Friday 9 December 2016

Expert warns Coalition to 'hold firm' in housing crisis

Both FG and FF want to transform Nama into a house-building agency

Jody Corcoran, Maeve Sheehan and Claire Mc Cormack

Published 20/09/2015 | 02:30

Conor Skehan told the Sunday Independent reports that the Government was proposing to 're-purpose' Nama as a housing executive 'reeks of common sense'
Conor Skehan told the Sunday Independent reports that the Government was proposing to 're-purpose' Nama as a housing executive 'reeks of common sense'

The chairman of the Housing Agency has said the Government needs to "hold firm" against pressure to introduce short-term fixes to meet mounting housing needs.

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Conor Skehan told the Sunday Independent reports that the Government was proposing to 're-purpose' Nama as a housing executive "reeks of common sense."

Yesterday Health Minister Leo Varadkar confirmed the Government was considering asking Nama to build houses: "One of the things that's under consideration - and it's only under consideration - is using Nama to build housing."

However, Fianna Fail will this weekend propose a National Home Building Bond to raise funds to address the growing housing crisis.

Like Fine Gael, Fianna Fail wants to establish an agency within Nama to build housing for profit for first-time buyers in Dublin and urban areas.

Under the Fianna Fail plan, the agency would be a "Special Purpose Vehicle" funded by a National Home Building Bond and managed by the National Treasury Management Agency.

Separately, Fianna Fail will also outline a €4.5bn social housing plan to construct 45,000 units: "The key point here is that this would be a for- profit venture," Environment spokesman Barry Cowen said.

Funding for the Fianna Fail plan would be raised from institutional investors including pension schemes; the Ireland Strategic Investment Fund; small savers looking for a good rate of return and the credit union sector, which has considerable cash reserves.

Yesterday Agriculture Minister Simon Coveney repeated that the Central Bank should look at 20pc deposit requirement for first-time buyers who could not afford to buy a home.

"The Central Bank should look at the ceilings for deposits," he said. "The solution to the problem has to centre around supply," he added.

But Mr Skehan urged ministers, who he said were under "unprecedented pressure to adopt an ever-extending list of initiatives", to hold firm.

A devastating new wave of family home repossession cases are about to hit the courts, with an estimated 7,000 cases listed in the next six weeks.

As the courts resume after the summer recess, new figures reveal that 2,000 families - largely from rural areas - face repossession court proceedings by the end of the month.

A staggering 180 cases are listed in Limerick and 166 cases in Ennis, Co Clare. A total of 165 cases are due in Letterkenny, Co Donegal and almost 140 cases will be heard in Naas, Co Kildare. In Athlone, 20 home-repossession cases will come before a judge.

Mr Skehan said the Government would be rightly criticised if it allowed itself to be "herded" into assuming that all housing needs can only be met by new building: "There are considerable numbers of vacant and under-utilised housing stock - especially in the Dublin area," he said.

"These represent the type of very easily harvested 'low hanging fruit'. These can be used to fill the gap between the re-emergence of demand and the recovery of supply of new-built housing.

"Encouraging quick changes of behaviour is best achieved by once-off fiscal incentives which can trade off short-term tax sacrifice for long term economic stability and competitiveness. Minister Noonan take note," he said.

He added advocates from a range of interests - from house builders to housing charities - were trying to persuade Government to adopt a series of short-term or short-sighted 'silver bullet' solutions.

"These pressures to adopt radical policies occur at this stage of every property cycle recovery. Left unchecked and unchallenged many governments - all over the world - succumb and introduce policies that turn out to be the pro-cyclical measures that eventually fuel the next bubble.

"Advocates for radical change and many commentators overlook that these problems are not unique to Ireland - we are not uniquely incompetent.

"Media in the UK, Germany and Spain are all filled with weekly reports about crises in housing because of mis-matches between housing demand and supply. There are calls for rent-control, planning reforms and tax breaks for builders all across Europe -we are not alone.

"Lest we forget, not so long ago in Ireland we succumbed to similar pressure and introduced lax credit rules, development incentive schemes and pro-property taxation incentives.

"Once introduced, these incentives are difficult to withdraw. They slowly accelerate the economy into the oversupply that characterises the start of the next property bubble.

"Now is the time for wise, calm action. Action is needed - but it needs to be careful and long sighted."

Mr Skehan also said the Government "needed to be praised and criticised": praised for the amount of work that has already been carried out to meet housing demand and criticised for not doing more to make public these actions.

He cited the Social Housing Strategy, which has already committed more than €3.5bn to building, acquiring or leasing 35,000 social housing units by 2020 and the Dublin Housing Supply Coordination Task Force, which had identified a capacity to provide over 46,000 new houses in the immediate to short term.

Sunday Independent

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