Dáil debates

Thursday, 14 April 2016

6:15 pm

Photo of Mick BarryMick Barry (Cork North Central, Anti-Austerity Alliance) | Oireachtas source

The issue is how to tackle the housing crisis in a serious way. I will start with a couple of citations, the first of which is from the chief executive officer of NAMA, Mr. Brendan McDonagh, when he addressed an Oireachtas committee in December. According to The Irish Times, he stated that a developer could expect to earn a profit of €20,000 on a newly built home that sold for €300,000 but that many developers were "not satisfied with a profit of €20,000 per house but wish to wait until it is €50,000" or more. Just in case anyone believes this to be a rogue quotation that is not supported by anyone else who is involved in the thick of things, there is a second one. It was made by Dr. Peter Stafford of Property Industry Ireland, PII, so I am not referencing a radical left-winger. In a presentation last May, he stated: "Developers margin is less than 40% to 50% over 3 to 5 years. This will not deliver the 15% IRR that Private Equity is looking for." He also stated: "The rates using private equity and even some senior debt leave us with effective rates of 10% -15%. Any blip along the way leaves us hugely exposed at those levels." Similar points were made by the Cork property developer, Mr. Michael O'Flynn, on "Claire Byrne Live" on 14 March.

What does this mean in reality? There is talk of a target of 25,000 houses to enter the market per year.

Half of them were one-off houses and were not part of housing schemes. Therefore, developers delivered 6,000 to 7,000 houses in the State last year, which is barely one quarter of what is needed.

Let us face the reality of what is happening here. There is a strike taking place but it is not industrial action by Luas workers, nurses or workers walking up and down on the picket line; there is a strike taking place involving big business and developers who are refusing to invest because they feel the profit margins they can achieve are not sufficiently high. They want more and they want bigger profits along the way. In reality, a generation is being held to ransom by the big developers as part of a campaign to increase their profit. I note the comments made by the spokesperson for Fianna Fáil in the discussion. In reality, he is saying the solution is to give them pretty much everything they are asking for. That is not the solution to the problem.

NAMA is adding to the problems. It admits it has sold to developers enough land for 20,500 units, mostly in prime locations in the big cities, only for them to be sat on. This is a scandal. NAMA is briefed to give the best deal to the taxpayer, as we were told ad nauseam by the outgoing Government. It has interpreted that brief as one of applying the values of the speculator. Thus, at the Oireachtas committee I referred to, the NAMA chairman, Frank Daly, stressed the agency could not fund residential building on that basis as it would not have been confident of obtaining a commercial return. It is playing the same game in this regard.

This Dáil needs to recognise fully the interests it is up against. In that context, the types of solutions on offer from the likes of the outgoing Government parties, such as a decrease in VAT for the construction industry, will not work. It does not represent a solution. A solution will involve cutting out the middleman developer whose speculative activity serves nearly to double the cost of a house. Local authority-owned and NAMA-owned land and properties now need to be used and optimised for social and affordable housing. The building industry and land zoned for development need to be taken into public ownership. The Master of the High Court, Mr. Edmund Honohan, in effect called for a softer position on what I am advocating with the use of compulsory purchase orders for the public good. We would say that compensation for the developers, vulture funds and the industry that have conspired to create a humanitarian crisis in our midst should not be the norm but given only on the basis of proven need.

Comments

No comments

Log in or join to post a public comment.