Affordable Housing - waste of taxpayers money.

shnaek said:
Apologies - I thought we were debating the council providing housing, not investments. My mistake.
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Apologies if my reaction offends but if you cannot understand what is being said and have to depend on sarcasm then that is a waste of time. I have put forward a balanced view of both the positive and negative aspects of system. This discussion has become fruitless.
 
There is definately some scope for abuse of the provision in that way alright. Colluding to sell the property below market value in a private sale would be asking for trouble though. The sellers would probably have to have some way of proving that they are selling the properties at the going market rate. I think the only way they could do that is if they put them up for public auction, and go through all normal procedures involved (having it advertised in the paper, etc.). If they did that it's possible they would be able to sell it for a lot less than the original valuation and the council would end up taking the hit on the loss. However there is always the chance that other bidders could push the price up, so it is not risk free.
 
What is the market price? In the current market someone looking to make a quick sale may accept a price 20-30% below 2006 valuations, maybe more.

Houses for sale not dropping their price are staying on the market for 6/8/12 months and more. Are the Council going to prevent owners from selling their own property at a price which they feel reasonably reflects the current market?

2006 prices were inflated. 2006 AH prices had seemingly another 10-20% stuck on top. Any 2006 AH propeties being resold now would almost certainly have to to be priced at a level whereby the Council lost all it's interest in order to sell.
 
Howitzer said:
What is the market price? In the current market someone looking to make a quick sale may accept a price 20-30% below 2006 valuations, maybe more.
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There's no doubt that the market is a lot lower than it was 2 years ago.

Howitzer said:
Houses for sale not dropping their price are staying on the market for 6/8/12 months and more. Are the Council going to prevent owners from selling their own property at a price which they feel reasonably reflects the current market?
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This is the problem with a private sale. The Council could easily turn around after the sale and claim it was sold below the market value. That is why I mentioned taking it to auction. It would be very hard for the Council to claim that the price it sold at auction was not the market rate.
 
So when you buy and your valuation, and the valuation of the bank, differ from the Council you have to accept. Well I guess they're giving you something for nothing so fair enough. But when you sell and your valuation, the valuation of the buyer, and the valuation of the back differ from the Council then the Council still have the final say even even though it's your property. Hmmmm. I'll await that court case.
 
Howitzer said:
But when you sell and your valuation, the valuation of the buyer, and the valuation of the back differ from the Council then the Council still have the final say even even though it's your property. Hmmmm. I'll await that court case.
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The problem is that all other parties have an advantage in getter a lower price for the property. The buyer, obviously wants to buy it at the lowest price. The bank would prefer to have it undervalued so that there is more of a cushion in the LTV. The seller does not stand to profit from a vastly reduced price, however they do not lose out either, and a big reduction would guarantee a fast sale for them.

The only real loser would be the Council so they would be well within their rights to take people to court if they thought they were colluding on this. If the seller went down the auction route it would make it more open and possibly avoid some serious probing by the council later on.
 
Affordable homes are too pricey for us council is told

A recent local authority report outlined how a massive 80pc of affordable home offers in Dublin city are now being rejected.
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DUBLIN CITY Council is to discount its total stock of affordable homes to get rid of a backlog of 300 unsold houses that are costing the council upwards of €300,000 a month in bridging loans and fees.
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Now surely all must accept the crazyness of the AH scheme, that this scheme is costing the tax payer unbelieveable amounts of money; money that we just don't have any more, and must be wound up NOW.
 
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This appears to be the end of the Affordable Housing fiasco. Quite whether the Councils will be able to recoup enough money from this fire sale to remain solvent is debatable. I don't think they will and believe a number will go the way of the Liverpool City Council of the 80s.
 

What you don't seem to be acknowledging in both this and subsequent statements are two costs to the taxpayer

1) Opportunity cost - the taxes spent on "affordable housing" could have been put to more worthwhile initiatives like health, education and policing

2) The additional costs borne by other house buyers. By commandeering 20% of all new developments for their own purposes, the state increases the cost of purchase for the remaining 80%.

I can generally accept the argument that my taxes should subsidise and provide shelter for those who need it. But why should I pay higher house prices and additional taxes so the chosen few can get a "discount house"?


Unless I am very much mistaken the application administrative fee was €60 not €2,000. Since most of the affordable housing purchases took place at the peak of the bubble (it was an attempt by the government to rig the market and prolong the bubble), I very much doubt the council will ever see a profit. Not in any of our lifetimes anyway. Also note, that "cost price" is not just the cost of building a similar sized house but also factors in the land price as well. These land values are being written down by anything up to 90%. So it is very easy for the market price to fall below the cost price. In fact, I will be startled if they don't since it would provide a huge incentive for developers to buy the now considerably cheaper land to develop and easily undercut this price.

Cheeus said:
Ultimately councils will still make a profit with affordable housing. A reduction in clawback to protect a buyer from negative equity does not amount to loss for the council, or a waste of tax payers money - it simply reduces the council's profit.
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See my post above on why councils will not make a profit on this madness. In fact, it will likely bankrupt most of them. It's costing Dublin City Council nearly €4M a year just to service the interest on these properties. This will lead to cutbacks in other services.


