Government denies the warning signs of Cuckoo Funds

Cuckoo Funds has been recently used to describe big investors investments poured into developing build to rent housing. However, on average the developments funded by cuckoo funds are not affordable for the average individual or family. Some of the main investors that comprise of the cuckoo funds are large institutional investors like pension funds, real estate investment trusts (REITs) and special private rental firms. Investors are increasingly interested in attempting to tap into the growing demand for Irelands rental market.

Cuckoo funds are known for buying properties and charging insanely high and unaffordable prices for the properties. However, the Housing Minister Murphy has denied that housing is unaffordable. Murphy continued to argue and defend the government’s record on housing and claimed that the government has protected renters.

However, individuals have accused the government of ignoring the red flags of activities related to cuckoo funds. Multi-national venture funds have been able to sweep up properties and resell them for immense costs. Cuckoo funds have created 3,000 new housing units in 2018.

The government has not yet claimed to see the …

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Is Long-Term Renting Sustainable?

Lifelong renting is becoming increasingly popular within Ireland’s largest cities. Influential Cork developer, Michael O’Flynn, talked about instances when he heard of people suggesting that up to 50% of houses should be rented. O’Flynn heavily disagrees with this statement and suggests that ideas such as economic and pension polices should be reviewed.

O’Flynn most recently addressed this issue during his discussion at the Institute of Professional Auctioneers and Valuers (IPAV). He set out to prove that retirees could not sustain a long period of renting properties and instead should have a house paid off to retire in. He asked the audience, “There are currently five workers for every pensioner, but the projection is for this to drop to two workers for every retiree by 2050. Have we considered how that will impact on pension income?” The renting model is not affordable for many classes of people and can cause severe economic troubles down the road when savings begin to dry up. Renting can be a great alternative for people moving to new areas or students and young adults in the …

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Dublin’s Airbnb market faces increasing regulations

As mentioned in previous articles, Dublin and its surrounding areas has been struggling to accommodate every person who is willing and able to purchase a home. Demand has stayed at levels significantly higher than that of supply, causing people all over the area to rethink their current living situations.

Local authorities are looking for possible causes and solutions to this shortage. The first possible factor that the government has decided to more heavily regulate in hopes of amending their housing issue is Airbnb.

Starting July 1, Airbnb lenders will be faced with increased water, insurance and commercial rate charges. Additionally, in areas where there is a high demand for housing there may be a temporary ban on the ability to do short term let outs of a property.

In the future, landlords will be restricted to renting out their properties for only 90 days of the year and will still require the acquisition of commercial planning permission. Furthermore, the bookings will only be allowed to extend up to 2 weeks before termination of stay, and these weeks …

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Central Bank seeks additional data

The Central Bank is keen on collecting data on its users, especially when they are looking to take out a larger loan in the future. The Central Credit Register, established in 2013, has been a beneficial tool for both parties in obtaining and storing financial information.

This tool is “a new secure system for collecting personal and credit information on loans of €500 or more” according to their website. All of the data that the bank uses to calculate your credit score is reported by people or institutions that are currently lending you funds on a monthly basis.

These reports are on a multitude of information, which include credit cards, overdrafts, different kinds of loans, and mortgages. This information is all pulled together to identify you as a possible consumer and give lenders a look at your reliability before making any offers. You can access this score in the form of a credit report by request.

As of 30 June, 2019 the Central Credit Register will begin to expand their requirements to include personal contract plans (PCP), hire …

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Finance Minister Announces €1.25 Billion allocated to Social Housing

According to Finance Minister Donohoe, the Land Developmental Agency has identified sites where a potential  3,000 homes could be built. State bodies are working with the government to locate land that can deliver an additional 7,000 units.

Donohoe also pledged an increase allocation of €121 million to the Housing Assistance Payment. This additional €121 million serves as a emergency accommodation. Donohoe reveled a €60 million increase in funding will also go towards emergency accommodations.

Also, landlords will have 100% mortgage relief on loans used to pay for rental properties. This new relief for landlords will be in effect in the next year. This action will help reduce the risk of becoming a landlord.

