4pc down for the year to January 2012.

The CSO estimates Dublin prices are 54pc lower than at the beginning of 2007 and apartments are 61pc cheaper.

Report by MARK KEENAN - Irish independent

More Property Porn...

2013-03-28T11:47:00.000+00:00

We're being seduced by property porn again – will we ever learn?

LAST week the "glossy brigade" was out in force. Papers were full of bright, impossibly blue skies, over "imposing" homes many of which "boasted" this feature or that attribute. Yes, the glossy brigade, Ireland's property pornographers, who pedal lifestyle fetishes to the middle classes are back at a newspaper close to you.

Amazingly, just six years after a property crash, which destroyed much of the economy, chatter about house prices appears to be back, or at least, out of social quarantine. Any day soon, expect a new TV programme on house hunting, the joys of home makeovers or the allure of trading up.

Why do we allow ourselves to be taken in by this nonsense? Every spring since the crash, the estate agents and the property industry have tried to re-launch the property market with puff pieces, hard selling and gimmicks.

Yet underneath the hype, the evidence from the housing market, published yesterday tells a significant story.

Since the pre-Christmas spinning about property, in February prices fell for the third month in a row. Prices are down 2.6pc on the year.

So much for the talk about the recovery in the domestic economy which spilled out from the huge marketing push of so-called "Ireland Inc" in the US around St Patrick's Day.

The reality is the house price index has just experienced its largest monthly decline since January 2012. House prices fell 1.6pc between January and February.

But when you look a bit closer, you see a tale of two markets. In Dublin, property prices fell 0.3pc in February but are up 3pc on the year. Outside the capital, prices continued to slide, falling 2.1pc month-on-month and a nasty 6.1pc decline since this time last year.

The Dublin market is showing the early signs of decoupling from the rest of the country. Outside Dublin, house prices are still weak and in the past two months have weakened further.

There are simply too many houses in the wrong part of the country where people don't want or can't afford to live at today's prices. So what will happen? Prices will continue to flatline or fall.

The first thing to appreciate is just how dramatic the fall has been. Overall house prices are down by just over 50pc across the board and in Dublin prices are down 56pc from peak to trough.

If you want to see the recession, look no further. Because so many people were convinced by the 'glossy brigade' to see housing as a wealth generating exercise, the flip side of the fall in houses prices is a massive increase in debts relative to assets.

Billions of euros of household "wealth" have been destroyed by this collapse in houses prices, yet the debt remains. And the more house prices fall outside Dublin the more the debt relative to assets rises. And what the banks are about to do – which is to accelerate house selling in order to clear their books – is going to make the situation worse. In economics, this is called the paradox of deleveraging.

When the bank and the home-owner sit down as is now envisaged in the personal insolvency process unveiled last week, the bank tells the client to sell the property. This makes the individual debtor's balance sheet better. But this is only the case if he sells and no one else does. But what happens when the banks are sitting down with everyone and telling them all to sell (repossession by another word) at the same time?

Obviously all prices fall. Therefore the very act of trying to pay back debt quickly puts the debtor in a position whereby he has more debt relative to his assets rather than less debt.

This is likely to be the ultimate consequence of the Government's efforts to bring the housing/banking crisis to a close. Prices outside Dublin, where the vast majority of new houses in new estates were bought during the boom in counties surrounding the capital, are likely to fall further.

In contrast, some parts of Dublin – south Dublin and older areas in the capital – are witnessing a mini-boom where there are not enough properties and there is no more space to build. We are seeing what might be described as the 'Knightsbridge and Kensington' effect in this part of the Dublin market. Over the years in London, even in severe property slumps, Knightsbridge and Kensington tend not to lose their value, or if they do, these areas rebound quickly.

But the question for the country and the economy remains: is this a good thing? Is a recovery of the housing market in Dublin a good development?

The unambiguous answer is no. Property destroys economies, good money chases unproductive investments and banks revert to type.

We all know that is going to happen. We have seen this before. The banks will start at the usual again, despite the slump, as they compete with each other to lend to 'sure bet' customers again. As trophy house prices rise, they will begin to look for less and less collateral and will, yet again, get involved in the property racket. Leopards don't change their spots.

In order to prevent this two-tier market developing and the banks again driving up property prices, the central bank could act. The key to house price rises is collateral. If the banks lend a percentage of today's price, then the rise in prices becomes self-reinforcing. Each rise begets new larger loans and so on.

What if instead of lending against today's price, the banks were forced to lend against the average house price for the last 30 years.

House prices would never rise dramatically. There would be no boom or busts and the housing market would never again distort the economy.

Now's the time to do it, when the property cheerleaders are still relatively muted and when the collective memory is still traumatised by the last boom.

If Dublin decouples from the rest of the country on a permanent basis, it will reinforce wealth divisions, with one section of the population struggling with too much debt and not enough income.

Another smaller, but influential part of the population will find their wealth underpinned by rising property prices. If that were the upshot of the past six years of economic trauma, it would be a lamentable result for all of us.

Report by DAVID MCWILLIAMS - Irish Independent

Ghost Estates - Haunted By New Tax...

2013-03-22T13:05:00.001+00:00

Thousands of 'ghost estate' residents will now fall into tax net...

