Thursday, 30 June 2011

Allsop Space July Auction...

From €25,000 to €1.45m: another distressed auction...

AUCTIONS: There’s interest from around the world in next’s week’s big sale

DUBLIN’S Shelbourne Hotel is expected to be packed again next Thursday for the second auction of distressed properties to be offered to the highest bidders by auctioneers Allsop/Space.

Most of the 87 residential and commercial properties are being sold by financial institutions and receivers. They include 59 houses and apartments, mainly in Dublin, Cork and Waterford, but also in counties ranging from Laois to Donegal. Apartments already rented have been of particular interest to many people who have checked out the online sales catalogue prepared by the Allsop/Space partnership.

The site has already had more than 60,000 hits, a figure that is expected to grow to over 100,000 by next Thursday. Just over 14 per cent of the enquiries have come from Ireland but there has been almost an equal level of hits from interested parties in the UK, USA, France, Australia, Spain Canada and Germany.

The organisers report a high level of interest in the event following the first sale in April this year when all but one of the 82 lots of apartments and houses sold under the hammer. The lowest priced house on this occasion, a three-bedroom terraced property at Headfort Grove in Kells, Co Meath, has a reserve of €25,000.

However, the highlight of the auction is likely to be the sale of a large Victorian redbrick on Ailesbury Road in Ballsbridge, Dublin 4. The end-of-terrace house has a reserve of €1.45 million even though many properties on the road changed hands at over €10 million during the property boom. Number 35 is in need of considerable refurbishment.

Many of the Dublin houses going for sale are priced between €200,000 and €300,000. One example is a four-bed semi at 249 Upper Kilmacud Road, Stillorgan, with a reserve of €275,000.

Also on the southside there are two partially-ompleted semi-detached houses on Killiney Hill Road with a guide of €200,000 for both. One of them is a three-bed, the other a two-bed.

In Dublin 15, the agents have set a guide price of €97,000 for a modern three-storey, four-bedroom house at 13 The Boulevard, Tyrrellstown. Another three-bed home with a marginally higher guide of €102,500 is located at 1 Stepaside Villas, Stepaside.

In Dublin 4, a four-bedroom Georgian house standing two-storeys over basement at 61 Haddington Road, comes with a guide price of €395,000.

In the city centre there is likely to be considerable interest in a tiny terraced house at 25a John Dillon Street, Christchurch, where the reserve is a mere €55,000. It has a floor area of only 27sq m (290sq ft). Anyone looking for a cheap apartment may well take a look at a two-bed unit in Castleforbes Square, off Mayor Street,in the docklands where the guide is €142,000.

Buyers in the market for income-producing residential properties in Dublin are likely to consider a two-bed penthouse in Smithfield Market. The current rent is €14,400, and the selling guide is only €175,000. At Linden Square in Blackrock, a three-bed apartment producing a rent of €15,600 could be knocked down at €222,000. Couples looking for a weekend or retirement home outside of the city might consider a four-bedroom Victorian country house on 2.5 acres at Camolin, Co Wexford. It has a guide of only €250,000.

Investors seeking commercial properties will have a choice of 18, including a string of pharmacies, a betting shop and three pubs. One of the bars, in Portumna, Co Galway, may be picked up for as little as €50,000 (less than what bar licenses were selling for over the past 20 years) and another one in Waterford for €185,000. The best located of the three is The Pint bar at Eden Quay in Dublin city centre which is rented at €78,000 per annum. It has a guide price of €485,000.

Report by JACK FAGAN - Irish Times

Are Euros Safe If Greeks Default?

Is your money safe in Euros if the Greeks default?

A big fat Greek default is on the cards and the Lehman's style spillover might have a dire domino effect on Ireland and the euro.

People are worried about Argentina-style hyperinflation making their money worthless or a government smash and grab on their precious savings if everything falls apart. What to do to protect money is the hot topic of the hour.

"This is being discussed at the board tables of business, charities, you name it," says Niamh Cahill of "The deposit rate of interest has been very much relegated as the most important concern, what's important now is safety."

So, if the worst came to the worst, what might happen?

"It could be one of two things," says Cahill. "The Government could say 'as of tomorrow we're going to devalue all deposits and loans on the balance sheets of banks in Ireland'. Or else they could say 'we're going to devalue all euros originating from Ireland'. That would be a logistical nightmare, but it's possible.

