Wednesday, March 30, 2011

Think tank backs levies on property and water - The Irish Times - Tue, Mar 29, 2011


PROPERTY TAXES and water charges need to be introduced to avoid further increases in income taxes, which would erode competitiveness, the Government has been told. The recommendations come in a six-page note from the National Competitiveness Council (NCC) which has been sent to the Government.

In the document, seen by The Irish Times , the State’s in-house competitiveness think tank has pressed for the implementation of a series of prioritised reforms.

Calling for the introduction of, among other things, a property tax and water charges, it says further income tax increases would have a damaging effect on competitiveness and make Ireland less attractive to highly skilled and highly mobile foreign workers.

Referring to spending by Government departments, the NCC urges an end to the traditional method of assessing needs from the starting point of the previous year’s budget allocation.

This should be replaced by “zero-based budgeting” which requires the continuous assessment of all spending programmes.

The agency also urges the Government to grant wide-ranging powers to a soon-to-be-established independent fiscal council. The council will oversee the management of the public finances and must be established under the terms of the EU-IMF bailout.

The NCC wants its powers to include a “capacity to stress test taxation and spending scenarios”.

While competitiveness gains have been made since the onset of recession, owing to falling costs, the document urges the Government to add to these gains by taking “structural policy decisions that will deliver more long-lasting, durable competitiveness gains”.

The NCC repeats previous calls for the liberalisation of domestic economic sectors to generate greater competition. It highlights legal services, medicine, energy and the public service as being in need of opening to competition.

It welcomes the inclusion of scheduled liberalisation measures for the legal and general medical practice sectors in the terms of the EU-IMF bailout.

Sectorally, the NCC believes the Government should focus on export opportunities in education, agriculture and tourism.

To boost the pharmaceutical and medical devices sectors, which now account for more than half of Ireland’s goods exports, the NCC believes a streamlining of the approval system for new products and processes is needed.

In an implicit criticism of the Central Statistics Office, the NCC says its resources must be focused on those sectors which are most important for the wider economy.

The NCC urges that its two-year-old proposals on education and training be “progressed immediately”, with a particular focus on the quality of teaching in schools.

The document notes Ireland was among the world’s most competitive economies from the late 1990s to 2003. This marks it out from other “troubled” peer countries which never achieved the sort of export success enjoyed by Ireland and proves high levels of competitiveness can be achieved.

The NCC was established in 1997 to measure the Irish economy’s competitive position vis-a-vis comparable economies and to make recommendations on measures to enhance competitiveness.

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Tuesday, March 29, 2011

Agency hasn't worked -- so now the gloves are coming off - - Fire-Sales on the horizon?

By George Garvey

Saturday March 26 2011

NAMA's decision to move against Paddy Kelly marks a new get-tough policy on its part and almost certainly brings the colourful property developer's 45-year career to an ignominious conclusion.

Originally from Co Laois, 67-year old Kelly was the first major developer to admit that the game was up when he told the Commercial Court in March 2009 that his assets exceeded his liabilities and that he might be bankrupt.

Since that admission, the blows have rained down thick and fast upon Kelly, who had an estimated net worth of €200m at the top of the market.

AIB, NIB and ACC are among the banks which have secured High Court judgments against him for unpaid debts.

He has also had his car seized -- not once but twice -- by the Sheriff and has been forced to move out of his palatial Shrewsbury Road, Dublin 4 home and into rather more modest accommodation.

At his peak, Paddy Kelly was involved in more than 50 projects, including the redevelopment of Smithfield in Dublin and several hotels with a combined value of €5bn.

His preferred method of recruiting partners for each of his projects, which was intended to spread the risk, achieved the opposite result.

As his son Simon explains in his recent book, 'Breakfast With Anglo', when Paddy Kelly sought to sell some of his properties to raise desperately needed cash in 2007 and early 2008, his partners refused to agree because they would have had to take a loss.

NAMA is appointing a statutory receiver to Paddy Kelly's seven hotels. These include three properties trading under the Clarion brand, a Marriot, a Maldron and a Days Inn.

The operation of the hotels is not affected by the appointment of the statutory receiver. NAMA has also appointed estate agents Savill to sell off properties owned by Kelly in Smithfield, Blackrock and Clonskeagh.

A statutory receiver is a sort of "super receiver", whose appointment is designed to prevent individual NAMA-participating banks appointing their own competing receivers to the same property. This is the third time that NAMA has appointed a statutory receiver to the assets of a major Irish property developer.

In February, it appointed a statutory receiver to Liam Carroll's sprawling property empire. It has done the same to some of Bernard McNamara's assets. Statutory receivers have also been appointed to the assets of several smaller property developers.

While there will be considerable personal sympathy for Paddy Kelly -- who, almost uniquely amongst major property developers, seems to have had no enemies -- NAMA's tougher approach is long overdue.

It is now almost two years since the former finance minister Brian Lenihan first announced his plans for the setting up of the National Asset Management Agency in his April 2009 emergency Budget.

Since then, events have moved at a glacial pace, with the state "bad bank" signally failing -- so far at least -- to achieve its stated aims of either stabilising the property market or getting the banks lending again.

Two years on, it is now clear that the property market and the banks' balance sheets are in far worse condition than even the most pessimistic observers could have imagined in April 2009.

With virtually all of Ireland's major property developers now hopelessly insolvent, not alone was NAMA's previous softly-softly policy not working, it couldn't possibly work.

As a result, Brendan McDonagh's outfit is going to have to adopt a much tougher approach in its dealings with property developers.

This is going to see NAMA seizing direct control of the assets of many more developers and selling off their assets for whatever it can get.

- George Garvey

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Profits down, rents up | The Post - This has to be the craziest property story!

Profits down, rents up
27 March 2011 By Samantha McCaughren Business Correspondent

Over the last three years, shoppers have become less inclined to part with their cash, so it may seem strange to hear about rent increases for retail tenants around the country, with the latest hikes coming for stores in Dundrum Town Centre.

Oasis and Coast, run by Ian Galvin’ s Aurora Fashion group, were both hit with rent hikes of more than 50 per cent this month.

The stores will have to pay an additional €100,000plus in rent.

The rent increases in streets and centres around the country are not just being pushed through by landlords, but often follow an independent arbitration process.

Retailers claim the arbitration process is weighted in favour of landlords, while others involved insist that it is fair, and more complicated than it appears.

Arguments put forward by those in the property market to back rent increases include the fact that rents have been unchanged in Dundrum since it opened in 2005. Dundrum rents are also lower than in other premium shopping centres, such as Liffey Valley.

However, Retail Excellence Ireland claims that some shops will close if higher rents are forced through.

The controversial arbitration system chooses arbitrators from a panel nominated by the Society of Chartered Surveyors.

A report from the working group on transparency in commercial rent reviews said last year it was ‘‘clear that there was a perception among some retail tenant interests that the arbitration process was inherently biased in favour of landlords’’. It found no objective evidence of bias, but said ‘‘the perception was real’’ and needed to be addressed.

Suspicion about the process remains.

There are claims that arbitrators are too closely linked to the property market to consider recommending lower rents.

One of the more contentious issues is that of side deals, whereby headline figures set a new market rent, but sweeteners are included in separate documents.

There are differing views as to whether or not these side letters ever make it into the public domain. Blaine Callard, chief executive of Harvey Norman’s Irish stores, said he had no faith in arbitration.

‘‘The arbitration process is an ineffective mechanism," Callard said. ‘‘It is based on this old real estate assumption that rents and property prices only ever go up.

The whole problem is that everybody involved in that process inevitably has some vested interest in the property market.

‘‘There is this huge momentum stacked against any kind of recognition that the rents agreed during the boom are completely unrealistic.

The arbitration process, in its current form, is part of the mechanism designed to maintain this facade that the shopping centres are still worth what it says on the balance sheet."

Harvey Norman has 14 stores in the Republic and two in the North, employing almost 800 people.