THOUSANDS of homeowners living in unfinished developments will be hit with property tax bills from the summer.

People living in estates which were classed as "seriously problematic" just four months ago will be forced to pay the tax after the Department of the Environment decided they did not qualify for a waiver.

Last year, some 1,322 housing estates containing 43,000 homes were considered exempt from the household charge because essential works needed to be carried out.

The Government has now decided that just 421 estates, with about 5,100 households, will not have to pay the property tax.

Housing Minister Jan O'Sullivan defended the move, saying that essential works, including public lighting, water treatment systems, roads and open spaces, had been provided in many estates since last summer.

The reduction in those qualifying for a waiver showed that progress was being made in tackling the problem of unfinished developments, she said.

"It does show there has been an improvement in a significant number of estates. We've been keeping the pressure on the various interests including developers, NAMA and local authorities to get things done," she told the Irish Independent.

"Part of the figure (of 1,322 exempt housing developments) was made up of estates which had no occupied houses. It would have been disingenuous to have listed them as exempt. The others would be ones where work has been done.

"I have no reason, as minister, to have not presented accurate figures. We got the figures from local authorities. I have seen estates where a small amount of work was needed, which would take the entire estate out of the seriously problematic category. The ones still in the category are still the worse ones, and are still unresolved."

The tax is calculated on the value of the property and is self-assessed by the owner. Some 180,000 demand letters have already been sent.

But questions remain as to why so many homes are no longer deemed exempt, given that the Government has only made €5m available to local authorities to improve estates, while NAMA has spent €3m improving around 180 developments it controls.

The decision to take the additional thousands of homes into the property tax net was also defended by Communications Minister Pat Rabbitte, who insisted it was "fair".

But the move was criticised during Leader's Questions in the Dail by Fianna Fail finance spokesman Michael McGrath, who said that only one in eight of those who had a property tax exemption would keep it.

Sinn Fein deputy leader Mary Lou McDonald said households living in unfinished ghost estate and "building sites" had suffered significant stress.

Rebel Labour TD Colm Keaveney said many people had seen no improvement works carried out in their unfinished estates over the past year – yet were now expected to pay the tax.

"People are furious because the councils never came to fix the lights, the footpaths and the services. Pat Rabbitte said that work had been carried out. Show me the work," he said.

Separately, the Campaign Against Home and Water Taxes has announced a day of protests tomorrow, with demonstrations planned in Dublin, Kildare, Louth, Cork, Wicklow, Limerick, Kilkenny, Wexford, Waterford, Carlow, Galway and Laois.

Report by PAUL MELIA AND MICHAEL BRENNAN - Irish independent

Guide To Calculating New Property Tax...

2013-03-08T10:18:00.001+00:00

Homeowners' guide to calculating and paying the new tax...

From next week 1.9 million homeowners will start getting letters from the Revenue outlining how they are to pay a new local property tax which is to replace the household charge that was introduced two budgets ago.

Property tax? But I paid a fortune in stamp duty when I bought my house at the height of the boom. Surely I can’t owe more money on a property that is now worth half of what I paid for it?

Yes you can. The Government, has decided to ignore the massive amounts of money it collected from us in property-related stamp duty over the last decade or so and start on a blank page when it comes to property tax.

The good news (for the Government) is that it should raise €500 million a year from the new tax.

How much will this one cost me?

Well it depends on where you live, but the good news is that the majority of people will be expected to pay less than €500 a year thanks to the all but total collapse of the Irish property market in recent years – a case of every cloud and all that.

There are 20 tax bands of €50,000 which go up as far as €1 million.

If your property is deemed to be worth more than that, the bands are dispensed with and you pay tax on the actual value of the property.

A band of €50,000 is a lot and there is a difference between €200,001 and €250,000. How is the tax worked out?

The rate is at the mid-range of each €50,000 bracket, so if your house is valued at either €210,000 or €245,000 the tax assessment will be based on €225,000.

I still don’t know how much it is going to cost me.

Patience. The tax is going to be charged at 0.18 per cent of the value of the property up to that €1 million mark, with a rate of 0.25 per cent being attached to all sums over that figure.

About 90 per cent of Irish houses are now estimated to be worth less than €300,000 which will see the tax liability for most people coming in at €50 a month or less.

Only half the tax is payable for 2013.

Break the numbers down for me.

If your house is worth between €200,001 and €250,000 you pay 0.18 per cent of €225,000, or €405 in a full year.

If your house is worth €500,000 you will end up paying €945 a year.

If you are lucky enough to own a house that is worth €1 million, you will be hit with a tax bill of €1,755.

On the other hand, if your house is worth between €150,001 and €200,000, you can expect to pay €315 a year.

I don’t have an extra fiver a month once all my bills are taken care of. What if I can’t afford it?

There will be some circumstances in which some people will be allowed to defer the tax. There will be three tests for people applying for deferrals.

The first is a straightforward income test.

If your gross income does not exceed €15,000 for a single person or €25,000 for a couple and you have no mortgage, you can defer the payment.

If you are in that income bracket and you have a mortgage, you can add 80 per cent of the gross mortgage interest repayments to that income ceiling.

