Is investment in Irish social housing and infrastructure blocked by risk averse financial regulation?

patslatt

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Is investment in Irish social housing and infrastructure blocked by risk averse financial regulation?

The pendulum of EU and banking financial regulation in Ireland has swung from the Celtic Tiger regulatory light touch, neoliberal view that markets are self regulating to growing regulatory red tape in recent years that is blocking funding of social housing and infrastructure. Given the increase in reserve ratios on risky bank loans under international banking rules,small builders find it very difficult to get bank loans to build houses. In the insurance industry which traditionally lends long term to match payouts on policies,increased capital reserves required under European insurance directive Solvency II has deterred infrastructure lending, diverting money into liquid government bonds.

What can be done to free up financings? Government subsidies could be given to banks and financial institutions to reduce the risk of loans to housing builders. This could be justified by the benefit to society of an improved housing supply which is urgently needed to prevent rapid increases in rents.

Instead of setting up an infrastructure bank as proposed by some politicians, it would be simpler for the government to pay an insurer to provide subsidised insurance for a portion of expected losses on infrastructure loans made by insurers and banks.Subsidies could vary with the nature of the infrastructure project. Since the Celtic Tiger crash, Ireland's spending on infrastructure almost ceased and fell behind that of poor third world countries relative to national incomes, so there is a need for increased spending.

Like insurers, pension funds with relatively young workforce beneficiaries favour long term investment. They should be encouraged to finance social housing projects, with loans repaid by councils and housing associations. However, the present cost plus model of social housing is wasteful on construction costs and would need to be made cost conscious.

The government's comprehensive plan to increase housing supply doesn't mention the role of financial institutions http://www.merrionstreet.ie/en/News-Room/Releases/Coveney_Announces_Plans_to_Fast_Track_Delivery_of_30_000_Homes_as_part_of_Rebuilding_Ireland_Initiative.html
 
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ON THE ONE ROAD

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could the state lend to local authorities to do the builds, paid back in rents or sales. We need houses but private developers failed very recently should we not be trying to avoid the private model after last time?
 

Dub01

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Didn`t Mary Harney come up with the bright idea of building no more social housing, while simultaneously opening Ireland`s doors to Polish workers years before the rest of Europe?

The housing situation in this country is screwed, mainly because we listened to the wrong people.
 

venusian

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It is neo liberal ideology that has created the housing crisis. Fine Gaels Housing policy has deliberately kept housing as a scare and expensive commodity to restore the banks balance sheets and to enrich their bankster and developer cronies. . Ireland has all of the required resourse to build housing land, building material, skilled labour etc to provide everyone with a decent and affordable home. Yet we have a homeless epidemic and hundreds of thousands of families crushed under extortionate rents and mortgage debt. This isn’t an unfortunate accident. It’s Fine Gael policy to enriches the elite at the expense of ordinary decent taxpayers. FF/FG fully support this state of affairs whilst lying and pretending otherwise
 

SideysGhost

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Another example of how insane the right are. Ireland's property sector has been a corrupt, unstable, overpriced mess that utterly fails to meet the needs of the people for decades because of right-wing conservative FF/FG policies.

In the mad mad world of patslatt the solution to this decades-long utter failure of right-wing conservatism is to....double down on the right-wingery!
 

GDPR

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Another example of how insane the right are. Ireland's property sector has been a corrupt, unstable, overpriced mess that utterly fails to meet the needs of the people for decades because of right-wing conservative FF/FG policies.

In the mad mad world of patslatt the solution to this decades-long utter failure of right-wing conservatism is to....double down on the right-wingery!
Hitler built hundreds of thousands of social houses. He also built ski resorts and cruise ships for the working class to enjoy on the two weeks paid holiday he forced the German employers to give them every year. Was he right wing - or left wing?
 

GDPR

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Like insurers, pension funds with relatively young workforces favour long term investment. They should be encouraged to finance social housing projects, with loans repaid by councils and housing associations. However, the present cost plus model of social housing is wasteful on construction costs and would need to be made cost conscious.

Mass immigration makes a policy of social housing impossible. Because no matter how many social houses you build, you will always have more immigrants to take them - and send the Natives to the back of the line.
 

patslatt

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could the state lend to local authorities to do the builds, paid back in rents or sales. We need houses but private developers failed very recently should we not be trying to avoid the private model after last time?
Pension funds and insurers are earning very little on fixed income investments and would benefit from increased returns on housing and infrastructure loans. The Irish state is borrowing heavily and needs to reduce budget deficits.
 

patslatt

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Didn`t Mary Harney come up with the bright idea of building no more social housing, while simultaneously opening Ireland`s doors to Polish workers years before the rest of Europe?