‘‘Rents being offered in some stores next door to me are half what we’re paying," Callard said. ‘‘It’s all under the table, and they sign people up on a higher rent and then do a side letter, so you can’t even prove there is a cheaper rent.

There could be a year free of rent or key money, so when you actually add all that together, rents are effectively 30 to 50 per cent lower."

Callard said it was not practice for side letters to be made available to other tenants.

‘‘You have a whole two speed market," he said.

‘‘It’s not a level playing field. We have a well-capitalised, foreign parent that’s profitable, so we have a long-term commitment to Ireland. But unfortunately, for a lot of the small to medium-sized retailers, the money under the mattress has run out. This is the crunch year."

Another retailer, Colm Sorensen of Butlers Chocolates, was also critical of the arbitration system. The luxury chocolates group owns 14 outlets in Ireland, including one in Dundrum Town Centre where it has been issued with a demand for a 100 per cent rent increase. The company has not gone down the arbitration route, however.

‘‘I think the process is very flawed," Sorensen said. ‘‘I think it is open to serious manipulation by the landlord."

Sorensen also said that secret side deals pushed up top line figures to give the impression of higher open market rents and claimed that new rental agreements were often timed to make sure the highest possible comparatives were in place ahead of rent reviews.

He said that, in one instance in Dublin, he believed a landlord struck a high-rent deal with a high-risk tenant to set a new headline rent.

‘‘A landlord wouldn’t normally let a property to a man with no assets, except for the fact that he would pay high rents," he said. ‘‘And then we were all brought up as a result of it."

Sorensen was also critical of Nama’s role in the rental market.

A number of properties, including Dundrum Town Centre, are now in the hands of Nama.

‘‘Nama employs developers to get tenants’ rents up," Sorensen said. ‘‘Nobody mentions Nama, but a government agency is behind a very high rent review request."

Barry Smyth, a member of the Society of Chartered Surveyors, who sat on the review group on commercial rents, insists that the system is fair.

On the issue of rent increases being recommended at a time when revenues are falling, he said that ‘‘generally, the tenant’s turnover and goodwill is not taken into account’’.

‘‘There are rents that are tied to turnover specifically, but for the majority of businesses, the turnover doesn’t come into it," Smyth said.

‘‘Because you could have a situation that you had a lazy tenant. And if turnover is booming, tenants may not want to reveal their turnover and have to pay a higher rent because of it."

Smyth also said that previous rental agreements, with introductory sweeteners, were not taken into account when seemingly large rent increases were reported on.

‘‘It must, to some degree, depend on when the rent was previously fixed and whether or not there were special conditions attached to the original rent," he said. ‘‘So looking at percentages doesn’t give the full picture.

There may well have been some incentives in the early part of the lease, which means an increase is justifiable." Another reason for a rent increase could be improvements to a retail development.

‘‘A location may have changed positively and, even though overall trade may be down, the specific location may not be down," Smyth said.

He also said that both the tenant and landlord presented their cases during the process.

‘‘The arbitrator is an independent person in a quasi-judicial position," Smyth said. ‘‘He must make a decision based only on the evidence that’s put to him. And both the landlord and the tenant have equal opportunity to be represented at the arbitration."

Smyth rejected the suggestion that arbitrators were biased towards property.

‘‘If I were asked to do a rent review on Grafton Street, and I happened to act for the landlord next door, I would decline that appointment, because it wouldn’t be appropriate," he said.

‘‘You can assume that, in any sort of rent review, the tenants are represented by valuers.

There may be some firms that are more readily identified with landlords, and some more with tenants."

He said it would be unlikely that an arbitrator would more closely identify with landlords. Smyth also said that side letters were fully available to retailers and their representatives.

‘‘The tenant’s valuer is quite entitled to get all that information," he said. ‘‘If it was being hidden by a landlord, I think the arbitrator might look somewhat askance at that."

The Sunday Business Post spoke to one retailer who said that side letters were included in his arbitration process, but a sizeable rent increase was still recommended.

Dozens of tenants in Dundrum have sought to go down the arbitration route, while many more retailers around the country are resisting rent increases.

With no sign of a return to spending growth by consumers, relations between tenants and landlords are likely to be strained for quite some time to come.

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New AIB Valuer panel causes concern to Auctioneers

From The Sunday Times:

AIB's decision to restrict membership of its mortgage experts panel to
customers has met with accusations that the bank has its priorities wrong.
Property professionals must be customers of Allied Irish Banks to be considered for inclusion on
a new panel of valuers for its mortgage business. The taxpayer-backed bank drafted a shortlist of
more than 100 professionals in January, from which mortgage applicants must select a valuer to
determine that they are not overpaying for their homes.
AIB was one of the last lenders to establish such a panel but it has shocked the profession with its
stipulation that valuers must be bank customers to make the shortlist.

Ed Carey, a past president of the Irish Auctioneers and Valuers Institute, described AIB’s policy as
unusual, saying he was concerned that the lender was prioritising valuers’ banking relationships
over their professional competence.
“Our concern is that the best candidates get on the panel — not just AIB customers,” he said. “The
public will want to know that valuations are being conducted by the proper people in the proper

Our firm was a long-time member of the panel, but we were arbitrarily dropped in January, without any notice. (We are BOI customers)

The local branch plead ignorance of the matter, citing "Head Office".

I hear reports that the Appointed Valuer is charging up to double normal rates. They now have a monopoly on AIB valuations.

Perhaps one for the Consumer Affairs people or the Competition Authority?




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ACC Bank secures €33m judgment against developer - Clonmel Property mentioned in case-The Irish Times


ACC BANK has secured summary judgment for almost €33 million against a Dublin businessman arising from unpaid property loans.

The bank had brought two sets of Commercial Court proceedings against John Walsh, Tinnahinch, Plunkett Avenue, Westminster Road, Foxrock, arising from property loans and a guarantee provided by him and others over loans to a property company, Marydean Properties Ltd.

The bank sought summary judgment for €30.2 million against Mr Walsh in the first set of proceedings arising from a facility under which ACC refinanced existing borrowings with Anglo Irish Bank relating to lands at Termonfeckin, Co Louth, and Ballyboghil, Co Dublin.

Mr Justice Peter Kelly was told yesterday by Damien Keaney, for Mr Walsh, that while no defence was being offered, his client was seeking a stay on judgment because of negotiations related to the sale of the affected property.

Mr Justice Kelly granted the application by Rossa Fanning, for ACC, but agreed to place a three-week stay. Mr Fanning did not object to the stay.

In the second case, ACC sought €2.67 million summary judgment against Mr Walsh on foot of his alleged 2005 guarantee of loans to Marydean to acquire and refurbish commercial investment properties at Gladstone Street, Clonmel, Co Tipperary.

Mr Keaney initially said his client contended he had a defence to that claim in circumstances where a solicitor for Mr Walsh had written to the bank revoking guarantees prior to ACC issuing its demand for repayment. An English court of appeal decision provided authority for that defence, counsel added.

Mr Justice Kelly said such a defence “is news to me” and it appeared to be an interesting proposition that a person could enter a guarantee “and walk away” from it.

He adjourned the issue to yesterday afternoon when Mr Keaney indicated he was no longer pursuing that defence.

In those circumstances, judgment for the €2.67 million was entered.

The €30 million claim arose from a €26.6 million loan facility, plus interest roll-up of €3.19 million, extended to Mr Walsh and two other men in January 2008 relating to property at Termonfeckin, Co Louth, and Ballyboghil, Co Dublin.

The site at Drogheda Road, Termonfeckin, had planning permission for a new village centre and residential units but ACC said it became apparent soon after draw-down of the loan a build-out of the site was not commercially viable because the property market had deteriorated.

The loan was also made for a medium-term development of some 172 acres at Ballboghil made up of two acres zoned residential and 170 acres zoned agricultural.

