A Manifesto For Property Developers

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 Ruth Coppinger TD

That action plan on housing.

End of local authority housing as we know it, three quarters of council land to be privatised, no challenge to EU rules and rocketing rents to remain.

What’s not to love?

Ruth Coppinger  writes:

The government’s Action Plan on Housing sadly repeats the failed focus on incentivising the market through increasing the profit of developers and landlords.

The market caused the crisis, now this neoliberal government turns to it to resolve it.

Given the scale of the housing emergency, the poverty of ambition is startling, considering also the much-lauded economic growth. The aim is to house only one-third of those on current lists by 2021.

Presumably the rest can just wait another 10! The figure of 47,000 ‘social houses’ is a mix of new-builds, refurbishments, acquisitions and leasing, the latter often impermanent. It falls short of even the Housing Committee target and adds on another year.

As I pointed out with the Housing Committee Report, funding and delivery is dependent on keeping within strict EU fiscal rules.

The Plan confesses that while the housing emergency has been raging, the Dept has scandalously spent two years trying to come up with a workable off-balance sheet model to do this.

If implemented, this will mark the end of local authority housing as we know it. Not alone will ‘additional social housing provision (be) a combination of building, acquiring and leasing’, but councils will not be directly funded and allowed to fully build on their own land.

They will be forced to hand over 75% of it to private developers. A new form of housing estate will be created on public lands: only 25% will be council housing and the rest private mortgages and affordable/’cost rental’ where tenants will pay up to 80% of the market rent, rather than a differential rent based on their income.

The key to resolving the housing emergency is to use council and Nama lands, for councils to directly employ labour and build on public lands on a large scale, cutting out the private developers cut (often 11-15% ) and keeping costs down.

The document is laced with stigmatising phrases about council housing, such as ghettoisation and not repeating ‘mistakes of past’.

But if social housing is limited to 25%, we would have to build 560,000 houses to clear the 140,000 on the council’s lists!

Local authority estates can be highly successful if well planned with facilities and open space. The income eligibility could be raised allowing more workers avail of affordable mortgages or council rents.

But there is never a concern for ‘tenure mix’ in Killiney or Malahide.

The real reason for the ‘tenure mix’ is to have a rental funding stream to achieve the neo-liberal ‘off balance sheet’ rule.

For the 6,000 people in emergency accommodation, there is little except more overpriced modular or transient housing. The emphasis is on forcing people onto HAP or private rental, potentially miles away from the family’s choice of area.

Despite the Private Rented Sector being the cause of homelessness, the government promotes it, extolling it’s virtue of supporting “a mobile labour market, as renting households may more easily pursue job opportunities.” It ignores the interests of workers and families who want to live in a fixed community.

Instead of rent controls to stop the huge hikes which are making people homeless, the Plan proposes no measures to curb profiteering on rents, it defends and promotes landlord interests by continuing the use of the private sector as a substitute for public housing, alongside introducing a new range of tax breaks to ‘incentivise’ landlords. No moratorium either on repossessions.

Rather than driving down the cost of housing to affordable levels, a ‘help to buy’ initiative for first time buyers would end up in the pockets of developers.

Michael Noonan told the Housing Committee ‘we do not have a shortage of money’. He is right. €5.4 billion is sitting in the Irish Strategic Investment Fund – the remnants of the pension reserve fund after it bailed out the banks.

But he admitted that EU fiscal rules prevent us actually spending it on public housing. It must be ‘off balance sheet ‘ and involve the private sector or be self financing. The same goes for the €2.4bn cash reserves Nama has left.

Neither do EU fiscal rules prevent taxation on wealth being used to finance housing. So, a millionaire’s tax could be introduced. The headline rate of corporation tax could be immediately imposed and increased to house our homeless.

The government could stop its opposition to Apple repaying €17 billion in back taxes to this country. There is vast untapped and untaxed wealth that could be used to fund affordable and secure home building.

Only a government that is willing to challenge and breach those rules can end our housing emergency.

That government is not this government.