You can also apply for a partial deferral if, as a single person, you earn no more than €25,000, or €35,000 for a couple.

Tax deferred accrues interest. For example, if you owe €206 at the end of this year, that becomes, with interest, €215 in 2014 and €228 in 2015.

Deferral will also be considered if someone is suffering “excessive hardship”, which applies if a person has suffered a significant financial loss or incurred a significant expense. Neither of these phrases is properly defined in the new law.

Homeowners in a debt settlement or insolvency arrangement may also qualify for a deferral for the duration of that agreement.

There is also a three-year deferral for people handling the estates of deceased people.

Is anyone fully exempt?

Yes, but very few people.

Properties bought from developers since the beginning of this year will be exempt until 2016 if they have not yet been lived in.

People who have had to vacate a property, bought as their home, because of long-term illness are exempt, while people who own a house in ghost estates will not have to pay the tax.

Properties used by charities have been excluded once they are used for recreational purposes, while homes adapted for use by people with disabilities could be exempt if the property was grant-aided by the local authority.

Some householders whose homes are affected by pyrite will be exempt for three years.

I don’t fall into any of those categories but I don’t want to pay. What are my options?

None. Unlike the €100 household charge which many people put on the long finger or ignored, this tax will be policed much more assiduously.

If you don’t pay it, the Revenue has all manner of ways to get it from you.

It has the power to deduct it from your wages or have it taken out of your pension. It can go after your bank accounts. It can withhold tax clearance certs, tax refunds and can impose fines and penalties. In short, it is not to be messed with.

Fine! How do I pay?

There are a number of options.

You can pay online at revenue.ie. The taxman says this is the “quickest and most straightforward option to file your return”.

It does not say why anyone would want to pay their tax quickly, however. Using the online system you can pay by credit card – a bad idea because of the high rate of interest on credit card transactions – or by debit card (better).

You can also fill in your bank details on the letter you will get and pay in full or you can pay by direct debit.

Bear in mind that if you pay by direct debit you will incur charges imposed by your bank so a better, cheaper option would be to have the money taken from your salary by your employer.

Other payment methods include cheques and cash payments through the post office or possibly utility companies, although the latter has yet to be confirmed. In short, Revenue has come up with all manner of ways to help you pay up.

When will I have to pay?

There are a number of important dates to remember.

May 1st is the date on which the property will be valued and if you are paying using regular post, the tax will have to be paid by May 7th.

If you use the online system, you have until May 28th.

If you opt to have the payment deducted at source – by your employer – that will begin at the beginning of July, while if you decide to pay by direct debit the first payment will come out of your account in the middle of July.

Back up . . . the household charge? I forgot about that. If it is being scrapped and I haven’t paid it yet, am I in the clear?

Absolutely not. If you pay the household charge by April 30th, you will have the fee capped at €130 – the original charge plus €30 in arrears and penalties.

If the tax is still outstanding in July, it will be increased to €200 and added to the local property tax due on your property.

Who determines the value of my property?

Ultimately you, but you will get some help from the Revenue.

When you get your letter next week, there will be a suggested tax band for your house but the ultimate decision on which tax band your property will fall into falls into your hands.

You will be expected to take into account things like the state of your property, any extensions, home improvements or rowdy neighbours when determining the actual value.

Be warned, however, that you will be expected to tell the truth so if you assess your gorgeous three-storey over basement red-brick house on a leafy Rathgar avenue in Dublin to be worth just €100,000, there is a good chance you will get a visit from Revenue before you can say “audit? I don’t want an audit.”

These estimates the Revenue are making, where do they come from?

Ah, you thought the property price register was for our benefit, didn’t you?

The register, which went live six months ago, has been a nosey-parker’s dream come true as it allows them to see exactly how much their neighbours are buying and selling their homes for.

Its main purpose is to help the Revenue determine how much properties across the State are selling for and then tax you accordingly.

That is not all, however.

The Revenue is also going to use a database developed by the Ordnance Survey of Ireland and An Post which contains information on the services and amenities near your home.

This is good news if you live on a barren and windswept stretch of the M50 where there is nothing that will add value to your home, but perhaps not so good if you live in Ranelagh.

So what happens if the Revenue underestimates the value of my house because it doesn’t know about my basement swimming pool and gazebo?

You have to tell them the truth.

If you have the best house on the worst street and the Revenue pitches you at a tax band below what your house is worth you will get away with it for some time.

However, if you come to sell the house, you will have to tell the buyer what band you are in and if that is out of whack with the price you are looking for, questions will be asked.

And when you sell the property for a price in a band two or three steps above the one you have declared, the Revenue will come looking for you.

I’m scared. I don’t want to get into trouble but I don’t know if my house is worth €195,000 or €205,000. What should I do?

Revenue will have 1.9 million houses to tax and are unlikely to be poring over every return with forensic detail.

It wants to get the money in and will make allowances for people who make honest mistakes in pricing.

If you put €195,000 instead of €205,000 on the form, it seems unlikely you would have your door broken down by the authorities demanding an extra €2 a week.

What will happen if my home is worth more than €1 million?

You will have to get the property professionally valued.

Yes, you will have to pay for that valuation but if, unlike the rest of us, you live in a house worth more than €1 million, you can probably afford the €200 it will cost to make sure the price is right.