The borrowers were actively involved in negotiations with a local GAA club to participate in a land swap that was expected to provide an opportunity to begin development of the area zoned residential, the bank said. No progress was made in relation to a formal agreement in that regard, the bank believed.

In separate proceedings yesterday, ACC also secured summary judgment for €2.67 million against Richard Murphy, Oak House, Hainault Road, Foxrock, Dublin, arising from the alleged guarantees provided in 2005 by Mr Murphy, Mr Walsh and others related to the loan to Marydean. Mr Murphy offered no defence to the claim.

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House price fall here worst in the world -

By Shane Hickey

Tuesday March 29 2011

THE average price of a house in Ireland went down by almost 11pc last year -- faster than anywhere else in the world.

A new survey has shown houses in Ireland plummeted in value in 2010, making Ireland the worst performer amongst almost 50 around the globe.

The study, compiled from government statistics by UK property consultancy Knight Frank, puts the slide at 10.8pc in Ireland.

The worldwide trend shows house prices were up 2.8pc in 2010 -- the market here came out bottom.

The largest increase was in Hong Kong with a 20.1pc rise, while both Latvia and Israel were up over 16pc.

However, Ireland is one of 15 countries which saw a drop in the annual survey.

Iceland, a country which has also has a highly volatile financial system, was down 1.4pc while there was a drop of 4.1pc in the United States.

Ireland comes in below Lithuania, where there was a drop of 10.1pc in house prices.

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Wednesday, March 23, 2011

Banks are stress tested for 60% fall in house prices - The Irish Times - Thu, Mar 17, 2011

SIMON CARSWELL, Finance Correspondent

THE CENTRAL Bank is stress-testing the Irish banks for a worst case scenario where residential property prices would fall 60 per cent from their peak and commercial property prices by 70 per cent.

This would involve residential prices falling by a further 17.4 per cent this year and 18.8 per cent in 2012 before the market recovers, while commercial property would fall a further 22 per cent this year before rising slightly in 2012.

The Central Bank is using these scenarios (published yesterday) for its stress tests on the banks’ capital – the Prudential Capital Assessment Review – to be announced on March 31st.

A stress test on bank liquidity – the Prudential Liquidity Assessment Review – will determine the value of loans to be sold or run down to reduce the size of the banks, bringing their loans closer in line with their deposits.

AIB, Bank of Ireland, EBS Building Society and Irish Life & Permanent are being stress-tested. Anglo and Irish Nationwide fall outside the tests as they are being closed.

While a worse or “adverse” case scenario will be looked at, the Central Bank expects residential property prices to fall by 55 per cent from their peak in 2007 until 2012 and to recover gradually in 2013.

This would imply declines of 13.4 per cent in 2011 and 14.4 per cent in 2012 after falls of 14.8 per cent in 2008, 18.5 per cent in 2009 and about 15.5 per cent in 2010.

The bank is using the Permanent TSB house price index, which shows prices have fallen 38 per cent from the peak. The index lags current house price falls. House prices have already fallen by 60 per cent since the peak, said Marie Hunt, director of research at estate agents CB Richard Ellis.

Commercial prices are expected to fall by 62 per cent from peak, implying a 2.5 per cent fall in 2011 and a rise of 1.5 per cent in 2012.

Unemployment is expected to peak at 13.4 per cent in 2011 under a “base” case scenario and at 15.8 per cent in 2012 in a worst case.

The rate reached 14.7 per cent in the last quarter of 2010, the Central Statistics Office has said.

The Central Bank can adjust its estimates upwards to account for this, but sources close to the process said the quarterly figure would average lower over a year.

GDP is expected to grow 0.9 per cent in 2011 and 1.9 per cent in 2012 under the base case and to shrink 1.6 per cent in 2011 before rising 0.3 per cent in 2012 under the worst-case scenario.

The Central Bank insisted the stress testing was “not an economic forecast” but that “hypothetical scenarios” were applied. The base case uses European Commission forecasts from December 2010 and the Central Bank’s property price assumptions.

The tests will decide how much of the €25 billion EU-IMF contingency fund will be required by the banks beyond the €10 billion to be pumped into the banks under the first part of the external bailout.

Central Bank governor Patrick Honohan has warned the stress tests would likely uncover larger losses beyond current estimates.

The liquidity test will set targets for each bank on their ratios of loans to deposits. The banks must show how they will offload assets and grow deposits before the end of 2013 and how this process will affect their capital requirements.

The average ratio stands at about 175 per cent (€1.75 on loan for every €1 on deposit).

This may be reduced to an expected average of about 122.5 per cent, but the final figure for each institution will not be known until March 31st.

The pace of the disposal of excess assets and the amount to be disposed will determine how much further capital the banks will need.

The Government is resisting firesales as they would inflict further losses and capital demands on the State.

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Almost half Start home loans over 90 days in arrears | The Post

Almost half Start home loans over 90 days in arrears
20 March 2011 By Jon Ihle

Nearly half the home loans underwritten by subprime lender Start Mortgages during the boom are deep in arrears, according to new data by ratings agency Moody’s.

Figures up to the end of 2010 on two bonds backed by Start loans show 48 per cent of remaining borrowers have fallen more than 90 days behind in their payments. About 30 per cent have defaulted outright, meaning they are at least nine months in arrears.

Moody’s issued downgrades on the bonds - Lansdowne Mortgage Securities 1 and 2 - on the basis of the poor performance of the underlying mortgages.

The action comes just weeks after the Central Bank revealed that more than 10 per cent of all private residential mortgages in Ireland were either 90 days or more overdue, or had been restructured due to financial stress.

Moody’s said it expected the arrears profile in securities backed by Irish mortgages to keep deteriorating in 2011 due to the weakened macro-economic environment here.

‘‘Moody’s expects that the increasing unemployment and lower income arising from the austerity measures will continue to hurt borrowers’ ability to fulfil their financial obligations," the agency said.

The Lansdowne securities closed in 2006 and contain pools of mortgages issued by Start between 2004, when the lender first entered the Irish market, and 2006. Many of the performing mortgages in the pools have been refinanced with other lenders or redeemed, leaving a high proportion of bad debts

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Tuesday, March 22, 2011

Calls for radical overhaul of rent reviews | Irish Examiner

Calls for radical overhaul of rent reviews

Saturday, March 19, 2011

A RADICAL overhaul of the arbitration system for commercial rents is urgency needed following rent increases of more than 50% being awarded against tenants in the Dundrum Shopping Centre in Dublin.

That was the call issued by chief executive of Retail Excellence Ireland, David Fitzsimons.

It is understood that two clients in the centre, Oasis and Coast, have suffered rent increases of 51% and 55% respectively following arbitration.

A further 45 of the centre’s 120 retailers face the same dilemma in the next few weeks as their results are made known, he said.

Mr Fitzsimons said the process was particularly severe on "the smaller number of indigenous brands" in the centre while some "international brands" with an Irish presence also looked vulnerable to the unfavourable review process.

Dundrum was built by developer Joe O’Reilly, who has had millions of debt linked to the centre transferred to NAMA.

Last year saw the first round of rent reviews since the centre opened in 2005. Rent rises of a massive 80% were sought in some cases despite the sharp fall in retail sales. As a result significant numbers of the centre’s tenants went to arbitration over the rent debacle.

Mr Fitzsimons said: "It is an absolute disgrace that in the 36th month of consecutive decline in the Irish retail industry, when sales levels have fallen over 30%, the allegedly independent arbitration system can come back with recommendations that these retailers’ rents should increase by over 40%.

"Over 45,000 people have lost their jobs in the retail industry over the past 30 months and over 400 stores are closing each month. If the unrealistic commercial rents being demanded by many landlords are not lowered significantly, considerable numbers of retailers will continue to close and large numbers of jobs will be lost.

"We are clear about the changes that need to take place: the ban on upwards only rent reviews for existing leases needs to be removed and the arbitration system needs to be completely overhauled."

