Housing issues - Budget 2024

[Brendan Burgess]

Help to Buy Scheme has helped 40,000 people

I will extend it to the end of 2025
And consider if needs to be changed


Local Authority Purchase scheme will be able to avail of Help to Buy

 

[letitroll]

The help to buy is becoming a bit tiresome...I mean it works, kind of...but bold decisive action would be for the government to get out of the taxation of NEW incremental housing completely.....i.e. stop putting VAT on new build housing.

Sure short run your looking at the majority of the tax saving flowing into developers hands.......but that is happening anyway via HTB.

Viability in housing projects is a bet on the future on average 36 months out..........the more a government can do to minimize variables 36 months out the better for project greenlighting/financing/investment in the sector......HTB expands the contestable market of first time buyers....but it constantly being extended with 26 month expiry dates is dumb.

The reality is that the cost to build homes to current environmental building standards places new starter homes certainly in the GDA out of the reach of large swatches of the public...& impacts developers ability to eek out a margin that rewards capital at risk (see GLV & Cairn share prices & poor returns on equity).......HTB & first homes equity scheme are measures to solve what is clearly IMO an indication that building standards have exceeded the median household income required to support the purchase of said homes at a level that (1) ensures adequate private sector supply in-line with population growth and household formation & (2) affordability.

Time to ditch the VAT.......and backfill some of that lost income with increases to LPT & stamp duty.....but chiefly LPT.

 

[Purple]

All funding by the State on the provision of housing should be spent on the provision of new housing. The State should be barred from buying private housing and turning it into public housing.

 

[DannyBoyD]

I'd say the same for HAP - essentially you are turning private rental accommodation into publicly funded rental accommodation.

 

[Purple]

I'd say the same for HAP - essentially you are turning private rental accommodation into publicly funded rental accommodation.

I agree. The need for social housing should be seen as a failure of public policy. Working people should be able to buy or rent their own homes. If they can't then the State is failing to manage the economy and society properly and there is an economic imbalance.

Throwing money are the symptoms of a problem won't fix the problem.

 

[lff12]

The help to buy is becoming a bit tiresome...I mean it works, kind of...but bold decisive action would be for the government to get out of the taxation of NEW incremental housing completely.....i.e. stop putting VAT on new build housing.

I agree RE VAT (its surprisingly high) but would make it a "temporary" use-it-now-or-lose-it to force site owners to build quickly or miss the opportunity.
On the other hand, nothing to stop a canny developer from simply leaving prices as is, and pocketing it as profit.

 

[lff12]

I'd say the same for HAP - essentially you are turning private rental accommodation into publicly funded rental accommodation.

Its worse. HAP and RAS act as a floor on rents and drive up prices as there are no incentives whatsoever to charge anything less than the maximum HAP rate.

 

[T McGibney]

I agree RE VAT (its surprisingly high) but would make it a "temporary" use-it-now-or-lose-it to force site owners to build quickly or miss the opportunity.

Use-it-now-or-lose-it incentives, mainly in relation to time-limited planning permissions caused a world of harm in the months leading up to and beyond the crash as developers scurried to commence works on sites that they hadn't the resources to finish. These places ended up as ghost estates.

On the other hand, nothing to stop a canny developer from simply leaving prices as is, and pocketing it as profit.

The more profitable development is, the more people will develop and the more supply this will generate.

 

[nest egg]

These schemes do not work. It's the market (central bank rules and interest rates) which set the prices.

Taking the VAT off will make no difference except to the builder's profit margin.

 

[T McGibney]

It's the market (central bank rules and interest rates) which set the prices.

..

Taking the VAT off will make no difference except to the builder's profit margin.

More supply will first dampen and then ultimately reduce market prices.

Basic economics.

 

[letitroll]

The more profitable development is, the more people will develop and the more supply this will generate.

Taking the VAT off will make no difference except to the builder's profit margin.

What does expanded builder profit margins equal......what happens when someone has juicy profit margins?.....people move into the space to try get some of those juicy margins themselves.....in turn driving down margins, increasing supply and destroying the juicy margins back to OK margins.

The result of VAT removal would be (Step 1)- at first a direct transfer of VAT money to existing developers & prices would remain the same (bad politics & bad initial outcome)......however (Step 2) more suppliers would enter the space at lower margins & supply would greatly increase......more supply, lower house prices, normalized building margins....that is an enviable outcome but the basic monkey brained voter could not mentally bring himself to go through the envious pain they would feel during Step 1 as "greedy" developers get a pay day

 

[T McGibney]

...more supply, lower house prices, normalized building margins....that is an enviable outcome but the basic monkey brained voter could not mentally bring himself to go through the envious pain they would feel during Step 1 as "greedy" developers get a pay day

Nail on head.

This disaster happened because establishment Ireland decision makers and influencers throughout the 2000s couldn't stand the idea of upstart developers, builders and tradesmen earning more than they did, so they did what they needed to put an end to it.