"More recently, with the sovereign debt issue in Europe escalating again thanks to Greece, people ask: 'Well I have diversified and my euros are in foreign banks in Ireland, but are they still safe if anything happens to the euro?' I think in general they feel that they probably wouldn't be."

There are two risk concerns investment clients are asking about, according to financial adviser Vincent Digby of Impartial. "First there is the credit risk -- what happens if Ireland defaults or restructures debt. What would the impact be on personal deposits or company deposits or money? Could the bank put a levy on it, or could the bank impose controls where you couldn't access your funds?

"Second is the currency risk -- what happens in the unlikely event of us being kicked out of the euro or choosing to leave the euro?"

How any exit would play out is the sixty-four million dollar (or rather multi-billion euro) question.

"The expectation," says Brian Culliton of Trusted Advisor Group, "is that the new Irish currency would depreciate significantly against the euro if it continued to exist, or depreciate against the harder euro economies' currencies such as Germany's in the event of a total break-up. Ireland exiting while the euro continued to exist is thought to be extremely unlikely. It is more likely that there would be a complete break-up," he says.

"The theory is that the Irish Government would impose exchange controls to prevent a rush of assets out of the country. This is speculation and it's not clear that this would actually happen.

"But if that were the case, the follow-through would be: Irish deposits in Irish banks would most likely be re-denominated in punts, with no translational benefits if the new currency depreciates. It's not at all clear that this would happen, but it would follow on from an imposition of exchange controls.

"By the same logic, holders of euro deposits in non-Irish banks based in Ireland are unlikely to benefit as the accounts would be redenominated in punts, with no translational benefits."

So if the worst of all worsts occurs, your savings here are exposed. However, moving your money offshore to a foreign currency account comes with a whole shooting match of other risks.

Foreign A/C THE pros

"If you have debts in another currency, such as a sterling mortgage for example," says Digby, "then a devaluation of the euro and its changing into say the punt would mean your debt would go up by the extent of the devaluation. So in that case you do really have to look at doing something to hedge that risk."

Equally if you're receiving or making rental payments outside the eurozone a local currency account may makes sense.

"Also for someone who is either intending to live abroad or who spends a significant portion of the year out of the country, in that case their Irish 'punts' abroad would be worth less and this will have a real impact on their purchasing power," Digby says.

If you have business interests outside the eurozone it may also have solid advantages.

Foreign A/C THE CONs

The biggest problem is that you -- literally -- become a currency speculator.

"You have to be clearly aware that the currency could move against you by 15 or 20 per cent," says Digby. "If someone's living in Ireland and spending euros, they're going to have to convert back at some stage. People need to know that the principal amount could be a lot less when they do."

Niamh Cahill agrees. "Over US$4 trillion is traded every day in the world and in excess of 90 per cent of that is speculation linked to trade. If you're trying to make an informed bet around whether a currency will get stronger or weaker you haven't a hope in hell."

The euro breaking up or our being kicked out of the eurozone is "still a long shot" says Digby. "Even if that comes to pass, if you're based in Ireland and all your assets and your liabilities are based in Ireland, you'll be broadly insulated from a devaluation.

"If it were to happen you can only imagine that import prices would go up dramatically and therefore inflation would be higher and yes, over time, your spending power would be eroded, but it's more of a longer term drift impact than an immediate problem."

A foreign account means you'll be missing out on higher interest yields at home. "The interest rates would be nowhere near as attractive compared to the deposit rates in the Irish banks," says Digby.

If you open a bank account outside the EU, you also end up paying at the marginal rate of tax (nearly twice the rate of DIRT) and there are likely to be embedded costs and charges attached as well.

Digby feels overall money here is well protected. "The €100,000 deposit guarantee scheme was issued under EU directives, and I would be very comfortable to say that would be paid in full if it was ever needed. As it's €100,000 per person, per institution, if you've more than €100,000 you can simply diversify across the credit institutions."


Most Ireland-based financial institutions offer foreign currency accounts.

Friends First's Insight Currency Fund is looked after by fund managers Alder Capital. The HSBC has an offshore savings account, as does Investec. The mainstream banks (Bank of Ireland, AIB, National Irish Bank, Permanent TSB and Ulster Bank) all have non-euro accounts.

Most are bog-standard deposit accounts in the foreign currency of your choice. "At any rate, the same principles apply in a structured product, in terms of currency risk" says Niamh Cahill.