So what do I do when I get the letter?

You select a payment option and complete the relevant details. You indicate the band number that corresponds to your property and you indicate the tax due.

You sign the form and post it back to Revenue.

Then you wait for them to take the money.

The online process is easier but the same questions will have to be answered.

What happens if I don’t get a letter looking for the tax?

It doesn’t matter. If you are liable to pay the tax, you are liable to pay the tax, even if the letter gets lost in the post.

I am a landlord – who pays: me or my tenants?

It is very simple. The owner pays. In the event that a property has multiple owners or if it is owned by a business, a number of children or a separated couple, then they are all liable, but they need to designate one person to pay the tax.

And if I just don’t pay?

To paraphrase Liam Neeson in Taken: They will find you. And they will kill you.

Or at least they will charge you 8 per cent interest on whatever you owe.

Report by CONOR POPE - Irish Times

Revenue To Use Aerial Photos For House Tax...

2013-02-18T21:19:00.001+00:00

THE taxman will use GPS-style technology to help work out your property tax bill.

Sophisticated aerial mapping will be used to measure a home's proximity to shops, transport links, schools and other amenities that have a bearing on a property's value.

A 'deprivation index' will also be used to measure the affluence or poverty of an area, which will also have a bearing on the value and the amount of tax that should be paid.

Homeowners will receive letters in the coming weeks telling them how much the Revenue thinks their home is worth and the tax band the property falls into.

The revelations show the hi-tech lengths the Revenue is going to in order to clamp down on those who knowingly undervalue their home for the new charge.

It is employing a sophisticated database which calculates a property's location in relation to facilities that increase its value.

Aerial maps and GPS-style systems will measure "the distance from each property to a series of amenities and services".

These will include train and Luas lines, airports, health services, schools, shops and emergency services such as garda stations.

The data will then be used by the Revenue to arrive at its estimate of how much every home in the country is worth and how much property tax should be paid.

It could lead to more protests from people living in cities, where there are more amenities close to hand, who claim they will unfairly pay more tax than those in rural areas.

Dublin city dwellers are likely to pay an average property tax of €405 compared with their rural counterparts, who will pay about €249.

Once Revenue has compiled its estimates they will be posted to every homeowner in the country within a matter of weeks. The tax will be levied at a rate of 0.18pc of house value, with a higher "mansion tax" rate of 0.25pc on values over €1m. There will be up to 19 different valuation bands, starting at under €100,000 and increasing in €50,000 tranches.

But the tax is still effectively self-assessed as homeowners will decide themselves which band to put their house into.

The self-assessed value will override the Revenue estimate, but as previously revealed in the Irish Independent, those who deviate from the provided estimates face the prospects of checks, inspections and challenges.

If the Revenue's estimate is used by a homeowner, they will not be challenged.

Those who do not respond for the property tax will be liable anyway, and will pay the charge based on the Revenue estimate of their home's value.

To help the Revenue arrive at its estimates, a GPS-like system called GeoDirectory is now being used to measure the distance from homes to local services.

It is unclear if this is costing the Revenue significant extra money – the system already exists as a joint venture between An Post and Ordnance Survey Ireland.

GeoDirectory manages Ireland's only complete database of commercial and residential buildings.

Each of the buildings in the database has a unique identification, and the system can specify the use of around 90pc of buildings in the country – if they are, for example, a newsagents, school, takeaway or office block.

The technology is already used by city and county councils to help co-ordinate services such as local roads, libraries, sanitation and the fire services.

It is also used by various state agencies to analyse the population, assess which services are needed in which areas and to maintain records of every commercial and residential address in the State.

A Revenue spokeswoman confirmed that the proximity of amenities would be taken into account when estimating the amount of tax it thinks everyone should pay.

"A range of data sources is being analysed to assist in providing this valuation guidance," the spokeswoman said.

Other data feeding into the Revenue include stamp duty receipts from 2010 on, electricity bills, rental details and records from the controversial €100 household charge.

The spokeswoman said the GeoDirectory "provides information on property location and type; and spatially derived data that indicate relative distances of all residential properties from a series of key amenities and services including transport, health, education and emergency services".

Affluence

The location data will also feed into a special online guide which will be set up on the Revenue website early next month to allow people to value their properties.

Among other things, the guide will take into account whether the property is semi-detached or detached or if it is an apartment, when it was built and the average prices of properties in the same area.

A deprivation index will be used to measure the "relative affluence or disadvantage of a particular geographical area using data compiled from various censuses".

The deprivation index was compiled for Pobal, a government agency that works for social inclusion, and is mainly based on the 2011 Census.

Report by FIACH KELLY - Irish independent

Fall In House Prices...

2013-02-15T16:45:00.000+00:00

Fall in house prices second-highest in EU...

Irish house prices fell at the second-fastest rate in the European Union last year and at a rate that was almost five times faster than the EU average, according to data compiled by academics based at the National University of Ireland in Maynooth (NUIM).

The figures published by the university’s All-Island Research Observatory show that Irish property prices are now nearly 30 per cent below a standardised average dating back to the middle of 2010.

They indicate that the Republic has had the worst-performing property market in the EU over the last six years, although markets in Spain and Bulgaria have performed almost as badly in recent years.

