Friday, July 29, 2011
Friday July 29 2011
BARGAIN hunters came out in force yesterday after bad bank NAMA put nearly 1,000 properties up for sale in the largest single sell-off in the history of the State.
The prospect of picking up a farm, pub, quarry, three-bed semi, hotel, apartment -- even an airport -- sparked an unprecedented wave of interest within hours of the list being published.
NAMA chiefs even promised to finance some of the sales as the agency announced losses of €1.18bn on dealings for last year.
It also revealed the extent to which NAMA is to recover money from reluctant debtors. In one case -- and as late as this week -- it seized jewellery worth €200,000 that had been given to a developer's partner.
NAMA bosses insisted they were not running a fire sale and kept asking prices and bids received a closely guarded secret last night.
But the reality is the agency will have to accept knockdown prices to get the property market moving and to meet strict financial targets laid down by the IMF.
That knowledge, combined with curiosity and thirst for a bargain, sent thousands on to the internet last night to pore over the portfolio.
Within hours, more than a thousand people had downloaded details.
NAMA's own switchboard was inundated and its staff fielded hundreds of enquiries -- before directing callers to the receivers that are handling the sales.
The list runs to 850 properties -- some of which are entire apartment blocks.
It includes everything from London pubs to fields in Offaly. But the 850 figure represents only one-tenth of the total number of property loans in NAMA.
The so-called 'bad bank' is even considering adding fine wines, art collections and jewellery that its officials have seized from troubled developers in its efforts to recoup money for the taxpayer.
NAMA is owed e72bn by borrowers from Ireland and abroad.
So far it has generated e2.6bn from sales and rental income.
The agency has also lent a further e900m in working capital to developers to finish off projects.
The agency has so far spent e46m on legal, audit, tax and board fees during the year.
Chief executive Brendan McDonagh earns a salary of e430,000, with chairman Frank Daly receiving e159,116.
The scale of the agency's customer debt was also laid bare yesterday.
For example, three developers owe more than e2bn each, but NAMA refused to name them. Another nine owe more than e1.5bn each.
Among the biggest debtors with NAMA are Sean Mulryan, Treasury Holdings, Joe O'Reilly of Castlethorn Construction, and Derek Quinlan, a former tax inspector.
For all its new-found transparency, NAMA still cannot reveal how much even the biggest debtors owe, or even who they are.
Mr McDonagh admitted yesterday that some developers had failed to make a fill disclosure of their assets when asked.
"Some of them forgot to put some things on the list,'' he said.
However, he said the lavish lifestyles of developers were now over.
"The helicopters are grounded," Mr McDonagh added.
Information on hidden assets was also becoming available.
"Ireland is a small country. It's amazing what people might mention they know -- information that is always welcome."
The launch of the NAMA list is a marketing coup on a scale not seen since fake punters queued over night for unavailable Dublin apartments at the height of the boom.
NAMA said it went public with the lists in the interest of transparency, but bargain hunters are hoping it's a sign the toxic loan agency is under pressure to up the pace in shifting its €30.5bn property book.
The list of properties runs to more than 800 so far-- some of those listed include multiple units in apartment blocks and retail centres, so there are more than 1,000 units involved altogether.
Even that number is just a tenth of the total number of property loans in NAMA.
Wednesday, July 27, 2011
RESIDENTIAL PROPERTY PRICES are falling at their fastest rate in over two years, according to the latest data published by the Central Statistics Office.
The latest Residential Property Index indicates that the average house price in Ireland fell by 2.1 per cent last month alone – meaning that prices had fallen by nearly 13 per cent since June 2010.
Prices in Dubiln were down by 2.4 per cent on average in the last month, with house prices down by 2.4 per cent and apartment prices down by 1.5 per cent.
Apartment prices in the capital are now 15.3 per cent lower than they were in June 2010, while house prices are just under 12 per cent down on where they were at that time.
Outside of Dublin, the average residential property price fell by 1.9 per cent in June, meaning prices were exactly 13 per cent lower than the same time last year.
The continued freefall of prices in Dublin means that apartment prices are down by 54 per cent from their peak, of February 2007, while hosue prices are down by 47 per cent from their peak in early 2007.
National house prices, which also peaked in early 2007, are down by 42 per cent.
By Michael Brennan Deputy Political Editor
Monday July 25 2011
STEPHEN Harris started off as a bicycle salesman -- and ended up as one of Galway's biggest property developers.
His father was the owner of a corner shop called "Ben's Stores" in Bohermore in Galway city and he followed him into business by setting up "Harry's Cycle Shop" in the area.
Though he was hit with a judgment for about IR£10,000 by the Irish Farm and Garden Machinery company in 1993, he satisfied the debt in 2001.
Mr Harris's transformation into one of the biggest property developers in the city caused amazement.
He bought a stud farm, spent millions on racehorses and bought pubs around Galway. At the height of the property boom in 2006, he spent €30,000 in a charity auction on a Waterford Crystal sculpture of Pegasus, the winged horse of ancient Greece.
And the following year he bought a one-bedroom apartment close to Rockefeller Plaza in New York for $875,000 (€609,000).
He joined forces with Achill builder Joe McNamara to form Harrmack Developments in 2002 and the company went on to build about 300 homes in the Galway area.
It built apartments in Doughiska, a sparsely populated area which turned into a new suburb of Galway city.
But Mr McNamara left to pursue his own building projects and the company's most recent accounts show that Mr McNamara's share in the company was transferred to Mr Harris's wife Marie in 2006.
He became known for hanging around in the company of other property developers in Galway in a tiny pub off Eyre Square.
O'Connell's became famous after it was sold for €14m to four Galway property developers -- Michael Burke, Peter Gilhooly, Walter King and Tom Considine -- in 2006. The widowed owner of the pub, Maureen O'Connell, had left it to the St Vincent de Paul years earlier, but the charity eventually got €7m of the proceeds after a long legal battle.
It was the perfect location for property developers to celebrate their deals because it was close to the offices of auctioneers and solicitors in Eyre Square.
The scenes in O'Connell's on Friday nights became legendary as developers celebrated their latest deals with champagne.
Mr Harris was involved in some of the biggest property deals in the west of Ireland.
He joined a consortium that spent €18m on a site outside Ennis in 2006. The plan was to develop it into a major out-of-town retail centre accessible from the new Ennis bypass.
The seller, an elderly Clare farmer called JJ McCabe, gave the purchasers a 'luck penny' of €50,000 in the 48-acre deal -- a tradition usually associated with selling cows or sheep.
But Mr Harris and his fellow investors had precious little luck.
A rare and protected butterfly species was discovered on the site, which led to planning objections, but an expert employed by Mr Harris found two years later that the butterfly had disappeared due to heavy grazing and flooding.
But even if Mr Harris and his fellow investors thought their luck had turned, they still failed to secure planning permission for their €50m retail park due to flooding and nothing has been built on the site.
Mr Harris was also part of a consortium attempting to turn a former factory site into the biggest retail development in Galway city -- the €450m Crown Plaza project in Mervue, which received planning permission in late 2006.
But the developers were hit by an unforeseen cost -- the soil in the site was polluted and they spent vast sums excavating it for treatment before the property crash hit. One Galway politician said the Mervue site was now a "hole in the ground".
Mr Harris worked on several projects with Bernard McKeon, a senior planner in Galway City Council who had had left his council job before getting involved in property development. But Bank of Ireland secured judgments of €2.89m against Mr Harris and €1.45m against Mr McKeon in 2009.
One judgement related to a joint loan for 14 apartments in Tubbercurry in Sligo, while the other related to a personal loan given to Mr Harris.
It is a long way since the glory days in O'Connell's pub -- which itself has felt the effects of the property bust.
