Lorcan Sirr: ‘Watch out for the magpie as it swoops on new estates to lock out our first-time buyers’

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Lorcan Sirr: ‘Watch out for the magpie as it swoops on new estates to lock out our first-time buyers’

 


As turnkey houses are delivered by private developers, there is naturally a land cost and profit element in the final price, making them more expensive than direct council build. Stock photo: PA
As turnkey houses are delivered by private developers, there is naturally a land cost and profit element in the final price, making them more expensive than direct council build. Stock photo: PA

The State bought 2,100 – or more than 15pc – of the 11,373 scheme houses and apartments built in 2018.

If we exclude the 1,644 council houses from that figure, then it rises to almost 18pc, or about one in every five houses.

These figures also exclude the social housing developers are legally required to build.

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In Tipperary, Cork city, Kilkenny and Roscommon the State, through local authorities or approved housing bodies, is buying more than half of all new-build homes in estates. In Laois, Monaghan, Waterford and Wexford it is more than one-third.

Last year, Longford managed to buy 47 turnkey houses. This is nearly three times more than the 16 scheme houses or apartments than was built in the entire county in 2018.

Requests for clarification on how this was possible went unanswered.

The statistical gibberish in Longford also gives credence to the ongoing suspicion that local authorities are including houses in their completion statistics for 2018 that are not actually finished until 2019.

This artificially boosts the output despite houses not being ready for occupation.

It gets more interesting when we look at stamp duty transactions. There were 2,795 ‘non-market’ new home sales in Ireland in 2018. These are purchases by the State or entities like the so-called cuckoo funds.

Of this number, the State was responsible for 2,100 turnkey purchases, or 75pc of all non-market transactions. In the four Dublin counties, the State was responsible for more than half of all non-market transactions. The use of turnkey purchases doubled from 2017 to 2018. I suspect it will double again from 2019 to 2020.

Estate agents have also anecdotally confirmed to me the huge role the State is playing in snapping up new houses across the country.

The response – that turnkeys are built under contract for local authorities – implies these are contracts to build, which then begs two questions.

The first is how have these arrangements with individual developers come about – and have they been advertised in the official journal of the EU in order to allow builders across Europe to compete for them?

The second issue is one of value for money. As turnkey houses are delivered by private developers, there is naturally a land cost and profit element in the final price, making them more expensive than direct council build.

They are also purchased at a price set by the local property market and not the cost of building the homes.

Councils are also not ramping up capacity and replenishing their own housebuilding skills.

They have traditionally built very high quality housing, with an eye to long-term maintenance and costs. A house bought from a builder only has to be good on the day it is sold.

The purchase of housing developments on their entirety also goes against the Government policy imperative of tenant mix.

There are very strong historic links between political success and helping people achieve the holy grail of home ownership.

Margaret Thatcher was an expert, assisting private purchasers and council tenants to buy their homes.

There are also likely political consequences for those who stand in the way of home ownership.

Think of the couple in Kilkenny who have moved back to her mother’s house for a few years to save a deposit for one of the new houses being built at the end of the road, only to find the council has stepped in and flashed its pieces of silver to buy the entire development.

Forget the cuckoo, watch for the magpie.

Dr Lorcan Sirr is senior lecturer in housing at the Technological University Dublin and author or ‘Housing in Ireland: the A-Z guide’, published by Orpen Press

Irish Independent

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