Noonan's measure has led to hoarding of land

This article originally appeared in Sunday Independent.

Measures introduced four years ago to encourage property transactions in the depths of the recession has led to land being hoarded.

'The issue was raised by tax lawyer William Fogarty of Maples & Calder at the recent Real Estate Stakeholders Summit, of which the Sunday Independent and Irish Independent are media sponsors.' Photo: PA

In what appears to be an unintended consequence of the seven-year Capital Gains Tax (CGT) holiday introduced by Michael Noonan in Budget 2012, buyers of land must wait until January 1, 2019 before releasing it to the market to avoid incurring a CGT liability.

The issue was raised by tax lawyer William Fogarty of Maples & Calder at the recent Real Estate Stakeholders Summit, of which the Sunday Independent and Irish Independent are media sponsors.

Highlighting the measure's contribution to the current housing crisis, Fogarty said: "It was brought in to incentivise the market. We're now in the bizarre place where people have bought land - and instead of them putting it to good use, they're waiting until January 1, 2019, before they'll release the land on the market.

"The Government could take a very good look at what impact its tax system is having on the property market. There are people hoarding land because that's what the Government told them to do."

Sunday Independent: Noonan's measure has led to hoarding of land

Wilson Moore Estate & Letting Agents

International investors remain crucial to recovery

This article originally appeared in the Sunday Independent.

HWBC’s Jonathan Hillyer says caution is required in relation to changing our tax regime.

Now the pundits have had their say on 2017's Budget, and now that things have calmed down a little, one might surmise that with the political uncertainty that is likely to prevail elsewhere in the world over the next 12 months, this Budget is exactly what Ireland needed.

The foreign investor, who has been instrumental in Ireland's recovery and is now looking to the medium to long term, would likely give an approving nod to Minister Noonan's budget speech. A minority Government has managed to come to a consensus around a budget involving modest fiscal expansion as opposed to big, risky populist gestures.

The positive perception of Ireland's continuing commitment to sensible fiscal management can only help us when existing and potential investors come to compare us to our European competitors. Stability is the watchword that provides the basis for continued inward investment of every kind, including property.

In terms of specifics, there was no clarification in the Budget regarding Section 110 purchase vehicles and other tax efficient structures used for the acquisition of real estate (ICAVs, QIAIFs, QIFs etc). This should be addressed in the upcoming Finance Bill. If there is any retrospective move or radical attack which affects the tax efficiency during the life or at the end of the property hold, this could have a material impact on values especially on larger lot sizes or portfolios where such structures are most common. The Irish commercial real estate market is increasingly dominated by medium to long-term Irish and offshore Institutional investors who do not use Section 110 but do consider ICAVs etc. Deterring these investors is unwise as they are crucial to the future health of the overall market.

In the brief time it has for consultation, the Government must ensure that if it must tinker with the existing tax structures; that it does so in such a way that Ireland remains competitive compared to its European peers. International investors are a crucial source of capital especially since domestic funding is still insufficient to support Ireland's much needed new development in the office and residential sectors.

Unsurprisingly, it was the Budget's residential market measures that attracted the big headlines. My view is the Government missed an opportunity to properly stimulate the supply side of the market in choosing to put the money in the hands of potential first-time buyers. Rising construction costs and local authority fees continue to be the main concern for most developers. If they don't respond by building more starter homes, the tax rebate could end up simply bidding the market higher.

Notwithstanding that reservation, I believe Ireland's recovery is still on track and that the confidence that has underpinned the dramatic turnaround in the property sector looks set to continue.

Sunday Independent: International investors remain crucial to recovery

Wilson Moore Estate & Letting Agents

New policies will help the hard-pressed

This article originally appeared in the Sunday Independent.

We would be waiting a long time for the market to right itself if we didn't intervene, writes Housing Minister Simon Coveney

The Government is not in the business of inflating house prices. We are in the business of supporting the delivery of enough homes for people, whether they be social or private. The current shortage of housing supply needs a significant Government response and it's getting just that. Last week's Budget prioritised housing supply, with a 50pc increase in the housing budget and a series of new policy initiatives to drive supply. Some critics argued for a non-interventionist approach, to wait for the market to correct itself over time; we'd be a long time waiting.

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We'll spend €1.2bn on housing next year, provide over 21,000 housing solutions for social housing tenants, fund multiple new initiatives to bring thousands of vacant properties back into use, streamline the planning system, fund housing infrastructure grants, create public-private partnerships for new projects and a lot more besides. Yet it's the first-time buyer initiative, representing less than 5pc of the housing budget, that has received all the commentary: positive and negative in equal measure.

There are lots of examples of supports for first-time buyers internationally, in the UK, Australia, New Zealand, Canada, Finland, South Africa and many more. Any government intervention in a housing market has risks, and needs to be designed to correct an imbalance. We have a severe imbalance affecting our housing sector where demand far outstrips supply. The results are not good; record local authority waiting lists, unsustainable rental inflation, homelessness at crisis levels, and inertia in the house building and purchase market.