It was bought by the property developers in 2006 using a loan from Bank of Scotland (Ireland), but the bank has taken it over and is leasing out the pub to new management.
- Michael Brennan Deputy Political Editor
Monday, July 18, 2011
By RONALD QUINLAN
Sunday July 17 2011
NAMA remains vulnerable to a constitutional challenge from any one of up 150 different property developers and investors whose €2.2bn in loans it has yet to take over.
The threat to the State's so-called bad bank from upwards of 150 separate 'legal entities' comes in spite of the Supreme Court's landmark ruling last Friday that its activities are constitutional, notwithstanding the manner in which it sought to wrest control of €1.4bn of the €2.1bn in loans given to property investor Paddy McKillen by Irish banks.
The Belfast-born and famously media-averse businessman had challenged Nama's move against him, arguing that his business was different to that of other bust developers being managed by the agency, and that his loans by virtue of their size did not, as Nama claimed, pose a "systemic risk" to the Irish economy. Mr McKillen also argued that the agency had not given him a "fair hearing" before it moved to transfer his loans on to its books.
Defending a separate challenge to its constitutionality from developer David Daly in the High Court last Friday, lawyers for Nama argued that he could not now object to the agency's move to call in €457m in loans he and his family owe, having consented to the loans' transfer to Nama over a year ago.
Addressing the court, senior counsel for Nama, Paul Sreenan, said decisions by the Supreme Court in the proceedings brought by Paddy McKillen made it clear that a legal challenge had to be brought at the time of the acquisition of the loans, and not as was happening in Daly's case, nearly a year later.
But whatever decision is arrived at in the Daly case, a further potential challenge or series of challenges to Nama's constitutionality are a distinct possibility, given the fact that some 150 legal entities comprising scores of developers and investors have yet to see their loans, totalling €2.2bn, transferred to Nama's books.
Were that to occur, it could prove to be both costly and embarrassing for the agency, given the legal bill of up to €7m the State is now facing as a result of Paddy McKillen's successful legal challenge.
In a move that took many observers by surprise, Nama revealed last Friday how it had now reversed its decision to seek the transfer of Mr McKillen's borrowings on the basis that since the commencement of his legal challenge in late 2009, they had been paid down substantially from their original €1.4bn total and therefore no longer posed a systemic risk.
While Mr McKillen has been reported as still having loans of €660m with Nama by virtue of his shareholding in the Maybourne Hotel Group, which owns Claridges, the Berkeley and Connaught Hotels in London, an informed source told the Sunday Independent that this debt is shared with a number of investment partners, and is not his alone.
The Sunday Independent further understands that Mr McKillen's banks intend to work with him to refinance the €1.4bn they will now take back on to their books with other international institutions following Nama's decision not to seek their transfer.
- RONALD QUINLAN
By Dearbhail McDonald and Siobhan Creaton
Saturday July 16 2011
BILLIONAIRE developer Paddy McKillen was last night "delighted" after winning a legal battle to keep control of a €1.4bn global property empire.
But the taxpayer faces a bill of up to €7m after the courts handed him costs in his high-profile dispute with the National Asset Management Agency.
The Government had argued Mr McKillen's loans had to be taken into NAMA because they posed a "systemic risk" to the financial system.
But in an embarrassing U-turn yesterday, NAMA decided not to take over his loans after months of legal wrangling.
It wrote to Mr McKillen and told him some €1.4bn of his loans would not be taken over by the agency.
The reclusive Mr McKillen, whose developments include shopping centres and luxury hotels, had always argued that the loans were performing well.
A spokeswoman said his business had never been healthier and he had paid down a lot of debt since the case started.
It marks the end of a costly and embarrassing process for NAMA, which had already successfully taken over €700m of Mr McKillen's loans.
His court victory could benefit the last remaining batch of borrowers whose loans are due to be transferred to NAMA in the coming months.
There is €2.2bn worth of loans outstanding that NAMA has yet to acquire. Many of these are syndicated loans and relate to 150 separate legal entities.
Crucially, because of yesterday's Supreme Court ruling, the developers now have the opportunity to object to their loans going into NAMA and the agency must apply fair procedures to give them all a hearing.
However, high-profile developers whose €72bn of loans have already been transferred to the agency will not be able to mount a legal challenge based on Mr McKillen's case.
This is because the Supreme Court ruled that legal challenges must be brought around the time NAMA acquires the loans.
In his case, Mr McKillen argued that NAMA had never given him a fair hearing before taking over his loans.
NAMA has now lost the chance to acquire Mr McKillen's loans which were performing well and could have helped make money for the State.
If NAMA is to ultimately make a profit for the taxpayer, it needs the developers' good and bad loans.
NAMA said it had made the decision not to pursue Mr McKillen's remaining loans which have been substantially reduced since December 2009.
At that point they were described by NAMA as being so big as to pose a "systemic risk" to the banking system.
However, Mr McKillen has used the time during the court case to rapidly pay down the loans. This year he paid an extra €75m in capital on top of the €95m in interest repayments.
His loans are currently said to be well below €1bn. The bulk of these loans are with Anglo Irish Bank.
"The loans were no longer deemed material in the way they had been in December 2009," a spokesperson for NAMA said.
NAMA was originally defeated last February in the Supreme Court, which found that Mr McKillen should have been given an opportunity to make representations before it took a decision to take over his massive borrowings.
The court also ruled that the decision on Mr McKillen's loans was made before NAMA was officially established.
The media-shy Mr McKillen was not in Ireland yesterday.
The Belfast-born entrepreneur, who is best known for his redevelopment of a former hospital on Dublin's Jervis Street into one of the capital's busiest shopping centres, said in a statement that he and his companies were "delighted" with NAMA's decision.
- Dearbhail McDonald and Siobhan Creaton
By JEROME REILLY
Sunday July 17 2011
A RECOVERY in the property market is being stopped dead in its tracks by the banks, which are turning down at least half of all mortgage applications -- mostly from people who are highly creditworthy.
With many experts now convinced that the market has gone below bottom, the difficulty in accessing credit for even high-quality applicants has reached crisis point.
Banks are continuing to reject applications for credit and 2011 looks like posting the worst mortgage-origination figures in four decades.
On Friday AIB, which is to merge with Educational Building Society, won conditional approval from the European Commission for yet another capital injection -- this time of up to €13.1bn. It is part of more than €19bn that was approved after the latest bank stress tests and comes on top of billions in taxpayers' money that has already been pumped into the banking sector but not passed on to the customer.
The claim that banks have stymied recovery in the property market comes as Charles Gallagher, founder of Ireland's only remaining publicly listed housebuilder, Abbey PLC, insisted that there could be a "healthy rebound in the housing market" here if mortgage-lending conditions were to improve.
Instead, it looks likely that only 11,000 mortgages will be approved this year -- down from 111,253 at the height of the boom in 2006.
Broker Kevin McNerney of the Trusted Advisor Group said there were thousands of potential buyers out there who believe that the market has finally bottomed out.
But for many of them affordability was either not the issue or was only secondary to the problem of getting access to credit.
"In the last few months, there has been a steady increase in the level of activity in the market," said Mr McNerney. The numbers of people turning up at showhouses and contacting estate agents is increasing. More importantly, the number of genuinely interested people has definitely escalated.
"However, a major hurdle to the rejuvenation of Ireland's property market is not the lack of interested buyers but rather the number of mortgage applications submitted to the banks, compared to the number of applications that are declined. My estimation is that at least half are being turned down."
Mr McNerney said that from his own personal experience there was an increase in the number and quality of applications being received.
"Unfortunately, this is not translating into an increase in the number of mortgage approvals from lenders.
"The majority of people I speak to at present would be looking to buy in the Greater Dublin area and most would be of the opinion that the prices have pretty much gone as low as they will go, or at least are certainly at a level now that makes it much more feasible for these people to buy rather than stay renting.
