Syndicated

Moves by Housing Minister Eoghan Murphy to scrap the ‘Help-to-Buy’ scheme may be in doubt after the State-backed lender charged with ramping up house building endorsed the policy.

It provides tax breaks of up to €20,000 for first-time home buyers.
Last year’s loosening of Central Bank mortgage rules and the launch of Help-to-Buy gave builders the confidence to push ahead with larger construction projects, according to Activate Capital, a joint venture between the Irish Strategic Investment Fund (ISIF) and private equity firm KKR.

“The pick-up in home-building activity during 2017 has been very significant. It is evident the changes to the Central Bank’s macro prudential regulations, together with the Help-to-Buy scheme, provided the necessary impetus to the market and generated the confidence for increasingly large phased housing construction,” Activate stated in an investor update sent to shareholders ISIF and KKR.
Mr Murphy is known to have reservations about Help-to-Buy, which was introduced by his predecessor Simon Coveney.

The new minister commissioned an independent review of the scheme by consultancy firm Indecon over concerns it was contributing to rampant house price rises.
However, Activate has been identified as an important part of the Government’s response to the housing crisis, and its views are likely to carry considerable weight.

Given the scale of the housing crisis, policy makers will be especially wary of any policy shift that reverses the current increase in building activity.
ISIF and Activate have in effect been tasked with delivering housing through funding of developers and by encouraging other finance houses to lend – for example, Activate can lend to buy land that banks will then provide funds to build on.

Controversially, while political leaders have emphasised the requirement for affordable homes, Activate has been accused of helping drive up land prices by providing financing for Cairn Homes’s market-topping €107m acquisition of part of RTÉ’s Donnybrook campus in Dublin, which is to be developed as luxury apartments.

In its update to investors, Activate said it has made more than €560m of debt available to builders and provided nearly €300m of loans for site acquisition and working capital.

The fund is currently backing 22 developments that will deliver more than 3,600 homes, the majority targeting first-time buyers.
Meanwhile, Mr Murphy’s hope that the Government’s ‘fast-track’ planning application system for large-scale housing developments would speed up the delivery of new homes has been dealt an early blow.

An examination by the Irish Independent of the pre-planning requests received by An Bord Pleanála to date shows that at least five applications for developments with as many as 2,254 housing units have been declared invalid. While most of those applicants have since submitted amended requests to An Bord Pleanála, the delays are understood to be a source of huge frustration for those affected.
Among the proposals declared invalid was an application from developer Michael Cotter’s Viscount Securities to build 934 new homes at Clay Farm in Leopardstown, Dublin 18.

Having been announced by the then housing minister Mr Coveney last November, fast-tracking was signed into law only on June 23 by his successor, Mr Murphy.

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A post Brexit transition period could last up to four years, Foreign Affairs Minister Simon Coveney has said.

Mr Coveney said the longer the transition period the better from an Irish perspective, but that it “can’t go on forever”.

“I think when we get to the point of negotiating and debating a transition arrangement, which isn’t now, that will be in phase two of the negotiations, I think we’ll be talking about a period of somewhere between two and four years. Let’s wait and see,” the minister said.

The minister said the EU is anxious to deal with the phase one issues first before discussing a transition period.
In her speech in Florence last week, Prime Minister Theresa May set out her plan for a two-year post-Brexit transition period under current EU rules, but again repeated that ultimately no deal would still be better than a bad deal.

The confirmation that Downing Street wants a bridging period that would see the UK abide by existing trading terms will give comfort to businesses here and in Britain fearing a cliff edge exit in March 2019, but could stoke anger among Brexiteers.

On the margins of the third All-island Civic Dialogue on Brexit in Dublin today, Mr Coveney said the European Union will be open to discussing a transition period.

He also said that “sufficient progress” on the main issues – citizens rights, the financial bill and Ireland – has not yet been made.
He said good progress is being made on a deal to maintain the Common Travel Area. He said the “most difficult” issue is the border.