First-time buyers are being squeezed more than anyone, trapped in a pressurised inflationary private rental sector, unable to purchase affordable homes. There are two fundamental reasons for this: lack of supply of starter homes and difficulty in securing a mortgage in line with the Central Bank rules. Ask anybody what it's like to save a deposit of €35,000 while paying the rent and you'll get your answer.

Strict Central Bank lending rules are in place for good reason. However, the new Budget measure was designed, in consultation with the Central Bank and Revenue Commissioners, to assist first-time buyers to put a deposit together to secure a mortgage for a new house. Five percent of the house value will be given back as a tax rebate to help save for a deposit. The restriction of 3.5 times income on mortgage lending remains unchanged.

So what we've done is help someone put a deposit together, which is the real obstacle, but not encourage over-borrowing that would drive house prices up.

We have also restricted the first-time buyer support to newly built homes, to encourage increased building. Applying the supports to a finite second-hand market would simply increase demand in an already crowded market and push prices up.

The core supply problem is that builders do not see the starter home market as worth building for, because they know the capacity to turn notional demand into a viable mortgage isn't there. If a first-time buyer wants to secure a mortgage of €300,000, the deposit required is €38,000 before even talking to the bank. The State will now provide €15,000 towards that deposit. It will make a significant difference to turning notional demand into real demand to buy homes, without increasing the mortgage ceiling available. Most importantly, it will give a very direct signal to developers that first-time buyers are back in the market to buy homes at the right price.

There's been some criticism of the thresholds set for the new scheme. First-time buyers will get 5pc of the value of a new property up to €400,000. In order to prevent a cliff effect over that figure, it was decided to limit the benefit to the value of €400,000, but allow property up to the value of €600,000 to qualify for the maximum rebate of €20,000. This was to ensure that a buyer of a property for €405,000 would not get nothing while a buyer of a property for €400,000 would get the full rebate. So it's capped at €20,000 but there's some flexibility in the qualifying upper threshold to accommodate the high-priced Dublin market.

In order to qualify for the rebate, the first-time buyer needs also to be borrowing 80pc of the house value, so this scheme will not be supporting buyers who have significant cash available. Instead, it's about supporting the hard-pressed person saving for a mortgage and deposit.

I'm sure of one thing. If we had not assisted first-time buyers in this Budget, I would have been rightly accused of abandoning a generation, locked out of the housing market, struggling to pay rent and unable to buy.

When judging the merits of any policy change, the best place to start is with the facts.

Last year there were 38,000 housing units sold in Ireland, less than 2,500 were new builds. Data on first-time buyers and new builds from 2010 to 2015 makes for stark reading.In 2010, first-time buyers represented 54pc of owner-occupier purchases across new and second-hand homes. By 2015, that figure was just 24pc. But what's most worrying is that only 2pc of the 38,000 homes sold last year were new homes to first-time buyers. That's only 760 across the whole country.

For every 11 existing properties bought by first-time buyers today, only one is a new build. While movers and investors' transactions in the property market have grown by 285pc and 344pc respectively since 2010, first-time buyers are up by only 15pc. We need to be building 7,000 affordable homes for first-time buyers, not 700 per year. That's what the first-time buyers supports are aimed at.

We are beginning to see an increase in supply. Nearly 3,500 new homes were completed in the second quarter of 2016, a 17pc increase on 2015. I hope we will reach 15,000 by the end of the year. We aim to get to 25,000 by 2019.

The Government's action plan for housing and homelessness, Rebuilding Ireland, is a good foundation to build a growing but sustainable housing sector. It takes a coordinated approach to all parts of the housing sector, recognising that each part is interlinked.

At the heart of the plan is a major focus on supply: 47,000 more social houses, a larger, more predictable private rental sector, and a much more balanced home purchase market.

The first-time buyers Help-to-buy scheme needs to be viewed in the context of the range of supply initiatives that the Government is pursuing.

I think we will only be able to judge the effectiveness of the measure when we assess the impact on supply of new affordable homes in a year's time. The initial soundings are encouraging, with a number of developers talking about increasing supply next year to respond to improved viability in the starter home market.

Getting supply of new homes moving in the right direction is good news for all sectors of the housing market. It will ease pressure on the rented sector, in turn helping to moderate social housing need and families presenting as homeless and ultimately helping deliver more homes.

Sunday Independent: New policies will help the hard-pressed

Wilson Moore Estate & Letting Agents

Property prices rise 3.8 per cent in Dublin and 6.7 per cent nationally in year to July

This article originally appeared in The Irish Times.

