# More bad news for first time buyers and  private renters in the Budget



## Brendan Burgess (13 Oct 2020)

From Michael McGrath's speech

_
An extra €500 million will be directed towards capital expenditure and will facilitate 
the construction of 9,500 new social housing units in 2021. A total of 12,750 units 
will be added to the social housing stock including leased units. _

In other words, the government is going to take 3,250 units out of the private market and rent them to people in social housing. 

Brendan


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## faketales (13 Oct 2020)

Yup, now I need to bid against the government.


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## Brendan Burgess (13 Oct 2020)

It's worse than that. 

You are bidding against the government who is using your money to bid against you.

Brendan


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## WolfeTone (13 Oct 2020)

Brendan Burgess said:


> In other words, the government is going to take 3,250 units out of the private market and rent them to people in social housing.



Thats one way of looking at it. Alternatively you could say that 12,750 units will be taken out of the unaffordable market and put into the affordable market. 
It's nowhere near enough to go round, but a step in the right direction.


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## Sarenco (13 Oct 2020)

WolfeTone said:


> Alternatively you could say that 12,750 units will be taken out of the unaffordable market and put into the affordable market.


Thereby making the private market increasingly unaffordable.


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## WolfeTone (13 Oct 2020)

Sarenco said:


> Thereby making the private market increasingly unaffordable.



Who wants to pay for unaffordable housing. Surely paying for affordable housing is more desirable?


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## Sarenco (13 Oct 2020)

WolfeTone said:


> Surely paying for affordable housing is more desirable?


Of course.

The point is the State is using taxpayers money to compete with private buyers in the private housing market, thereby increasing costs for private buyers.

Very basic economics.


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## WolfeTone (13 Oct 2020)

Sarenco said:


> The point is the State is using taxpayers money to compete with private buyers in the private housing market, thereby increasing costs for private buyers.
> 
> Very basic economics.



True. But the housing stock is not built on such basics, it is somewhat more a complex economic issue than that.

The construction industry will make its own projections of how many houses it will build during any given year. Taking in numerable factors, not least govt spending. If government spending is increasing, it is likely that construction activity (including house building) will expand. Meaning the State buying and/or leasing units will prompt developers to invest more into building units rather than less. Meaning more housing availability not less.


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## Marty39 (13 Oct 2020)

How do we compare to our neighbours in europe? My gut feeling is that we are overly generous in this regard. What are the benefits of been overly generous: do we have less crime etc.? I'd like to see less money going towards social welfare and housing but would not like to see anti social behaviour increase as a consequence. How are we doing as a nation?


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## WolfeTone (13 Oct 2020)

Marty39 said:


> How do we compare to our neighbours in europe?



Homelessness across Europe is estimated at 3million - pretty bad. Ireland, amongst other 'old' Europe nations have at least developed and implemented strategies to combat homelessness. Other European countries, such as Romania, have not implemented anything but Im also not sure what the level of homelessness is there.
Everybody seems to be looking to Finland who are the only country to significantly reduce homelessness over the last number of years.


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## Purple (14 Oct 2020)

I think there will be a major reduction in office building in the coming years which will free up capacity within the construction sector to build residential properties. That should help  matters considerably.


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## EO2020 (14 Oct 2020)

People simply can't afford the rents that are common now. More and more hardworking people are being forced out of the private rental market...when a 3 bedroom house is going for 1850 a month an hour from Dublin, it simply can't be done by huge numbers of people who used to be able to afford it quite easily. 
That 1850 house was rented for 900 only 6 years ago. The renters income has not doubled in 6 years, if anything it is less.  More and more people are having to apply for assistance with rent, who wouldn't have considered it a few years ago. 

What do you want people to DO?


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## Purple (14 Oct 2020)

EO2020 said:


> What do you want people to DO?


Me? I want people to stop blaming landlords for charging the market rate and instead focus their attention on the State who have created such a dysfunctional market. I say the State because it is as much down to the Civil Service, who are the permanent government of the country, as it is to their temporary political masters. I'd have the Local Authorities and the Construction Industry Federation next in line.


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## EO2020 (14 Oct 2020)

Never mind blaming landlords or the State, do you think the person facing homelessness as rents rise out of their reach cares whose fault it is? 

You all sit in here in your comfortable homes pontificating on this change or that change, some policy, whose to blame and how bad it is for landlords, but what do you actually want the people to DO?


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## Purple (14 Oct 2020)

EO2020 said:


> Never mind blaming landlords or the State, do you think the person facing homelessness as rents rise out of their reach cares whose fault it is?
> 
> You all sit in here in your comfortable homes pontificating on this change or that change, some policy, whose to blame and how bad it is for landlords, but what do you actually want the people to DO?


You're making a lot of assumptions; I'm separated and renting in the private sector, I just pay a big chunk of a mortgage on a comfortable home I don't live in.
If you want to fix something you have to know where the fault lies. Blaaming landlords and vilifying them solves nothing so yes, they should care a lot about who's fault it is.  This is a faxable problem but it requires a willingness, forcefulness and ability which seems to be lacking amongst our politicians and State sector.


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## WizardDr (14 Oct 2020)

I think on this Platform we all mean well but there are definitional issues that we need to be clear on and we also need to realise that the Irish psyche for many years treats housing like the British do the NHS.