Ruth Coppinger is a member of the Socialist Party and an Anti Austerity Alliance TD for Dublin West. She has occupied Nama housing with homeless families. Ruth is a member of the Housing Committee and has published her own housing Minority Report. Follow Ruth on Twitter: @ruthcoppingertd

50 thoughts on “A Manifesto For Property Developers

  1. Harry Molloy

    hardly surprising that a Communist has contempt for any housing that isn’t council housing.

    oh for the glory days of Soviet housing!

    1. Clampers Outside!

      But is she right that this basically spells the end of all social housing? And the handing over of that responsibility to the market…?

      If she is right that that is what this is… then that’s nothing to get all “you feckin’ Commie” about, in all fairness.

        1. Jean

          This is our political elite filling their pockets off the back of the citizens they are supposed to represent

    2. louislefronde

      Some people want everything for free… oh… and make the middle class pay for their lives!

      Sorry Ruth, I don’t doubt your sincerity nor the need for public housing. But I am tired of listening to that ‘neoliberal’ soundbite you and your fellow communists throw around with abandon. It’s just a shame you never worked in the private sector….

      1. Sham Bob

        You complain about people wanting everything for free but you don’t doubt the need for housing? Which is it?

      2. Jean

        What are you on about seriously. Socal housing that was build in the 50\60’s was sold off in the 80\90’s and bought by the people who had paid rent for 40 years. Yes social housing occupants pay rent! As nothing in this world is free. And before you givw me the private sector spcheel I to work in the private sector and yes I’m luck I bought my own home. But would I give way my back garden to a developer for free so he can build a house on it using labour from the north or foreign subcontractors. And then sell it to a landlord. Growup or wakeup and smell the coffee

      3. Ro

        You’re obviously too right-wing to be aware that Ruth Coppinger isn’t a liberal. In fact, would be one of the main voices in politics speaking out against neo-liberalism. And if you knew your stuff it’s the super rich and multinational corporations that she is targeting. I give you 0/10 for intelligence.

  2. Sido

    Really, blaming the Irish County council that sits in the Oireachtas for the failings of the neo liberal government in Brussels – misses the point.

  3. b

    another article full of workable solutions from Comrade Coppinger

    of course, it is as simple as the county councils holding open auditions for all the out of work competent builders and setting them to work on a site. There are numerous examples of where you get the council to run a development project, it really cuts the costs down massively

  4. MoyestWithExcitement

    “They will be forced to hand over 75% of it to private developers. A new form of housing estate will be created on public lands: only 25% will be council housing and the rest private mortgages and affordable/’cost rental’ where tenants will pay up to 80% of the market rent, rather than a differential rent based on their income.”

    And the asset stripping of the working class, the transfer of wealth from the people to a wealthy elite, continues. Neo liberalism failed in 2008. Our government’s idea on how to respond? More neo liberalism. We are governed by incompetent buffoons who are voted in by deluded slogan chanters who repeat opinion pieces from the Sunday Indo like it’s their own opinion.

    1. louislefronde

      Working Class being asset stripped, give me a break? It’s the squeezed middle aged between 30-50 who were screwed over by the Greedy Boomers, and it’s not unique to Ireland, either… And by the way its the middle class who pay 80% of direct taxes in Ireland….which has conveniently been termed by the left as ‘progressive’…. when in fact it’s bureaucratic theft to buy the votes of the ‘dependent class’.

      1. MoyestWithExcitement

        “Working Class being asset stripped, give me a break?”

        Publicly owned land and services being sold to private individuals is asset stripping the working class, yes.

          1. louislefronde

            Because, you know……they’re worth it…..

            Somebody remind Copping and her comrades, that there’s no such thing as a free lunch, free water, free bin collection, free money, free allowances……. because someone else is paying for it.

          2. MoyestWithExcitement

            “because someone else is paying for it.”

            VAT is a thing, lad. The working class pay their fair share. Someone needs to remind you right wingers that it’s the working class who keep the economy ticking with their spending and that austerity, diminishing their spending power, is fundamentally stupid.

          3. Harry Molloy

            judging by the election results it’s those you term right wingers who make up most of the working class

      2. Anne

        “And by the way its the middle class who pay 80% of direct taxes in Ireland”

        Are you referring to PAYE?