“I think we do need to make more progress around bringing clairty around how we are going to resolve the question of maintaining a largely invisible border on the island of Ireland and maintain the status quo,” he said.
He reitereated that it would make it easier if Britain agreed to remain in a customs union with the EU.

“But that is not compatible with some of the other things that Britain has been saying, in terms of their ambitions to negotiate free trade agreements all over the world. We aren’t where we need to be on border issues.”
He said there is no “road map” to get us where we want to be.

Taoiseach Leo Varadkar told the gathering that the timetable to achieving progress by next month is “challenging”.
“While there has been some progress, very significant gaps remain,” Mr Varadkar said.

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The enhanced mortgage-to-rent scheme launched by mortgage campaigner David Hall offers hope to thousands of families trapped in an arrears nightmare.

The scheme enables a housing body take over the ownership of homes where mortgage holders are deep in arrears, with no prospect of getting back on track.
How does it work?

David Hall, of the Irish Mortgage Holders Organisation, has set up iCare Housing to buy homes off people in deep arrears. This is the first time the scheme is being operated on such a large scale.
He has funding from AIB Corporate Finance to run the enhanced mortgage-to-rent scheme initially for customers of AIB and its subsidiaries EBS and Haven.

Those who opt for the scheme will lose ownership of their homes. The homeowner must voluntarily surrender their home to the lender.
The lender, in this case AIB, then sells it to the approved housing body, such as iCare, at a discount to market rates. Those who take it up go from being a homeowner to being a tenant of an approved housing body.

How do I qualify?
Borrowers must be eligible for social housing. This means the property must be of a value no more than €365,000 for a house and €310,000 for an apartment or townhouse in Dublin, Kildare, Meath, Wicklow, Louth, Cork and Galway. The maximum values for the remainder of the country are €280,000 for a house. They must not own any other property.

The net income for a family in Dublin must be less than €42,000. In Co Cork, the income limit is €36,000 for a family.
To qualify, the property will be in negative or marginal positive equity. The mortgage debt must be deemed unsustainable.

Who owns the property?
The property will be owned by iCare. People in the scheme will have a 30-year lease with iCare, and pay rent to it. If you qualify for the scheme, and you agree to it, your arrears will be written off.

There will be an option for those who are in the scheme to buy back the home in future at a discount to today’s market value.
How much will the rent be?

You will pay what is called a differential rent to iCare. This means the amount of rent you pay depends on the amount of your total household income.
If your income is low, your rent payment will reflect this and will be low, but if your income increases so will your rent payment.

Mr Hall expects to agree deals with the local authorities. Where people in the scheme have no funds, up to 92pc of the rent can be paid to iCare by the local authority.

How is the deal being financed?
The homes will be bought at a discount from the lenders.

AIB Corporate Finance is providing funding for iCare Housing, which could rise to €100m if the scheme works out. There is also funding coming from the State’s Housing Agency, under a Capital Advance Leasing Facility. The funding works out at up to 40pc of the value of the homes. The interest on this is 2pc, and the first repayment is not due for 30 years.

Will other lenders take it up?
Housing Minister Eoghan Murphy called on other lenders to take it up. Mr Hall said he was in talks with Bank of Ireland and some vulture funds about taking over properties, where the owners are in arrears, and operating the mortgage-to-rent scheme.

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Housing minister Eoghan Murphy’s hope that the Government’s ‘fast-track’ planning application system for large-scale housing developments would speed up the delivery of new homes has been dealt an early blow.

An examination by the Irish Independent of the pre-planning requests received by An Bord Pleanála to date shows that at least five applications for developments with as many as 2,254 housing units have been declared invalid. While most of the affected applicants have since submitted amended requests to the An Bord Pleanála, the delays are understood to be a source of huge frustration for those affected.
Among the proposals declared invalid was an application from developer Michael Cotter’s Viscount Securities to build 934 new homes at Clay Farm in Leopardstown, Dublin 18. A subsidiary of Cotter’s Park Developments Group, the firm plans to deliver 363 houses and 571 apartments within a 10-year timeframe at the south Dublin scheme.

