Thursday 12 December 2019

Housing crisis could be eased if we stop the backhander culture

UK builders could offer a solution to our housing problems if we saw plcs building homes, argues Thomas Molloy

We need to get rid of the backhander culture
We need to get rid of the backhander culture

Thomas Molloy

THE London stock exchange is bulging with house builders that have the capacity to build tens of thousands of homes every year.

At first sight, it might seem strange that no politician this side of the Irish Sea has publicly or privately urged the likes of Barratt, Taylor Wimpey or Berkeley to open up shop here. After all, we turn to foreign firms to solve all sorts of other problems and then offer them generous tax benefits to boot but we ignore a group of home builders (employing thousands of Irish people) capable of building 100,000 homes a year.

The problem is corruption. Corruption is the invisible force in Irish development which helps to explain why things get built and why others don't.

The same invisible force often determines why so many estates were built on flood plains, miles from public services or to substandard levels. Planning tribunals and court cases suggest that planning corruption has involved those holding the highest offices in the land down to local councillors. This drives out listed companies which find it very difficult to operate in corrupt countries or corrupt markets.

Here in Ireland, the Dublin stock exchange had two long-established and very reputable house builders; McInerney and Abbey. The former has de-listed owing to financial problems while the latter is focussed mainly on the UK market. A newly listed company, Hibernia REIT, is building some homes in Dundrum in Dublin but the reality is that unlike other countries, publicly quoted companies here account for a tiny fraction of home building in Ireland.

This is a shame. Listed building companies are a transparent and viable alternative to the private developers we favour here. A stock exchange listing comes with certain obligations and imposes minimum levels of quality that are not always evident when houses are built by individuals with no reputation.

That's not to say that there's no room for local builders. In fact, all the big UK companies were floated on the stock exchange by builders who had the talent and brains to make it big while staying honest.

We will know that the Irish property market has finally shrugged off the backhander culture when we start to see experienced builders using the Dublin and London stock exchanges to raise the money necessary to build the homes we need.

The end of the backhander culture will in turn have at least three positive effects on Irish life.

The first positive would be that our banks would not have to lend to developers.

The second positive would be that our political culture might improve.

The third positive would be more and improved homes in the right places.

Sunday Independent

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