TIM O'BRIEN
Local authorities are examining development schemes to see if almost €300 million in unpaid levies can be passed on to householders.
The move follows the revelation that Wicklow County Council is pursuing homeowners near Avoca for sums of up to €4,800 after the developer failed to pay.
While the move has caused distress to householders, many of whom question the validity of the move, Wicklow County Council has proven successful at recouping outstanding levies.
A recent audit by chief planner Des O’Brien revealed 98 per cent of all levies due in the last 10 years had been paid, leaving an outstanding amount of €2.5million.
Yesterday Mr O’Brien said the council was pursuing householders and developers for the outstanding contributions.
Levies imposed as a condition of planning permission are generally required to be paid before construction work begins, or at least on a phased basis, with a significant up-front payment.
Wicklow council used to inspect each site to ascertain if construction had begun but in recent times had adopted a more cost-effective approach using Google Earth and other searches.
The council’s press agent yesterday issued a statement saying development levies were “a charge on the property itself, not on an individual or a developer”, and there was was “an obligation to pay these contributions”.
The Department of Environment said the question of levies was a matter for the planning authority itself.
But a spokesman noted it did not believe Wicklow was “first off the block in this regard”.
Dublin City Council said its policy was not to pursue householders but it was pursuing developers for outstanding levies.
Other councils including Fingal and Dún Laoghaire-Rathdown said they were unable to be definitive about their approaches to the issue but they were doubtful if the charges were passed on to householders in the event of default by developers.
Cork City Council was owed €9.2 million in development levies as of January 1st, 2012. Fine Gael councillor Jim Corr said the city council, like many others, was watching what was happening in Wicklow “with interest”.
Since the Planning and Development Act 2000, which overhauled development contributions, such funding has become increasingly important to local authorities.
Contributions are mostly levied for use of roads, water and waste services, among others.
Monday, February 11, 2013
Councils may pursue householders for levies unpaid by developers - The Irish Times - Mon, Feb 11, 2013
McDonald's to pay €300,000 in Temple Bar - The Irish Times - Wed, Feb 06, 2013
JACK FAGAN
Fast-food chain McDonald’s is to pay a rent of about €300,000 for a new restaurant to open shortly in Dublin’s Temple Bar. The multiple has begun fitting out the former Frankie’s steak house and bar at Temple Bar Square which is owned by the restaurant group, Fitzers Holdings Ltd.
Agreement on the new rent comes only weeks before McDonald’s expects to secure a substantial reduction on the €1.15 million rent it is paying for its Grafton Street branch. The outcome will be closely watched by other traders on the street also hoping to have their rents reduced.
The controversial decision by An Bord Pleanála overruling objections by Dublin City Council, Temple Bar Cultural Trust and An Taisce took the property market by surprise because of the number of fast- food outlets already operating in Temple Bar. An Taisce has contended that the decision will reinforce negative perceptions of Temple Bar as a “drinking/fast-food quarter”.
One of the conditions of the planning permission is that the restaurant cannot trade between midnight and 7.30am, unlike the McDonald’s branch on Grafton Street which is free to open 24 hours a day.
The Temple Bar permission was granted for an initial period of three years in order to allow a reassessment of the development on the “character and dignity of the area”.
McDonald’s plans to use the entire 228sq m (2,454sq ft) on the ground floor as a restaurant and takeaway and a further 198 sq m (2,131 sq ft) at first-floor level as restaurant space. Both the basement and the top floor will be used for ancillary services. The two upper floors of the 1880s period building have been in residential use up to now.
Simon Cooper of Savills handled the lease and rent negotiations for Fitzers Holdings while Jack Devlin of O Buachalla advised McDonald’s.
Scarcity value
McDonald’s has been looking for a 50 per cent reduction on its Grafton Street rent following the ending of its 35-year lease on the former Hospitals Trust headquarters. It is entitled to a new lease at open market value.
However, the owners of the 1,858sq m (20,000sq ft) building, Royal London mutual life and pension fund, were expected to seek premiums of at least 30 per cent on the rent to take account of the scarcity value of having a round-the-clock food business on the city’s premier high street. Both sides expect to reach agreement in the coming weeks.