The Government has committed to introduce measures to ban upward-only rent reviews and that will be crucial if Ireland’s retail sector, which employs more than 255,000, is to stop haemorrhaging jobs and investment, he said.

The whole system needed to change to an aggregator system rather than comparing prices in similar developments, he added.


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Treasury Holdings planning €300m Dublin supercasino - The Irish Times - Mon, Mar 21, 2011


PROPOSALS FOR a €300 million supercasino on the banks of the river Liffey have been submitted by Treasury Holdings to the Department of Justice.

Treasury says its Spencer Dock site near Dublin port is an “ideal location” for the construction of a large-scale casino as part of a regeneration of the area.

It claims the development could attract three million visitors a year and create 2,200 new jobs in the Dublin region. The venture could boost spending in the local economy by €75 million a year and generate more than €40 million a year in gaming taxes.

Details of Treasury’s plans are contained in a submission to the department, which The Irish Times has obtained under freedom of information legislation. Treasury, whose loans are in Nama, filed the submission together with an international casino operator.

The name of this company has been withheld on the documents released on grounds of commercial sensitivity.

According to the submission, a large-scale casino, including hotel, convention and spa facilities, along with restaurants, pubs, nightclubs and a bowling alley, would be 50,000-75,000sq m in size and would cost between €250 million and €300 million.

Last December, former minister for justice Dermot Ahern, published proposals that would allow a single “resort” casino with multiple gaming tables and up to 1,500 slot machines. The new Government has yet to pronounce on the issue, but an application for a large-scale casino resort in Co Tipperary is the subject of a Bord Pleanála hearing.

Treasury’s submission is one of almost 70 made to the minister last year as part of a consultation process. Up to now, Mr Ahern’s department had refused to sanction the release of these submissions. It was drawn up before Treasury opened the national convention centre on the Spencer Dock site last September.

It says that for a large-scale casino to be financially viable, there must be sufficient demand. “This generally means locating the casino resort in or near population centres where it is easily accessible by local customers and tourists.”

The failure of the UK to legislate for larger regional casino resorts makes it likely any Irish venture would attract visitors from the UK and mainland Europe, Treasury argues. It says its international partners would give priority to local people in recruitment and would “seek out the economically inactive, minorities and young people, to the extent permissible under law”.

The submission claims the development would employ 1,750 people as well as creating 450 jobs in tourism. About 2,000 jobs in construction would be created over a 2½-year period.

The submission includes a section on “myths”, in which the promoters claim much research on gambling is biased. It rejects the contention that problem gambling will rise with the introduction of large-scale casinos

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Monday, March 21, 2011

Irish Nationwide loses out on Dunne loans | The Post

Irish Nationwide took an 87 per cent writedown on a loan to a company owned by developer Sean Dunne last year.

Dunne’s Waterside Kilcock Property Company, registered in the Isle of Man, borrowed €38 million from the building society in 2006 to buy the former Zed Candy factory site in Kilcock. The local council gave planning permission for 180 apartments and a 29-store shopping centre on the site, but An Bord Pleanála overturned the permission.

Irish Nationwide was forced to write down the value of the loan to €5 million, a price which most likely reflects what the National Asset Management Agency (Nama) paid for the loan. The 87 per cent haircut would have been one of the biggest on the society’s books, where the loans transferred to Nama at an averaged discount of 72 per cent.

A separate loan of €70 million given to Dunne by Irish Nationwide, to part-fund his purchase of four blocks at the front of AIB bankcentre in Ballsbridge, had to be written down to just €18 million – a write-down of nearly 75 per cent. An Bord Pleanála also ruled against Dunne’s plans to develop that site.

AIB had signalled that it would exercise a break clause it had on the 20-year lease for the four buildings, and the bank was due to vacate the office blocks in four months’ time. Most AIB staff are based in new buildings at the back of the bankcentre.

However, the bank has signed a new five-year deal with the landlord at a much lower rent, The Sunday Business Post has learned. The bank may save money by moving staff into Bankcentre from other locations around Dublin. Ulster Bank provided the rest of the funding to Dunne when he bought the AIB blocks for €207 million. AIB’s new deal should boost the value of the buildings, which would otherwise have stood empty after July.

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Tuesday, March 15, 2011

Clare and Galway property firms enter receivership | The Post

Two more property development firms have gone into receivership, as banks continue their action against heavily-indebted builders, writes Gavin Daly.

ACC has appointed a receiver over Patrick Carmody Construction, a Clare-based company that borrowed €3 million from the bank in 2006 to buy a site.

Gearoid Costelloe of Grant Thornton in Limerick has been appointed receiver to the company, which was founded in 2001 in Ennis.

Patrick Carmody Construction owed more than €3million to creditors at the end of June 2009, according to its latest accounts.

The firm had assets worth less than €650,000 and was owed more than €2.8 million by debtors.

Meanwhile, AIB has put Galway-based Cuddy Development into receivership following a loan it gave to the company in 2008.

Michael Butler of Dublin accountancy firm Butler Reddy & Co is receiver to Cuddy Development.

The firm, owned by Sean and Shane Cuddy, bought a site for €2 million in 2004 and spent almost €1 million developing it.

However, in 2008, it wrote down the value of the project by €274,000. At the end of June 2008, it valued its stocks and work-in progress at €3 million and owed more than €2.6 million to creditors.

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Navigating the rental market | The Post

The Irish property market is undergoing a transformation, and the rental sector has been seriously affected.

Rental rates have fallen back sharply to levels last seen in the late 1990s. Would-be first-time buyers are now opting to, or are forced to, rent, creating a new ‘renting is the new buying’ trend.

That in turn is leading to a run on good quality properties, a further shortage on larger rental apartments and houses and a post property boom generation disillusioned by the country’s long-held obsession with home ownership.

The number of people buying new homes has fallen sharply. Last month, the Irish Bankers Federation/ PricewaterhouseCoopers mortgage market profile revealed that mortgage loans dropped by more than 40 per cent from 2009 levels to a total of €4.7 billion last year.

There were almost 28,000 new mortgages issued.

The average first time buyers (FTB) loan in 2010 was €185,193 - the lowest since IBF/ PwC research began, in 2005. So what can those opting to rent expect to pay? The average rent nationwide is €830, according to the latest figures from

Its report, published last month, analysed the latest trends in the Irish rental market and showed that rents fell by an average of 0.6 per cent over the course of last year, compared to falls of 15 per cent in 2009 and 10 per cent in 2008, suggesting the rental market may have reached ‘‘an even keel’’.

A year-on-year analysis of rent changes throughout the country revealed that, in the last three months of 2010, rents fell across the board, except in Dublin, the largest rental market in the country.

In the capital the figures show a mixed picture. Dublin was divided by the Daft analysis into six rental zones in which rents fell everywhere except for Dublin city centre, where they rose by almost 3 per cent, and in south Co Dublin, where they rose by 2.2 per cent.

‘‘There is likely to be a shortage of good quality three and four-bedroom rental units in cities," said Ronan Lyons, who set up’s economic research unit seven years ago and is responsible for the website’s quarterly residential reports.

‘‘However much buyers will put up with moving further out of a city in order to fulfil their property needs, tenants want the pick of locations.

‘‘Instead of buying, would-be first time buyers are now renting and looking at rentals in terms of a five year solution.

That will put a squeeze on the three and four-bedroom rental segment, which Ireland does not have in large supply," he said. ‘‘It will also create a slight restructuring of rents where sought-after areas will enjoy a premium.

‘‘What remains to be seen is how the profile of longer term tenants over the next few years will dictate either where they live or what kind of services they’ll need.

For example, would be first-time buyers who want to start families and choose to rent for the next few years are likely to want to live in suburban areas near schools, parks, shopping centres and other amenities," said Lyons. ‘‘We may also see more of the let torent phenomenon that’s becoming more apparent in Britain.

