Real deal... the business of property
New homelessness figures were released this week. Drilling down into the numbers confirms that the number of adults who are homeless is still increasing, albeit at a slower pace. The figure stands at 4,760, an increase of 133. The most vulnerable people are families and dependants. Thankfully, numbers for both these groups have fallen by 33 and 98 respectively. The number of adult homeless people, however, is still rising, implying that we haven't turned the corner yet. A promise was also made by the Government that the 700-plus people living in hotel accommodation in Dublin will be rehoused by July 2017. This deadline hasn't changed but it will require an additional 300 houses to achieve. Where will these come from?
The Government's strategy on empty houses is to be published in late March. In advance of this, the Peter McVerry Trust is holding an Empty Homes Conference on March 8 in Croke Park to identify both barriers and solutions to how to best use the nation's vacant properties.
The most up-to-date figures available for vacant homes were published last June and stood at 198,000, with 50,000 of these in Dublin alone. Commenting on these figures, CEO of the Peter McVerry Trust Pat Doyle claimed that in our cities, we have 13 vacant houses for every homeless adult. "Tackling empty homes is a no-brainer," he said. "It can deliver badly needed housing in areas with the greatest need, but only if the Government commits to genuinely tackling the issue."
The Repair and Leasing scheme initiative announced this week also aims to address the issue of vacant houses across the country. This pilot scheme proposes to secure up to 800 additional properties for social housing. A €32m provision has been made for the repairs necessary to bring these properties up to standard.
Apart from providing more homes, the provision will help to reinvigorate villages around the country.
Sales down, but values up
FIGURES released this week by website Myhome.ie confirm that the number of sales transactions in 2016 fell by 3.5pc on the previous year, to 47,500. The total value of transactions was up 7.5pc. This is in tandem with an average increase in values of 8.1pc nationally for the year.
These figures are of real concern and highlight the continued lack of suitable stock in locations where they are most needed. It only serves to highlight the need for an immediate increase in the delivery of new housing units by both the public and private sector. On the plus side, planning permissions are up nearly 50pc on this time last year. It is essential, though, that these permissions are followed through on and the houses are constructed without delay. If many are located in areas where it is not yet profitable to construct new homes, it will be of little benefit to the market in the short term. Let's not forget these permissions last for a period of five years.
Dublin accounts for 31pc of all sales that took place over the 12-month period. This figure will continue to rise as the population of Dublin increases at a much faster pace than the rest of the country.
Another significant number is the 18,900 properties currently listed for sale on Myhome.ie, a decrease of 12pc on last year's figure and less than 1pc of the national housing stock (two million). In a normally functioning market, the figure would be up to three times higher.
The most expensive residential property sold in Ireland in 2016, according to the Property Price Register, was the Lyons Estate in County Kildare for €12m. The cheapest was for €5,900 in Claremorris, Co Mayo.
Mind your houses
In the past week, the focus has shifted from houses for the Irish people to the Houses of the Oireachtas, and it's clear now that a leadership contest will take place in Fine Gael over the next two months.
Once the contestants are confirmed - I'm betting on Varadkar, Coveney, Harris, Bruton, and Fitzgerald - the real canvassing will begin. Some TDs have already nailed their colours to the mast, but the real focus will be on the undecided and those whose initial preference didn't make the final list. One of the front runners for the role of leader and Taoiseach is, of course, the Housing Minister, Simon Coveney.
The timing is, at best, unfortunate. The Housing Strategy is still in its early stages. On top of this, the Brexit discussions are imminent, once Article 50 is invoked at the end of March. There is no doubt that these issues will take priority over the next two months. But at the same time, it's crucial that the momentum established to date in addressing the housing crisis is maintained. Following the Taoiseach's speech last Wednesday night, we know that things will start to crank up just before his St Patrick's Day trip to Washington to meet US president Donald Trump. Minister Charlie Flanagan says it will be 'business as usual' while the leadership battle is taking place. I find that as implausible as Trump remaining in office for four years.
On the question of distressed mortgages
The Government is close to finalising a new initiative which will address the most distressed mortgages in the country. Approximately 34,000 mortgages are in arrears of two years or more. Recent changes to the Mortgage to Rent Scheme allow for the bulk buying of mortgages to be rented back to those in significant arrears. It is understood that up to three parties are interested in purchasing a portion of these mortgages.
They include Arizun, a US-based equity fund, a Merrion Capital backed consortium and ICare, which is headed up by David Hall of New Beginnings. It is likely that additional parties will enter the fray as the process is rolled out, especially with the potential number of properties in question.
The debt would be wiped out and the occupiers would rent the property over a 20-year period with the option to buy the property back at a future date. They might also benefit through a share of the future uplift in value of the property.
From the Government's perspective, a large sale like this offers tangible benefits, far and away the biggest one being the ability of people to stay in the family home on a long-term basis, without the threat of eviction or repossession, on the proviso that they continue to pay the agreed rent. It also would eliminate the challenge the Government faces in rehousing those whose homes may have been repossessed.
A crucial element is the rent that would be charged. It is too early to estimate the likely rent levels and how they would compare with market rents. But obviously, they would have to be affordable for it to work. Could they be supported through government monies or subsidies?
With the recent announcement that the Government is considering the initiative, it's likely we'll see it rolled out over the next 12 months. It is difficult to see much of a downside for the occupier, the Government and the landlord alike. As always, though, the devil will be in the detail.
In a separate development this week, the Independent Alliance launched a bill that aims to keep people in their homes and avoid repossessions. The bill allows courts to consider the social impact of repossession on homeowners and their dependents.
It would appear that people in Ireland who are in the most precarious positions in relation to their mortgage are now being provided with options, which ultimately will allow them to look to the future and not to the past.
- Philip Farrell is a market commentator and property consultant