Author Archives: Vanessa Foran

From top: Watching Tuesday’s budget speech in a Arnott’s; Vanessa Foran

Accountant Vanessa Foran (her off the telly) writes:

By now you will be already familiar with the main contents of Budget 2018.

I’m just going to mention some key items that got my attention; some contractions, some ironic, one that got my agreeing nod and another that deserves its “are ye taking the piss!”

The Vacant Site Levy isn’t quiet the Revenue Generator the Minister for Finance is telling you. In fact, not a single cent has been earned from it yet since Alan Kelly (yes Labour) came up with it. Of course, it’s worth driving it up even further, since that action doesn’t cost them anything and doesn’t consume resources.

But the levy conditions are so wide it is easy to navigate a work-around. Additionally, most of the Sites on the registrar (and for the site to be subject to this levy, it must already be on the Local Authority Register of Vacant Sites) are increasing in value at a far steeper pace than 4%. Dublin and the surrounding commuting areas are already running ahead with double digit growth values.

This moves me easily on to mention the Commercial Stamp Duty rise, also by 4%; and I am advised, also attaches to the Buy-To-Let Stamp. If this is the case, then it is hardly the incentive to attract more Residential Landlords to commit further investments in the rental sector, or even encourage new Landlords into the business.

Since I am on residential letting; HAP. The Housing Assistance Payment has not delivered any additional units into the Private Rental Sector. Not one. No additional Rentals have been created according to the statistics and data.

Yet your Government is laying another €149 million into HAP. However, if no additional properties are becoming available for qualifying Tenants, it will remain unspent. Maybe this is the plan, a pretend spend to announce in the many responses to the Housing Crisis.

I would add to that and say that there was no new Housing Initiative announced beyond NAMA now advising the Commercial Sector. You can digest that at the Private Sector, and let me record again that I strongly disagree with the Private Sector being the supplier of Social Housing.

The top topic now, even before Brexit, is Social Housing. Yet everything we’ve heard in the last 48 hours was announced weeks ago. That part of your Budget was recycled material that was given a new suit.

By the way; Brexit is getting a €3 billion Management fund. Yet our own Rural Affairs barely saw a €13 Million top up. So your Broadsheet-on-the-Telly friend Johnny Keenan may have to wait a bit longer for some decent broadband.

That might be a familiar and handy dig at the lack of investment outside of Dublin. But you simply cannot promote Rural Relocation as an option to Homeless Families unless there is infrastructure that can be relied on.

The same issue applies to Small Businesses and Start-Ups. If there was any genuine interest in decentralising part of the Dublin based activity and business then perhaps part of that €3 billion should have been allocated to a Rural Affairs led Development Fund.

This pretty much sums up the attitude of this Government to the general public to be honest. I have already remarked my disgust at the labelling of workers on the Industrial Wage and below as “Middle Income Earners.”

These are the Working Poor and not the Squeezed Middle that Campaign for Leo would canvas them as.Continued use of this “Squeezed Middle” allowed this Fine Gael Budget give them pretty much nothing that would enhance their day to days.

Yet the Hotel Industry get to keep their cosy VAT rate of 9%. This is my “are you taking the piss.” I am required to collect VAT from my clients, who are most likely insolvent and or at risk of losing their homes, at 23%. Yet anyone can go away for a Spa Weekend in a 5* and only pay VAT at 9%. There’s one contradiction there. A luxury non-essential service is at 9%. And Insolvency is at 23%.

Additionally, and this may not be public knowledge as it doesn’t get into the press releases and spins, but the Hotel Industry already got a full re-Rating (they now pay reduced Rates) and it wasn’t reversed either in this Budget, despite the obvious fact that this industry is clearly back on its feet.

If I had the means I would engage an Economist to study how much the Hotel Industry got to retain as profits because of their reduced Rates; to actually put a price on how much is being denied to their respective Local Authorities.

One thing to trap from this is that the Hotel Industry must have very good Lobbyists working for them.

Here’s another contradiction; the Budget promoted a 5% Unemployed rate to near full employment over the 12 months. This spells out as a possible Labour Shortage to me and yet Employers PRSI was increased.

This is absurd, and will lead to more Contractor arrangements. USC and PRSI, both EE and ER must be overhauled and rebuilt before it is touched again. Continuing with the current yet historic Social Insurance framework is not working and it is not value-for-money for the taxpayer.

Anyway, steam now vented so onto something which will see tangible benefit over the next 12 months. The additional €75 million into a now rebooted National Treatment Purchase Fund (NTPF.)  As a former Hospital Financial Controller, I know this is a magnificent boost, and I promise ye reading this that the NTPF can make a huge impact into those waiting lists.

Incidentally, this was a Fianna Fáil demand as part of the Confidence & Supply agreement with Fine Gael.

At a budget event yesterday, I learned from Sean Fleming TD that this budget is the first balanced budget in 10 years. But don’t get too confident, there is still a National Debt of €44,000.00 sitting on your head. €44k per head. The 2nd heaviest in the world. We are not in debt as much a Japan, although I’m inclined to envy their indigenous industry profile; Toyota, Honda, Nissan etc.