"Unfortunately, though, the banks are still being very tight in certain areas where I feel they could use some leniency. I am not saying they should go back to the lending practices of three years ago but a bit of common sense would not go astray."
Last week, Frank Conway of moneycoach.ie said that the banking sector was continuing to focus on improving bank capital, which can only be done by bringing money in, not lending it out.
"Anecdotally, individual cases may be approved but this is not for the masses, especially not for those who are in negative equity or who now regret their investment decisions," said Mr Conway.
The latest EBS/DKM affordability index shows that property is now more affordable than at any time in the past 25 years. Funding a mortgage on a new home will cost the average first-time-buyer couple just 13 per cent of their joint income today -- down from 26.4 per cent in 2006.
Nationally, the net income needed to fund a mortgage for the average working couple is expected to fall to just 12.9 per cent (15.6 per cent in Dublin) by September -- creating the most affordable house-purchase scenario since the mid-Eighties.
House prices keep falling -- by 12.2 per cent in the year to the end of May -- but new mortgage lending remains low. According to the Irish Banking Federation (IBF), the number of mortgage loans issued continued to decline.
Just over 3,000 mortgages were issued in the first three months of this year, according to figures from the IBF. That is the lowest level of mortgages since records began.
- JEROME REILLY
Banks are not keen to write €200,000 off a home loan or allow owners to sell properties in negative equity but some will do so, writes CONOR POPE
THE BANKS ARE coming down hard on people who do not repay their loans, but some experts say many of those loans should never have been given in the first place. This means that ultimately the banks will have no choice but to forgive the debt, although they are unlikely to admit that they are doing so.
Examples of boom-time lending practices are emerging now. A quantity surveyor with a salary of €40,000 was given mortgages for five investment properties, the last of which cost six times his salary.
“There were some extraordinary things going on. Someone in this situation should never have been approved for such a level of credit,” says Eamon Curley, a former banker who specialises in helping small investors to sort out their investment problems. He works for small businesses and small-scale property investors.
“The first loan was okay and maybe the second, but the other three were ridiculous. That gives him a chance to negotiate with the bank,” says Curley.
And that is where he comes in. He takes a forensic look at the documentation and if he finds errors or proof that internal rules were not applied properly when processing loans, then he can play hardball with the banks.“Very frequently the banks messed up,” he says.
“[Now] they look at the credit reports that were prepared ahead of a loan being sanctioned and, if the money should not have been signed off on in the first place, they will quite often come to their senses ahead of instigating any costly legal proceedings.
“Banks are undoubtedly writing off debt. Some are still in denial, but most have made provision for bad debts.”
Some banks want it both ways. They write off the debts on their balance sheets but continue to pursue the borrower through the courts for the money owed. Such moves have come in for severe criticism by the judiciary in recent months, however.
Curley describes the 12-month moratorium on repossessions as a purely political devices. “What is going to change in 12 months? It is pushing everything back while the bank is still adding interest to the money owed,” he says.
In the US, there are two common approaches at the moment: returning the keys, which is popularly known as jingle mail, or making a short sale.
A short sale plays out as follows: Imagine you have a property you bought for €200,000 with a deposit of €20,000. You have had it for five years and have an outstanding debt of €170,000. Properties in your complex are now selling for €100,000 and you have a buyer who is willing to pay that much. Your lender allows you to sell and takes the €100,00. It puts a black mark against your credit rating for no more than two years and that is the end of the story.
That is not what happens in Ireland. Here the bank may allow you to sell the property for €100,000, but it can then pursue you for the other €70,000. This has effectively stopped people selling when in negative equity.
The US system can lead to a much sharper crash in prices and can make the banks much more careful about to whom they lend their money too, but recovery is faster.
“It would have to be better than the slow death we are witnessing,” Curley says.
Solicitor Anthony Joyce is the mortgage man of the moment after he managed to remove a massive millstone from around the necks of one Dublin couple. The solicitor helped his clients to negotiate a reduction in their mortgage of more than €200,000.
They secured a reduction in their mortgage debt to Stepstone Mortgages from €360,000 to €154,950 last November. They lost their home but have been able to rid themselves of the huge debt they could not repay by finding a buyer for the house.
According to Joyce, banks are proving increasingly “practical and willing to work with customers who are financially devastated”. On his advice, the couple put their house on the market for less than properties were going for in the area, and got a buyer pretty quickly.
They then went to Stepstone and suggested that it could take the money, or it could repossess the house, put it on the market and wait maybe six months to a year to get a buyer, by which time the value of the property probably would have fallen further.
Stepstone Mortgages agreed to the deal. Joyce says the couple’s credit history is in tatters. “They will probably never get a mortgage again, but it means they can begin to get on with their lives.” Joyce has between 20 and 30 clients who are in a similar position, he says.
The most unfortunate are those who “have split up and hate each other but are still living under the same roof because they are in negative equity so can’t sell their houses and can’t get on with their lives,” he says.
The Stepstone case was a positive outcome for all, he says. “The bank wins because they don’t have to wait for two or three years and pay all the legal fees. The couple wins because they get rid of the house and can get on with their lives and we win because we got our fee,” he says.
Such results can breathe life into a property market that has slipped from stagnation into rigor mortis. As the Space/Allsop auctions of distressed properties have shown, there are people who can buy once prices get to a certain level. Stephen McCarthy, the managing director of Space/Allsop, has been involved in this aspect of the industry for a couple of years now and is well placed to assess what banks are doing. “The banks are not writing off debts left by the sale of a house but they are not aggressively pursuing them either,” he says.
“There is no one answer, and the banks are taking it on a case-by-case basis but no bank is engaged in widespread debt forgiveness.
“If you sell as a co-operative seller, without a receiver being appointed, the banks are saying they will take that into account but no one is giving any guarantees. The last outcome the banks want is to get a house back. I am dealing with these banks all the time and they do not want to take the houses.”
He says that distressed property auctions have shown the banks that there is an active market at prices that might make them more inclined to deal with individual homeowners.
McCarthy says returning the keys to the lender is growing in popularity in Ireland but walking away is rarely the best option.
“If a person bought a house, then they obviously wanted it at some stage,” he says. “But now they can’t pay the full mortgage, for whatever reason, so they want to walk away. But they have to live somewhere so they would be better off paying something and staying in the property.”
By Paul Melia
Monday July 18 2011
THE taxpayer will be forced to pick up the tab as councils ban housing on massive banks of land -- bought for billions by property speculators at the height of the boom.
The value of development sites has plummeted by more than 90pc, after councils rezoned land which is no longer needed for housing.
The Irish Independent has learned that 12 of the country's 34 local authorities have already dezoned or banned development on lands. The remainder will do so by the end of the year, under a radical shake-up of planning system countrywide.
But the move will have serious implications for taxpayers. Banks lent billions for speculative deals on those lands which have since collapsed -- with the State now forced to pick up the bill. Housing will now no longer be allowed to be built on 8,000 hectares previously earmarked for development in 12 local authorities alone.
At the height of the boom, this land could have sold for more than €1m per hectare. However, after rezoning the average value is likely to be just €25,000 a hectare, informed sources said.
The findings provide the first indications of the extent of the zoning madness rubberstamped by councils over the last decade.
Many of the local authorities were controlled by Fine Gael, the main government party now tasked with cleaning up the mess.
At the height of the boom, around 44,000 hectares of land -- enough to build more than one million homes -- was zoned as suitable for housing.
This was almost 32,000 hectares more than needed.
House prices continued to soar, despite the oversupply, with landbanks swapping for huge sums. In practice, many of these landbanks were swapped from owner to owner, with nothing built. Now local authorities have been ordered to rationalise their planning policy -- identifying where there are needless landbanks, and dealing with them by rezoning.
