There is a message coming from two sectors who have a housing demand that isn’t discussed when it comes to the finger pointing game, but who, by rights should get a mention.
The most recent one is mentioned in Construction 2020. Under the heading ‘Social Housing’ on page 14 it talks about how social housing is important then says this ‘It is estimated that in the region of 5,000 new Social Housing units will be provided in 2014 through leasing and existing capital programmes. This includes completion of mortgage-to-rent arrangements’.
Translation: repossessed houses will help create social housing supply. It won’t add supply, it will just re-profile properties from one classification into another meaning the list length stays about the same for these properties. This merely lets people who borrowed leap frog the 90,000+ people in the queue ahead of them into getting a home (which used to be theirs) reclassified into social housing.
The ‘Mortgage to Rent‘ scheme came from the inter-departmental group on mortgage arrears and was launched by Jan O’Sullivan in mid 2012. That it has been an abject failure to date doesn’t get half of the coverage it should, that it discriminates housing need on a past financial basis is almost universally avoided in commentary.
That last line matters, to get social housing you go on a waiting list, to get ‘social housing’ if you can’t pay your mortgage and if per chance you do get a mortgage-to-rent, then by nature of having been able to purchase at one stage in your life you advance over those who never had the capacity to leverage up.
The other group who want repossessed houses are the likes of IRES REIT the Irish Residential Real Estate Investment Trust. How the media cheered on the introduction of this REIT listing without going to the basic work of reading the prospectus notes is again curious.
Headlines were largely benign, most of the focus was on how investors were snapping up shares and the like.
Intention to float said: “Significant market consolidation opportunity (editor: translation -repossessions). Approximately 30,000 buy-to-let mortgage loan accounts in Ireland in arrears over 90 days at December 2013. At end of 2013, the six main banks in Ireland had 3,179 buy-to-let properties in receivership.The Directors expect that approximately 10,000 units of foreclosed buy-to-let properties may come to market throughout 2014 and 2015.”
Again this indicates that repossessions will be a supply for a ready and willing cash buyer. So in 2014 you can expect two things
1: Social housing supply can come from repossessions and that’s how we’ll multiply the ability to provided them x10 of what we did in 2013.
2: There is a buyer for repossessed investment properties (many of which are tenanted) and that won’t require bank credit as they are cashed up at present, nor will it resolve supply, but with any luck it will help raise the management standards in the rented sector.
Why scrapping development levies, part V and lowering VAT weren’t used (all far more likely to get a result), and actual statements of sincere intent rather than aspirational ones on planning is anybody’s guess.