This has lead to an interesting dilemma.  Most of us are not buying or selling but those that own their property feel much happier when house prices rise.  They have risen because of a shortage of housing units - in that Germany has about 480 units per 1000 and we in Ireland have  about 430 per 1000.  Population about 4.9m. Housing stock approximately 2.033m.  If we wanted to be at the German average we would need 2.45m units and we have about 2.033m.  Yet there is talk all the time about the '..demand.." being an annual figure.  The reality is it an unmet demand of about 319,000 units today. A do nothing strategy is camouflaged by piece meal strategies with dozens of sound bites as in plenty of noise.  

Much has been said in posts and they are helpful because this happens to be a large puzzle and it can be frustrating to put a shape on everything.
My estimate of the number of houses is based on the average heading to two per household.  In people's own circumstances they will see a lot of 1 or 2 person situations.

Then we have a belief that we have a 'private market' but there are very few providers meaning its an oligopoly. The State has made a dogs dinner of planning where I understand the *cost* of an apartment before it is ever sold is over €250,000. So bad are the planning laws that when that awful Grenfell tragedy occurred the Department had to go through a skyscraper of documents to see if the regulations were ineffective despite the volume  and could that awful event happen here.  The planning and development policy feeds into a dysfunctional market with few providers and a dumb State.

This removal of individuals is also reflected in the buy to let market. At an individual level you face USC, PRSI, Income Tax burdens which make this a risky business when you have substantial protections put in place against rogue landlords often a minority and we then react and put in place dreadful regulations that are geared to get all the solo landlords out. And it is a great strategy because it is working.

There would be true privatization if me and my partner could build apartments out the back.  In reality getting planning is long and arduous and ends in failure and the loss of time. We have a limited number of so called suppliers. This is closer to a private monopoly and of course collusion would not happen.

The difficult market ahs attracted Vulture Funds because they rely on inefficient markets to  thrive. We have no focus on _how _we can solve the housing market except we get targets which means we are not getting anywhere near solving the problem as population grows. REIT structure is a strong drug designed to kill  off individual landlords. The public image of landlords is a creature of history with a 1912 ring about it.

Housing Sales by Banks to Vulture Funds' has delayed a ticking time bomb and allowed the Bank to say "....it wasn't us..."


We are no nearer solving this problem because the big picture is missing.


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## Leo (14 Oct 2020)

EO2020 said:


> but what do you actually want the people to DO?



Perhaps lobby politicians for meaningful change, an overhaul of the entire system and stop considering a headline grabbing few quid on one temporary band-aid after another as a win. Ask why the government are giving homelessness charities €150M+ while at the same time criticising them for delivering poor value for money and lack of accountability.


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## LS400 (14 Oct 2020)

@ WizardDr,

That`s a brilliant and well written post.


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## Purple (14 Oct 2020)

Leo said:


> Perhaps lobby politicians for meaningful change, an overhaul of the entire system and stop considering a headline grabbing few quid on one temporary band-aid after another as a win. Ask why the government are giving homelessness charities €150M+ while at the same time criticising them for delivering poor value for money and lack of accountability.


This is a good article on why Modular Builds don't work in a dysfunctional construction sector.


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## Purple (14 Oct 2020)

LS400 said:


> @ WizardDr,
> 
> That`s a brilliant and well written post.


He does that quite a bit.


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## WolfeTone (15 Oct 2020)

Budget measures could see 35,000 new homes a year - CIF

I'm no expert, but this sounds like good news for first time buyers and private renters.


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## Purple (15 Oct 2020)

WolfeTone said:


> Budget measures could see 35,000 new homes a year - CIF
> 
> I'm no expert, but this sounds like good news for first time buyers and private renters.


We're back to the could's (and Emma Stone).
It's hard to take those clowns in the CIF seriously in anything they say. Gombeens of the highest order.


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## WolfeTone (15 Oct 2020)

Purple said:


> We're back to the could's (and Emma Stone).



This thread is a 'could' also. 
I'm no fan of the CIF, but they do have some intricate knowledge of the industry. Between CIF and any other entity, when it comes to projecting house completions, I think their opinion carries a bit more weight.


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## Purple (15 Oct 2020)

Fair enough


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## Leo (15 Oct 2020)

Purple said:


> This is a good article on why Modular Builds don't work in a dysfunctional construction sector.



That's good, reminded me of my previous life in project management and the amount of energy focused on risk and how to ensure the blame always laid elsewhere


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## Purple (15 Oct 2020)

Leo said:


> That's good, reminded me of my previous life in project management and the amount of energy focused on risk and how to ensure the blame always laid elsewhere


Exactly. One person or organisation had to own the responsibility for the entire project from start to finish, including the financial and legal responsibility. 
VW or Ford etc. are responsible for designing the car to strict safety and emission standards, designing the production process, producing the car and ensuring that all happens in a safe and competitive manner. We need construction companies to take that role and we need regulations which require that model to be used. Until then we'll suffer from the gross inefficiencies of a dickensian construction sector which operates as an oligopoly with margins so high there is no impetus for it to modernise.


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## Leo (15 Oct 2020)

Purple said:


> VW or Ford etc. are responsible for designing the car to strict safety and emission standards, designing the production process, producing the car and ensuring that all happens in a safe and competitive manner.



You can bet the motor companies aren't producing the levels of waste you see on the average Irish building site either!


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## WizardDr (17 Oct 2020)

LS400 said:


> @ WizardDr,
> 
> That`s a brilliant and well written post.


Many thanks LS400 and appreciated.


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