The massive shake-up does bring some good news for thousands of homeowners living in ghost estates because these developments will have to be completed before planning permission is granted for new units.
But it will also have a negative impact on the taxpayer. Every loan over €20m goes into NAMA, meaning that hundreds of devalued sites are now controlled by the 'bad bank'. About 18pc of the €73bn in NAMA loans are connected to land.
A NAMA spokesman said these loans had been substantially written-down when they were taken over, some by as much as 90pc.
The new figures show:
?a total of 12 councils had 14,000 hectares of land available for housing two years ago; l Under the new plans, there are just 5,800 hectares;
?Laois now has 273 hectares of land for housing, down from 2,235 hectares two years ago;
?Sligo County Council reduced its landbank from 350 hectares to 195;
?Other councils to have re-zoned are Fingal, Clare, North Tipperary, South Tipperary, South Dublin, Wicklow, Galway City, Dublin City, Kildare and Cork City.
- Paul Melia
THE NATIONAL Asset Management Agency will provide €3 million to fund urgent remedial work in ghost estates – partially completed and derelict housing developments – linked to loans held by the State agency.
Nama has loans linked to 28 of the 221 worst-case ghost estates. The remainder were funded by banks which did not transfer loans to the State agency. A spokesman for the agency said it hoped work on the housing developments would start by September.
“Whatever about longer-term solutions for the ghost estates issue, there is an urgent need to address particular problems in a number of these estates in the short term,” said the spokesman.
These included half-completed construction works, incomplete sewerage and road works and open-earth works, he said.
“Our focus in the short term will be on financing working to address these problems while we develop longer-term solutions for the problem.”
The agency is working with the Minister for Housing Willie Penrose TD and the Department of the Environment to fund the work on the housing estates.
Less than one-third of the funding available from the department to fix urgent health and safety problems in 180 “ghost estates” has been allocated to local authorities, it emerged last week.
A €5 million State fund was set up to allow local authorities address safety issues such as open manholes on the ghost estates.
THE MINISTER FOR the Environment is expected to bring proposals detailing his preferred method of collecting the household charge to Cabinet tomorrow week.
Householders are facing two new bills, with a household charge coming into operation from January 1st next and domestic water metering to follow.
Phil Hogan had been awaiting the results of a departmental spending review to determine the amount of the household charge, which the previous government had intended to set at €100 a year.
If that figure was levied on the State’s 1.8 million households, up to €180 million could be raised in a year, although it is believed a higher rate could allow greater numbers of people, such as those in receipt of social welfare, to be exempted from the charge.
“The Minister has put together proposals on how he intends the household charge will be applied in the way that’s as fair as possible for everyone,” Mr Hogan’s spokeswoman said.
Three more Cabinet meetings will take place before the summer recess. The household charge issue is not on the agenda for tomorrow’s meeting but is expected to be discussed at one of the two remaining meetings.
Tánaiste and Minister for Foreign Affairs Eamon Gilmore yesterday said the structuring of the charge remained a subject for discussion by Cabinet. “It hasn’t come to the point of deciding what amount should be applied in the first place,” he said.
Mr Gilmore said “the idea of a household charge” was one of the options Mr Hogan was considering.
“He has not yet concluded his considerations on it and hasn’t yet brought proposals to Government on it,” he told RTÉ Radio 1’s This Week programme, “so we’re a bit ahead of how it actually would be structured. That’s a matter still for discussion.”
A Fianna Fáil spokesman said the charge should be based on people’s ability to contribute.
Commitments given in the EU- IMF bailout deal require property and water charges. However, site valuation arrangements required to implement the property tax are not sufficiently advanced, so the household charge is to serve as an interim measure.
Meanwhile, Mr Hogan’s spokeswoman said he intended to establish the promised new State-owned water utility company, Irish Water, by the autumn and would bring related proposals to Cabinet after the summer recess.
Labour Senator John Whelan suggested an existing agency be reconfigured to deal with water metering and mains management, instead of setting up an “expensive” new company.
Tuesday, July 12, 2011
A BUILDER has claimed before the High Court he is being prevented from carrying out remedial works at an allegedly unsafe and unfinished section of a housing estate in Co Tipperary.
Crohan O’Shea and O’Shea Homes, of which he is a director, claim they have the support of residents of Ard Na Sidhe, Cashel Road, Clonmel, to carry out works, but the site owners had indicated they would refuse access.
They have brought proceedings against brothers Michael Butler, Glenbrook, Old Spa Road, Clonmel and William Butler, Ballytersna, Cashel, Co Tipperary, and Bosod, the firm which developed the estate of 113 houses.
Hugh O’Flaherty, for the plaintiffs, told Ms Justice Mary Laffoy yesterday his clients wanted injunctions which would allow them enter the estate to carry out works.
The court heard Clonmel Town Council has issued enforcement proceedings against O’Shea Homes arising from its providing a bond when it was involved in the early stages of the development.
Counsel said his clients want to make the estate safe for residents and children and, if the bond was called in, it would cause unquantifiable damage to Mr O’Shea’s reputation as a businessman, and affect his ability to source credit.
Ms Justice Laffoy has adjourned the injunction application to next week.
In an affidavit, Mr O’Shea, of Summer Hill, Marino Avenue West, Killiney, Co Dublin, said he and his company became involved in a partnership with the Butlers and another party to build 113 houses at the Clonmel estate.
Bosod was set up as the development vehicle for the project, and that company was granted a licence by the Butlers to build houses on the site, he said. Under the agreement, the Butlers acknowledged they held the ownership of the land in trust for themselves and the other partners, including Mr O’Shea, he said.
O’Shea Homes had also entered into a bond for €287,000 with Clonmel Borough Council.
O’Shea Homes managed the first nine months of the contract, Mr O’Shea said, while the Butlers carried out works on the site. After that period, the Butlers took over the running of the site, he said.
He found the Butlers unreasonable and difficult to deal with, and legal proceedings later began in 2006.
As part of a settlement of those proceedings, he had resigned from Bosod and transferred his shareholding to the Butlers, he said.
However, he was still owed €650,000 by them, and the bond originally entered into remained in place. While 98 of the 113 dwellings were occupied, about seven remain to be completed.
The site is in a poor state, presents a safety hazard to the residents and would cost about €400,000 to clean up, he said.
The Butlers were fully aware of that, but Bosod had failed to carry out any remedial works in the estate in recent years, he said.
O’Shea Homes was prepared to enter the estate and had the support of the local council and residents to do so.
However, solicitors for the defendants had indicated they were not prepared to allow O’Shea Homes enter the site to carry out the works, he said.
By Neil Callanan
Sunday July 10 2011
Irish private equity group Signature Capital has paid about €130m for a German shopping centre that had been controlled by Quinlan Private before the centre collapsed into insolvency.
The Neumarkt shopping centre in Cologne was bought by Quinlan Private, since renamed Avestus, for €170m in 2006 but it went into administration last November after Avestus missed a €9.6m payment.
An insolvency administrator was appointed in March.
The centre had formed part of a commercial mortgage-backed security, a type of bond, that is listed on the Irish Stock Exchange.
Last week, the bondholders were informed that a sale-and-purchase agreement has been signed between Signature Capital and the insolvency administrator.
"Given there are several documents necessary from the government, the Special Servicer expects the closing to happen before September 30, 2011 and a payment to the bond holders" will be made in November, the statement said.
Signature Capital declined to comment last week.
The company was set up by Ciaran McNamara and Enda Woods, two former directors of Investec Bank's Irish division, and after the shopping centre deal goes through it will manage more than €800m of assets in Germany, Britain and the United States.