"The statistics around speculation and foreign exchange are still the same, whether you're in a structured product or not.

"You need to drill right down and understand what you're getting: ask is there a guarantee, and if it is a tracker-type product."


"There are a wide range of other options to hedge the credit risk," says Vincent Digby. "We help people open deposit accounts in Deutsche Bank in Germany, there are also German bonds, and other money assets.

The interest rates on a German deposit account will not pay you anything like the yield you can expect at home. "It's for security, it's where people say: 'I want to know in 12 months that my money is safe where it is.' If Ireland leaves the euro and you have German bonds or a German bank deposit account, they'll either stay in euros or, if the eurozone breaks up entirely, they'll go back into Deutschmarks -- and under most people's thinking should appreciate considerably.

"That might be a more appropriate way of managing the currency risk for people who are looking for capital preservation.

Cahill advises spreading risk. "Diversify between a number of banks whether it's in Ireland or outside. For a very big portfolio, say €10m, that could include putting some into foreign currency, but you don't want someone taking their life savings and just lobbing it into sterling.

"There is no perfect hedge," says Culliton, "but, the following are worth consideration.

"Buy German, Swedish, Danish, Swiss or Norwegian bonds (that is, strong non-Eeuro, or strong euro government bonds). The downside to this is that you will be lending your money to these governments for not much more than 3 per cent a year, but this would seem like a pretty attractive deal in the event of a eurozone break-up.

"The simplest, though not the most effective hedge in the event of penalties, is investing in unit-linked funds which hold non-Irish assets."

Buying precious metals like gold is another, though that comes with its own risks, given the talk of a gold/silver bubble.

Overall, keep a sense of proportion, advises Culliton. "No matter how persuasive the narrative backing up a particular investment thesis, investors should not base investment strategy around narrow predictions, that may have a 10 or 20 per cent chance of occurring. Don't build your investment strategy around one possible outcome. Consider all possibilities."

Article by Roisin Burke - Irish Independent

Wednesday, 29 June 2011

True Cost Of Euro Dream...

Ireland left to count the true cost of euro dream...

An exclusionary venture that values banks ahead of ordinary people – this is not what we signed up for.

JUST THREE years ago we were being bamboozled into voting for the Lisbon Treaty, the then latest stage in the creation of a wondrous European project that would consolidate peace on the continent and promote yet further wealth creation.

It would also give Europe a voice in world affairs corresponding to its financial clout, give greater administrative cohesion to the decision-making processes in the union and incorporate the industries of war (defence industries) into the corporate structure of the union.

The Lisbon Treaty had arisen from the refusal of the French and Dutch electorates to approve a draft European constitution. The new treaty was devised to give effect to the purpose of the draft constitution, while avoiding the tiresome ordeal of obtaining electoral approval anywhere, except Ireland. The Irish electorate, at first, ungallantly baulked at approving this new enhancement of the euro project, as the French and Dutch had done, but then in trepidation, reversed itself in the second vote.

Prior to the temporary Irish blip in 2008, the EU appeared to many to be a momentous achievement: a political and economic union, involving 27 nations, across a Continent which had been ravaged by wars and strife for millennia. A union inspired by the zeitgeist of our age: free markets, deregulation, privatisations, “reforms” of labour markets, the neutralisation of trade unions that for so long had “held back” the forces of progress. Along with the construction of a foreign and security policy that was intended to give “muscle” to that union.

Opposition to that project was perceived as suspect: borne of xenophobia or ultra-left infantilism. It could not be because of concern with the reversal of democracy that the project entailed by marginalising electorates from any direct say in its design and ethos. Nor of any apprehension about the injection of crude neo-liberalism into the veins of the union, nor general trepidation over the fanaticism of zealots hell-bent on this grand endeavour, whatever the consequences to the people they so noisily purported to care about.

It is different now.

The device at the core of the European project, the euro itself, has proved calamitous. The euro involved the creation of a European Central Bank which, at German insistence, was given immunity from any form of democratic control, however indirect. It was also given control over one of the key regulators of economies: the supply of money and of interest rates, with a brief to control inflation.

The ECB managed interest rate policy to the benefit primarily of Germany and to the detriment primarily of Ireland. The ECB made it clear it would not countenance a member state allowing a bank to collapse, which was what partially inspired the bank guarantee here, although not its scope.