Cheeus said:
Perhaps they could use some of that cash to monitor current affordable properties and prevent people abusing the scheme by renting them out - now that is a clear waste of tax payers money and should be stopped.
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What cash? I agree that it is unfair for people to avail of this subsidy and then rent out their properties. Equally some of the assumptions of the scheme are plainly ridiculous. For example, subjecting people buying a 1 bedroom "affordable home" to a 20 year clawback. Very few people plan on living in a one bedroom unit for 20 years. Most of the units built in the bubble-era won't even last that long. One of my abiding memories of the scheme was listening to a woman on the radio talking about being denied her right to buy a €1M affordable home in Kinsealy. Some labour TD chimed in to agree with her that the scheme should be extended to include "exclusive neighbourhoods" and people on above average earnings. Eery stuff.

The solution is not reform, it is simply to abolish this abominable waste of taxpayer funds. Let the market decide the price of housing. If you can't afford to buy a house, then buy a different one or none at all. I'll never be able to buy a Bentley but I don't lobby my TD to use government to buy me one, I just buy a car I can afford.
 
Dublin City Council announces €30m in cuts

Budget day is always a good day to bury bad news.

At this stage Dublin City Council may have a liability of €630,000 (~7M pa) a month in bridging loans to finance AH units it is obliged to purchase, whilst simultaneously it has to cut it's own housing budget (maintenance, etc) by ~7M pa. It doesn't take much to join the dots.
 
Affordable home sale rules could be scrapped


The taxpayer is getting taken to the cleaners on this one. The notion advanced on this thread that councils would make a profit on these units looks laughably naieve right now.
 
I don't think they'll be able to scrap it for those who have already bought as it was part of the contract of sale. It makes sense that they scrap it for unsold properties. The council's loss will be huge if they don't. At least this way they can actually shift the properties.

The tide has certainly turned for affordable housing and it looks like the council are doing nothing to try to minimise their losses.

It is ridiculous that Sth Dublin Co Co and now Dun Laoghaire Co Co are still trying to sell affordable units with clawback for higher than the market values. If they can't sell them without clawback they'll be forced to change their use to social housing and that would cost the tax payer much more.

As for those who bought at the peak and are now hoping to remortgage and buyout the council without clawback - very few will be able to in reality because the loan to value ratio won't be high enough, what the banks will lend has dropped significantly and lots of peoples' wages will have been cut. I only bought through affordable housing last year and prices have dropped by 100k. I wouldn't have a hope of remortgaging with any bank now so I'll probably still pay clawback down the road.

In the last year Dun Laoghaoire Rathdown have allowed extra properties to be sold by developers as affordable housing instead of selling their existing stock. They have just got the go ahead to build yet more affordable housing and are going ahead with it - despite not being able to sell what they have.
 
You may have bought but it looks like we're all paying.

What is wrong with these people?
 
If I hadn't bought you'd be paying.

Why don't you get on to your local council and ask them what they're doing to sell their remaining stock? That's what I've been doing for the last few months because I do think it's a disgrace that they are sitting on empty apts instead of selling them whatever way they can.

Over a year ago I did the same for South Dublin County Council - if they had listened they'd have sold their properties now. The Docklands apts sold when clawback was lifted.

Trouble is that people are up in arms then when the councils make that decision.

What do you see the solution as being yourself?
 
Stop the scheme today and manage the existing AH units through their lifetime. Essentially do a NAMA on it. Take the losses and move on. Get all the issues out in the air and sorted (remortgage, renting out, clawbacks).

There are obviousy legally binding contracts that prevent them rowing back on existing deals but when you make a mistake at least try and learn from it. There was obviously some valid thinking in the inital concept but the point at which this made sense disappeared a long time ago (07 I'd say). Why continue entering into contracts after that point when you can't shift your existing stock? I'm not suggesting corruption, I'm saying plainly there is incompetence at the heart of this.

There is a latent inability to admit making mistakes in Public bodies. So instead they're digging a bigger and bigger hole, except it's with our money.

Perhaps John Gormley will see the light and draw a line through it in the same way as he did with the Voting Machines. The problem is that the general public still think that the AH scheme is a good thing. Until it becomes politically acceptable I don't think he'll act and neither will anyone in the individual Local uthorites. Gormley can stop the scheme as he has no previous with it and can simply lay the blame on his predecessors.

Ask prospective Coucillors calling to your door what their opinion of the scheme is and you'll see this won't happen for a long while.
 

I totally agree. Properties in DLR Co Co were ready in late 2007. There were a large number of people interested in them. They weren't sold until late 2008, now many are unsold. If the scheme had been administered properly it might have worked. I agree with affordable housing in principle but the schemes have been poorly managed and even in the last few months as pitfalls have been pointed out to the councils they are still not acting.

Maybe people should ask the councillors canvassing at their doors their opinions on the losses being made by the council now. I contacted our local councillors months ago about this and got no reply. In the meantime developers have sold lots of properties in the development here while the council can't shift theirs - a little creative thinking and the council would have offloaded them by now.
 

Didn't he already announce that local councils can sell their remaining properties on the open market without clawback restrictions? The councils aren't doing it though.

When I asked the council if they could lower their prices I was told that they couldn't because they'd be selling at loss. So sell on the open market and don't make a loss. Affordable housing prices in DLR Co Co are generally still equal to, or a bit less than market values. So if they sold them on the open market they'd break even? They should learn by the mistakes of the other councils who didn't do this while the properties still held some value.
 
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