REIT legislation could be start of new era in Irish property - The Irish Times - Wed, Feb 06, 2013
Bill Nowlan
“A REIT is a tax efficient way to enjoy the benefits of owning investment properties without the hassles of being a landlord” is the most succinct definition to emerge from the first REITs conference organised by the REITs Forum a week or so ago.
The capacity crowd of 487 was twice initial expectations and from the quality of the presentations and the level of interest, it was clear the property gene is alive and well not only in the Irish DNA but also in the 10 per cent overseas participants at the conference.
John Moran, secretary general of the Department of Finance, spoke about his ambitions to make Ireland a base for international REITs in much the same way as Dublin is now an international centre for aircraft leasing. John Mulcahy of Nama spoke about the potential role of the agency and its borrowers in providing a significant supply of quality property for REITs.
The CEO of EPRA (European Public Real Estate Association) Philip Charls described the various indices in place to benchmark investment performance of REITs against each other and also equities and bonds.
He pointed out that over the past five years REITs have significantly outperformed income yield on equities and bonds around the globe. He also noted the average market capitalisation of REITs in Europe was more than €1 billion with one of 14 billion (Unibail).
There was much focus on the minimum size of the first Irish REIT and the potential size of the Irish market. The conclusion from Alan Carter, specialist REIT analyst with Investec in London, was that it would be difficult to attract international interest at a level below €250 million.
According to EPRA, the potential in the Irish market could reach €5 billion within five years, supporting earlier estimates from NCB of a potential market in three to five years north of €2.5 billion.
So how do we get from here to there? The first thing is the legislation which should be enacted by early April in the Finance Act. Then there will be the work by the Stock Exchange in preparing listing rules. After that it is over to the market to make it all happen.
In Ireland, with the exception of Nama there are probably only one or two existing property businesses that could get to the minimum €250 million threshold, so the assembly of portfolios to reach this size will be the first challenge.
The second challenge will be in attracting international investors to Irish REITs. This will be the measure of success or failure in the long term. Ireland now has had virtually no long-term international investors in property. The property bubble was financed almost exclusively by Irish banking balance sheets with borrowings – national and international.
Property ownership is essentially an equity play and in the noughties we lost that plot. Before then and now again, Ireland has had to rely almost entirely on local equity in its property industry. Historically this mainly came from high net worth individuals or from the pension funds and financial institutions. This is unlike most European countries where international equity owns investment property – for example more than 50 per cent of the buildings in London City are owned by non-UK investors. In Dublin the factor would have been less than 1 per cent.
Hopefully this conference and the emerging REIT legislation will signal the start of a new era in Irish property that brings us into the world property investment scene. But we will have to play by international rules. Rating agencies such as EPRA will be reporting on the level of performance and quality of governance on a totally objective basis and not on the basis of local rules which were open to abuse.
Tuesday, February 5, 2013
Council rates to be cut as reform leads to savings - Independent.ie
STRUGGLING Irish retailers can expect cuts in commercial rates of up to 5pc next year as multi-million-euro savings from local government reforms are delivered.
Finance Minister Michael Noonan has said that council mergers and abolitions will go ahead to deliver greater cost-efficiency and value for money for taxpayers.
His vow came despite several town councils putting funds aside for a potential legal challenge to their abolition.
"There has been a total change in the way local government is to be run. In Limerick, for instance, we have merged (the) city and county councils. There are huge benefits to the public when you reduce the cost base by doing things like that," Mr Noonan told the Irish Independent.
"For instance, the commercial rate in Limerick has been cut by 5pc – it is the biggest cut in the country. It just would not be possible to do that if we hadn't put the two local authorities together."
Mr Noonan said the benefits for the taxpayer and retailers will be apparent from next year.
"I think that there will be more cuts in the commercial rate next year because the full savings have not yet been realised. There are a whole series of organisations around the country which are being merged to make them more efficient and more cost-effective."
Under the 'Putting People First' initiative, Environment Minister Phil Hogan plans to achieve cost savings of €420m through the abolition of town councils and mergers of other councils.
- Ralph Riegel
House completions fall to lowest level since records began - Independent.ie
THE number of new homes being built has plummeted to its lowest level since records began more than 40 years ago.