The ECB has insisted on member states absorbing the losses of its banks, even though the losses were in part the responsibility of agents in other member states. And along with the EU Commission and the IMF, it has imposed programmes of austerity on Greece, Portugal and Ireland, ravaging still further the lives of the poorest people of those countries.

The new institutional structure of the EU, which was one of the key points of the Lisbon Treaty, has failed to deal with Europe’s debt crisis, a crisis caused in large part by the EU itself. The new presidency of the European Council has been a joke, a joke made all the more bizarre by the recent row between Herman Van Rompuy, the president of the European Council and José Manuel Barroso, the president of the European Commission, over the sharing of executive jets.

The creation of a new position of high representative for foreign affairs and security policy to co-ordinate foreign and security policy has been another failure – the EU has been entirely wrong-footed by the revolts on its doorstep against squalid Arab dictatorships with whom it played footsie for decades.

Those revolts have undermined another central plank of the union, the free movement of labour and have added further force to a menacing plank, that of fortress Europe. Italian and French responses to the flow of immigrants from North Africa in the midst of the recent uprising there have included demands for border controls and a tightening of immigration policies. In several countries there has been a rise of extreme-right parties – in Sweden, Finland, Denmark, France, the Netherlands and the UK – all of them xenophobic.

For Ireland, the crisis has not been just transformative of the society brought about by the Celtic Tiger, it has also been transformative of our relations with the EU. Initially, we were the supplicants, pleading for favours via the Common Agriculture Policy, structural funds, regional policy. Then the model students, obedient and so appreciative.

Now, one of the problem children, truculent and resentful. And perhaps a little sceptical of a venture that is inherently contemptuous of “ordinary” citizens of the union, exclusionary and instilled with an ethos we should never have signed up to.

Article by VINCENT BROWNE - Irish Times

Dublin Rents Among EU Highest...

Some Dublin rents among highest in EU despite decline...

The relatively high rents for Dublin prime office and retail accommodation are highlighted by the latest Knight Frank summer survey of European rents and yields.

Dublin's prime shopping centre rents, at €3,750 per sqm per year, are the second-most expensive of the 25 cities surveyed and surpassed only by London's West End, where rents average €5,556 per sqm.

Parisian rents, at €2,000 per sqm, are little over half those in Dublin. Dublin shopping centre rents are the only ones to show declines.

Keiron Diamond, director at Knight Frank Ireland, points out that many distressed tenants have secured rent reductions or other forms of deals with landlords, some of whom, however, are reluctant to publicly acknowledge rent cuts.

The values of Dublin shopping centres have declined and this is also reflected in the yields, which at 7.75pc, shows the values are the fourth cheapest in Europe.

Some might argue that the high yields reflect the withdrawal of investors from the Irish market but that yields are therefore difficult to verify due to the lack of transactions.


Others can point to a similar CBRE survey last year, before the upward-only rent review became a government promise, which also showed a very low ranking in the European yields league for prime Dublin retail.

In contrast, Knight Frank's European Market Indicators report shows Dublin retail warehousing rents, at €100 per sqm, are among the cheapest in Europe and ranked 20th in the league, while prime yields for these properties at 8.25pc are the second-highest in Europe.

Dublin's office and logistical rents are more competitive than shops and this competitiveness should help attract job-creating inward investment.

Dublin prime office rents, at €376 per sqm, are the ninth-most expensive of the 25 cities surveyed, just ahead of Munich, Amsterdam and Edinburgh.

Prices for those buying Dublin offices are among the cheapest, with a yield of 7.25pc ranked the 20th in the league.

In the industrial sector, Dublin rents, at €75 per sqm, are close to mid-table at 11th-most expensive.

The survey shows that prime rents across all of Dublin's four key property sectors are declining, while yields across all sectors are increasing.

In the three months since the previous report, rental growth has been observed in a number of key European markets.

However, there has been little movement in prime yields.

Report by Donal Buckley Commercial Property Editor - Irish Independent

Tuesday, 28 June 2011

Tax Due On Second Homes...

Second-home owners have two days to pay €200 council charge or face fine...

OWNERS of more than 300,000 holiday homes and residential investment properties have until Thursday to cough up €200 to their local authority or face fines.

If the levy is not paid by June 30, owners risk penalties of €20 a month.