Property prices rise 3.8 per cent in Dublin and 6.7 per cent nationally in year to July

In the Dublin residential property market, prices increased by 3.8 per cent in the 12 months to July 2016.

Buying a house in Ranelagh, Rathmines, or Rathgar is likely to set purchasers back a hefty sum.

The Central Statistics Office’s new residential property price index, which includes information on cash purchases for the first time, shows huge disparity in prices throughout the capital.

Year-on-year price rise

In the Dublin residential property market, prices increased by 3.8 per cent in the 12 months to July. This compares with an increase of 2.5 per cent in the year to June and an increase of 4.5 per cent in the year to July 2015.

In the year to July, residential prices at a national level increased by 6.7 per cent.

During the month of July, property prices in Dublin increased by 1.6 per cent. This compares with an increase of 0.4 per cent in June and an increase of 0.4 per cent in July of last year.

Residential prices in the capital are now 58.2 per cent higher than their lowest level in April/May 2012, but remain 35.3 per cent below their peak price level in 2006.

Compared with property prices nationally, which fell 54.4 per cent from peak to trough, Dublin prices fell further, falling 59.1 per cent from high point to low point.

However, Dublin prices began to recover sooner and have recovered further than national prices. Currently Dublin prices are just 12.7 per cent less than their base value (January 2005), compared to 14.5 per cent nationally.

Dublin house prices increased 3.9 per cent in the 12 months to July 2016. This compares with an increase of 1.9 per cent in the year to June and an increase of 3.7 per cent in the year to July 2015.

The capital’s house prices are 60.4 per cent higher than their trough in February 2012. However, they are 32.8 per cent lower than their peak in April 2007.

The recovery was initially led by price increases in Dún Laoghaire-Rathdown in 2012 and 2013. However, since late 2014 onwards, Dublin City has led the growth in house prices. In contrast, house prices in the Fingal area have been slowest to recover.

The price of apartments in Dublin increased 6.4 per cent in the year to July 2016. This compares with an increase of 8.7 per cent in the year to June and an increase of 11.9 per cent in the year to July 2015.

Dublin apartment prices are 68.9 per cent higher than their 2012 trough, but are 40.1 per cent lower than their peak in February 2007.

The strongest period of price growth for Dublin apartments (2013-2014) coincided with a period of substantial growth in the volume of sales. From 2015 onwards, volume growth has leveled off and price growth has been more hesitant.

The Irish Times: CSO figures show huge disparities in Dublin property prices

Wilson Moore Estate & Letting Agents

CSO figures show huge disparities in Dublin property prices

This article originally appeared in The Irish Times.

Property prices rise 3.8 per cent in Dublin and 6.7 per cent nationally in year to July

In the Dublin residential property market, prices increased by 3.8 per cent in the 12 months to July 2016.

Buying a house in Ranelagh, Rathmines, or Rathgar is likely to set purchasers back a hefty sum.

The Central Statistics Office’s new residential property price index, which includes information on cash purchases for the first time, shows huge disparity in prices throughout the capital.

Year-on-year price rise

In the Dublin residential property market, prices increased by 3.8 per cent in the 12 months to July. This compares with an increase of 2.5 per cent in the year to June and an increase of 4.5 per cent in the year to July 2015.

In the year to July, residential prices at a national level increased by 6.7 per cent.

During the month of July, property prices in Dublin increased by 1.6 per cent. This compares with an increase of 0.4 per cent in June and an increase of 0.4 per cent in July of last year.

Residential prices in the capital are now 58.2 per cent higher than their lowest level in April/May 2012, but remain 35.3 per cent below their peak price level in 2006.

Compared with property prices nationally, which fell 54.4 per cent from peak to trough, Dublin prices fell further, falling 59.1 per cent from high point to low point.

However, Dublin prices began to recover sooner and have recovered further than national prices. Currently Dublin prices are just 12.7 per cent less than their base value (January 2005), compared to 14.5 per cent nationally.

Dublin house prices increased 3.9 per cent in the 12 months to July 2016. This compares with an increase of 1.9 per cent in the year to June and an increase of 3.7 per cent in the year to July 2015.

The capital’s house prices are 60.4 per cent higher than their trough in February 2012. However, they are 32.8 per cent lower than their peak in April 2007.

The recovery was initially led by price increases in Dún Laoghaire-Rathdown in 2012 and 2013. However, since late 2014 onwards, Dublin City has led the growth in house prices. In contrast, house prices in the Fingal area have been slowest to recover.

The price of apartments in Dublin increased 6.4 per cent in the year to July 2016. This compares with an increase of 8.7 per cent in the year to June and an increase of 11.9 per cent in the year to July 2015.

Dublin apartment prices are 68.9 per cent higher than their 2012 trough, but are 40.1 per cent lower than their peak in February 2007.

The strongest period of price growth for Dublin apartments (2013-2014) coincided with a period of substantial growth in the volume of sales. From 2015 onwards, volume growth has leveled off and price growth has been more hesitant.