‘‘For example, a well-paid civil servant who purchased a one-bedroom city centre apartment for €350,000 three years ago might have their property valued at €180,000 now. They can’t afford to sell it, but the

might be better off renting it out and having a tenant help cover the mortgage.

If they’re getting married, for example, they may want to rent a three-bedroom home in the suburbs.

It’s definitely a trend to watch for."

Letting, or renting, is the way forward, according to Nicola O’Callaghan, a manager at Hooke & MacDonald in Dublin.

‘‘If a property is in good condition, it will rent quickly - and we’re constantly on the look out for good quality units to rent. However, there are only so many investment properties available," she said.

‘‘The city centre will always be in high demand, even though apartments are usually older, smaller and more dated. People who will go further out of urban centres want good quality units close to frequent transport links and with more facilities available."

The profile of tenants is also changing, according to O’Callaghan. Young professionals in their mid-20s are staying at home for longer and moving out later. In general, those in their late 20s to late 30s are looking for properties to rent on their own or as couples.

One and three-bedroom rentals are most sought after, according to O’Callaghan. ‘‘A couple can share a one-bedroom unit, so it’s more affordable. In some cases it’s harder to rent a two bed, particularly if one room is a single or a more mature tenant wants the extra space but doesn’t want to share their home and can’t afford to cover the rent on a two bed.

‘‘The split in rent between three is more significant than between two parties," said O’Callaghan. ‘‘There’s only so much the average two or three bedroom unit can charge per month and we can’t value rents by size anymore. It has to based on affordability. Young professionals will usually budget about €550 to €600 per room per month.

‘‘We may start to see attitudes to home ownership shift to those shared by our European neighbours. In France, Italy, Germany and Spain people sign long-term leases for two to five years or more at a time.

‘‘It isn’t typical here, but it might start to kick in, particularly given that it’s in the interest of both parties.

The tenant has the security of a longer term lease and the landlord has a long term tenant to maintain and look after their property and pay the mortgage on it."

O’Callaghan advised landlords to be cautious when appointing a letting agent.

‘‘There’s been a large increase in letting agents recently and you don’t need a qualification to advertise yourself as one. Landlords should hire people who are familiar with tenancy laws and legislation, particularly since the establishment of the Private Residential Tenancies Board (PRTB)."

All private tenancies must by law be registered with the PRTB and the board maintains a public register of tenancies on its website.

The body replaced the courts in relation to landlord and tenant disputes. Last year, landlords accounted for almost 40 per cent of the board’s cases, many in part due to a significant increase in rent arrears cases.

‘‘Reference checking is a huge part of our service and we’ve seen an increase in false references lately," said O’Callaghan. ‘‘Some landlords don’t want to pay a 5 or 6 per cent fee, but it can backfire if their tenant is in financial difficulty and can’t pay the rent. I’m aware of one case where a tenant has been living rent free for 12 months because the landlord cannot evict them."

However, arrears cases make up a small proportion of difficulties involved in renting.

The vast majority of tenants, particularly the new profile tenants, are professionals with steady incomes and clean banking records.

They’re more mature and have higher living standard requirements than students in search of basic bedsit type accommodation.

One female architect from Dublin is a would-be first time buyer who has temporarily moved home, while searching for a place to rent in the sought after areas of Dublin 2, 4 and 6.

‘‘I’ve found landlords are more willing to negotiate than agents," she said. ‘‘Although it’s marginal, they will negotiate on price and on replacing old and stained furniture, for example.

‘‘It’s hard to find anywhere that doesn’t have storage heaters and poor facilities. Parking, balconies and extra storage are considered a luxury in Ireland.

Asking for bicycle storage has raised sniggers from agents.

‘‘I want a place with a good cooker and a washing machine and if there’s nowhere to hang out laundry, then I want a washer/dryer. Agents shrug their shoulders when you ask where to hang out wet laundry. In many cases, their attitude has been ‘well, if you don’t want the place, someone else will take it’.

‘‘I’m doing two searches," the architect said. ‘‘One is a solo search for a one bedroom unit on my own and the other is for a three-bedroom place that I can share with two friends also looking for accommodation.

‘‘Decent properties are hard to find. Landlords seem reluctant to modernise or refurbish them.

Some are looking for too high rents on investment properties that they’ve taken out high mortgages on.

The whole idea of renting is to avoid that mortgage trap," she said.

‘‘Rents are lower in newer apartments in suburban areas such as Sandyford, but you end up paying the difference in daily Luas fares and taxis at weekends."

Another young professional in her late 20s employed in Dublin city centre moved home to Wicklow temporarily while looking for suitable accommodation in the capital. ‘‘I rented with friends for years until one of our trio moved in with her boyfriend," she said.

‘‘My flatmate and I have been looking for almost three months and our search for satisfactory accommodation has been very hit and miss. One of our requirements was accommodation with two car park spaces, which has proved difficult to find.

‘‘One property had a lean-to kitchen that appeared to be part of a conservatory in a previous life. It wasn’t insulated and security at the rear of the house was an issue.

‘‘Other units were in subdivided buildings with flimsy door locks leading to small, dark and draughty rooms. If we’re paying €600 each, we don’t want to have to share washing machines or kitchens with other tenants in the building.

‘‘Another letting agent hadn’t had the apartment serviced for viewing. It was filthy and had kitchen cupboards full of stale goods and food with long since use-by dates.

‘‘I can look beyond a certain level of dirt and am happy to put on the Marigolds and give the new place a good clean, but there’s nothing you can do with a stained old mattress.

‘‘Landlords must learn that there is a certain level of standards they have to meet in order to let their property to good tenants.

‘‘Progress is also needed in terms of a deposit protection scheme to cut down on lengthy disputes."

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Monday, March 14, 2011

Two sides of the argument re Banning upward-only rent reviews - The Irish Times - Mon, Mar 14, 2011

Madam, – Recent articles by Bill Nowlan and Ann Hargaden (Commercial Property) regarding rent review proposals are to be commended. One would hope our new Government will take heed of them.

If we are to bring any stability and activity back to our virtually dormant investment property market, it is essential that the madcap notion that insolvent commercial tenants will be able to have rent reductions foisted onto unwilling landlords be knocked on the head very quickly.

Otherwise Nama will never be able to unload the billions of euro of property it now has on its hands, and property values in Ireland will continue to stagnate for many years to come.

No foreign investor in their right mind would consider investing here while such a threat looms and as your correspondents have correctly pointed out, the rental markets, given time, will find their own level, without further governmental interference, or ill-thought-out suggestions.

Landlord and tenant legislation has evolved over hundreds of years, and it would be most unwise to wish to change it, unless absolutely necessary. – Yours, etc,



Dublin Land Securities Ltd,

Mespil Road,

Dublin 4.

Madam, – Ann Hargaden, Lisney director, makes a number of debatable points in her article (Commercial Property, March 9th) which essentially argues against the revoking of upward- only rent reviews on commercial properties.

Ms Hargaden states that if a property’s rent were to be reduced by 30 per cent then the landlord would effectively lose 100 per cent of his initial capital invested. Of my six leased properties, five have been in the possession of the current landlords in excess of 15 years and so this loss of capital would not apply as assumed.

Ms Hargaden contends that “most tenants will not have had a rent review at the very peak of the market and the vast majority will have had a lease break option since the downturn commenced”. Five out of six of our leases were settled at the height of the boom and none have lease break options.

Finally we are told that “the idea that a landlord would willingly allow a tenant to become insolvent and leave himself without income to meet his loan repayments is ludicrous”. This shows that Ms Hardagen must be writing about a world where dreams and reality have become distorted. If she would like a list of such realities then I’m sure that David Fitzsimons of Retail Excellence Ireland would only be too obliged to supply a long list of such cases. – Yours, etc,



Wicklow Street,

Dublin 2.

The words "Rock" and "Hard Place" seem most apt...

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Petmania seeks examinership | The Post

The owners of Petmania, a family-owned chain of 15 pet stores, will seek the appointment of an examiner to the business in the High Court tomorrow morning.