        Which doesn’t include billionaires who dodge tax using QIFs for examples..

        http://www.davy.ie/binaries/content/assets/davypublic/fund-services/briefings/investing-in-irish-real-estate-via-a-qualifying-investor-fund-web.pdf

        Overview
        The Qualifying Investor Fund (‘QIF’) is an Irish regulated fund structure and the vehicle of choice for private and institutional
        investors who are undertaking large scale investment in real estate or other alternative asset classes. The total asset value of Irish
        Qualifying Investor Funds is €204 billion

        axation Benefits
        Investors who invest in Irish real estate assets either directly
        or via SPVs are subject to local income and capital gains taxes
        regardless of their tax resident status. QIFs mitigate these tax
        liabilities.

        Taxation within QIF structure:

        Income and gains on directly held assets accumulate tax free

        Tax Free, Louis ..who grew up on the Cote D’azur..

        1. Anne

          I was just reading this too – Section 110, that Stephen Donnelly mentioned recently..

          http://www.arthurcox.com/wp-content/uploads/2014/12/Arthur-Cox-Property-Investment-Structures-in-Ireland-Irish-Investment-Opportunities-Nov-2014.pdf

          While subject to the higher 25% Irish corporation tax rate, the taxable profits
          of a Section 110 SPV are computed in accordance with trading principles
          and can include a deduction for profit participating debt. This means that, after
          deduction of financing costs and other related expenditure as well as interest
          on profit participating debt, minimal profits are generally left behind in the
          SPV resulting in nominal taxes. The use of profit participating debt also provides an efficient means of profit extraction for investors.

          A wide variety of domestic exemptions from withholding tax on interest provide non-resident investors
          with minimal Irish tax leakage on investments in a Section 110 SPV.

        2. Anne

          You can be left with “minimal profits”… but can have yourself some “profit extraction” at the same time… How can it be so, you might be asking yourself..

        3. Anne

          “And by the way its the middle class who pay 80% of direct taxes in Ireland”

          Indeed..

          http://www.byrnemccall.ie/byrnemccall/main/Special_Purpose_Vehicles.htm

          Here’s more for you Louis from Cote d’azur

          Introduction – why is Ireland a leading jurisdiction for SPVs?

          Ireland is a firmly established location for the establishment of special purpose vehicles (“SPVs”) for financial investment transactions including securitisations, repackagings, collateralised debt and loan obligations, warehousing, and distressed asset investment.

          There are a number of reasons for Ireland’s popularity: Ireland is an onshore jurisdiction and a long standing member of the European Union and the Organisation for Economic Cooperation and Development (“OECD”). Ireland’s favourable tax laws allow structures to be established which are tax neutral. With the correct structuring, wide exemptions allow the return generated by the SPV to be paid to investors free from Irish withholding tax. In addition, Ireland has an extensive network of double tax treaties which provide for the return generated by the underlying assets to be paid to the SPV with zero or reduced foreign withholding tax.

          Section 110 provides that the taxable profits of a qualifying company involved in the holding and/or managing of “qualifying assets” should be computed on the same basis as a trading company. This allows for the cost of funding and other related expenditure (including for example interest and currency swap payments and payments to service providers) to be tax deductible. The ability to claim a tax deduction also extends to profit participating interest. While the qualifying company will be subject to corporation tax at the rate of 25%, tax neutrality can be achieved by matching deductible expenditure with income through the sweep out mechanism of a profit participating or ‘hybrid’ note (“PPN”) (see below).

          “see below” in the article if you’re interested..

    1. Panty Christ

      CIF and developers – “Not *profitable enough to build” profitable but just not enough. Yep, that’s greed.

      *they make 10% on everything after wages, land cost, levies etc etc. New builds, like those cosy 3 storey houses in blocks of 10/15 popping up all over dublin are on average €500K a go on the market. Last time I checked 10% of €500k, it was €50k per unit. So clearly not enough profit to be made.

  5. DubLoony

    The whole goal of the mixed developed & housing types is to have a social mix.
    The big blocks of social housing only, under serviced & on the outskirts of towns were a social disaster.