Viscount Securities submitted its pre-planning request on July 10 last. However, it took until September 1 – a period of nearly eight weeks – for An Bord Pleanála to declare it as invalid. An amended proposal from the company has since been validated.
Most requests are knocked back by An Bord Pleanála because the developer has not complied fully with its guidelines for the paperwork required for a Strategic Housing Development (SHD). The delays encountered by Cotter and other applicants are all the more concerning when one considers that it took the Government over seven months to give the fast-track planning system legal effect. Having been announced by the then housing minister Simon Coveney last November as part of the ‘Rebuilding Ireland’ plan, the measure was only signed into law on June 23 last by his successor, Mr Murphy.

The new Housing Minister’s high expectations for the system were evident in a newspaper interview he gave the following month. Commenting on its introduction, he said: “There were certain things that I knew I wanted to come in and do immediately, that I knew I would be able to do quickly because they were to be enacted – and I did that.”
Murphy’s hope for the fast-track system will be dented further by the news that UCD saw its pre-planning request rejected because its proposal for an SHD was deemed by An Bord Pleanála as “not a reasonable basis for application”.

UCD is seeking permission for 512 student accommodation units, comprising 3,006 bed spaces in seven blocks, including a student facility centre and 994 car parking spaces, which would be built within 10 years. While UCD submitted its pre-planning request on July 3 last, it took seven weeks for An Bord Pleanála to inform the university that its application was invalid.
While An Bord Pleanála declined to comment on its operation of the fast-track scheme, Hubert Fitzpatrick, director of the Construction Industry Federation (CIF), said there was no evidence as yet that there is a major problem with it.

He said: “An Bord Pleanála has issued detailed guidelines and the new system has to be given time, so that any niggles can be resolved.

“The industry will work proactively with the system and review its progress. If any streamlining is required, we expect that it will take place.”

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Families who are in deep arrears have been given fresh hope that they will be able to stay in their homes – as renters.

Mortgage campaigner David Hall has done a deal with AIB to buy out hundreds of homes where the mortgage holders are in arrears.

They will then be rented back to the families that previously had mortgages on them.

It is understood that funding of up to €100m for Mr Hall’s iCare Housing organisation is set to be provided by the bank for an initial phase of the scheme.
Debts of those taking up the scheme will be written off, once they surrender their homes to iCare. People who get on to the scheme will have to qualify for social housing.

But they will get an opportunity to buy back the homes in the future if their personal circumstances improve, the Irish Independent has learned.

The chance to buy back the homes should act as an incentive to keep people paying the rent. It is an enhanced mortgage-to-rent plan, and the first time such a large-scale scheme has been tried in this country.

It has Government backing, and Housing Minister Eoghan Murphy is set to announce the deal today.
Mr Hall said: “This is the biggest mortgage arrears solution since the crash.

“It will apply to the most vulnerable and stop them losing their homes.”

He said the scheme would apply to a few hundred homes initially, but it had the potential to apply up to between 7,000 and 10,000 homeowners who were in mortgage distress across all banks.

There are more than 30,000 residential mortgage account holders who are more than two years behind on their payments. These people are at high risk of losing their homes.
Mr Hall said: “The big issue now is housing, and not debt. People need somewhere to live, so it is about ensuring they do not end up with their homes repossessed.”

He added that the scheme could be life changing for those who benefit, most of whom will have legal proceedings hanging over them. Part of the deal will seek legal cases adjourned.
Distressed

“This will be the golden ticket for these people. It is a game-changer,” he said.
Mr Hall’s iCare is a not-for-profit housing body. Its directors include Pat Doyle of the Peter McVerry homeless charity, and Louisa Santoro of the Mendicity Institution, one of Dublin’s oldest charities.

ICare will use the Government’s mortgage-to-rent scheme to buy the homes of distressed borrowers.

It will then allow them to remain in their homes.
The properties will be leased to local authorities, and the families will pay rent to the council. Children will be able to stay in the same school.