The data does contain some glimmers of hope that a recovery may be in sight or at least that the worst of the price falls are over.

The figures, compiled from Eurostat price surveys, show the Republic reporting the third-highest quarterly property increases in the third quarter of last year with prices going up by 1.6 per cent over a three-month period.

Precipitous declines

Eurostat compares housing sectors across all 27 EU countries and while the Republic has been among the worst performing markets over the last six years, it has recorded even more precipitous declines in Estonia and Latvia, although in both countries prices subsequently recovered.

Irish prices have yet to stage a similar recovery.

The Eurostat House Price Index shows prices across the EU declining by 1.9 per cent last year when compared with the same quarter of 2011.

The highest annual price increases last year were in Estonia where prices went up by 8.4 per cent.

Luxembourg saw increases of 7.1 per cent while prices in Finland went up by 2.1 per cent.

The largest decline last year was in Spain, where prices fell 15.2 per cent year-on-year.

Prices in the Republic were down 9.6 per cent in the 12 months to the end of last September and the cost of a property in the Netherlands was down 8.7 per cent over the same period.

The EU House Price Index sets the base price of property in each country at 100 points at a date in the middle of 2010 and lays bare the scale of the collapse in the Republic.

At the beginning of 2007, Irish prices stood at 151 points on the standardised scale but fell back to 76.5 last year.

'Perfect Storm'

“The scale of the price collapse in Ireland is as a result of a perfect storm of a banking and economic crisis coinciding with a dramatic oversupply across the market,” said Prof Rob Kitchin of NUIM.

“We have recorded declines in other countries and while some, like Spain, have mirrored the Irish experience, most countries, where over supply was not a problem, have seen price falls which are more modest.” He said few positives could be drawn from the figures from an Irish context.

“Looking at the data, you could say the declines have levelled off and are even marginally on the increase, but the increases are primarily being driven by sectors of the Dublin market where there is not an oversupply.”

Prof Rob Kitchin said that family homes in urban centres are in relatively short supply and high prices in this category was pulling up averages elsewhere.

“There is no question that there is a shortage of good family homes so there will be a recovery there first, but elsewhere an oversupply will keep the market depressed for a very long time.”

Report by CONOR POPE - Irish Times

Dublin City Property Hit With Huge Tax...

2013-01-27T16:46:00.000+00:00

Revealed: huge inequity in rural/city property tax...

Small apartments in capital will be charged more than rural 'mansions'

THE gross inequity of Finance Minister Michael Noonan's property tax is today laid bare as it has emerged Dubliners on the lowest rung of the property ladder will pay higher property tax than the owners of large four-bedroom homes across rural Ireland.

One-bed apartment owners in the golden triangle of south county Dublin will be forced to pay on average €315 in property tax, higher or equal than that paid by the owners of large detached houses in 19 other counties outside the capital, a Sunday Independent national property survey published today reveals.

The figures have reignited angry calls this weekend from within Fine Gael to have the terms and scope of the property tax amended in the Finance Bill to address the "injustice inflicted on the people of Dublin".

Dublin South TD Olivia Mitchell said: "What is happening is that many young people who bought apartments at the peak, paid huge stamp duty and are now caught in negative equity will be subsidising those in country mansions. It is grossly unfair," she said.

According to our county-by-county analysis, owners of large homes in counties Mayo, Roscommon, Leitrim, Cavan, Longford, Westmeath, Offaly, Laois and Wexford will pay, on average, lower property tax than owners of the smallest apartments and houses in areas such as Stillorgan, Dalkey and Blackrock.

For example, owners of large four and five-bed houses in Taoiseach Enda Kenny's constituency of Mayo will pay a mere €225 a year in property tax, while people in the same-sized house in south Dublin will be forced to pay €945, a difference of €720 a year, our survey says.

But worse still, those who own large rural homes who will pay the €225 property tax will be charged €90 less than owners of small one-bedroom apartments or houses in south Dublin. While the figures contained in the survey are based on averages, the reality is that the owners of larger homes in Dublin will pay in excess of €1,000 every year in property tax.

In counties Kerry, Galway, Donegal, Monaghan, Limerick, Waterford, Tipperary, Sligo, Longford, Louth, Kilkenny, Meath and Carlow, owners of the largest properties will pay on average €315, the same as the one-bed apartment owners in south Dublin.

The survey examined the latest available sales data based on actual sales figures drawn from the Residential Property Price Register as well as information contained in quarterly reports on the property market by Daft.ie and MyHome.ie.

Reacting to the findings of our survey, angry Dublin Fine Gael TDs have reiterated their claims that what is being introduced is not a property tax but merely another form of income tax.

Dublin South TD Olivia Mitchell said: "We all know this so-called property tax is not a sustainable model for collecting money. These figures demonstrate clearly that the property tax is massively unfair."

She added: "I know the rural people have said they don't have the same services, and their subvention should come out from general taxation. This is not a property tax and the people of Dublin are being done a grave injustice."

Her colleague Eoghan Murphy, who represents the Dublin South East constituency, branded the property tax as a "deeply retrograde measure".