The court will consider a petition to put three related companies into examinership in a bid to restructure their finances.

The companies are Petmania, furniture retailer Meubles (Ireland) and O’Keeffes of Kilkenny, which runs a garden centre in the city. The group was founded by the O’Keeffe family in the 1970s.

The Petmania business started in 2005 in a section of the family’s garden centre, but expanded quickly in the following years. It has about 250 staff.

In an interview with The Sunday Business Post a year ago, Petmania managing director Shane O’Keeffe, a nephew of the founders, said that the group hoped to have 20 pet shops around the country by 2012.

Petmania made a loss of almost €645,000 in the 12 months to the end of May 2009, which it said was ‘‘as expected, given the building of its new store network’’.

It had a deficit of €731,000 on its balance sheet and owed €6.2 million to its parent, O’Keeffes of Kilkenny, at the end of the financial year.

The latest accounts for the parent company show it had accumulated profits of €3.5 million in May 2009, but had outstanding bank loans of €3.8 million and also owed €4.2 million to its directors.

Sad to see a long-established business like Meubles being brought down by a foray into another unrelated business.
The old adage of "Stick to the knitting" is very important today.

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Minister backs plan to protect tenant deposits | Irish Examiner.

Minister backs plan to protect tenant deposits

Friday, March 11, 2011

THE new Housing Minister Willie Penrose has backed plans for a tenancy deposit protection scheme to support thousands of vulnerable tenants coping with a wave of property repossessions and bust landlords.

An independent body will hold tenants’ deposits and landlords face being fined for wrongly holding onto advance payments under proposals being considered.

Mr Penrose also confirmed that savings with the proposed scheme may be reinvested in housing projects for the homeless.

Following an Irish Examiner analysis this week of tenant cases before the courts and their emerging battles with troubled developments, Mr Penrose said the deposit protection scheme would be an immediate priority for his office.

"This area has to be tackled. There is a need for an independent body that would hold and protect deposits and make quasi judicial decisions."

Estimates suggest that with deposits for rented accommodation averaging €1,000 for each of the approximate 250,000 tenancies, there would be a fund of at least €250 million held in such a scheme.

Such funds would gain interest when withheld in one account for tenants and landlords. The minister said any extra funds earned could go to supporting the homeless or housing projects.

Keeping in line with previous Labour Party proposals, Mr Penrose also said he believed the Private Residential Tenancies Board (PRTB) could run the deposit protection scheme.

"They would be the body for it rather than setting up another quango," he explained yesterday.

Housing support group Threshold say deposits were at the root of more than 4,000 cases dealt with by the organisation in 2009, according to its latest figures.

The charity has also claimed that 50% of cases brought to the PRTB relate to deposit retention and can take up to a year in general to be processed.

Mr Penrose said landlords found to have wrongly withheld deposits under the planned scheme would have to cough up payments or face fines.

"There has to be some deterrent, some sanction, otherwise cases will get bogged down there."

The Government in its recently published programme pledged to put an end to disputes regarding the return of deposits in a scheme.

Mr Penrose said he would be meeting with housing support groups and charities soon about the proposed tenancy deposit plan.


This is utter madness. More bureaucracy. Simple solution is to only allow Bonded Agents to hold deposits. This will stop the "rogue element" that cause problems. Not necessary to blanket the entire letting market with this! It will push up costs.

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Shady going-ons involving The Showgrounds, Clonmel. From The Examiner

Firm awarded €2.4m damages over land sale

Friday, March 11, 2011

A HIGH Court judge has awarded €2.4 million in damages to an investment firm against three men concerning the purchase of land on which the Showgrounds Shopping Centre in Clonmel was built.

The judge directed that his judgment be sent to the Charity Commissioners because of a €1.5m pay-out during the transaction.

The proceedings stemmed from a contract entered into by Mount Kennett Investments with the defendants — the "vendors" and separately Patrick O’Meara, Anthony Fitzpatrick and John Tobin for the purchase of the lands.

Mr Justice Clarke said the contractual entitlements Mount Kennett had under its contract with the vendors were transferred to Greenband, which claimed damages in lieu of specific performance and damages for delay.

Mount Kennett maintained proceedings for specific performance of the contract in question against the vendors and in November 2007 Mr Justice Smyth determined Mount Kennett was entitled to an order for specific performance of the relevant contract.

However, the contract was not performed or at least not in the way contemplated by the decree of specific performance.

The vendors contracted to sell a fee simple interest in the site to Mount Kennett but, at the time they entered into that contract, had only a contractual entitlement to buy the property themselves, which depended on consent from the Commissioners of Charitable Donations and Bequests.

Mr Justice Clarke said there was a leasehold interest in the property. This was held by Clonmel Leisure Group in which the vendors had an interest along with a fourth shareholder, Pat Buckley. The Charity Commissioners did not consent to the sale. Subsequently Mount Kennett became entitled to acquire the freehold and secure the consent of the commissioners.

The judge said Greenband paid more to acquire the fee simple title in the lands than had been subject of the original contract and the price ultimately paid was €5m.

The judge said that after the commissioners approved the sale to Greenband it appeared that the Show Society paid out €1.5m to the vendors and Mr Buckley on foot of a handwritten document that expressed that the sum be paid in relation to unspecified claims.

The judge said the society was not entitled to use its money except for purposes associated with its charitable objects.


Read more:

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Mystery Lettings, be careful who you deal with!

Strange case of the mystery lets

Mark Keenan

Published: 13 March 2011

Agent lists high-end, luxury property for rent; owner denies the house

is available; advertisement disappears. What on earth is going on?

A house in Killiney, Co Dublin, was advertised to let last week at a whopping €25,000 a month. If

achieved, it would be a record rent for any Irish home.

Except Paddock Wood isn’t actually available to rent — according to the man who owns it. It’s the

latest property to become part of a “mystery lettings” phenomenon whereby luxury homes are

advertised, but their owners subsequently deny they are on the rental market.

Paddock Wood is owned by the tech entrepreneur John Nagle, who confirmed last Thursday that the

property had been listed as to let on He says the advertisement was placed without his

knowledge, however.

Nagle says he was made aware that the property had been advertised by a report in this newspaper

last week. “It is my property but it’s not available to let and that ad appeared without my

knowledge,” he says.

All web advertisements seeking a tenant for the house were pulled last Monday morning.

The ad, which was posted by agent Alan Ferris, read: “This property is a discreetly hidden

contemporary treasure which is unique in its modern creation set into the Irish coastline in Killiney,

one of Dublin’s most affluent residential areas. The state-of-the-art home is quite possibly one of

Ireland’s best-kept secrets.”

Indeed, it seems even the house’s owner wasn’t in on the secret. We contacted Ferris last week but

he declined to comment. The advertisement he had placed said the six-bedroom house would be

available from April 30 this year.

Nagle says the house is not his family home, but an investment property. He adds that he knows

Ferris personally and that the agent has in the past successfully let homes on his behalf. But Nagle

says he has no idea how Ferris came to advertise Paddock Wood and describes the incident as “an


With Ferris reluctant to talk about the matter, it remains a riddle. But it is not the first mystery

surrounding the let of a luxury home in Ireland — and it is unlikely to be the last.

Another high-profile case was Michael Flatley’s Castlehyde in Fermoy, Co Cork. Last year, Adams &

Butler advertised the performer’s 14-bedroom residence as to let, with the price available on


An advertisement on the company’s website posted last August was removed after sources close to

Flatley denied the property was available to let. On that occasion, the agent confessed to the

mistake. A spokesman for Adams & Butler said the company was not in fact assisting Flatley in

letting out his home.

The spokesman’s explanation for the advertisement appearing was that it had predated Flatley’s

purchase of the property.

This seems curious, however, given that Flatley bought Castlehyde more than 10 years ago and the

advertisement in question had included the line: “The house is now owned by Mr Michael Flatley.”