The vast majority of the 8,488 homes built last year were one-off stand-alone houses, new figures reveal.
Just 2,333 of those erected in 2012 were in housing estates, reflecting the overabundance of houses already completed and lying idle – many of them in ghost estates.
New figures from the Department of the Environment also show that just under 1,000 apartments were finished in 2012. This total represents just 5pc of the 20,000 which were completed during 2006.
The decline of the industry is in stark contrast with the situation in 2006 when almost 100,000 homes were built.
The 8,488 homes built in 2012 was the smallest number since 1970 – when a total of 13,887 houses were put up.
The virtual collapse of the home construction sector is playing a large role in the current wave of emigration of young tradespeople, particularly to Canada, Australia and New Zealand.
Commenting on the figures, Construction Industry Federation (CIF) director general Tom Parlon said 2012 was a very difficult year for the Irish house- building industry.
Unsustainable
"Previously, the lowest level had been the 13,887 units that were built in 1970 when the records began, but the total for 2011 dropped below that mark, and 2012 has seen a further fall in completions," he said.
Mr Parlon said that house building reached unsustainable levels during the boom years. But the industry had now gone through six successive years of decline.
"Unfortunately, it looks like we will see another slight reduction in house building in 2013," he added. "Overall the low commencement rate for 2012 has led us to forecast another drop in housing units built during the coming year."
The CIF director general said there were positive indicators, including increased demand for homes in urban areas.
"The banks have also promised to increase the level of mortgages during the coming 12 months."
The 2012 home completion figures are also a 19pc fall on homes built the previous year.
The statistics illustrate how some counties which saw massive increase in new homes during the property boom have seen construction fall to a trickle.
The largest percentage drops in house completions in 2012 compared with the previous year were in Galway City (56pc drop), Kilkenny (46pc drop), Fingal (45pc drop), Tipperary (41pc drop), Carlow (39pc drop) and Mayo (38pc drop).
- Treacy Hogan Environment Correspondent
Substandard bedsits are made illegal - The Irish Times - Sat, Feb 02, 2013
Laws that came into force yesterday will remove the most substandard bedsit accommodation from the rental market, housing charity Threshold said.
The standards that private rented property must meet are laid out in the Housing (Standards for Rented Housing) Regulations 2008 and 2009. All the provisions applied to new tenancies in properties let for the first time since February 1st, 2009. Since yesterday, all tenancies are required to comply with all provisions.
Threshold said this would see the end of traditional bedsit accommodation and improve requirements for private rented accommodation.
Chief executive Bob Jordan said the regulations would serve to remove the “bottom layer” or the most substandard accommodation in the country. He acknowledged they involved costs for landlords but said the new rules had been flagged four years ago.
The main concern was that local authorities would carry out inspections to make sure people were not living in substandard conditions.
Some of the most vulnerable people in the country were living in bedsits, which provided very basic accommodation with no shower or bathroom and no central heating, Mr Jordan said. “This accommodation does not comply with modern standards,” he said.
Threshold expected that where landlords were found not to be in compliance with regulations, the relevant local authority would take action and take them to court if necessary.
The number of bedsits has declined from about 9,000 in 2006 to about 5,000 in 2011.
Groups such as the Irish Property Owners’ Association oppose the new regulations and say many landlords cannot afford to renovate their properties or get loans to upgrade them.
'Quick-fire sales' are not always that fast to process - Independent.ie
Buyer perceptions that a receivership sale may be a 'quick-fire sale' can prove unfounded. Because many receivership properties are sold through auctions this gives the impression that such distressed property sales are processed in just a few weeks. In fact, a lot of expertise and preparatory work is required to ensure the sale process works efficiently.
It is for this reason banks are increasingly turning to fixed-charge receivers to handle the disposal of problem properties.
Usually such fixed-charge receivers are chartered surveyers with property expertise, rather than chartered accountants with business and finance expertise, who usually handle company receiverships.
A fixed-charge receiver is appointed only for property issues such as commercial and residential buildings or land. They will not take control of an existing/trading business as this traditional corporate receiverships is still very much for accountants.
The number of fixed-charge receiverships has increased over the past two years as financial institutions in Ireland have become aware of the benefits of the process once a borrower has defaulted on the terms of their mortgage.
