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Right to buy means right for landlord to buy you out

by Éilis Ryan 16 June, 2018 0 Comments

The myth that Irish people have a historically-rooted preference for home ownership is a long-standing cornerstone of Irish housing policy. The story goes that Irish people will always have an innate preference to own their homes, regardless of how attractive, secure and affordable renting is made. In the middle of the country’s worst housing crisis, this myth has, extraordinarily, justified yet another round of Council-housing sell-offs, with the 2016 Tenant Incremental Purchase Scheme. Tenants are given a discount of up to 60% in the market value of their home, if they choose to buy it from the Council. It then disappears from Council stock and, a generation later, is sold onto the private market. If there is limited evidence to support the myth that the Irish have an in-built preference for home ownership, what is clear is that government policy in the last half century has done everything in its power to grant preferential treatment to the purchase of homes. What is touted as an ‘innate preference’ for home ownership has in fact been carefully incentivised and manufactured through decades of developer-driven housing policy. Margaret Thatcher, Ireland and the ‘right to buy’ In 1980, British Prime Minister Margaret Thatcher passed legislation granting a legal right to all Council tenants in the UK to buy their homes. It was the culmination of her philosophy that the freedom to accumulate profit was the foundation of all human freedom. Speaking about the scheme in 1984, she said that “Spreading the ownership of property more widely is central to this Government’s philosophy, because where property is widely owned, freedom flourishes”. Any freedom gained by those who managed to buy their Council home was temporary at best. As with all public goods that are privatised, Council-built homes were transformed into commodities to be bought and sold for profit. Now, it’s estimated that 40% of ex-Council homes are owned and let by private landlords. The Tory Minister behind the scheme, Michael Heseltine, once said that the major victory of the “Right to Buy” scheme was “the transfer of so much capital wealth from the state to the people”. If by “the people” he meant “wealthy landlords” – then yes, he was probably right. Otherwise the darling of one-nation Toryism needs a rethink about his party’s victories. Astonishingly, successive Irish governments’ commitment to selling off social-housing stock pre-dated, and has arguably always been stronger than even, Maggie Thatcher’s. Provisions had been in place since the 1930s to enable tenants to buy their Council house in rural areas, and from 1966, with the introduction through the Housing Act of a nationwide ‘right to buy’, there was a surge in the numbers of publicly-built homes which were sold off. As in the UK, the temporary benefits of home ownership have not provided security for further generations. Over time our housing stock, particularly in sought-after areas closest to the city, has been commodified just like the in UK. House built by the Council in places like Marino and Cabra regularly sell for €400,000-€500,000. Working-class estates are under threat of becoming gentrified enclaves. Home ownership has never been affordable – so the State had to introduce schemes to make it so A critical point justifying subsidies to home ownership is that they are designed to somehow rectify temporary problems in the housing market. Lack of affordability is blamed on a temporary market malfunction (for example, lack of adequate supply), and temporary extraordinary measures are deened necessary to enable access to that market. In reality, however, these measures will be required forever – not just to rectify one-off market malfunctions. Michelle Norris has outlined how, in the 1960s, it was possible for a buyer to recoup up to a third of the purchase price of a house through various government subsidies. In the 1970s and 1980s, a hundred thousand Council-built houses were sold to tenants at knockdown rates, ostensibly as a way to make home ownership affordable. And as recently as 2004, the National Economic and Social Council was highlighting that:“The high entry costs of home ownership have conferred advantages on those whose families have housing equity and disadvantages on those who do not have access to ‘parental gifts”. In fact there has been no time when home ownership was ‘affordable’ in the sense of a majority of the country’s population being able to afford to purchase a home on the open market, unassisted by the government. Any ‘affordable housing’ initiatives delivered by this or future governments, will simply be the latest in a long cycle of state subsidies to the private market. Is it a good use of money for the State to subsidise home ownership? Fundamentally, what the debate about ‘right to buy’ and ‘affordable housing’ comes down to is whether it is a good use of public money to subsidise ‘home ownership’. As debates and inaction over the housing crisis rage on, a demand for public housing is being gradually subsumed into a broad and amorphous call for “social and affordable housing”. The notion is that some people will always want to buy their own home, and that they have a right to State support equal to that of those who rent from the State in secure, affordable publicly-owned housing. But what is being lost in this conflation of public housing and affordable housing, is that, unlike investment in public housing for rent, when the government subsidises ‘affordable home ownership’, the investment serves only one generation. The home can then be sold on to the chaotic, unjust and uncontrollable private housing market. “Affordable home ownership” – whether through land, or through ‘right to buy’ schemes selling off Council houses – keeps the property market bubbling. It suits the developers, solicitors and estate agents who benefit from increasing house prices that the state funnels money into pushing more and more workers into that market. But it does absolutely nothing to tackle the housing crisis. The real solution When considering how we invest public money to tackle the housing crisis, we need to look