Last year, the Adams & Butler website also featured a to-let advertisement for Kilcoe Castle in Co

Cork, the home of the actor Jeremy Irons.

A newspaper that wrote a report based on the information on the website was forced to apologise to

Irons last July. The apology read: “We wish to clarify that Mr Irons has never placed Kilcoe Castle

for rent through Adams & Butler and that the property is not available to rent at the sum of between

€50,000 and €100,000 per week.”

One month after the apology was published, a reporter from this newspaper received an email

saying Irons’s property was available to rent “for about €10k per week”. And if you Google Kilcoe

Castle, one of the results is a short-let listing on the website of the British agency Loyd & Townsend

Rose. The entry reads: “Kilcoe Castle, sleeps 10, five double bedrooms, 1 hour and 30 minutes from

Cork airport, fishing in the bay.”

There are many reasons why mystery letting adverts appear. As the Nagle, Flatley and Irons cases

illustrate, sometimes the issue is nothing more than a breakdown in communication between agent

and owner.

An international property agent who wishes to remain anonymous points to a more serious problem

that can arise. “We have seen cases of ads being placed by people posing as estate agents. Some of

these people hope to hook someone to let a house at a high price by using internet advertising, but

often this ad is placed without the permission or knowledge of the owner in the hope that once they

get an offer, they can approach the owner and end up with a decent chunk of cash from the deal.

“They often lift the property photos from the sites of their rival agents who are legitimately

appointed. Sometimes the owners might not even have considered letting the property at all.”

There are other reasons why there may be mystery surrounding upmarket lets. “We have seen cases

where owners deny they have given instructions to their agents because they don’t want the greater

public knowing that they are renting their home. Sometimes they do it simply for privacy because

they don’t want people to know they own a luxury investment property or home in the first place,”

says the agent.

In America there have been numerous rows concerning homes being advertised for sale or rent

without the knowledge of the owner. One well-known property portal has been questioned about its

policies in this area.

We asked Brian Fallon, co-founder of, whether Ireland’s largest property website had

mechanisms in place to prevent the posting of homes against the owner’s wishes. At the time of

going to press, he had yet to reply.

So it looks as if mystery lets will continue to be a feature of the luxury home market. But one thing is

certain: if you do want to rent a house at the top end of the market, check with the owner first.

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Buy-to-let loan liabilities key to how much capital banks will need -

By Emmet Oliver Deputy Business Editor

Monday March 14 2011

The condition of thousands of loans given to small-time property investors and landlords now holds the key to how much more the Irish banking system will need in capital, the Irish Independent has learned.

Risky buy-to-let loans are getting the most intense scrutiny of all the assets held by the Irish banks as EU/IMF-commissioned stress tests near their conclusion. The results are due at the end of March.

The surprising disclosure by Belgian lender KBC in early February that almost 11pc of its buy-to-let loans are in arrears has caused loan experts used by the Central Bank to pay additional attention to the area.

Random sampling and detailed modelling on this area has stepped up in recent days, sources pointed out. The Central Bank is using giant US fund manager Blackrock to price the loans held by Irish banks. The loans are being tested using different scenarios, with Barclays and Boston Consulting Group also working for the bank.

AIB has said almost a third of its mortgage book is made up of buy-to-let loans, and Bank of Ireland told investors recently: "We have a particular issue in a component of our buy-to-let book and the arrears are quite high there. We've identified that and we have necessary actions in place to deal with that."

Stress tests

Some €10bn is already scheduled to go into the banks, but the stress tests are designed to establish whether another €25bn of so-called "contingent capital" will be needed. The stress tests are not completed and reports suggesting €25bn may be needed for the banks have been described as "premature" by sources.

Irish banks, according to figures produced in late 2009, have a combined mortgage book of €102bn, with up to a quarter in the buy-to-let area, which traditionally defaults at higher levels than the homeowner segment.

KBC is one of the banks in the Irish market that has provided up-to-date figures on buy-to-let versus owner-occupied loans. In February, it put arrears on owner-occupied properties at 7.4pc for 90 days or more, while buy-to-let loans were showing 90 days-plus arrears of 10.9pc. "The buy-to-let segment is the most vulnerable," said a source familiar with the tests.

The stress test, known as the Prudential Capital Assessment Review (PCAR), needs to have international credibility and the involvement of Blackrock is seen as essential to this.

The IMF's chief official in charge of designing the Irish bailout package, Ajai Chopra, told the Irish Independent previously that tracker mortgages were an area of concern. But their main effect was to reduce the profits of the Irish bank, rather than arrears at this stage, said one source.

- Emmet Oliver Deputy Business Editor

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‘First-time buyers get €25k tax deal if they buy this year’ | Irish Examiner

Mortgage interest for first-time buyers is being all but abolished from 2012, according to the director of the Irish Mortgage Corporation Frank Conway. He said however first-time buyers who buy this year will still manage to qualify for the maximum amount.

Mortgage interest relief is a special scheme in which mortgage holders receive back a proportion of the interest they pay on their mortgages. The special tax deal is managed through what is known as Tax Relief at Source (TRS), first-time buyers are the biggest beneficiaries where up to €416.67 is repaid directly back to mortgage holders bank accounts each month.

Tax relief is available up to seven years after taking out a mortgage.

The maximum qualifying interest amount for a first- time couple is €20,000. In year one and year two of purchasing, the maximum interest relief is 25% or €5,000 annually. This reduces to €4,500 in years three, four and five and to €4,000 in years six and seven.

"2011 is the last year in which first-time buyers can avail of the maximum relief of €416.67 per month. From 2012, all first-time buyers will move to the standard rate of mortgage interest relief, which has a monthly maximum value of just €75," said Mr Conway.

It means that a first-time buyer who purchases a home up to and including the 31 December 2011 will be in line to qualify for up to a massive €31,500 over a seven-year period.

However, a first-time buyer who completes their mortgage and home purchase just one day later, on January 1, 2012 will receive a maximum benefit of just €6,300.

"First-time buyers who complete their purchase in 2011 will be up to €25,000 better off than first-time buyers who complete their purchase from January 1, 2012, onwards," said Mr Conway.

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Wednesday, March 9, 2011

Developer awarded €4m over council's 'bungling' - The Irish Times - Wed, Mar 09, 2011


A HIGH COURT judge has awarded €4 million damages to a developer over “bungling and ineptitude of a high order” by Meath County Council in granting an effectively unworkable contract in 2006 for a development at Ashbourne.

Mr Justice Peter Kelly ruled the council, following an “extraordinary tale of error after error” by it, was guilty of negligent misrepresentation and breach of duty of care to Darlington Properties Ltd in relation to the contract of May 2006 for purchase and development of a council-owned site at Ashbourne.

He found the council negligently misrepresented to Darlington that a distributor road linking the site to Ashbourne town centre – which was vital to Darlington’s development – would be built when the council should have known that construction of that road was impossible due to the nature of a permission granted by the council itself for an adjoining development.

The council’s decision since then to “defend the indefensible” was “not impressive” and led to the €4 million judgment against it, plus costs of a three-day trial at the Commercial Court, which had “all to be borne by the public purse”, the judge said.

When the council’s errors must have become known, no one from the council was prepared to admit them or even meet Darlington, he said.

The council had maintained that “ostrich-like” approach and kept liability as an issue throughout the hearing without calling any witness to give evidence on liability.

If the council had dealt with the matter honourably, it “might not have resulted in litigation at all”.

Mr Justice Kelly was giving his reserved judgment on proceedings by Darlington, a subsidiary of Woodgreen Builders Ltd, arising from the council’s acceptance of the company’s tender to buy a council-owned site at Ashbourne in 2006.

The judge said it was clear the council’s local area development plan, pre-sale brochure and pre-contract correspondence all provided a distributor road was to be built on the site by the purchaser and was to connect to the main street of Ashbourne town centre.