The housing situation in this country is screwed, mainly because we listened to the wrong people.
The Irish social housing model became discredited for many projects that concentrated socially disadvantaged people in ghettos, instead of developing socially mixed housing. The latter is expensive as many people receiving subsidised rents don't need a subsidy.

Private sector housing could fill social housing needs in areas of the country where housing isn't blocked by NIMBY red tape typical of the big cities.
 

patslatt

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It is neo liberal ideology that has created the housing crisis. Fine Gaels Housing policy has deliberately kept housing as a scare and expensive commodity to restore the banks balance sheets and to enrich their bankster and developer cronies. . Ireland has all of the required resourse to build housing land, building material, skilled labour etc to provide everyone with a decent and affordable home. Yet we have a homeless epidemic and hundreds of thousands of families crushed under extortionate rents and mortgage debt. This isn’t an unfortunate accident. It’s Fine Gael policy to enriches the elite at the expense of ordinary decent taxpayers. FF/FG fully support this state of affairs whilst lying and pretending otherwise
The economy needs bank lending and a recovery in housing prices helped that along by facilitating financial workouts on defaulted mortgages, contributing to the repair of bank balance sheets. The introduction of tax free capital gains on housing was the main government initiative to support prices. The other main driver of recovery in housing prices has been NIMBY red tape that blocked housing building. Councils pandered to NIMBYs with restrictive zoning, vexatious planning appeals,excessive technical standards in Dublin and lack of investment in sewerage, water and roads.

Let's see if Housing Minister Coveney's housing plan can overcome these obstacles http://www.merrionstreet.ie/en/News-Room/Releases/Coveney_Announces_Plans_to_Fast_Track_Delivery_of_30_000_Homes_as_part_of_Rebuilding_Ireland_Initiative.html. A housing boom could be an election winner.
 
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patslatt

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Hitler built hundreds of thousands of social houses. He also built ski resorts and cruise ships for the working class to enjoy on the two weeks paid holiday he forced the German employers to give them every year. Was he right wing - or left wing?
National Socialism was warlike nationalist with many socialist characteristics.
 

Roberto Jordan

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The Irish social housing model became discredited for many projects that concentrated socially disadvantaged people in ghettos, instead of developing socially mixed housing. The latter is expensive as many people receiving subsidised rents don't need a subsidy.

Private sector housing could fill social housing needs in areas of the country where housing isn't blocked by NIMBY red tape typical of the big cities.
Pat - as you seem to be to the right ( if you forgive me) of things on here - cna you expand on what your idea of socially mixed housing is - ideally speaking?
I struggle with the idea. I can envisage how it can work in high density urban areas with buildings/ small developments adjacent to each other such that a neighborhood is mixed.
But I struggle with some of the stuff I have have read from Ireland of suburban housing estates with neighbor A paying their life savings while neighbor B has the same property / address provided for next to nothing. I can buy that in very high density areas like Manhattan south of 110th street where the scarcity of land and residences drives it ( and the two apartments will be very different in size & finish) but it doesnt sit well with me in regard to 3 bed semi's in kildare or west dublin....

It may be that I am turning from my social democratic roots as middle age takes hold but in the area of housing, where most folk are making considerable private contributions , i struggle with the provision of the SAME for others by the state =especially as the difference in income & assets may often be marginal in the extreme.
 

GDPR

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National Socialism was warlike nationalist with many socialist characteristics.
If you wish to ensure the survival of your race, you cannot leave its fate to the vicissitudes of the free market. That being the case, all genuine Nationalists must also be Socialists.
 

Voluntary

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Given the increase in reserve ratios on risky bank loans under international banking rules,small builders find it very difficult to get bank loans to build houses.]
First of all, why not move towards the system more popular in EU where builders don't depend on banking loans but depend on customers financing?

The way this often works is the builder/developer design the plans and sells homes off plans. Buyers take mortgages, sign up contracts before the building site even starts, banks release money to the builder in instalments as the building site progresses, usually 30% at the start, then 20% after phase I, another 20% at phase II etc.
The insurance firm backs up the deal in case of developer insolvency or other fu.k up, so buyers and banks are protected.

The whole financing issue goes away as banks lend to home buyers directly (lower risk) instead of lending to developer (high risk). The cost of such financing is also lower as we're talking about mortgage rates (3% instead of SMB rates (often over 12%).
 