The current scheme will be restricted to those who qualify for social housing. This means a family in Dublin will be on an income of less than €42,000.

In Cork county the income limit is €36,000.
But the iCare scheme will be broadened out to private tenants in time.

Eligible properties for the scheme must be valued between €280,000 and €365,000, depending on the location, with the higher values for Dublin.

Other groups, such as Arizun and the Merrion Capital and Phoenix-backed Home for Life scheme, are also hoping to launch large-scale mortgage-to-rent schemes. Arizun is also looking at private rental schemes.
Earlier this year the Government announced changes to the mortgage-to-rent scheme to allow thousands of additional struggling mortgage holders to become eligible to apply.

The amendments to the scheme, originally developed in 2011, were announced by then housing minister Simon Coveney.

Several changes to the eligibility criteria of the scheme are being made – which will mean more households in rural areas, in particular, will be eligible.
A more formal communication channel between the lenders and borrowers was being proposed.

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Around three exporting companies a week on average have been approved for a state-backed Brexit-ready grant since June.

The Be Prepared Grant rolled out by Enterprise Ireland (EI) provides firms with up to €5,000 to get themselves in shape to deal with any potential fallout from the UK’s EU exit.

It was launched in June, but is limited to EI’s 5,000 client companies. So far, around 45 have been approved for the scheme, with Dublin accounting for around 40pc of the applications.

Exporters have been the early casualties of the Brexit vote, due to sterling’s dramatic devaluation in the wake of the referendum last June. Although the pound has recovered some ground since it crossed the 90 pence to the euro mark in recent weeks, it is still hovering around the high 80s.
It’s estimated that the pound has lost around a fifth of its value in the wake of the referendum.

The grant support is designed to help firms cover consultancy, travel and other out-of-pocket expenses associated with drawing up a Brexit action plan.
EI will match 50pc of the costs incurred by a company in drawing up a strategy, up to a maximum of €5,000. A spokesman said there has been a “strong pipeline” of applications.

“We expect more applications following on from the 163 one-to-one meetings that took place between Brexit exposed companies and independent advisers in the Brexit Zone at International Markets Week earlier this month. “The one-to-one meetings with client companies focused largely around currency risk management, transport/logistics and purchasing/supply chain. Currency risk management was the top item on the agenda for the majority of companies,” he said.
Companies in the industrial, life sciences and consumer sectors account for the chief recipient of the grant, followed by ICT and international services.

But the fact that the grant is available to just Enterprise Ireland client companies has led to criticism.
“It’s certainly not fair that EI companies have this help and that other companies cannot avail of Enterprise Ireland support,” Irish Exporters Association chief Simon McKeever told the Irish Independent.

Stephen Donnelly, Fianna Fail’s Brexit spokesman, questioned whether €5,000 was enough to help companies, and said EI was not getting enough resources.
“EI are superb and we are not using them. We need a national programme response to this.”

Cross-border development body InterTrade Ireland is also providing support to exporters.
In July the Irish Independent reported that about 15 companies had been provided with Brexit “start planning vouchers”, worth €2000/£2000 each, aimed at ensuring businesses get advice on specific issues such as movement of labour, goods, services and currency management.

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EUROPEAN Commission plans to increase taxes on digital firms risk undermining growth and could stifle global efforts to find common solutions to tax issue, US companies operating in the EU said yesterday.

The comments echo the Irish Government’s position, which is opposed to the proposals that would see some online companies with little or no physical presence in many EU member states taxed based on their turnover, rather than profits.

Critics have said that online firms such as Google or Facebook pay too little tax in the EU by re-routing most their profits to low-rate countries, such as Luxembourg or Ireland.

Frustrated by how long it is taking the world’s rich nations to reach a deal on how to fairly tax digital giants, the EU has threatened to move ahead alone with a tax on turnover, or with other short or long-term measures.
“Unilateral action by the EU would seriously undermine international efforts to address tax issues,” Susan Danger, head of the American Chamber of Commerce to the EU (AmCham EU), said.