While a fixed-charge receiver is appointed by a financial institution, nevertheless they have to act as the agent for the borrower. This means that the receiver has a duty of care to both parties and the ultimate goal is to maximise the level of return, thus reducing the level of debt which is of benefit to the lender and the borrower.
Given the severe downturn in the property market, the financial institutions are concentrating on protecting the value of their loan books, the predominant value of the loan books being the bricks and mortar.
Neil Bannon, who acts as a fixed-charge receiver for a number of the financial institutions, noted that all receiverships are a process but the reason for the process is generally caused by property related matters.
Paddy O' Connor, a senior member of Bannon's receivership team, believes that "proprieties in receivership tend to have complicated issues that require property expertise in order to provide a solution. These complicated issues or 'barriers to sale' generally include issues which property surveyors deal with on a day-to-day basis." Such issues include legal title, lease restructuring, rent abatements/arrears, rates arrears, over-holding, compliance etc.
It is a quick and cost-effective way to deal with the process as the fixed-charge receiver has the necessary property expertise to deal with the problematic properties.
Neil Bannon, who is the only Irish-based fixed-charge receiver recognised as a registered property receiver under the joint scheme run by the Insolvency Practitioners Association and the Royal Institution of Chartered Surveyors, stated that "the clear advantage of a fixed-charge receiver is the property experience and market knowledge brought to the process. A fixed-charge receiver's core skill is identifying the optimum value for real estate and the establishment and implementation of a strategy to extract this value".
It is also important for purchasers to be aware that certain difficulties may arise from receivership sales. There may be a potential gap in information on the property's history prior to the receiver's appointment.
Gaps in items such as VAT history, land/property registration, planning compliance etc. may cause difficulty for a purchaser.
Consequently, receiver sales tend to be slower than private market sales.
Ireland leads in housing affordability - The Irish Times - Thu, Jan 31, 2013
Housing affordability has improved more in Ireland than in any developed country in the English-speaking world, an international report has found.
The ninth annual Demographia International Housing Affordability survey found house prices in Ireland are now on average 3.2 times gross annual incomes, making Ireland and the US (3.1) the most affordable of seven countries surveyed.
The survey has been tracking house prices in Australia, Canada, China (Hong Kong), Ireland, New Zealand, the UK and the US over the last nine years.
The survey is confined to English-speaking countries that have similar patterns of home ownership and excludes European countries where home ownership is historically lower.
It defines affordability as a situation where house prices are three times gross annual income before tax, or less.
The only cities with a population of more than one million to meet the criteria were all in the US. There were 20 such cities, most of which have been badly affected by deindustrialisation, including Detroit, Cincinnati, Cleveland and Indianapolis.
After Edmonton in Canada, Dublin was the most affordable of the major metropolises. House prices peaked at six times the average salary in Dublin in 2006; they have now dropped to 3.6 times the average salary.
Up until the late 1980s and early 1990s, house prices were a multiple of between two and three times’ average salaries in all the markets surveyed, before deteriorating in the years after that.
The survey says the principal reason for house inflation has been the curtailment in the supply of development land.
It also maintains there is a consistent pattern in all countries where there has been a tendency by vested interests to “cheer on” house-price inflation, as if houses were a “commodity like gold” instead of a basic necessity.
The cheapest city in Ireland relative to income is Waterford (2.5), followed by Limerick (3.1), Galway (3.2) and Cork (3.4).
In the last quarter of 2007, at the height of the property boom, house prices in Ireland were a multiple of 4.7 times the average gross salary.
By contrast Australia, the most popular destination of the current crop of Irish emigrants, has some of the most unaffordable urban housing. It uses just 0.04 per cent of its land area for housing.
The average house in Sydney costs 8.3 times the average salary, in Melbourne it’s 7.5 times salary, in Adelaide it’s 6.5 and in Perth it’s 5.6. The average home in a major Australian city costs 6.5 times the average salary.
New Zealand’s only major metropolis, Auckland, is also classified as being severely unaffordable, with house prices 6.7 times the average salary.
London is the fifth-most-unaffordable city surveyed, with house prices a multiple of 7.5 times gross salaries.
The UK has no major market where house prices are less than four times the average gross salary.