Avestus recently lost control of a €1.1bn portfolio of Marriott hotels in the UK, in which it was an investor and the group had to make at least five cash calls to investors in 2009 because of declines in the values of properties which it had purchased on behalf of investors. Last year, it was revealed that state-owned Anglo Irish Bank lost about $40m on debt it gave to Avestus, for a tower building in Chicago, USA.
Quinlan Private was set up by Derek Quinlan, the former Revenue inspector, who has lost control of nine Irish properties he and his family owned after a receiver was appointed by NAMA.
Last week, it was reported that his Villa La Carriere at Cap Ferrat, France, had sold for about €70m prior to auction. The villa includes a cinema room for more than 10 people and a spacious "bar and discotheque", according to the brochure.
- Neil Callanan
The most expensive country house ever put on the UK market, and backed by Michael Fingleton's Irish Nationwide, is facing receivership action from NAMA within days, it is understood.
The 103-room Updown Court in Surrey, which has five swimming pools, was an Irish Nationwide joint venture and the building society lent £63m (e71m) to the project over several years. Irish Nationwide once held a board meeting there, it has also emerged.
The developer Leslie Allen-Vercoe told the Irish Independent yesterday he had heard nothing from NAMA about the estate being put into receivership.
He said Mr Fingleton was very familiar with the project and had talked on several occasions with Mr Allen-Vercoe about its progress.
He added that the issue now was the best way for Irish taxpayers to get from its sale. He said NAMA's move could jeopardise this.
Apart from the five swimming pools, the property also has a bowling alley, a cinema and an indoor squash court.
It failed to sell in 2005 for a price tag of £70m -- at the time the most expensive UK residence ever. It is understood NAMA may only need to sell Updown Court for £20m (e22.5m) to make a return, after it imposed a severe discount on the original loan.
Mr Allen-Vercoe said he was not personally liable for any of the debts and his only role in the project in the last year was to find a buyer. He said one British, one Russian and one Far East buyer had come forward. He added that if NAMA decided to appoint a receiver, it would be against the interests of Irish taxpayers as stamp-duty tax advantages could be lost.
Mr Allen-Vercoe said if the property market had not taken a downturn, the joint venture would have seen himself and Irish Nationwide taking a 50:50 share of the proceeds, once the loan had been discharged.
Tuesday, July 5, 2011
By Declan O'Brien
Tuesday June 28 2011
A new, simplified system that allows landowners to register uncontested rights of way with the Property Registration Authority (PRA) without the need of a court order has been given the green light.
Confirmation of the changes was contained in the announcement of the Civil Law (Miscellaneous Provisions) Bill 2011, which was published last Friday by the Minister for Justice, Equality and Defence, Alan Shatter.
The bill includes amendments to the Land and Conveyancing Law Reform Act 2009 and the Registration of Title Act 1964. A Department of Justice spokesperson said it was hoped to have the bill enacted before the Dáil breaks for the summer.
The current provisions of the Land and Conveyancing Law Reform Act 2009 require landowners to apply to the Circuit Court for an order confirming legal title to existing unregistered rights of way and easements by December 2012.
This meant that existing unregistered rights of way would lapse if they were not registered or if legal title were not established through a Circuit Court order.
The proposed amendments will allow a landowner who claims to be entitled to a right of way to apply to the PRA to register that right on the owner's Land Registry folio.
In order to be satisfied that the owner's claim has been substantiated and is not the subject of a dispute, the PRA will serve notice on the relevant parties. The detailed notice and other statutory requirements will be published in the form of a statutory instrument.
The amendments also extend the three-year period during which existing rights of way and easements must be registered to 12 years.
As a result, landowners have until December 2021 to register rights of way.
IFA assistant general secretary Bryan Barry welcomed the move, saying it would resolve an issue that affects tens of thousands of landowners.
"The amending legislation makes good sense and will remove the need to go to court to obtain legal title," Mr Barry said.
"Landowners claiming rights of way will be able to apply to the PRA for a modest fee, enclosing the appropriate maps.
"The PRA will then notify the owner of the other property concerned and, once the application is not contested, the easement will be registered."
- Declan O'Brien
By Paul Melia
Monday July 04 2011
LOCAL authorities are taking an average of five months to re-let council houses even though over 100,000 people are on waiting lists for a home.
As many as one in 20 council houses across the State are lying idle and among the reasons is that prospective tenants are snubbing an offer of a home in places they decide are "undesirable".
A major report into the State's spending on local authority housing says that people who refuse two "reasonable" offers of a home should be forced to suffer "substantial penalties" including moving them further down the waiting list.
It added that councils were failing to inspect properties prior to them being vacated, which added to delays in re-letting.
"Local authorities should operate a refusal policy whereby tenants who refuse two reasonable offers of accommodation should suffer substantial penalties... (including) being placed further down the waiting list for a set period of time," the report from the local government auditor in the Department of the Environment said.
It added that councils needed to address anti-social behaviour in these areas, improve the physical environment and implement measures to "counteract" the negative perception of certain low-demand or "undesirable" areas.
Officially, more than 56,000 families are waiting for a home but that is based on the last count in 2008. A count is currently under way, and it's expected that the number could rise to as many as 100,000 as the impact of the recession deepens.
The review found that 7,045 homes were not available for letting in December 2008 -- the most recent year for which figures are available -- from a total stock of 122,446.
In 2007, average vacancy rates stood at 5.2pc, rising to 5.75pc the following year.
Among the reasons was that homes were left in "such a state of disrepair" that major refurbishment work had to be completed before they could be re-let.
There were no inspections of council houses in many areas prior to a tenant leaving, meaning that councils were not aware of any damage caused.
The report said formal inspections should be carried out on a regular basis.
Auditors carried out an in-depth probe into eight local authorities -- Cavan; Cork City; Dublin City; Dun Laoghaire Rathdown; Galway City; Kerry; Mayo and Wicklow -- and found some councils were better than others at meeting self-imposed targets for completing repairs.
In Kerry, 92.9pc of repairs were completing on time, compared with 85pc in Dublin City.
But the average time to re-let a dwelling ranged from 36 weeks in Kerry to 10 weeks in Cavan. Among the reasons given for the delays were budget constraints, a high level of refusals by applicants and the amount of repair work needed.
Councils spent €81.8m in 2008 on housing maintenance and improvements, but the cost of refurbishing the homes widely varied. It is hoped a new system of tendering jobs should help reduce prices.
Housing Minister Willie Penrose said the key recommendations of the report would be implemented "as a matter of urgency".
Monday, July 4, 2011
By Charlie Weston
Friday July 01 2011
New research has found that only a tiny percentage of people are planning to buy a home in the next year, as plunging property values and a lack of bank lending keep mortgage holders tied to their current homes.
Just 2pc of householders are planning to either buy a home, trade up or down or move to a different rental property. This translates to around 40,000 people.
Instead of moving or buying, consumers intend to concentrate on paying off debt and redecorating where they live, the report from consumer research firm Mintel shows.
Severe mortgage-lending conditions and a continuing fall in house prices are forcing people to put off purchases.
Some 300,000 out of 800,000 mortgage holders are in negative equity, where the value of their mortgage is greater than the value of the home.
Mintel's David Pasley said the research showed that one in eight adults were planning to redecorate their homes. The focus of the homeowners was also on attempting to pay down their existing debts rather than taking on a new mortgage.
Just 11,000 new mortgages are expected to be issued this year -- a 40-year low.
Meanwhile, a report from selling agents Sherry FitzGerald shows that the price of a secondhand house fell 5pc in the period between April and June.
- Charlie Weston
By Donal Buckley
Friday July 01 2011
PROPERTY auctions generated nearly €3m in sales yesterday as houses, shops, sites and even a nightclub went under the hammer.
A range of 15 properties was offered at five different auctions in Dublin and around the country, and 12 of them sold.