"This can in no way be perceived as fair, no way. It doesn't make any sense. I am all for a local services tax or charge, but this is just another form of income tax," he added.

"If this is going ahead, we must make allowance for those who paid stamp duty at the peak, but we must see exactly to what degree Dublin taxpayers will be subsidising those down the country."

Dun Laoghaire TD Mary Mitchell O'Connor said her major concern about the tax was for those who paid stamp duty at 9 per cent who would be burdened by this new tax.

She said: "This proposed tax takes account of people's ability to pay through a series of deferral arrangements but it does not take account of those who paid stamp duty of up to 9 per cent at the top end of the market. Many of those buyers had to borrow the money to pay that stamp duty. It would be galling if other counties did not pay and expected Dun Laoghaire residents to subsidise them."

Peter Mathews TD said many people in south Dublin simply won't be able to pay the tax or would have to sacrifice "dental work" for their children.

"I can see that there's going to be for those people who would in theory like to pay it, an inability to pay it. If you have a €650 after-tax bill on a modest enough house in south Dublin, that's a lot of money. Sure they're giving up things that they would have considered worth fighting for, things like dental correction work for children; all those things are being cut out," he said.

He added that owners of one-bed apartments in Dublin were far more likely to have borrowed heavily than owners of four-bed detached houses outside Dublin.

"You might find also that the income-generation capacity of the one-bed apartment owner is far more volatile than the owners of the four-bed house," he said.

In March, homeowners will receive correspondence from Revenue as to the amount of property tax they will have to pay when the tax comes into force in July. This year homeowners will only be liable for half of the full charge. The full tax will be levied from January 1, 2014.

Report by DANIEL McCONNELL and RONALD QUINLAN - Sunday Independent

Dubliners Hit Hard...

2013-01-21T20:27:00.001+00:00

How this crippling new homes levy will hit Dubliners 3 times as hard...

DUBLINERS face having to pay almost three times as much property tax as householders outside the capital. The controversial tax is due to be rolled out across the board this summer at a 0.18pc rate of the value of the property.

But the discrepancies between how much householders in the capital will have to pay compared to people living in towns and cities elsewhere suggests the tax may be one of the most divisive ever.

Today the Herald highlights the disparity between the charge on homes in Dublin and two medium-sized towns, close to Cork and Galway cities.

We have selected three types of houses - a four-bed detached, a three-bed semi-detached and a three-bed terraced - for comparison purposes. The big difference between the houses in each type is their location and price.

Unfair

Homeowners are due to receive an estimate on their bill from the Revenue in March.

They must submit their valuation by May 28 and this will determine the rate for the next three years.

The disparity between what residents of Dublin and elsewhere will pay has already caused a rift in Fine Gael.

Olivia Mitchell is one of those TDs who has railed against the calculation method.

The Dublin South TD said the tax is grossly unfair on those living in the capital.

"I am hoping that Minister Phil Hogan will realise that the situation as it applies to Dublin is really unfair," she told the Herald.

"Yes, houses are dearer here but I want for us to pay for what we get in Dublin and not services in other parts of the country.

"I would like to see that the big houses will pay more than smaller houses right across the country but that everyone only pays for the services that are provided in your area. It is a local tax and it should remain a local tax."

Ms Mitchell admits that it is unlikely that there will be any change at this stage, but hoped there would be next year.

Michael Kitt, Fianna Fail TD for Galway East, agreed the current property tax system was unfair. However, he described it as "utter hypocrisy" for a Government backbencher to voice concerns at this late stage.

"I think it is utter hypocrisy to be raising this issue now when we were guillotined from discussing the matter properly in the Dail and were only given a few hours to discuss the matter.

"I believe she's right in that it is unfair and people in the east are getting hit harder.

"But it will be a huge hit to families all over the country who are already struggling to pay mortgages and bills. This will be hard on families, no matter where they are," he added.

Environment Minister Phil Hogan agrees there is an imbalance in the way in which the tax will be levied.He compared the property levy to motor tax, explaining that the vast majority of motor vehicles are on the east coast, but these help pay for roads throughout the country.

"Obviously the monies that come in through the motor tax, or the property tax, are predominantly going to be coming from the east coast of Ireland and major urban areas," he said.

Perverse

As the issue continues to build steam, the Dublin Chamber of Commerce have come up with a table based on property website Daft's asking prices to highlight the significant differences around the country.

Director of policy Aebhric McGibney said the tax is "inherently unfair" and that many people are living in the capital out of necessity rather than by choice.

"Two people who have exactly the same type of house will pay a vastly different type of tax depending on where they live," he said.

"Someone in north County Dublin could pay €400 but then someone in Carlow or Mayo will pay just €90. A lot of people don't have a choice, they pay a lot more of their salary to have the privilege of being near to their job.

"It seems perverse to provide an incentive to people to live further away from their job. The property tax as structured could create the urban sprawl in the Dublin area in rural areas," he added.

Repoet by Claire Murphy, Caroline Crawford and Ralph Riegel - Evening Herald

Irish Property Crash 2013

2013-01-11T13:38:00.001+00:00

Another year over, what do we know?

Five years on from the crash, what have we learned? There is no magic solution but we are still thinking like an island.

