The Big Bang Theory

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From top: Environment Minister Alan Kelly and Independents 4 Change TD Mick Wallace in a meeting of the Committee on Housing and Homelessness this morning

This morning.

During a meeting of the Committee on Housing and Homelessness.

Independents 4 Change TD Mick Wallace spoke about land banking in Ireland.

“You talk about the vacant site levy as if, I know you say that you’d have liked to have brought it in in 2017 and you’d like 7% and, well I’m glad to hear that, but the vacant site levy that was brought in before Christmas – do you not agree that it’s absolutely a joke. It’s going to bring in so little, it’s not going to speed up the development of sites. Are you going to tell me otherwise?”

“I mean if a fella has borrowed the money to actually land bank, you’re not asking him to even pay tax on it, you’re not asking, you’re not hitting him with a levy. It’s .75% if he owes more than 75% of the money and course he owes more than 75% of the money – he’d be off his head if he wasn’t borrowing to acquire land for land banking.”

“So do you not admit that the State has refused to actually address the problem with land banking because that is the fact and it is probably the biggest problem in terms of affordability around private housing in Ireland: land banking.

I see a site sold in Clontarf last week for, I think it’s, 27 units. The builder, the developer paid over €220,000 per unit for the site. Over 220 a unit? Now? I mean, so we haven’t dealt with it and I mean it’s an absolute scandal to the State has never dealt with it.”

“…This country is full of small sites and Dublin city has loads of them.. Do you not admit minister that there’s a huge concentration on the part of the local authorities on the big bang effect of big sites. Why aren’t we, why aren’t we getting the small sites going? Why don’t we get the small builder back in?”

“The small builders, there are small builders all over the country dying to do work. And you know what, I’ll tell you something else as well, they’re not looking for a profit of €20,000 – €40,000 a unit. The builders that I know are probably different to the builders that Frank Daly [of NAMA] might know. They’re not looking for that. I tell you what – if they made between €5,000 and €10,000 profit per unit, they’d be delighted with themselves, they’d be more than happy.”

“I’m asking you minister, is it possible to actually activate a lot of the smaller sites and get the smaller builder back in but then we’re back to the finance problem again. Can the State start organising the finance for them? Because the banks won’t give it them, the banks don’t want to lend to him.

“Most of the building that’s going on in this town today is being done by investment funds and the Irish banks are not even funding it but these guys come up with their own money and they’re dominating what’s being built at the moment. You have the Kennedy Wilsons and the [inaudible] now building but they’re only building for the rental market – so they don’t have to worry about selling them at a low price.”

More to follow.

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39 thoughts on “The Big Bang Theory

  1. ahjayzis

    Can we not just implement the Kenny Report? It’s been gathering dust for 42 years. It would end land speculation in Ireland.

      1. ahjayzis

        That rezoned land for development should be valued at 25% above the agricultural valuation. It would’ve ended planning corruption by speculators and would forever reduce the cost of development.
        No millionaires would ever be created overnight by the colouring in of a planner’s map.

    1. Tish Mahorey

      But land speculation is the modern gombeenism and it’s the bread and butter of Fianna Fail and Fine Gael backers. Profiteering from the disadvantage of fellow citizens is an Irish tradition.

      Your mates in Government create the disadvantage and then you (and they) cash in.

  2. thecitizenatbarneys

    In fairness, Wallace is 95% right with this.
    Unless public bodies learn how to procure properly though…. plus ca change.

  3. Owen C

    “The small builders, there are small builders all over the country dying to do work. And you know what, I’ll tell you something else as well, they’re not looking for a profit of €20,000 – €40,000 a unit. The builders that I know are probably different to the builders that Frank Daly [of NAMA] might know. They’re not looking for that. I tell you what – if they made between €5,000 and €10,000 profit per unit, they’d be delighted with themselves, they’d be more than happy.”

    I think Mick is being a bit disingenuous here. Frank Daly, I’m pretty sure, has said how developers, not builders, want to make a 20-50k profit per unit. That’s based on finding land, buying it, designing a development, getting planning permission, building it and then selling it. That might take a few years. 50k on a 250k house (lower end) is 20%. Thats not exactly outlandish for the time, investment and risk involved. Some of the listed property developers have expressly mentioned that they are aiming for a 20% profit margin.