Five sold for over their guide prices, but six went for below their reserves, including three Dublin apartments.
Estate agents Gunnes offered nine of the properties and sold six under the hammer and two afterwards. The most valuable was a Rathgar period house, 9 Kenilworth Square, Dublin 6, which had a reserve of €425,000 and sold for €460,000. While it needs refurbishment, its price is only a fraction of the €2m-plus prices achieved for similar houses in 2007.
Gunne director Marian McQuillan said these were not distressed sales, just properties that had been slow to sell. Ten more properties will be for sale on July 21. At nearby 13a Kenilworth Lane, a two-bedroom mews with a €220,000 reserve sold for €240,000 and next door, 13b Kenilworth Lane, with the same reserve, sold for €220,000.
A site at 25 Kenilworth Lane, with planning permission for two mews houses, was available for €120,000 and sold under the hammer for €135,000.
The lowest price was €52,000 paid for a one-bedroom flat, 11 Linnen Hall, Georges Hill, Balbriggan, Co Dublin. It had the advantage of €50,000 Section 23 tax relief, as well as rental income of €8,400 a year. Yet it sold for €8,000 below its reserve of €60,000.
In another auction, a former chemists next to Dundrum town centre at 1 Ballinteer Road sold for €192,000 just below its reserve of €195,000. Conor McCormick of McCormick Estates conducted the executor sale to a private investor.
Meanwhile, in Co Kerry, the Blue Note Nite Club and pub in Listowel was withdrawn at €255,000 and the agents Sherry FitzGerald Dillon Prendiville sold it after auction for a price understood to be below the reserve of €270,000.
In Co Meath, two of the three properties auctioned by Sherry FitzGerald Sherry sold over their guides. At Teelings Mill, Clowanstown, Drumree, Co Meath, a lot consisting of the mill, the miller's house and outbuildings on 10 acres guided at €250,000, sold for €280,000.
On Wednesday, a 171-acre Kildare stud farm failed to attract a bid at auction. Joint agents Goffs and Coonans quoted a €4.5m guide price for Loughtown Stud in Clane. The price has been reduced to €2.9m.
By Paul Melia
Saturday July 02 2011
THE State has taken in more than €180m in the second-home tax since it was introduced. This is €80m more than expected.
The Department of the Environment yesterday revealed that the owners of 320,000 investment properties and second homes have paid the annual €200 tax to local authorities, with almost one in five located in Dublin city.
The tax-take is far in excess of what was predicted. In 2009, when the Non-Principal Private Residence (NPPR) tax was introduced, the Government said it expected annual payments to amount to €40m if 200,000 owners paid.
New figures show that payments are averaging €68m a year -- or 70pc above expectations.
The tax was introduced in September 2009 and is payable to the local authority where the property is located. It is among a range of measures to help city and county councils raise income to fund essential services, instead of relying on exchequer funding.
A breakdown of the figures from the department shows:
?In 2009, the tax was paid on 323,365 properties, yielding €68.7m.
?The following year, €66.9m was paid on 320,766 houses and apartments.
?So far this year, €47.7m has been paid on 238,720 units.
?The total yield to date is €183.5m -- just €100m was expected to be collected when the tax was introduced.
A department spokesman said officials always suspected that more than 200,000 second homes would be subject to the tax.
"We initially expected €40m a year," he said. "There was a general acceptance that there was more properties out there than what we were saying, but we didn't realise how many there were."
Local authorities have been given extensive powers to make sure owners of holiday homes pay the tax. Councils can check utility bills to see if power is turned off during the winter -- suggesting that the premises are only used as summer residences. They can also examine the voter register and land registry records.
Department figures show that most second homes are in Dublin city, where 43,397 ( 18.18pc) are located. The capital is followed by Cork county (7.86pc), Fingal (4.87pc), Kerry (4.91pc) and Donegal (4.61pc).
The lowest number -- 1,683 (0.71pc) -- is in Monaghan. Also low on the list are Longford (0.83pc), Offaly (0.89pc), Laois (0.90pc) and Leitrim (1.01pc).
Owners can pay the charge electronically at the website, www.nppr.ie. Those who refuse to pay face hefty fines, with a 10pc surcharge added every month.
This means that the first month that the charge is unpaid incurs a fine of €20 on top of the €200. A person who fails to pay the tax for one year will owe €200 for the levy, plus €240 in fines, giving a total of €440.
Failure to comply with the law can result in a fine of up to €2,000.
Owners of properties that are leased to local authority tenants under the Rental Accommodation Scheme are exempt from the tax.
- Paul Melia
By JOHN REYNOLDS
Sunday July 03 2011
BALMORAL International Land, the property vehicle of the Fyffes banana empire's McCann family, is facing increasing financial uncertainty this month as more than €70m of loans fell due at the end of June.
Shares in the ISEQ-listed company, currently at just one cent, have fallen by 75 per cent in the past 12 months, following €30m of writedowns in their property valuations in December.
Cork developer Michael O'Flynn owns a 14 per cent stake in Balmoral International, worth just €814,000 at the current share price, through a firm called Rosecastle Ltd. He declined to comment last week.
Loans of €45.9m secured on five office buildings in the Netherlands fell due at the end of December, while further loans of up to €129m, which were unsecured and subject to a loan to covenant but guaranteed by subsidiary companies, began to fall due on June 5, according to the firm's most recent accounts.
An €11.1m loan with a quarterly capital repayment schedule, secured on Belgian warehouse and office properties, is due to be settled in full in October.
Other properties owned by the company, which had €180m of net borrowings at the end of December, include land in Edinburgh, warehouses, offices and industrial buildings in Belfast, Southampton and London, land in Swords, Co Dublin, and offices in Clonshaugh, Co Dublin.
Balmoral declined to comment, while a spokesman said: "The company is in ongoing discussions with all the banks concerned and is confident of a outcome."
- JOHN REYNOLDS
Sunday July 03 2011
THEY control your water, rubbish collection, fire services, playgrounds, parks and more. But with development levies and commercial rates slashed to ribbons, councils are running seriously short of money in some cases.
Dublin City Council
Down by €86m (10%)
Staff down 749 to 6,182 (12%)
A dirtier, less literate Dublin with falling firefighter numbers and a creaking water and waste service could be in store if income keeps falling.
The council warns it can't meet all customer expectations on water supply so if it ever stops raining and there's a dry spell, supplies aren't guaranteed and there's "no provision" if there's another Big Freeze like last year.
In the city and suburbs, from Fairview to Rathmines, residential road and street cleaning is being cut from once a week to just once every three months.
In the city centre, the number of street cleaning vans and staff have dropped. The city's household junk collection service -- where it would take away old mattresses and TVs every few months -- has been halted, saving €1.5m, but illegal dumping is rising as a result.
Cleaning up graffiti isn't happening any more unless it's offensive. The €3.2m cut to the Dublin Fire Brigade budget is mostly "payroll cost savings" but councillors and fire service insiders beg to differ.
The budget for buying books and CDs for libraries is down by more than €160,000.
There is virtually no budget for flower and tree planting or pruning, or for parks like Phoenix Park, Stephen's Green and the Iveagh Gardens, as the €1.37m Parks Improvements Fund has been yanked.
Staff at the city's swimming pools and gym facilities have been cut. Council leisure centres, including Swan Leisure in Rathmines, now find they are competing for income with scores of struggling private gyms.
Spend on the upkeep of playgrounds has been halved to €825,000.
A hike in clamping fines from €80 to €100 is under consideration, as is one to increase parking permit charges, from €40 to €50 each.
People are piling on to the housing list but close to €7m has been cut from the housing budget.
At least €1.5m less in commercial rates will come in this year.