Fianna Fáil will insist that their Confidence and Supply agreement with this Government is bringing Stability to the country, and it is serving the country well by getting more spend into Services, and less into Tax breaks, which is hardly a secret Fine Gael ambition.

I’m not party to any deals made in Leinster House or their Party Offices, but I will say that this Budget is not a pre-election one.

Tinkering around with a fiver here and there, and not adding anything to the pint is about the height of the populist giveaways. However, it is worth me mentioning that your TDs will get to enjoy their pay rises from January 1st while Social Welfare recipients will be waiting until April.

That behaviour really bugs me as an accountant. Everything included and passed by the Dáil in the 2018 Budget should all commence on the 1st January. The top ups now being earned from Tuesdays Midnight, will all be recorded into this Financial Year 2017.

I will sign off with a note of comfort, my additional 200 EITC will at least be enough cover for my Diet Club Orange and Sunbeds over the next year.

I hope to see ye tonight and feel free to ask questions.

Vanessa Foran is a principal at Recovery Partners. Follow Vanessa on Twitter: @vef_pip

From top: David Hall; AIB; Vanessa Foran

Yesterday, AIB/EBS, the Irish Mortgage Holders Organisation and iCare Housing agreed a deal which will see the bank buy out hundreds of homes from distressed mortgage holders.

Those homes will be then rented back to them.

David Hall, chief executive of the IMHO and iCare, described it as “sensible, practical solution” to the housing crisis.

Accountant and insolvency expert Vanessa Foran (her off the telly!), writes:

It will by now be a well-read story and well covered announcement about David Hall and his iCare Housing Agency launch with AIB/ EBS.

The inevitable spin will surely have spilled into all your timelines; therefore I feel obliged to comment as I have contributed on this type of solution, Mortgage-to-Rent (MTR) in the recent Housing Special hosted by Broadsheet on the Telly.

I’m not going to argue against the Mortgage-To-Rent (MTR) scheme set by the Central Bank themselves within the Mortgage Arrears Resolution Process (MARP) as I have brokered a number of them myself on behalf of distressed home owners.

But this work is all pro bono as there is no place or role for the Personal Insolvency Practitioner (PIP) in this process.

The Creditor Bank will pay a Solicitor and a Financial Advisor (usually the original Mortgage Broker) but they will not pay a PIP. Which is an insult to the legislation introduced to deal with Mortgage Arrears and Personal Debts; The Personal Insolvency Act 2012.

The offence is caused to me in two parts. I cannot progress a Personal Insolvency Arrangement (PIA) unless the Debtor(s) have complied with MARP. A body of regulations in the hands of the Central Bank of Ireland and can be changed at their whim and yet a whole section (Chapter 4) is beholden to it.

Secondly, this Legislation created the new profession of Personal Insolvency Practitioner to specifically manage insolvent homeowners in a process that attempts to keep them in their Family Homes. Yet we are not considered suitable parties for the Mortgage-To-Rent solution.

I brokered the few I have because either the Mortgage Bank insisted that was the only solution they were prepared to consider or that I couldn’t find a more local Voluntary Housing Association to purchase the house by way of a Voluntary Assisted Sale (this might also be referred to as an Assisted Voluntary Sale or a Consensual Sale).

Before I continue, I must advise, and David Hall’s Twitter feed over the years will confirm likewise, that he has a very poor opinion of PIPs and of my profession.

The current MTR process requires the Debtor home owner to surrender their property to the Creditor Bank, from where the Bank proceed to sell the property.

The Home owner does not get to agree the sale price of the most important asset they may ever own, or even control the biggest liability they may have; and that is something I cannot defend.

It is from my direct experience to date that I can confirm that it is not good value as the costs of the eventual sale, such as selling costs and conveying costs are charged to the outstanding debt of the home owner.

An additional burden on the Debtor is that they must get themselves onto the Local Authority Housing List, and I know of no MTR progression to date that took less than 15 months. Some Banks will forgive this outstanding debt, and I will tell you AIB/EBS is one of them, but many don’t.

The process I work on behalf of these qualifying clients, and where I have built a reputation and a portfolio of successful outcomes is with Voluntary Assisted Sales.

Here the homeowner is the Vendor, they agree the price with the buying Housing agency and convey the property themselves with a Solicitor representing them; the “Assisted” in these resolutions is the agreement from the Creditor Bank to allow the home owner to sell their own property.

Ideally it is to a local and active housing association that will keep the family in their community and within their support network, and they will have already gotten the family onto the Housing Lists before anything progresses; and so far so good.

What is happening with the Mortgage-To-Rent path to Social Housing is that financing the housing bodies like David Hall’s iCare is in the control of the banks and the private sector, and at National Level. Not in your local Authority or your local communities.

Social Housing should be community based and run; and from where they can negotiate their own finance options and make their own decisions. My experience, which is direct and hands-on confirms this.

Some immediate questions need to be answered amid the announcements and fanfare around this AIB-led Housing Agency.

Will there be a cap on value for house eligibility?

How will iCare manage a dispersed portfolio?

And if the now tenants do get afforded the opportunity to buy back the property, how will that future price be calculated?