    Builders may well be willing to build a house for a 5-10k profit margin, but I’m assuming they’re not taking on all the development costs/risks/responsibilities as well.

    1. ahjayzis

      Is building and selling a shed of a house in Dublin not one of the least risky things you could do with your money?

  4. Toni The Exotic Dancer

    Wallace is bang on here. Sort the supply side out, not the demand side. And it starts with large penatlies for land hoarders. Above all else, housing needs to be fixed now. No more can-kicking.

    1. Clampers Outside!

      +1…. Ass Kisser will still do his own stupid thing and fupp it up… like the promise of cheap modular housing and his failed attempt to return us to shoebox apartments.

    1. Tish Mahorey

      “Wallace Tax Dodger.”

      He’s paying it by arrangement. He never dodged it, he just didn’t have it to pay when it was due. Not the same thing.

      You’ll find plenty of actual tax dodgers to the centre right of Irish politics. Pa-lenty of them. Taking bribes in through off-shore accounts, waiting for them when they retire. Changing legislation to facilitate a big corporation is a lucrative business for a politician.

          1. Broadsheet Spawned A Monster

            The stuff about Wallace is complete crap. The Jesuitical bullpoo about how the money was just resting in his account. You’re a bigger bottyhole for agreeing with him btw

          2. Sheik Yahbouti

            By the beard of Allah, this appalling insult will not go unpunished. “bottyhole” you say?? Are you a little girl?

  5. Fact Checker

    Building in Ireland is a high-risk activity. It takes minimum 24 months from site purchase to handing overkeys and getting paid. There are lots of tricky regulations to be respected and potential for delay (planning system, etc).

    In the meantime, the prices of houses (really the land underneath houses) is INCREDIBLY volatile in Ireland. 24 months is a long time in Irish land prices.

    So you could make a huge profit. Or you could make a huge loss. It is not a predictable enterprise like selling corn flakes in a supermarket.

    Big risk generally involves high rewards when it goes right. This is axiom 1 of finance and is not unique to building houses in a particular city in NW Europe.

    1. Jake38

      As I have noted previously Fact Checker, your contributions are far too sensible for this discussion.

    2. fmong

      In the meantime, the prices of houses (really the land underneath houses) is INCREDIBLY volatile in Ireland. 24 months is a long time in Irish land prices.

      Surely this is because we’ve been having unregulated boom to bust cycle fuelled by politicians with close ties to builder and a property advert funded media all mixed in with an unregulated “ah sure it’s yourself” banking style?

      The only way to stop this fishing tailed is to apply controls and strong regulations, people will bitch and moan, but in the short term but we need to recalibrate or we’ll walk directly into a double dip recession…

      1. Fact Checker

        The issue is that land use in Ireland is already HIGHLY regulated. Anything more than a one-storey extension to your house requires elaborate adherence to a somewhat arbitrary set of rules with often-unpredictable application (aka the planning and zoning system).

        This means that ‘shovel-ready’ sites are rare. And when supply is tight a small increase in demand (Dublin economy is growing strongly) means huge increases in prices. Opposite happens when economy stalls, prices collapse.

  6. DubLoony

    There are lots of little pockets of derelict sites in Dublin. They will never be hit by the site levy because they are less than .5 ha in size.
    Big developers don’t like those infill sites because there isn’t an economy of scale when doing large estates.
    There was some incentives a while back for innovative self builds.

    Bottom line, city will remain poc marked if nothing changes.

    1. Kieran NYC

      +1

      Those sites might become more attractive if there wasn’t such a knee-jerk reaction against any suggestion to build ‘up’ in Dublin.

  7. Junkface

    Oh God! Ireland, its so depressing. Massive problems and corruption everywhere. How do we even function? Christ!

  8. scottser

    Big bang theory is gone a bit poo. I mean, look at how penny has let herself go in that 2nd pic.

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