Down by €32.14m (14%)
Staff down 397 to 1,813 (21%)
The council lost its shirt on an unfortunate affordable housing venture, paying about €15m for 63 homes on the grounds of the former Dun Laoghaire Golf Club. The selling price was forced down to an average €100,000 per unit, meaning millions lost.
Grants to kit out homes properly for disabled people are cut to €550,000 this year, from €2.32m. Some 40 per cent, or €84,300, less is being spent on public loo cleaning and maintenance.
Almost €1m less will go towards the fire service.
Planned new cycle lanes aren't progressing any further than paper stage as funding can't be confirmed.
The council says it has no funding for taking charge of estates beyond 2011. More than €1m has been cut from litter control -- emptying of bins, street cleaning and so on. €150,000 less will be spent on book-buying for local libraries, almost €100,00 less on arts programmes, and €430,000 less is going on festivals and concerts.
Spending on cleaning the area's beaches, from Salthill to Killiney, is down 40 per cent to €291,700. Provision for bad debts from rates and levies has rocketed to €6.7m.
The budget for councillors' jollies has been cut from €53,000 to €20,000.
A further 10-15 per cent of jobs are to go by spring 2012.
Fingal Co Council
Down by €8.37m (just 3.36%)
Staff down 251 to 1,379 (18%)
Fingal stashed away a lot of development levy and rates money and still has some of that in the bank, which meant its cuts have been relatively low, but rates income will be down at least €3.6m this year.
In Balbriggan, only half of the expected rates were collected with a whopping €113,000 "irrecoverable".
An axe has been hanging over the emergency ambulance service based in Swords and costing around €17.5m as HSE funding was withdrawn. A deal might still be hashed out as local opposition to it going is fierce.
Another 49 staff will be cut from payroll by 2012.
€143,000 has been knocked off the budget to buy books, DVDs and CDs for libraries.
More than €500,000 is being pulled from funding outdoor facilities like football pitches, parks, beaches and playgrounds.
Down by €35.26m (12.5%)
Staff down 138 to 1,334 (10%)
Development levy income in the South Dublin Council region has collapsed from €45m to less than €5m and the rates income is falling, while bad debt provision is up almost €5m to €18.8m.
The public swimming pool planned for Lucan "is impossible now and a playground programme is also stalled", says a councillor. "We're at the pin of our collar to maintain our parks."
€1m is coming off the fire service budget.
A further 10-15 per cent of staff are to go in 2012.
Cork City Council
Down by €1.6m (a 19% cut)
Staff down 201 to 1,400 (14%)
Payroll has been slashed by €10.8m but there's more to come, with staff cuts to be close to 25 per cent by the end of the year. Despite that, the council is to spend €250,000 on a facelift for City Hall.
Public parks, cycle lanes and park-and-ride facilities are being hit hard, local representatives say.
Diarmuid Gavin's €2m Chelsea garden is to go on display in 2012 and will cost at least a gardener's salary, around €40,000, to maintain.
In total, parks and recreation centres will lose 80 per cent funding from €3.3m in 2011 to €600,000 in 2012.
The €270,000 funding six community warden jobs has been pulled. The massive €1bn Atlantic Quarter docklands development is on hold, indefinitely, as the main developer has been Nama-ed.
Close to €600,000 was cut on procurement costs and €45,000 on consultants and barristers and other legal fees.
Housing spend is being cut from €16.7m this year to €7m in 2012.
Council staff perks were cut by €575,000.
Limerick City Council
Down €0.41m (1%)
Staff down 95 to 612 (15%)
As it never had a rates and development bonanza, the city's budget has reduced very little. The feted €3bn regeneration project is the major casualty of the economic crash, however. Now it will be just €300m spent over 10 years.
Limerick is the European City of Sport for 2011, but €561,000 less is being spent on the city's recreation and amenities.
Nearly €100,000 less is being spent on leisure facilities, including €10,000 less on sports and recreation. A further €100,000 less is being spent on parks, pitches and open spaces.
"We can't recruit school wardens (ie lollipop men and women) because of the staff embargo, and there are always areas looking for them," one councillor complained.
Councillors' expenses have been slashed by €80,000.
Galway City COUNCIL
Down by €11.46m (a 12% cut)
Staff down 98 to 482 (17%)
There's a rates crisis. So far this year, only 30 per cent, or €33m, of what was expected has come in. Irrecoverable rates are budgeted at €4.65m but are likely to be far higher.
Conference and expenses allowances of nearly €500,000 in 2008 have gone to a big fat zero for jaunts abroad now.
Street cleaning at the weekends (when the crowds throng Shop Street) has been curbed in order to avoid shelling out on overtime.
Parks and pitches spend is down by more than €100,000 and nothing is being spent on playgrounds this year.
With demand from families seeking to economise, the council is providing for allotments for the first time.
By LIAM COLLINS
Sunday July 03 2011
Abandoned ghost estates may be used as a training ground to help apprentices get skills and take people off the dole.
A plan has been put to Fas, Nama and some of the Irish banks by a British firm, Equity Share Partnership (ESP), which says it has financial backing of €10m for two pilot projects and could eventually have 4,000 workers on these training schemes.
They are in talks to begin work on schemes at Bandon, Co Cork, and Kilminchy, Co Laois, to kick-start the initiative.
"We will take people off the housing list and the live register, put them to work on these ghost estates with properly trained instructors, and at the end we would give them an option to buy or rent completed houses," sid Michael Litman of ESP.
He said those employed on the schemes would get a chance to finish an apprenticeship or learn a new skill -- and at the same time help to end a major social blight on the countryside.
The British company, which has used the model before, is looking at areas where there is business activity and where local authorities will confirm that there is a demand for housing.
"The only option for estates which were built out in the middle of nowhere is to flatten them -- if nobody wants to live in these locations what's the point of having them?" said Mr Litman.
"Our aim is to get the two pilot projects under way by September and then we will see where it would go from there," he said.
"Basically what is on offer is a chance for people who have no chance of owning a home to get involved in this project, they would work to finish the houses and then they would be able to rent or possibly even buy the houses when they're finished off."
One of the major problems arising from the collapse of the construction industry is that thousands of building apprentices, carpenters, plumbers, electricians and plasterers have been abandoned, with nowhere to complete their practical training.
According to Mr Litman, partially finished houses in ghost estates would be an ideal training ground for such people, as well as those who wanted to get off council housing lists.
Studies have already shown that Ireland has the worst apprenticeship record in Europe. The apprenticeship figures also mirror the youth unemployment rate with Ireland having one of the worst unemployment figures in the EU with 32pc between the ages of 16 and 25 out of work.
- LIAM COLLINS
A Cork solicitor has claimed that the National Asset Management Agency (Nama) is delaying recovery in the property sector by seeking unrealistically high prices for properties it is selling.
Niall Murphy, a solicitor in Ballincollig, has been acting for a young couple who paid a booking deposit on a house in Cork in February last year. The house was valued at €260,000.
The property had not been built at that stage, so they signed contracts subject to being able to get a mortgage when the property was completed.
‘‘In May 2011, we were notified that the property was complete," Murphy said.’ ‘I obtained the valuation from a valuer appointed by the bank of €240,000, based on which the bank was in a position to issue a loan offer to our clients.
I wrote to the builders’ solicitors, seeking confirmation that we could complete at this figure. They replied by saying that Nama would only sanction a sale price of €250,000."
Murphy said the figure meant Nama was only accepting a drop of €10,000 - less than 4 per cent - in the price in the 15 months since the booking deposit had been paid.
Data from the Central Statistics Office show that residential property outside Dublin fell in value by 11 per cent between March 2010 and March 2011.
On that basis, Murphy said Nama was looking for an unrealistically high price and rejecting the chance to sell a property ‘‘for a fair market value’’.