AmCham EU said a turnover tax, as proposed by France and backed by other large EU countries, would reduce investment, hit jobs and penalise start-ups, low-margin and loss-making companies. Current rules exempt loss-making firms from paying taxes.
A report by EU lawmaker Paul Tang said the US online retailer Amazon, which has its EU tax residence in Luxembourg, had been mostly exempted from taxes in the 2013-2015 period because it did not make profits.

The EU is also considering more structural measures to change the way companies are taxed, so that levies could be raised when they have a “virtual” platform in a country, and not only a physical presence.
Changes to existing rules could be added to a review of corporate tax rules currently under debate in the EU Parliament, the Commission said.

AmCham EU also criticised the initiative for a common tax base in the 28-country bloc, saying the move could “adversely affect EU competitiveness and growth if it is not in line with internationally agreed rules”. (Reuters)

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In some Dublin areas it has become twice as expensive to rent as it is to buy, and renters are moving back in with their parents in increasing numbers in a move to try get on the property ladder.

Average rents across Ireland rose 2.8pc in the last quarter and are now €1,017.15.
In comparison, a 25 year mortgage on the average three bed semi detached house costing €211,843 works out at €969 per month at current rates, according to a survey carried out by the national Real Estate Alliance Group.

According to the Irish Independent, estate agents are finding that in some circumstances house buyers can halve what they are paying in rent if they buy a property in the area.

“Rents have gone through the roof, fuelled by an all-time low of supply of suitable properties, with many prospective buyers trying to escape rents of €2,000 a month in Dublin,” John Cumisky, from REA Cumisky said.

Yesterday the Irish Independent revealed that the price of an average semi-detached home is rising by an average of €500 per week.

Overall, the average house price across the country has risen by 11.2pc over the past 12 months.
According to Anthony McGee of REA McGee it is increasingly difficult for first-time buyers to save deposits and purchases homes due to a combination of high rents and childcare costs,

“There are lots of instances where we are seeing people moving home to parents to save deposits. Even though the rents they are paying are in excess of a mortgage on the same property, they can’t seem to attain a mortgage due to their inability to raise money for a deposit,” Mr McGee told the Irish Independent.

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Large numbers of young drivers have been accused of being untruthful to their insurers. According to a new study, motorists are not being open about who is the primary driver of the car or about their profession.

The survey commissioned by Liberty Insurance also found eight out of 10 drivers of all ages believe that a claims culture exists in this country.

Liberty said that being untruthful about the primary driver, your profession, annual mileage or penalty points when applying for insurance constitutes fraud.

If detected, it may prevent an individual from securing insurance cover in the future or could invalidate a claim, the insurance company warned.

The research shows drivers between the ages of 17 and 29 have a more liberal interpretation of insurance fraud than their insurers.

The survey, which was conducted by Red C Research, found that 56pc of young drivers agreed that being untruthful about their job description was a “mild” fraud, with many not considering it to be fraud at all.

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Tech giants will be able to get fast-track planning permission for data centres under processes being developed by the Department of Enterprise.

The Government is devising laws to prevent a repeat of the controversy that had led to severe delays to a proposed €850m project in Athenry, Co Galway.

Apple has reportedly warned officials the investment will be put at risk if there are any further hiccups. The company first revealed plans for the data centre in February 2015, but has faced significant opposition.

An Bord Pleanála granted planning permission last year – but this was the subject of a judicial review on environmental grounds following appeals by local residents and a landowner. A High Court ruling is due to be delivered on October 12.

Now Data Protection Minister Pat Breen has said every effort will be made “to ensure Ireland remains an attractive investment option for multinationals seeking to construct data centres here”.

He is examining legislative options that could lead to a more efficient planning system for future projects.

“In any planning procedure, all sides with input to a proposed project must be respected and listened to before a final decision is made. However, there is no reason why this process cannot happen at a quicker pace while respecting all contributions to a planned project,” Mr Breen said.

Taoiseach Leo Varadkar has insisted Apple remains committed to the Athenry development despite the delays. The company had expected the project to be finished this year.

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