The charge has raised almost €160m for local authorities nationwide since it was introduced in 2009. Last year, €66m was collected for 318,889 properties, down slightly on the 2009 figure of €68.2m on more than 322,000 properties.

Those who are unable to pay the charge should contact their local authority to see if they can come to an arrangement to pay by instalments, said tax expert Cathal Maxwell of

Mr Maxwell added that there was a major squeeze being put on people with investment properties as lenders tried to force them off interest-only mortgage deals, invoking clauses in contracts to review the mortgage. This can mean monthly repayments tripling if investors have to pay interest and the capital.

And next year's new household charges from the Department of the Environment will also apply to second homes and investment properties and could mean total charges of up to €500 a year, Mr Maxwell said.

The €200 charge on second homes applies to all properties in Ireland other than a person's residence.

Owners became liable for this year's payment, known as the non-principal private residence (NPPR) charge, on March 31. However, they have until June 30 to pay and escape a surcharge. Anyone who fails to pay faces court proceedings, while the onus is on the owners to establish whether they are liable for the tax.

Report by Charlie Weston - Irish Independent

Saturday, 25 June 2011

Irish Property Auction Results A Disaster...

Property auction disaster shows prices still falling...

IRELAND'S first discounted property auction proved a disaster yesterday, with just two of the 63 properties on offer being sold.

Only two separate plots of land sold for a total of €95,000 at the auction in a Cork hotel, despite the fact that over €10m worth of houses and properties were on offer.

Those same properties were worth almost €30m just five years ago. But yesterday potential bidders felt the prices were still too high.

Analysts grimly warned last night that it was proof the Irish market had still to reach rock bottom -- with potential buyers convinced that prices will fall back further.

Yesterday's auction was the first to involve discounted Irish properties. These are cut-price holdings being sold by private owners or developers eager to dispose of assets.

Ireland's first distressed-property auction took place in Dublin last April when €14.8m worth of deals were struck. Distressed property involves land or buildings being sold off at the direction of the National Asset Management Agency (NAMA) or court-appointed receivers.

A total of 65 discounted properties were listed by GMAC Auctioneers yesterday. One was sold before the auction and another was withdrawn from offer before the bidding began.

But 61 of the 63 properties offered had to be withdrawn by auctioneer Tom McCarthy after failing to reach their reserve price.

Almost 30 did not attract a single bid.

Post-auction negotiations were ongoing in relation to three properties last night.

In one case yesterday, a 1.75-acre site in Borris-in-Ossory in Co Laois attracted a single bid of just €4,000.

The two lots that were sold both involved plots in rural areas.

In Dun Chaoin, Dingle, Co Kerry, a one-acre field -- with startling views of the Blasket Islands -- sold for €26,000, €1,000 above the reserve price.

The land does not have planning permission but the purchaser -- a 35-year old from north Cork who did not want to be identified -- said he was pleased with the deal.

"I wouldn't say it was a bargain -- I thought I might get it for less than €20,000.

"But I am buying it as a long-term investment -- maybe for 10 to 15 years' time. This was what I came here for today," he said.

A local auctioneer said the price was a fair one for agricultural land in the area, which is close to the site where 'Ryan's Daughter' was filmed in 1969.

"The crucial thing about the site is that it doesn't have planning permission. If it had it would be a totally different thing," said Anthony Mac Gearailt of Mac Gearailt and Associates Auctioneers in Dingle.

Mr Mac Gearailt, noting that planning permission was not easy to get, said an acre site without permission would easily have achieved €90,000 to €100,000 in Dun Chaoin at the height of the boom.

Yesterday locals in nearby Kruger's pub in Dun Chaoin said the buyer had got "a bargain".

The only other property sold was a 10-acre field in Tullig, Leap, Co Cork, which fetched €69,000 -- €1,000 below the reserve -- after the vendor agreed to allow it be sold.

The land, which is zoned for horticultural use, fetched less than the average value for agricultural property.

One prospective bidder said yesterday's proceedings were "like watching a car crash in slow motion".

Several bidders had travelled from Dublin, Laois, Limerick and Galway. Around 150 people attended the event, which began at noon at the Radisson Hotel in Little Island --but by 2pm there were just over 60 left.

Tom Considine said he returned home empty-handed because he felt that values would decline still further.

"I think there is an expectation that prices still have further to drop," he said.

Francis Herlihy was interested in a property in Lusk, Co Dublin -- but opted not to invest.