He said he had asked the developer’s solicitors for a copy of the correspondence with Nama, in which the agency set out its position.
However, the solicitor said it was waiting for a reply from Nama. ‘‘Clearly, the price that is being sought is not the market price.
‘‘Nama appears to be attempting an artificial price support mechanism in excess of what the market is willing to pay, to keep the price of the underlying assets [and therefore the value of loans they have acquired] artificially high," said Murphy, who outlined the case on his blog at www.murphyslaw.ie.
In a radio interview last weekend, Nama chairman Frank Daly said people who had encountered problems trying to buy property from the agency should contact him directly.
He said Nama was keen to help people to buy property, and was advancing ‘‘modest proposals’’ for credit initiatives to kick-start the property market.
He gave the example of a buyer who wanted to buy a Nama property valued at €20 0,0 0 0, but only had €20,000 in savings and a €140,000 mortgage. Nama could take an equity stake over the remaining €40,000.
The property would be revalued in four or five years, and if the house had fallen in value by €40,000 or more, Nama would ‘‘take the hit’’, Daly said.
The Law Society is to consider the issues of ‘Chinese walls’ and residential property undertakings by solicitors, but has rejected efforts by Mayo solicitors to push through a general ban, writes Kieron Wood.
Chinese walls are a practice that allows major firms to act for opposing clients.
More than 100 members of the Mayo Solicitors Bar Association (MSBA) petitioned the society for a special general meeting of the profession to discuss a ban. But Law Society president John Costello, in an e-bulletin to all solicitors, said the Council of the Law Society believed that the issues were ‘‘too complex and nuanced to lend themselves easily’’ to general motions.
Costello said a general meeting or postal ballot that aimed to direct the council to exercise regulatory functions in any particular way was outside the power of a general meeting of solicitors.
About 200 solicitors from all over the country attended the meeting in Blackhall Place last Thursday night. Evan O’Dwyer, president of The Mayo Solicitors Bar Association, said about 40 lawyers from Dublin, Wexford, Roscommon and Mayo spoke at the ‘‘very robust’’ three-hour meeting.
‘‘The Mayo solicitors expressed frustration that this was an initiative coming from the bottom up," said O’Dwyer.
‘‘It shouldn’t have come to this, that we had to bring the issues to the fore. There was concern expressed that the Law Society was afraid to stand upto the big five firms.
We wanted to direct the council to do A, B and C, but it turned out to be just a general discussion."
The Law Society has now reconvened its task force on undertakings to deal with the issue of domestic property undertakings. A task force on the issue of Chinese walls will be headed by Catherine Treacy, who retired recently as chief executive of the Property Registration Authority.
Following a scheduled meeting of the Law Society Council last Friday, director general Ken Murphy said: ‘‘The council was already dealing with these matters before they were raised by the Mayo solicitors. All matters where the Law Society is making regulations must proceed by detailed consultation before any decision is made."
Merlin Group, the Dublin business best known for its car auctions, is entering the property auctioneering business with plans for a mass auction of around 75 properties in early autumn.
The firm has invested heavily in setting up a new unit, Merlin Property, and is in discussions with banks and receivers ahead of the first auction, to be held in Dublin’s Burlington Hotel. David Byrne, managing director of Merlin Group, said that it hoped to hold up to five ‘‘grandstand’’ property auctions a year, and would also hold smaller events.
The property division will employ ten people and expects to create 40 jobs over the coming year, including jobs for valuers, property negotiators and estate agents. Byrne would not comment on the cost of the new division, but said it had ‘‘invested heavily’’ in technology and professional advice. ‘‘We intend to go after this market full-force," he said.
Merlin Property hopes to attract professional buyers to its auctions, as well as individuals. It will sell residential and commercial properties, including ‘‘the more difficult-to-sell properties’’, such as ghost estates. The catalogues for the auctions will be available on Merlinproperty.ie, with a four-week viewing period before an auction.
‘‘We’re building a database of potential investors in Ireland and overseas. We’ve conducted meetings with wealth managers in London and Glasgow.
The message is that Ireland is a good market and you can make a return," said Byrne.
He described Merlin Property as a ‘‘turnkey’’ service that would source buyers and sellers, and provide property management services for buyers who wanted to let out the properties they bought. ‘‘It makes it more attractive to buyers if we have a full turnkey package, rather than being left to their own devices after buying a property at auction," said Byrne.
He said that the idea for a property unit arose more than a year ago, as the company already had relationships with banks and receivers from its sales of cars and machinery. Its Ganly Craigie business is already involved in selling land, including farmland and quarries, as well as heavy machinery and construction equipment.
‘‘We decided this is the right time to do it, rather than being too early or too late," he said. ‘‘Speed to market has become crucial because the cost to institutions of holding on to properties can quickly stack up. We know from experience that realistic reserve prices create successful auctions. There has to be value for the buyer and the seller."
British auction firms Allsop and Space will hold their second Irish auction this week, when 87 residential and commercial properties will be available. Their first auction in April attracted huge interest and 81 of the 82 lots were sold.
However, auctions by other firms have been less successful, with two properties out of 65 selling at a recent auction in Cork.
The Merlin Group has been in business since 1974, and employs 75 staff between its car auction business, Ganly Craigie, car sales and car rental. Merlin Property is being headed by Lisa Geoghegan, a former estate agent
The state would have to pump another €5 billion into the banks and pay out €1.8 billion in compensation to landlords if it banned upward-only rent review clauses, according to new research.
A study prepared by DKM Economic Consultants for the Irish Association of Investment Managers (IAIM) estimates that up to €14 billion would be wiped off the value of commercial property by a complete ban on upward-only clauses. Landlords would be likely to sue the state for ‘‘state interference in private contacts’’, DKM found.
Even if a legal challenge failed and the clauses were banned, the state would still face a massive bill.
‘‘The additional losses (over any existing provision) to lenders are at a minimum €6 billion, of which circa €5 billion would be incurred by banks or institutions owned or funded by the exchequer," said DKM.
That includes a hit that would have to be taken by the National Asset Management Agency (Nama),which has taken over the loans of the Irish banks on terms that suppose upward-only reviews would remain in place.
The upward-only reviews have become a major issue, with retailers claiming they are putting shops out of business.
However, the DKM research said that rents would be higher if upward-only clauses were not allowed in lease agreements. It said that a call for the clauses to be banned failed to recognise that many landlords gave tenants other inducements - including rent free periods and fit-out expenses - to accept longer leases with upward-only clauses.
DKM’s research also found that 76 per cent of all retailers who sought rent relief from their landlords had been successful, after providing accounts based evidence that rents were a major factor in their situation.
DKM said that jobs in the retail sector ‘‘would not be revived solely by a change in the terms of lease agreements’’.
It described as ‘‘implausible’’ a claim that 30,000 jobs could be saved by banning upward only rent reviews, and ‘‘highly implausible’’ that 20,000 extra jobs could be created if they were banned.
It said that the potential benefit of saving jobs set against the risk of banning the clauses and facing billions of euro in costs ‘‘makes no economic sense’’.
Frank O’Dwyer, chief executive of IAIM, said the association would welcome a quick resolution of the issue, as uncertainty was deterring investment in Irish property.
‘‘At its peak, there were €3 billion-worth of commercial property transactions a year," O’Dwyer said.
‘‘In the first half of 2011, it looks like it was under €10 million. ‘‘There are virtually no transactions taking place. It is a very complex issue and we would welcome certainty."
Frank Daly, chairman of Nama, also said last week that uncertainty was deterring potential investors in Ireland. Alan Shatter, the Minister for Justice, is expected to bring the heads of a bill abolishing upward-only rent review clauses to the cabinet in the coming fortnight. It will then be referred back to the attorney general, Máire Whelan.