In the end, not even sex could sell Belmayne. Nearly six years ago the north Dublin estate seared itself in the nation’s memory, with images of couples cavorting on kitchen counters, all in the desperate hope of arousing interest in an increasingly flaccid property market. At the now infamous launch party, the developer of Belmayne, Donal Caulfield, wearing a diamante-studded Roberto Cavalli beanie, promised buyers “gorgeous living” in four-bedroom houses with curved walls, all for €600,000. (Below: one of the famous “gorgeous living” ads)

The “gorgeous living” hoardings are long gone, as are the prices. No-nonsense signs on the Malahide Road now advertise houses in Belmayne starting from €245,000.

Belmayne is just one attraction in north Dublin’s property market Ground Zero. In 10 minutes you can drive from the evacuated fire hazard of Priory Hall, past the boarded-up boxes of Balgriffin and hundreds of homes from Kinsealy to Baldoyle buckling on unstable foundations.

Entering Belmayne through its massive stone portal, a throwback to a more confident era, is a pleasant surprise. The streets are tidy, as are the cream plaster and brick facades. Green spaces have just been planted, fences have been added and there’s talk of allotments.

A new Chinese restaurant has opened, two men are adjusting the sign on a new Polish shop, and around the corner the Macari’s takeaway is doing a steady trade. When it opened, in the dark days of April 2010, Macari’s was the only business here but it is now surrounded by other stores. Customers say that, overall, Belmayne has become a more neighbourly place.

“We’re quite happy here,” says the owner, Lydia Macari, who is the third generation of the chipper dynasty. “Residents are positive now and take pride in the area, houses are filling up, and the area’s more inviting. If you’re driving by, you can finally see a bit of light.”

There’s still a lot to do: a fence behind the final row of houses exposes the muddy expanse on which half of Belmayne was never built. Missing, too, are promised facilities such as schools, a library and a medical centre. Remedial construction work is ongoing, although there is no quick fix for the reality of negative equity. But in dealings with local authorities and Belmayne’s developer, resilient residents seem determined to improve what they can.

Turning things around in Ireland – which is, for some of our neighbours, the Belmayne of Europe – is a bigger challenge.

As 2013 begins, with the countdown running on the EU/IMF programme, expectations are growing on what lies ahead. Will a return to financial markets close the book on a chastened chapter or just open another?

It will be difficult to convince our European neighbours to relieve us of our legacy banking debt. As this crucial year begins, can at least minimum consensus be found on the past crisis to agree any resolutions for a common future? Recent attempts by politicians to stitch together a collective narrative – “We all partied”, “You are not responsible for this”, “We went mad borrowing” – have backfired spectacularly.

Political perspectives

“I sense among voters a higher awareness that if a political party proposes something that is too good to be true, it probably is,” says Paschal Donohoe, the Fine Gael TD for Dublin Central. “In the next general election, anyone aspiring to government who puts forward a manifesto that is uncosted or that raises unrealistic expectations will deal a terminal blow to their party.”

In Galway West, Fianna Fáil TD Eamon Ó Cuív says the country has undergone a three-step process: first, the spendthrift ways of the boom and then, early in the EU/IMF programme, a hope that there was an easy way out. “Now, having changed government with new drivers in the saddle, there is a realisation there is no magic bullet and only a minority think the need to balance the budget is not real,” he says.

“Some people might think that the day the EU/IMF leave they will remove all strictures in terms of getting the deficit down but new lenders, the markets, will be no less severe in demanding a good performance.”

Next month’s repayment of the debt relating to Anglo Irish Bank coincides with the 70th anniversary of one of the most famous speeches by his grandfather Éamon de Valera. Often dismissed for its idealised imagery of “cosy homesteads”, the speech sounds a warning to a nation in hard times not to succumb to easy temptations.

Quoting the Young Irelander Thomas Davis, de Valera said that striving for an ideal Ireland was not a Utopian pastime for the Dublin elite in the good times but the “solemn, unavoidable duty” of all Irish, at all times. De Valera’s own ideal Ireland was one made up of “people who valued material wealth only as a basis of right living”.

Lessons for the future

The journey from de Valera’s “right living” to Belmayne’s “gorgeous living” has brought the country to a crossroads where, as anyone who reads de Valera’s speech will see, no one ever danced. What Ireland does best is to get on with it.

In Baldoyle, not far from Belmayne, business is going well for FP Fogarty Belting. For 40 years the company has manufactured many of Ireland’s industrial conveyor belts that carry everything from bread to baggage. Comfort food and emigration are company mainstays at the moment but the director, Daragh Fogarty, says that, like many, he now has to work harder for less. “Customers are making big capital investments, which is a good sign that they see a future in their business,” he says. “The Irish food sector is thriving and I know we’re lucky not to be in a sector like construction, which is still on its knees.”

After buying his home, Fogarty bought an additional investment property, at the height of the boom, that is now worth a fraction of the purchase price. “I’m not blaming the banks for lending me money though it’s true there wasn’t any regulation,” he says. “Banking friends of mine had a wild life. When they went out they regularly put the company credit card behind the bar. That’s not happening now.”