The strong centre

by Village 15 May, 2018 0 Comments

Paschal Donohoe is a decent man: modest, cultured, the cleverest man in the room, according to a senior Fianna Fáil figure who spoke to Fiach Kelly in the Irish Times recently: the man other politicians envy, and a safe pair of hands. At 43, he has graduated with first-class honours from Trinity college, lived abroad, pursued a career in the private sector and risen without obstacle from local politics in Dublin city council to the heights of government, and the Ministry of Finance. Unlike his even younger boss Leo Varadkar he doesn’t have the sheen of a cultivated image. he has never attracted any suspicion of impropriety, never been excoriated, even in the unpleasant role of frugal Minister for Public expenditure (which he sure-footedly merged with the Finance brief when he took it over). When Village interviewed him he was open, generous with his time, eloquent. He reads progressive Irish fiction, has some quirky tastes, knows what is going on in his constituency about whose substandard welfare he remains committed. He even says he reads Village. Village’s agenda is equality, sustainability, accountability and it is wide and all-embracing enough that any political force, as Mr Donohoe certainly is, can be assessed against its imperatives. He is certainly in relative terms a model of accountability and openness. But what of equality and sustainability? Paschal Donohoe serves the politics of Fine Gael faithfully. He implies that Fianna Fáil is economically fickle, not always pro-european or outward looking and, increasingly implausibly now, that its attitude to ethics is demonstrably inferior to that of Fine Gael. He believes in Europe, the Open Society of Declan Costello, in an embracing attitude to outsiders. He believes in a balance between the markets and the state and, creditably from the perspective of this magazine, thinks the momentum has moved too far to the markets and needs to move back to the state, globally at least. He takes a robust attitude, as did his hero Declan Costello, to the obligations of the state. It will intervene to incentivise or nudge those who do the right thing, it will not perpetrate evil itself. He was passionate in defending the coherence of this attitude, in his interview. Mr Donohoe believes in the rights of property but will interfere at the edges, as with site-value and sugary drinks taxes. The state needs to plan systematically for development of its own lands. On national planning he was reluctant to stay how he would stop unsustainable development – such as the sprawl of Dublin into counties Meath, Wicklow, Kildare and beyond, as opposed to merely incentivise and encourage sustainable development – for example of cities and towns outside Leinster. He does not seem engaged by the environmental and climate-change agendas, though he knows its rhetoric. He rarely acknowledges, in policy, that Ireland is the laggard in Europe on climate, plastic waste and many other environmental performances. He does not seem zealous to revive the across-the-board indicators of social and environmental success, not just economics, that even the Fianna Fáil and Fianna Fáil-Green governments toyed with a decade ago. Failing them, it is likely we will continue to be a model of unsustainable, joyless growth, a paradigm of how to nearly get it right. As to equality, Mr Donohoe is exercised by the plight of those who cannot put themselves in a position to benefit from the equality of opportunity that those with strength crave. He knows from his Dublin central constituency that intergenerational inequality is difficult to mitigate. But his credo is equality of opportunity and he and his party are never going to be forces for radical redistribution, for equality of outcome. He is a decent man of the “strong centre”. He and his party have done some service bringing back elusive economic success to this country bankrupted by the now shiny principal opposition party. It has been argued that Fine Gael, with its visceral fetish for the rights of property, so well-enjoyed by its protagonists and indeed its voters, is ill-equipped to deal with the crises of housing and homelessness that do much to undermine the fabric of society in 2018. It is ideologically too wedded to the private sector to provide homes on the scale required on public lands. Mr Donohoe, in fairness, claims that he has far-reaching proposals to do just that. We’ll see. Ireland is lucky to have such an open, decent, youthful and thoughtful politician in the Department of Finance as the risen fiscal pendulum suggests we can once again explore a national Vision. But it is impossible to be radical from the centre, however strong, and – for Village, Mr Donohoe would do well to address the social and environmental agendas as stringently and competently as he continues to promote and foster the purely economic agenda.