    No-one is ever going to build Ballymun, Fatima, Darndale, Jobstown or original Tallaght again. It took years or work to deal with the problems, some were flattened, others made mode diverse but no before lives were ruined by bad planning decisions.

    Having a mix is a more European norm, ending stigma of address & social exclusion.
    But no telling that comrade Ruth.

    1. Corrado Gini

      I don’t want to live beside people who haven’t paid the full ask for their properties. I don’t want a social mix. You can keep them out in some estate off the M50, thanks.

    2. Harry Molloy

      I’m actually surprised to hear anyone proposing local authority estates in this day and age.
      Tbh, my gut feeling is that if they were proposed in the plan she would have come out against them and call it social marginalization.
      You can’t win with some. The adults will get to work in the meantime.

    3. Anne

      You’re not giving the best examples of social housing..

      A lot of Dublin estates were council estates originally.. houses that now cost close to 400k.

      Fintan O’Toole: Opposition to social housing is matter of ideology not economics
      Why could State build housing in hungry 1930s and postwar 1940s but not now?

      http://www.irishtimes.com/opinion/fintan-o-toole-opposition-to-social-housing-is-matter-of-ideology-not-economics-1.2397695

      Free-market ideology
      It is striking that the decline in the building of social housing in Ireland follows directly from the rise of so called “free market” ideology in the Thatcher/Reagan era. In the mid-1970s, social housing made up a third of all new houses. The shift in which that proportion dropped to just 5 per cent was as disastrous economically as it was socially – the property bubble could not have inflated without it.

  6. Medium Sized C

    I see ghettos in the future.
    Large chunks of privately owned housing sublet by councils.
    More expensive, less well attended and obviously way less protection for tenants.

    Although that said, the traditional model of civic authorities building social housing did that too, but at least that was just down to catastrophic planning.

    1. Harry Molloy

      sure what’s the solution if both are wrong?

      make everyone rich I suppose. maybe someone should propose that.

  7. Trust in the News

    Since then establishment of this state social housing was built by county councils
    and the NBA, if the state could waste almost a billion on Irish Water, how come
    they could not establish a State Agency to house its citizens, with what they spent
    on Irish Water and the proposed additional payment to Brussells on cockeyed CSO figures, it would build a lot of houses, but this would upset the property market and put a damper on property price inflation and the merry to round that
    along with for Solicitors, Auctioneers, Landlords, Newspapers and Taxmen.

    1. Andy

      Because that morons proposal is based on:
      (i) per unit construction costs
      (ii) no maintenance or voids,
      (iii) a 1% borrowing rate in perpetuity.

      What’s wrong with that?
      (i) He doesn’t include any costs for the construction of services, utilities, infrastructure etc,
      (ii) Social Tenants, unlike like those that buy their own property, don’t maintain their own homes. Something breaks (no matter who broke it) then its for the council to fix. Maintenance capex is a significant expense for LAs as it stands,
      (iii) Ireland’s historic 10 year borrowing rate is much higher than the current 1% (c. 4% during the boom when we were the belle of the ball). An increase in the Borrowing cost to 4% results in the per annum per unit cost (rent) increasing from €1,740 to €6,960 – never mind funding any sinking fund to upgrade the properties.

      But you know, with David, a simple solution sells papers.

  8. rob

    No moratorium either on repossession – the housing plan addresses the issue of mortgage arrears through mortgage to rent which ensures the borrower and their families stay in their homes. There are an estimated (by the Housing Agency) 60000 mortgages in serious arrears i.e. they will never be paid back so mortgage to rent allows all of these borrowers to avoid having their houses repossessed.

  9. jake38

    I presume Copps and the other Trots would like me to fork out more tax to pay for their free houses. No thanks.

  10. Rodger

    Get the councils to employ direct labour. Is this for real, how would this be a cheep option. The mind boggles.

    1. Sham Bob

      I think it just means the local authority being the developer and controlling the project.

      1. jake38

        They’d do a fantastic job. Like they do with potholes, and the water supply, to name just a couple of examples of the spectacular effectiveness of Irish local authorities.

        1. MoyestWithExcitement

          Oh, that’s right. I forgot Priory Hall turned out to be an elaborate prank.

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