Homelessness services were also planned to receive an increase of funding of  €30 million. This funding is to help alleviate the burdens of the housing crisis. The total spending on homelessness in 2019 is now boosted to €146 million. Donohoe’s report revealed that housing needs for 25,000 people will be met in 2019 due to the increase in supply of housing stock. The increasing trend in supply of housing …

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The Help to Buy Scheme

The Help to Buy (HTB) scheme is an incentive for first time property buyers. The scheme helps individuals with deposits needed to buy or build a house or apartment. The incentive is that the scheme will give individuals an income tax and deposit interest retention tax (DIRT) refund. This refund extends up to four years of income tax and DIRT tax paid in Ireland in arrears. The incentive has a limitation to a maximum of 5 percent of the purchase value of a home up to a value of €500,000.

To qualify for the scheme, individuals must be first time buyers. The property bought or going to built must be newly built with the construction subject to the value added tax (VAT) in Ireland. The requirements of the Help to Buy scheme also involves taking out a mortgage on the property with a qualifying lender. The loan to value ratio must be at least 70%. This loan to value ratio denotes the percent of the loan that covers the purchase value of the property.

The scheme is estimated to contribute …

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UN Sent Irish Government a Letter on Housing Crisis

The Irish government received a letter in March from the UN rapporteur, Leilani Farha, stating that, “housing in Ireland is moderately unaffordable.” The UN was using this letter as a wakeup call to the Irish government and made some very serious allegations. One of the allegations that the letter made was, “house prices are now approaching levels last seen at the height of the property bubble.” This statement relives a terrible time in the history of Ireland. The Irish government responded by saying that average households only spend one-fifth of their income on housing costs but acknowledged some prominent issues that need to be improved.

A couple of the top problems stated in the letter related to land hoarding and equity landlords. First, land hoarding occurs when investors will purposefully sit on a property to increase demand and lower supply in the area before selling/renting. This is causing major problems for citizens that are struggling to keep up with the increasing prices. The other problem is landlords, “have openly discussed policies of introducing the highest rents possible in order to …

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Ireland tourism rates rise leaves no trace on total spending

During the first quarter of 2019, it seemed that tourism spending has fallen by 4%. What is odd about this number is the fact that the rate of travel to Ireland has risen by 5.5%. After further investigation, data showed that although the frequency of traveling to Ireland increased, the amount of time that a tourist was to stay in the country has decreased by 3.2%.

With tourism number usually around 12.5 million people over 3 months time, this 3% decrease has left only 11.64 million. 3pc can make a huge impact in total income, especially with the high number of visitors per year.

Tourism is a main form of income in Ireland, especially in the city of Dublin. With a significant decrease in the number of people spending in very tourist oriented areas, there may be a significant amount of competition.

This competition will occur all throughout the city, causing stores with similar products to decrease prices so that they can stand out from their competition. The problem with this tactic is the fact that price …

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Late loan payments continue to rise

The Central Bank of Ireland reports that the total amount of mortgages that are now classified as long-term arrears have hit record highs, topping the charts at almost 6 billion euro. There are many types of properties that can and have become part of this number, but the largest group tends to be that of more residential properties.

In the previous quarter, mortgages in arrears were down significantly. Sadly, the largest category in mortgages in arrears, residential properties that are two years or above in late payments, is still increasing. The buy-to-let sector has been the largest subcategory of residential properties in arrears; 17.62% of the total is in arrears.

In April 2019, only 118 of all applications of mortgages for buy-to-let properties were approved while in April 2018 154 mortgages were approved. There was a 30% decrease within the same months separated by only one year, according to the Banking and Payments Federation Ireland (BPFI).

This huge scale down may be due to Brexit, or perhaps the seeming unreliability of buy-to-let properties ability to bring in …

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Credit union caps

The change in the economic climate of Ireland in the last few months has caused many money lending institutions to change their policies. Credit unions are among the most common to change, with the current amount totaling 36 unions all across the state.

The largest adjustment to these businesses are focused around savings accounts of current members. People who are utilizing these saving tools are now being asked to keep their savings below a certain amount.

Some of the caps imposed on these deposit accounts range from €15,000 to €40,000, causing major problems for many of the current users. If an account is above the cap amount, the account owner is required to find an alternative place to store these additional funds in less than a month.

One of the largest draws towards credit unions for people is the ability to get higher interest rates on savings and lower interest rates on loans. High interest rates can be very beneficial on savings but without a significant amount of funds able to be held in an account you …

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