Darlington’s tender was the highest, its offer of €4.5 million was accepted by the council and a contract was completed in June 2006.

Mr Justice Kelly accepted that Darlington would not have bid for the site in the absence of the proposed distributor road and noted internal correspondence showed officials in the council’s planning department were fully aware of the need for the road.

In May 2007, “alarm bells” began ringing for Darlington when, during a visit to its site, it noted construction work on the adjoining site where it expected the alignment of the distributor road would be.

Darlington obtained planning drawings and realised the council had granted permission for a development by Naus Development Ltd in such a way as to make the building of the distributor road impossible and dramatically alter the potential of the Darlington site.

Mr Justice Kelly said Darlington presumed the Naus permission was granted after its June 2006 contract and tried to do the best it could in the changed circumstances. However, zoning changes in a new development plan in 2007 created further problems and the council failed to respond to several communications from Darlington seeking to address those.

Darlington’s planning applications were later refused, a draft local area plan of February 2009 dropped the objective of the distributor road and by April 2009, Darlington realised there was no prospect of an economic development of the site.

Darlington learned for the first time in 2009 that the permission to Naus which had rendered the distributor road impossible was granted in June 2005, many months before the council had offered for sale the site bought by Darlington. It then issued legal proceedings.

Mr Justice Kelly ruled Darlington was induced to enter into purchase of the site on foot of negligent misrepresentations by the council as far as the distributor road was concerned.

The council should have known at the time it had granted a permission for phase 5 of the Ashbourne town centre, which made it impossible to construct the distributor road, he said.

There was a “clear obligation” on the council to ensure what it was telling Darlington was accurate as, were it not for the distributor road, Darlington would have had no interest in the site and would not have bid for it, he ruled.

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New law puts power in hands of apartment owners -

Apartment owners are to take control of their own blocks and common areas under a new law.

The law, which comes into effect next month, means developers currently controlling common areas -- including car parks, gardens and bin areas -- will be given six months from April to sign them over to private companies run by the owners.

The developers will also have to pay for the setting up of management companies while owners will also have more say in how annual service charges are set.

For example, owners will be entitled to a list of all of the charges and will vote on whether they are fair and acceptable.

The developer will also have to pay the cost of service charges for units that have not been sold.

The law, the Multi-Unit Development Act 2011, also provides that the service charge cannot be used to pay expenses that are the responsibility of the developer unless 75pc of the owners agree at a meeting.

There are more than 500,000 people living in apartment blocks and townhouse developments, mainly in the capital.


And the new law brings legislation up to date to reflect the growth in apartment blocks over the past decade.

Other provisions include the establishment of a special fund for unforeseen maintenance of these areas that will be paid for by the owners and held by the property company.

In the case of existing developments, this fund must be set up within 18 months of these regulations coming into effect.

And with new developments, the fund must be set up within three years of the sale of the first unit.

The management company must also take over ownership of the common areas in a new development before a unit can be sold.

The new law also allows for fairer representation of owners in property management companies.

Each owner of an apartment or townhouse will have one vote when these companies are making decisions.

The management company will have the responsibility to set house rules for the development.

The move was welcomed yesterday. "It empowers individual owners of multi-unit properties to enforce the rights and obligations created by the legislation in the Circuit Court or resolve disputes by mediation,"said Paul McCutcheon, a property partner at LK Shields.

- Ailish O'Hora

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Tuesday, March 8, 2011

Quinn companies liable for losses on Kiev properties | The Post

The Central Bank has insisted that companies owned by businessman Sean Quinn must cover losses in troubled investment funds that bought properties in Ukraine during the boom.

The Central Bank and Financial Regulator have been investigating the Leonardo Property Fund, which was controlled by Quinn Life on behalf of 186 people, mostly close associates of the Quinn family and employees of Quinn Group companies.

The fund borrowed significant sums from Anglo Irish Bank to buy buildings in the Ukrainian capital of Kiev, which subsequently collapsed in value, leaving a deficit in the fund.

Following its investigation, the Central Bank is insisting that the losses will be covered by the Quinn companies that employ the individual policyholders, and not by Quinn Life.

The companies involved are understood to include Quinn Insurance, which has been in administration for the past year due to solvency issues. It has emerged that Sean Quinn sent a letter to the policy holders in 2006, offering them a guarantee on their promised investment.

In a statement, the Central Bank said: ‘‘The Central Bank can confirm it has directed Quinn Life Direct Limited (QLD) to contact affected policyholders in relation to insurance policies invested, through QLD, in the Leonardo Property Investment Fund and the Leonardo Property Pension Fund.

Policyholders are being contacted to confirm that the guarantee associated with their investment in the funds will be met by their employer and that it is not a liability of QLD."

The Leonardo Fund is the only property-linked fund operated by Quinn Life, which writes savings, investments and pension policies.

It invested in commercial properties in the Ukraine on behalf of the 186 policyholders, who are understood to include employees of Quinn Cement, Quinn Glass and Quinn Insurance.

The properties rose in value and Anglo advanced funds on the strength of the increase, with the money secured against the properties.

When property prices collapsed, the unit-linked fund was left with a significant deficit and Anglo faced losses on its loans.

The Central Bank investigation looked at the role of Quinn Life, Anglo and the other parties in the deal.

The latest figures for Quinn Life show it had almost €133 million in funds under management at the end of 2009.

However, its premium income fell by more than 20 per cent to €18.7 million that year and it made a loss of €1.7 million, ‘‘reflecting the turbulent market conditions’’.

Meanwhile, a decision on the sale of Quinn Insurance will fall to the new government, which will be formed this week.

The frontrunner is a joint bid from Anglo and US firm Liberty Mutual. Under its proposal, Anglo is expected to hold onto a share in the insurer for a number of years, in a bid to recoup money owed by Quinn, and then dispose of its interest.

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84pc of hotel owners fear they could go out of business this year -

By Donal O'Donovan and Laura Noonan

Monday March 07 2011

A MASSIVE 84pc of hotel operators fear they are at risk of going out of business this year as high costs, a lack of bank finance and the sluggish economy threaten their livelihoods.

The grim outlook is revealed in a new Irish Hotels Federation (IHF) survey, which shows the number of tourists visiting Ireland fell by a third since 2007.

The situation will be debated by hundreds of hoteliers at the IHF's annual conference, which runs until tomorrow at the Slieve Russell Hotel in Ballyconnell, Co Cavan.

Delegates will also call on the incoming Government to take measures that the IHF says could create 20,000 hotel jobs.

"We have a good story to tell the next Government, but they'll have to be willing to listen," IHF president Paul Gallagher said last night. "They have to start seeing business as a partner, not as a cash cow."

The biggest concerns of the 180 hoteliers surveyed related to local authority rates, wage and utility costs, and the banks.

The IHF wants the new Government to tackle costs, including by "liberalising" the energy market.

Hoteliers also want the Government to introduce a "guarantee scheme" to help businesses access credit and have suggested the creation of a "reconstruction or development bank".


More than half of those surveyed said they'd experienced "difficulties" accessing "standard credit facilities" over the past 12 months, while 28pc said banks reduced their overdraft.

The number employed in the industry has fallen from 60,000 to 54,000 in the past year alone. The review showed 46pc of hoteliers suffered a fall in business, while 72pc cut staff in 2010.

The number of foreign tourists fell to 5.7 million in 2010 from a peak of 7.7 million in 2007, as the number of domestic trips fell 4pc to eight million. Overall spending dropped 13pc to €4.6bn.

Hotels responded by slashing prices, with room rates falling by another 6pc, leaving them down more than 30pc over the past three years.

"I don't think there's much more to go," said Mr Gallagher. "We have to stabilise our rates."

The survey did show increasing optimism among hoteliers, with 30pc having a positive outlook, against 11.5pc a year ago, and just 37pc having a negative outlook, down from 50pc.

- Donal O'Donovan and Laura Noonan

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