Central Bank warns of a financial stability threat due to cuckoo funds

Cuckoo funds or offshore venture funds in Ireland’s commercial property is causing apartments to be bought up by the big businesses that make up the cuckoo funds. The increasing dominance of offshore investment in Irish commercial property is causing risks that they will also import a boom bust cycle. According to research from the Central Bank, the threat is also that house prices will fall and the banks will be weakened.

Warnings have been definably seen as two of the biggest property investors in recent years look to sell a large portion of their office blocks. The Central Bank continues to explain that foreign financed funds are more vulnerable to negative shocks outside of Ireland. In other words, foreign investors are not as concerned with the Irish economy as they are concerned with the general economy and their investments. Foreign investors are not concerned with the health of the Irish economy and could potentially get rid of all Irish assets to pursue easy profits elsewhere.

Although there is high risk associated with cuckoo funds and foreign investors, these investments are …

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Renting vs. Buying

A current issue revolving around Irish news is whether to increase the supply of rental or property ownership. It is well known that there is a shortage in properties available, but just trying to produce as many properties as possible is not the solution. Careful review of the issue needs to take place by the government and necessary legislation would follow. Some factors to consider include; land zoning, shared ownership purchase models, tax breaks for EU nationals arriving for construction work, reduced CGT for empty sites, tax reduction for citizens downsizing, and help-to-buy schemes.

First time home buyers are having trouble purchasing homes due to the increasing purchase prices. It is universally agreed upon that more properties need to be available. According to an independent article, 2500 houses that were built in the first three months have not been sold yet. In addition, this is driving up decisions. That coupled with difficult mortgage banking is challenging middle- and lower-class citizens to find accommodation. These statements emphasize the lack of availability and ease for purchasing affordable housing.

Build-to-rent schemes have the …

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Recent currency conversions

One of the hardest parts of traveling outside of the EU, or any area that uses the same currency as your own is dealing with exchange rates. Many people traveling from Ireland for business or pleasure to their neighboring country, the United Kingdom, many times find themselves exchanging their hard earned euros for a lesser amount of British pounds.

As of late, any person traveling from the EU to the UK may have noticed a decline in the value of the pound compared to that of the euro. Within the last month and a half, the pound has hit record lows since 2009; the exchange rate is 88.92 pence per euro.  

This low extends to the exchange rate associated with the United States dollar. One pound sterling is currently exchanged for $1.268. In just the beginning of May 2019, the rate was $1.32/pound. This is a significant loss in value over one month’s time.  

This fall is heavily due to the instability of the economy that rests on the shoulders of the October 31 Brexit decision. The …

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OPW’s failures in property management – overpaying for properties

A former employee of the Office of Public Works (OPW) will discuss in a private session of the Public Accounts Committee (PAC) that they have shown to have immense failures in the property management unit.

The main purpose of the OPW is to support the implementation of policy. The Office of Public Works also advises the Minister and the Minister of State in property. This property includes heritage properties and flood risk management.

The former employee worked in the property management unit. The previous employee revealed that the Office of Public Works wrote numerous reports that showed the shortcomings and failures in the way that the OPW deals with property.

The OPW has been under recent pressures due to the move of the Department of Health headquarters onto Baggot Street. According to the PAC, the move led to an overpayment of €21 million. The former employee will assess on the value of money in the OPW’s total property and report to the PAC related to the overspending of OPW. According to the employees report the overspending of a single session exemplifies …

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Irish economy projected to make gains

According to a report posted by Ernst & Young (EY), one of the Big Four accounting firms, the Irish economy is seemingly on the rise. This multinational company with HQ in London, England, United Kingdom has been investigating the health of the Irish economy.

Through their research, the company found insight that allowed them to project how the Irish GDP will grow within the current year. As of now, they have estimated that the economy is to grow by 4.1%. This number is consistent with that of the Central Banks, who projected growth of 4%.

These numbers are based solely on the first three months of 2019, and are bound to change with more and more information collection. As of now, their predictions are based largely on substantial corporate tax returns and the addition of new jobs into the market.

Although there are significant positive projections associated with these findings, there are many possible repercussions. One of the most prevalent issues would be the lack of resources available within the Irish economy, but especially around Dublin, to be …

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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 dangers …

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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 has …

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