Yes, of course it makes sense for the banks, which is why it's happening. The banks then control both the existing housing supply and the availability of credit to developers. That creates a perverse incentive to perpetuate a housing supply crisis, which is damaging to the economy in other ways. The answer to the question in your first sentence, then, depends on who you're asking.Why would this be seen as a problem? General bank strategy is to maximise loan recoveries. In the context of BTL exposures where repayment capacity is not evident, the only alternative recovery source is a sale of the security. Taking a view that property price rises will continue at a higher rate than interest costs (assuming that interest is not being covered) it is perfectly reasonable to delay putting properties on the market. Given that in most cases the rental income is sufficient to cover he interest and possibly a small portion of the capital this strategy is advisable. i.e. you leverage your way out of a loss making portfolio.
When they implemented Bacon's proposal that investors should no longer be allowed write off mortgage interest relief it caused property sales to fall and rents to rocket. It was so catastrophic that it was reversed within about 3 years (might have the time line wrong).
Governments should stop interfering was my conclusion after that.
We discussed it in 2009 here:
http://www.askaboutmoney.com/showthread.php?t=110905
and this thread, where accountanat poster Tommy McGibney makes a good point at post 14
http://www.askaboutmoney.com/showthread.php?t=176467
Is the existing housing stock is overpriced, relatively? New houses SHOULD be expensive, cos they're supposed to be better built. That's progress, right?
More expensive than existing stock. I'm not making an argument about costs of construction over time, but if you can't build low end new houses then better build higher-end ones.Why should new houses be more expensive?
Every other manufactured good is cheaper in real terms now than it was at any time in the last 200 years.
Houses can and should be manufactured and assembled to a higher standard at a lower cost now than they were 20 years ago. The reason they aren't is that the construction sector is more interested in moaning than innovating, more interested in looking for handouts than sorting out their own problems. The very fact they are looking for the government to do anything "for them" typifies the problem.
But since you raised the costs-over-time issue...
If you can work out how to scale yourself to live on a silicon wafer then I'm sure you'll find your "house" is much cheaper. In the real world houses have a large wage cost component so are more like a service product (e.g. posh restaurant food) than a manufactured good.
That's nonsense. Most of the house can be built off-site in a factory with automated lines. First fix electrical and plumbing can be done at that stage. The assembly of the units on site can be speeded up by using the correct power tools instead of 18th century hammers.
Then proper QA and QC can be carried out at the time of manufacture so the purchaser isn't relying on our third rate tradespeople to fit windows, plaster walls and hang doors. Who knows, the plumbing mightn't leak and the doors and windows might open and close properly!
The only major element that needs to be manufactured on-site is the foundation and that is done using heavy equipment.
Houses in Ireland are built in the same way as they were 50 years ago. At least half of the on-site labour cost can be removed, maybe 75%. The off site labour can be done more efficiently and to a higher standard.
We need to build houses the way most of Europe and North America does. The site is what's valuable so the house itself should be able to be changed every 50 or 100 years without a massive financial and environmental cost.
The demography of the loss of the bedsits would in my opinion be mostly single men (I cannot back this up) but from what I've seen and read of bedsits. They are not all grotty, but severly grotty ones that I did see were for the type of men that would hardly be socially fit for a hostal. So to me they serve a housing need. And the men were safer and happier in that type of environment.
http://www.irishtimes.com/news/soci...omelessness-and-housing-sector-grim-1.1844116
That's nonsense. Most of the house can be built off-site in a factory with automated lines. First fix electrical and plumbing can be done at that stage. The assembly of the units on site can be speeded up by using the correct power tools instead of 18th century hammers.
Then proper QA and QC can be carried out at the time of manufacture so the purchaser isn't relying on our third rate tradespeople to fit windows, plaster walls and hang doors. Who knows, the plumbing mightn't leak and the doors and windows might open and close properly!
The only major element that needs to be manufactured on-site is the foundation and that is done using heavy equipment.
Houses in Ireland are built in the same way as they were 50 years ago. At least half of the on-site labour cost can be removed, maybe 75%. The off site labour can be done more efficiently and to a higher standard.
We need to build houses the way most of Europe and North America does. The site is what's valuable so the house itself should be able to be changed every 50 or 100 years without a massive financial and environmental cost.
Are there many people now homeless as a result of the bedsit ban? The stuff that I'm hearing about is more about families being priced out of their house or apartment, not bedsits.
I'm just surprised that in all the recent publicity about homelessness, I haven't seen one case in the press that related to the bedsit policy.
I think that's a very important point. Legislating based on how things should be is dangerous when so many can fall into the gulf between what should be and what is.
Proper regulation and proper enforcement was the solution to grotty bedsits.
Between the disaster that is care in the community and the closure of bedsits many elderly men with minor to severe mental health issues who find it hard to cope on their own have been left with little or no support and shelter.
Well Firefly how right you were. As was Purple. All of us still here. Tommy who dealt with landlords was on the ball too. All of us back in 2014 and before. It amazes me the mess the government has created. Today they will march for housing to be a metal right. Knee jerking the government into some fanciful solution that won’t solve anything. But they won’t discuss options with ordinary landlord like me. I see properties I could buy and convert into love apartments, but there is no reason to do so as the costs and risks are too high because of government policies.Hi RainyDay,
Asuming that "a half-decent 1-bed apartment with its own bathroom and separate bedroom" would be the next rung of the ladder up from a bedsit, I'm just curious to know what you think would happen to rent prices of these apartments once the bedsits were removed - would prices rise, fall or stay the same, all other things being equal?
Firefly.
You have your answer now. And things are going to get a lot worse. Eventually the lack of affordable rental is going to drive investors out of Ireland and the jobs with them. It’s a catastrophe.It would also be interesting to see what the government ministers were saying back then.
And what will we and they be saying in 3 years.
Brendan
Proof that even back in 2014 it was clear REITs would drive up rents.Interesting article in the Indo today from Dr John McCartney of Savills
Investors are not the enemy in the housing crisis and only building more units will fix it
and
I see properties I could buy and convert into love apartments
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