Voluntary

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Pat - as you seem to be to the right ( if you forgive me) of things on here - cna you expand on what your idea of socially mixed housing is - ideally speaking?
I struggle with the idea. I can envisage how it can work in high density urban areas with buildings/ small developments adjacent to each other such that a neighborhood is mixed.
But I struggle with some of the stuff I have have read from Ireland of suburban housing estates with neighbor A paying their life savings while neighbor B has the same property / address provided for next to nothing. I can buy that in very high density areas like Manhattan south of 110th street where the scarcity of land and residences drives it ( and the two apartments will be very different in size & finish) but it doesnt sit well with me in regard to 3 bed semi's in kildare or west dublin....

It may be that I am turning from my social democratic roots as middle age takes hold but in the area of housing, where most folk are making considerable private contributions , i struggle with the provision of the SAME for others by the state =especially as the difference in income & assets may often be marginal in the extreme.
That's a very good point. All new social housing should be apartments and not houses unless in remote rural areas where apartment building is not feasible. The social housing should be also bare minimum, so legal minimum size regulations (per person living) are met, but not exceeded.
 

Conor

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First of all, why not move towards the system more popular in EU where builders don't depend on banking loans but depend on customers financing?

The way this often works is the builder/developer design the plans and sells homes off plans. Buyers take mortgages, sign up contracts before the building site even starts, banks release money to the builder in instalments as the building site progresses, usually 30% at the start, then 20% after phase I, another 20% at phase II etc.
The insurance firm backs up the deal in case of developer insolvency or other fu.k up, so buyers and banks are protected.

The whole financing issue goes away as banks lend to home buyers directly (lower risk) instead of lending to developer (high risk). The cost of such financing is also lower as we're talking about mortgage rates (3% instead of SMB rates (often over 12%).
You're obviously not watching Coronation Street these days...
 

Conor

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I somehow missed it...
What's on the director's agenda?
Dodgy builder Pat Phelan has been collecting deposits from residents on the street for apartments in a new development he's building. Little do they realise that these apartments will never be built, he's has far more deposit-paying buyers than planned apartments, and he and his business partner are about to abscond to Mexico with their ill-gotten gains!

Don't worry, I'm sure he'll get his comeuppance, but at what cost?
 

Voluntary

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Dodgy builder Pat Phelan has been collecting deposits from residents on the street for apartments in a new development he's building. Little do they realise that these apartments will never be built, he's has far more deposit-paying buyers than planned apartments, and he and his business partner are about to abscond to Mexico with their ill-gotten gains!

Don't worry, I'm sure he'll get his comeuppance, but at what cost?
Well, I quickly explained how this works abroad and it works with success, so there's a little learning curve involved and proper regulation required put in place. If developer runs to mexico then hey - that's what the insurance is for.
Also there's no money collected under the table, the bank is transferring your mortgage directly to the developer based on the securing asset (planned development) , all contracts signed with solicitor, so buyers have 2 layers of security in place, first is the bank issuing the mortgage who verifies the asset (builder + plans) because it's in his best interest to do so, second layer of security is the insurance (obligatory, as banks would not go for such mortgage without a proper insurance in place).

Central Bank would need to work on the proper regulation, so the insurance plans are sufficient.
 

patslatt

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Pat - as you seem to be to the right ( if you forgive me) of things on here - cna you expand on what your idea of socially mixed housing is - ideally speaking?
I struggle with the idea. I can envisage how it can work in high density urban areas with buildings/ small developments adjacent to each other such that a neighborhood is mixed.
But I struggle with some of the stuff I have have read from Ireland of suburban housing estates with neighbor A paying their life savings while neighbor B has the same property / address provided for next to nothing. I can buy that in very high density areas like Manhattan south of 110th street where the scarcity of land and residences drives it ( and the two apartments will be very different in size & finish) but it doesnt sit well with me in regard to 3 bed semi's in kildare or west dublin....

It may be that I am turning from my social democratic roots as middle age takes hold but in the area of housing, where most folk are making considerable private contributions , i struggle with the provision of the SAME for others by the state =especially as the difference in income & assets may often be marginal in the extreme.
EXPENSIVE SOCIAL HOUSING

The above is an argument against expensive social housing which is only affordable to middle income people. That suggests all social housing should be flats but that wouldn't be practical in the countryside and villages where apartment living is unknown. Modest bungalows on small sites and terraced housing could be a compromise.
 


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