Cerberus conflicts are biggest financial and political issue facing NI Executive

by Frank Connolly 27 March, 2016 0 Comments

An investigation by BBC’s ‘Spotlight’ programme broadcase on, 29th February, into the sale of NAMA’s huge property portfolio in Northern Ireland has revived an embarrassing issue for the outgoing government. Village readers will recall how distressed commercial and residential properties, previously valued at £4.5 billion, were sold to US vulture fund Cerberus, for just £1.2 billion in April 2014. An article in December documented how the sale was now the subject of investigations in the US and the UK and by the Law Society and the Stormont finance committee in Northern Ireland. At the centre of the controversy is former NAMA official, Ronnie Hanna, who resigned as the agency’s Head of Asset Recovery six months after the sale of the portfolio known as ‘Project Eagle’. Hanna was named in the Dáil by independent TD, Mick Wallace, as one of a small group of people who met multi-billion-dollar-backed US investment funds to promote the sale of the portfolio, accompanied by Frank Cushnahan, a former member of NAMA’s Northern Ireland Advisory Committee. It was also sensationally claimed at the Stormont hearings in September last that Cushnahan; Belfast accountant, David Watters; former partner in Tughan’s solicitors, John Coulter; property developer, Andrew Creighton; and former DUP leader, Peter Robinson, were to receive substantial sums from the Project Eagle sale. All denied the allegations. Cushnahan and Coulter, along with US law firm Brown Rudnick, were to take €15 million in fee payments from another US investment fund, Pimco, if its bid for the property portfolio was successful. Pimco withdrew from the process in early 2014 after its compliance officers advised that such payments would be illegal, under US law. In March 2014, NAMA informed finance minister, Michael Noonan, of the dodgy fee arrangements being offered in connection with what is the largest ever disposal of public assets in the history of the state. Instead of calling an immediate halt to the bidding process the finance minister advised NAMA to plough ahead with the sale. Noonan seemed implicitly to consider that the ethical problems were at the other end, in Belfast. And that the Belfast office didn’t really reflect on the Dublin office. The problem for Noonan and NAMA is that if Hanna is involved in wrongdoing that brings the culpability right back into the Dublin office and the remit of the Irish government. Cushnahan and Coulter then encouraged Cerberus to enter the race in the clear expectation that fee payments would be made if its bid was successful. The Spotlight programme revealed that Cushnahan misled his former colleagues in NAMA by continuing secretly to work on the Cerberus deal without their knowledge. Cushnahan confirmed in a clandestinely recorded discussion last year with Belfast property developer, John Miskelly and accountant David Gray, associate of Waters, that he was due to get a “ fixer’s fee” from the Cerberus deal. He said that he and Coulter had done “all the work on the deal” but his role was kept secret because of objections from NAMA to his involvement. Cushnahan said that Coulter moved £6 million into a holding account for him so he could be paid. During the recorded discussion, reference is made to assistance provided by Ronnie Hanna to distressed developers. There is also a description of how Peter Robinson’s son Gareth advised Miskelly to go to Cushnahan about his NAMA-controlled debts. Miskelly confirmed to the BBC that the recordings were an accurate reflection of the lunch meeting with Cushnahan and part of an effort by him to expose the financial misconduct surrounding the sale of the Project Eagle portfolio which is under investigation by the US Securities and Exchange Commission and the National Crime Agency in Britain. Miskelly claims he has handed evidence of wrongdoing to both. Cerberus has denied any wrongdoing in respect of the purchase, while refusing to provide answers to detailed queries due to the ongoing criminal inquiries. Similarly, Cushnahan; Hanna who runs a private consultancy in Belfast; and Robinson, have declined to comment further. Robinson surprised many when he announced his retirement as first minister as hearings into the Project Eagle sale were taking place last Autumn. Village documented in January how Gerry Adams had in effect telegraphed Robinson on his need – in the context of ethical issues relating to the NAMA debacle of which Adams was apprised – to reinstitute the then suspended Northern Executive. Robinson and former finance minister, Sammy Wilson, were involved in discussions with Noonan and NAMA to try to minimise the exposure to personal guarantees of a number of prominent developers in Belfast and across the North in respect of their debts taken on by the agency. Last year, it emerged that Robinson held meetings with former US president Dan Quayle, chairman of Cerberus, and had discussions on the sale with Noonan, without disclosing them to his deputy first minister, Martin McGuinness. It now transpires that Cushnahan was on three sides of the deal having worked for NAMA, some of the bidders as well as for the distressed developers. The latest explosive revelations prompted Sinn Féin leader, Gerry Adams, to repeat a call for a Commission of Investigation into the NAMA sale. Frank Connolly