Tighter financial regulation is an important lesson of the recent crash that will stand to the country, says John McHale, professor of economics at NUI Galway. He is also a member of the Fiscal Advisory Council. “With the economy stabilising, even a slow return to growth in domestic demand could see things turn around surprisingly quickly,” he says. “When a boom comes again, if the Government goes back to the old habits of spending money when it has it – the McCreevy philosophy – the Fiscal Advisory Council would be quite outspoken in its response.”

Other economists, such as Michael Taft of the trade union Unite, say such views prejudice an already limited debate on Ireland’s next chapter. “We tend to think as an island, not interested in how other countries dealt with their crises by maintaining demand or keeping people at work on a part-time basis,” he says. “Instead we just say, ‘We’re spending too much’, and cut.”

He is concerned at the lingering damage of crisis-era attacks on the public sector. “Beating the drum against one way of doing things, the public way, means you have only the other way: the private way,” he says. “That doesn’t give choices, strengthen democracy or improve people’s capacity to participate as citizens. Instead, they are reduced to participating as consumers.” As Ireland heads toward the bailout door, Taft would like to see broader debate about the consequences of economic decisions. A century on, he says, the time has come for people to embrace the slogan of the 1913 Lockout: “No decision about us without us.”

Will it be an inward debate or is Ireland ready to hear unvarnished truths from foreign perspectives, such as that of New York-based writer and builder Barry McKinley? “The sense of entitlement that developed during the Tiger years has all but disappeared, but I have a feeling that as soon as we can afford our bad habits, we’ll happily go back to them,” he says. “Nevertheless, we’ll come back from the brink: we always do.”

The danger of predictions

The economic meltdown has been a disaster for some and has offered clarity to others. But, after discarding God and losing faith in Mammon, who decides in modern Ireland what de Valera’s idea of right living actually means? Is there anything wrong with a little gorgeous living now and then, once it’s not lying spreadeagled on an overpriced kitchen island? With many people struggling to get through this month, let alone this year, it may seem cruel or Utopian to be thinking about a better future. But, like all new year’s resolutions, thinking about the next step is not about senseless self-denial now.

Thinking about a better tomorrow in a tough today has a long Irish tradition, from Davis to de Valera. “De Valera’s language is quaint but the idea is not so off the wall,” says Éamon Ó Cuív. “Right living might be an old-fashioned term, but if you put it into a modern context, he is saying that economic success is simply a means to an end, of ensuring everyone in this country has the best quality of life possible to enjoy our culture, our environment and our community.”

Other voices What’s changing in Ireland?

PASCHAL DONOHOE Fine Gael TD, Dublin Central
Has Ireland changed, for good or ill? Entire families emigrating was the worst change; the amazing performance of high-tech businesses is a sign of the best kind of change.

Will change persist or will old ways return? Banking union and strengthened euro governance will make it difficult for old ways to return.

Has there been any change in the political culture or in the expectations of the electorate? All policies have costs and consequences. You might defer them but you cannot avoid them.

What have you learned about yourself and about Ireland? For myself: never take anything for granted. For Ireland: our strength is awesome but digging so deep for so long comes at great social cost.

JOHN McHALE Professor of economics, NUI Galway
Has Ireland changed? Financial regulatory and supervisory regime are greatly improved, and there are stronger fiscal rules and institutions.

Will change persist? Institutional changes will persist after the bailout, making boom-bust cycles less likely.

Has there been any change in the expectations of the electorate? It’s surprising there hasn’t been more focused demand for institutional change and accountability across the public and private sectors.

What have you learned? Irish pragmatism has been an asset. The challenge is to combine this with demands for reforms of institutions that have clearly failed.

BRENDAN CONNELLAN Former Wall Street trader, now a New York-based playwright
Has Ireland changed? During the boom Ireland become much more crass. Now there’s an effort to reclaim our interest in the arts, which may not pay the bills but makes us happier.

Will change persist ? There will be no going back to the comfortable ways of a cosy little island being pleased with itself.

Has there been any change in the political culture? It’s likely there will be a new party in Ireland within two years, something like the PDs of old, that will have 20-25 per cent of the vote in no time.

What have you learned? Ireland is more robust than it seems and is perversely well suited to buckling down in a crisis but tends to repeat its mistakes in a cycle.

MICHAEL TAFT Research officer with the union Unite
Has Ireland changed? People are having to live with a lot less.

Will change persist? Even though there are limitations on the economy, there is not just one programme to which everything is reduced. There are choices to be made.

Has there been any change in the political culture? It’s the same political rhetoric; it could be called a one-policy state of squeezing wages, services and the idea of a public realm.

What have you learned? There is a loss of morale and confidence. A lot of people are hanging on but I don’t think they can be led into a selfish life.

RALF SOTSCHECK Ireland correspondent of Germany’s Tageszeitung daily
Has Ireland changed? The relaxed vibe is gone, in favour of the “time-is-money” philosophy. One indication: more car horns.

Will change persist? The banks haven’t changed their ways. Without fundamental bank reform the next crisis is a certainty.

Has there been any change in the political culture? Ireland’s political culture has been based on greed and corruption for 40 years. People are sick of the choice between cholera and plague.

What have you learned ? The EU has become a rich man’s club that protects rich people at the expense of middle- and lower-income people.

Report by - DEREK SCALLY - Irish Times