 

[Purple]

What does expanded builder profit margins equal......what happens when someone has juicy profit margins?.....people move into the space to try get some of those juicy margins themselves.....in turn driving down margins, increasing supply and destroying the juicy margins back to OK margins.

The result of VAT removal would be (Step 1)- at first a direct transfer of VAT money to existing developers & prices would remain the same (bad politics & bad initial outcome)......however (Step 2) more suppliers would enter the space at lower margins & supply would greatly increase......more supply, lower house prices, normalized building margins....that is an enviable outcome but the basic monkey brained voter could not mentally bring himself to go through the envious pain they would feel during Step 1 as "greedy" developers get a pay day

The constraints on the supply of housing are:
Labour; we don't have the people to build the houses.
The State; all States are inefficient but ours seems to be particularly so, it takes far too long to get planning and build homes.

Reducing or removing VAT may help but it will almost certainly cause significant price inflation (wages and materials etc) within the supply chain which will eat up much of the incentive the VAT reduction/removal would give developers to enter the market.

I've no problem with developers making millions. That's their reward for taking risks and working hard. I just don't think this measure will help that much.

 

[T McGibney]

The constraints on the supply of housing are:
Labour; we don't have the people to build the houses.
The State; all States are inefficient but ours seems to be particularly so, it takes far too long to get planning and build homes.

Reducing or removing VAT may help but it will almost certainly cause significant price inflation (wages and materials etc) within the supply chain which will eat up much of the incentive the VAT reduction/removal would give developers to enter the market.

We haven't enough labour and we haven't enough developers but removing a tax wedge would be bad because it would if make it more worthwhile to supply labour and developer expertise?

My head is spinning.

 

[Purple]

We haven't enough labour and we haven't enough developers but removing a tax wedge would be bad because it would if make it more worthwhile to supply labour and developer expertise?

My head is spinning.

Do you think that the labour is available but deployed elsewhere?
It takes years to train engineers, carpenters, bricklayers etc. SOLAS, the successor to FAS, is in charge of Trades in this country. Words fail me in trying to articulate just how utterly and completely useless they are. No amount of money fixes badly structured organisations with the wrong mindset and the wrong goals. It's another example of the State and State employees failing the Nation. Despite the increase in employment in the construction sector the number of apprentices in the wet trades (bricklaying, plastering, tiling etc) are actually declining.
There is a global shortage of such labour so buying it in isn't an option.

 

[T McGibney]

Do you think that the labour is available but deployed elsewhere?

I don't think that. I know it. The country is full of men working in factories, retail, farming, caretaking and a host of other roles who spent the 2000s building houses and then when the crash came switched to whatever job was available to make ends meet.

I was speaking to one of them this week. He works in a reasonable but "boring" (his words) factory job and farms a bit on the side but still misses the sites, not least the pay.

 

[Protocol]

Yes, a cousin is a former plumber, but works in an MNC.

He states it's "full of plumbers".

I suppose they were burned by the boom-bust of construction.

Working in a medical devices or pharma MNC is clean, dry, there might be a pension plan, and health insurance. There are progression opportunities.

I can see why lads have not gone back to sites.

 

[Purple]

I don't think that. I know it. The country is full of men working in factories, retail, farming, caretaking and a host of other roles who spent the 2000s building houses and then when the crash came switched to whatever job was available to make ends meet.

I was speaking to one this week. He works in a reasonable but "boring" (his words) factory job but still misses the sites.

That was 15-20 years ago. Would they still be able to do the job?
It's hard physical dangerous work. Do they still want to do the job?
Were they labourers or skilled people? It's the skilled guys that we are short of. Those skilled guys who moved into factory jobs are probably earning as much or more using the new skills they have learned and they are dry and safe and get to go the work in the same place every day.
How many of them are there? Anecdotal information isn't data.

I'm sure there are plenty of them out there but are they the right people with the right skills and age profile? I don't think there are any easy solutions.

 

[Purple]

Yes, a cousin is a former plumber, but works in an MNC.

He states it's "full of plumbers".

I suppose they were burned by the boom-bust of construction.

Working in a medical devices or pharma MNC is clean, dry, there might be a pension plan, and health insurance. There are progression opportunities.

I can see why lads have not gone back to sites.

So 10-15 years later it might well be the case that he or those like him have a whole new skill set and have spent as long away from plumbing as they did in it.

There's a shortage of mechanics in the Dublin area because Intel have recruited so many of them to work as technicians. Clean, stable, well paid work in a very pleasant environment.

 

[T McGibney]

That was 15-20 years ago. Would they still be able to do the job?
It's hard physical dangerous work. Do they still want to do the job?
Were they labourers or skilled people?

The guy I spoke to the other day is a carpenter. That work isn't especially dangerous.

Most of the guys who built our house in the late 90s were either in America, unemployed or in dead end jobs throughout the 80s.