If it was that easy to run a Housing Association, we would all be at it since there is 100s of millions out there available for the Voluntary Housing Sector to acquire properties from banks that have had them surrendered by desperate homeowners willing to do anything to stay in their homes.

The last time I checked it costs €600 to set one up.

What worries me most is not that iCare cannot be good landlords and won’t be able to manage tenancies and property assets in every county in the state; it’s the lack of Independence blatantly on display; the conflict of interest is so dominant I could chip a tooth on it.

It is no secret that David Hall’s Irish Mortgage Holders (IMHO) have always had finance from AIB and other banks. And now again with this new venture iCare.

AIB clearly have direct influence over all these activities, all parties can negate this and talk to us about Chinese Walls, data protection legislation, privacy policies etc., but there is no denying that a series of conflict of interest risks exist.

Of which the lack of Independence regarding the contractual sale prices paid and the property selections should probably be addressed before any family be allowed proceed.

Selling the properties, and then financing the purchase by an organisation that already secures significant funding from the lender is not in the best interest of the distressed homeowner, and it is most definitely not in the best interest of any realistic and long-term viable National Social Housing Strategy.

I sincerely wish iCare and IMHO every success, the more success stories we have in this profession the better, because it encourages more people who are in need to reach out.

I am an active member of this new profession but it is in everyone’s interest to ensure we all do our best work to ensure it is respected, valued and AT ALL TIMES independent and transparent.

It needs to thrive so that the Mortgage Arrears crisis can finally come under control; otherwise you have to accept that homeless families, accommodation shortages and social housing stock shortfalls as a permanent tattoo on our National Identity.

Vanessa Foran is a principal at Recovery Partners.  Follow Vanessa on Twitter: @vef_pip

Rollingnews

From top: RTÉ Television Centre; Vanessa Foran

Accountant and insolvency expert Vanessa Foran (her off the telly!) kindly agreed to have ‘look see’ through RTÉ’s recently published Annual Report for 2016.

What she saw will make you TORCH your remote.

Vanessa writes:

If anyone was watching Broadsheet on the Telly last Thursday night you might remember I had a look at the RTE Annual Report for Broadsheet, but unfortunately we didn’t get to it on the broadcast.

I would like to fill you in on two particular areas that got my attention: The distribution of the Licence Fee income and payments to the directors.

First, a look at allocation of the licence fee.

In 2016, Licence Fee Income was reported as €179.1 million.

Of that 57.4% [€102,803,400] was allocated to television (RTÉ 1 & 2).

Of the €25.7 million allocated to private providers, 14% of total taxpayers’ finance, €22.6 million of it is paid to suppliers outside of our national broadcaster’s jurisdiction or, if you like, Tax Take area.

That’s €22.6 million = 12.6 % of the Irish taxpayers’ 2016 contribution to our national broadcaster.

Money that could go to up and coming screen writers, pilots, animation development, wildlife programming – all sorts of Irish stuff. It might even introduce some new faces to the RTÉ canteen, which I feel confident and competent enough to assume is something we would all like to see.

As a viewer myself, and a taxpayer, I would prefer to see more of this, the above, even if it is awful, than see RTÉ pay for and host repeats of shows I can already get on ITV or TLC, or YouTube.

For comparison, as that’s a requirement of any accountant’s report, the sum spent by our national broadcaster on acquiring programming from Irish suppliers was €3.1 million (1.7%)… €3.1m v €22.6m…1.7% v 12.6%.

[Note: If information that this money was spent on getting into the Rio Olympics and other events, becomes available, then I will reverse my opinion but, as I write this, I am of the opinion that sporting events and such are in the RTÉ Sports and Current Affairs allocations].

Meanwhile, the report’s Governance Section contains the directors’ emoluments….

RTÉ Authority chair Moya Doherty is paid twice what her fellow directors get paid.

Is Ms Doherty worth 100% more than anyone else? Argue that among yourselves but I would have to state, without any apology, that €3,100 plus mileage etc, per meeting, is outrageous.

And while it pales the other sum of €1,600 per head, €1,600 is still outrageous. It is an abuse of taxpayers’ money in my very humble opinion

And it’s all multiplied by 10.

The sum of €41,000 is also recorded for mileage and subsistence (up ten grand from previous) for directors. This is €41,000 of expenses.

Interestingly, there is good attendance at meetings, but with this kind of stipend per meeting why wouldn’t there be?

Charities and your local credit unions are forbidden from paying their directors any fees so why should RTÉ?

Why, in receipt of €179,100,000 from taxpayers, should RTÉ be allowed pay a multi-millionaire €3,100 to attend a meeting? And, repeat it, month after month for 10 meetings a year?

A hospital would never get away with that.

Also, Aengus MacGrianna is the staff representative on the board, and gets this €1,600 (aka a €16k annual top-up.) Why is this coming from RTÉ? Why isn’t his union paying it?

Perhaps the Broadsheet commentariat could decide the answer to this and my other questions between yourselves. But do let me know the outcome.

Vanessa Foran is a principle at Recovery Partners.  Follow Vanessa on Twitter: @vef_pip

Earlier: Muck And Brass