The Irish Times: CSO figures show huge disparities in Dublin property prices

Wilson Moore Estate & Letting Agents

How demand for housing is 'a lot stronger than previously thought'

This article originally appeared in the Irish Independent.

Demand for housing is much stronger than previously thought, a new survey indicates.

KBC Bank Ireland’s Chief Economist Austin Hughes and Director of Product, Eddie Dillon launch KBC Bank’s new Home Buyer survey (Photo: Shane O'Neill Photography)

Pent-up demand for property is now so strong after the market’s collapse that up to a third of people are considering buying a new home.

The survey, commissioned by KBC Bank, found that 32pc of adults are contemplating buying a residential property in the next two years.

KBC Bank economist Austin Hughes accepted that the levels of pent-up demand found in the survey were “exceptionally large”.

This was especially the case as a normal level of transactions would see just 4pc of the housing stock changing hands.

But he said strong demand for housing reflected the fact the housing market here had not functioned for eight years.

“A large part of it is catch-up demand. It is not persistent demand. It is not something we will see for the next 20 years.”

Mr Hughes said the level of demand was much stronger than was commonly assumed.

Asked to put a number on it, he said: “You are probably looking at a couple of hundred thousand coming to the market.

A number of factors were driving people to consider buying – this includes new buyers, movers and those looking at investing in a buy-to-let property.

The stronger economic environment and greater confidence among consumers had meant thousands are considering buying. Jobs were more plentiful, and people needed to move because their personal circumstances had changed, such as having more children.

A nationally-representative sample of 2,000 people were interviewed by Ignite Research last month for the survey.

Mr Hughes said it was surprising that the survey found that almost half of those considering buying in the next two years were single and were looking at buying on their own.

This reflects that fact that more and more people live on their own, he said.

Irish Independent : How demand for housing is 'a lot stronger than previously thought'

Wilson Moore Estate & Letting Agents

'Repair and Lease' plan to pay owners €30,000 to put vacant homes in use

This article originally appeared in the Irish Independent.

Owners of vacant properties will be given up-front payments by the State in a scheme designed to bring thousands of homes back into use.

New scheme: Housing Minister Simon Coveney. Photo: Tom Burke

As much as €30,000 will be provided to bring properties up to a standard allowing them to be rented to social housing tenants or families in need of State support, before long-term leases of up to five years are agreed.

Housing Minister Simon Coveney said the Repair and Lease scheme would help alleviate short-term demand until delivery of new homes was ramped up.

He added that a pilot project was under way in Carlow and Waterford, and that both local authorities and Approved Housing Bodies (AHBs) could enter into arrangements with private landlords.

"It will be extended to AHBs, and they may be a more effective vehicle for delivery," he told the Irish Independent. "Local authorities might advertise in the paper seeking expressions of interest, but an AHB will go out and knock on doors and ask who owns property and see if they will accept three or five years' rent up front.

"That hands-on approach is needed. There's thousands (of vacant units) in urban areas and we need a scheme that brings a portion of those properties back into the market.

"It's much quicker than building a house or going through planning permission. The reason why I think this is important is we need a solution for the next two years while the overall housing stock increases. We need solutions for people today."

Census 2016 says there are some 200,000 vacant properties across the country, and the Department of Housing will begin compiling a register of vacant units when the final census figures are released later this year.

The Repair and Lease scheme is designed to make vacant private properties in need of renovation capable of being rented for social housing or to those in receipt of housing assistance payments (HAP).

In many cases, families may have inherited a property after a parent passed away but were reluctant to sell. These families would be given a portion of the rent up front to make necessary upgrades. The amount was likely to be around €15,000, but could rise to €30,000 if required, the minister said. Once expressions of interest were received, local authorities or AHBs would negotiate rents.

Some €1m is being provided over the coming months, with €2m next year. Based on average rents being demanded this year, at €929 per house, the allocation could fund delivery of more than 2,100 units.

"I'd see this as a really good response to short-term housing need but we need to show that the model works," Mr Coveney added. "It's a much cheaper way of getting housing than building or buying."

The property owner will have no role in managing the property, which will be handled by the local authority or AHB, which will also ensure it is maintained.

AHBs including Focus Ireland, the Peter McVerry Trust and Simon Community will be given resources to fund the works, and it is expected that much of the demand will be in the cities. However, vacant units in any area of need can be utilised.

The scheme is in addition to the Housing Agency's €70m budget to spend on vacant properties. It is negotiating with banks in relation to 1,600 vacant units linked to bad loans. The homes will be sold to councils and AHBs, allowing the fund to be continuously recycled.

Irish Independent: 'Repair and Lease' plan to pay owners €30,000 to put vacant homes in use

Wilson Moore Estate & Letting Agents