"I believe the reserve prices are just too high -- it is as simple as that," he said.

GMAC auctioneer Tom McCarthy admitted he was "very disappointed" with the outcome and said he believed the reluctance of prospective buyers was due to liquidity problems in the market.

"We had expected better. There is an appetite amongst vendors for this type of sale. But we will have to go back and review what happened today.

"It will give you an indication of the state of the market -- it appears to be only people with cash that are in the market," he said.

First-time buyers either don't have the cash savings to make purchases -- or find it exceptionally difficult to secure the required finance.

"I think liquidity is a huge issue -- there were properties there that were for sale for less than their construction cost," he said.

Report by Ralph Riegel - Irish Independent

Thursday, 23 June 2011

Cheap Homes For Auction...

Rock-bottom lots top the agenda in Cork...

A Cork agent is hoping to repeat the success of the Allsop/Space auction, putting 65 properties to auction tomorrow in Cork

A GLUT of houses selling at half their original price in Urlingford, a convent in Tipperary and a handful of island properties off the Cork and Kerry coast are hotly tipped to draw bidders to a auction of discounted property in Cork tomorrow.

The 65 properties going under the hammer at the Radisson Little Island at noon have attracted 40,000 hits to the auction website ( over the past three weeks. The auction is being run by Noel Forde and Tom McCarthy of Mac Estates and GMAC Properties of Bandon and Castletownbere.

Their initial aim had been to auction Cork properties, but since they announced plans for the auction they have attracted properties from Kildare, Kilkenny, Tipperary, Waterford, Kerry and Clare.

Inundated with offers from owners eager to offload property, auctioneer Noel Forde capped the listings to accommodate a second auction in September.

Inspired by huge interest in the country’s first discounted property auction held by Allsop and Space in Dublin in April, Mr Forde said tomorrow’s sale illustrates that the Irish love affair with property is far from over. “I think this is how property will sell in the future, the public auction will replace the private sale. It’s a better system for everyone, contracts close faster, the vendor gets paid quicker and the whole process is transparent for the purchaser,” he said.

The Dublin auction saw €14.8 million worth of deals struck in just six hours. Forde expects tomorrow’s sale to generate in the region of €10 million. However, his auction differs from the Allsop/Space model in that all the properties are being put up by individual owners rather than by banks and receivers. Allsop maintains that the only way such sales can work is if there is a large proportion of distressed property being off-loaded by financial institutions at rock bottom prices.

The listings for the Cork auction include two detached homes on Valentia Island in Co Kerry which, with 1,000 hits each, have generated plenty of interest. Lot number 17 is a three-bedroom architect-designed dormer bungalow with unobstructed sea views over to the Blasket Islands, and has a maximum reserve of €254,000.

A second four-bedroom property reserved at €230,000 in the village of Knightstown on the island is proving popular among prospective buyers and should sell for well in excess of the reserve, Mr Forde said.

“These are attracting a huge amount of attention from domestic buyers and from abroad. Like the two properties on Bere Island, they are well priced and these are the kind of properties I would expect to sell for well over the reserve,” he added.

Three renovated cottages in Kilkee and Kilrush in Co Clare have captured interest, going under the hammer with a maximum reserve of €80,000 each, down from €200,000 in 2006.

A detached cottage in Lusk, Co Dublin, five minutes from the train station and close to the airport, is reserved at €155,000 and comes with a planning option to demolish the house for a newbuild.

A nine-bedroom former Convent of Mercy on 2.31 acres of zoned land in Borris-in-Ossory, Co Laois, is guiding at €200,000 and has become a prime location thanks to planning approval for a €460 million Las Vegas-style leisure facility in Two-Mile-Borris.

A developer keen to offload homes in what Forde describes as fully-finished, mature estates at Togher Way and Togher Crescent in Urlingford, Co Kilkenny, has added 14 homes to the bill.

The reserves for these homes– a mix including a single-storey two-bed up to a detached five-bed –range from €75,000 to €185.000. The original prices averaged around €345,000. “This is not a ghost estate, the houses are incredible homes, ready to walk into,” Forde said.

The mass auction trend has sparked a new venture by a Dublin firm that aims to bring bidders together to lower survey costs. Rival bidders can pay anything up to €500 for a pre-auction survey of a property. is offering a shared cost with refunded payments the more a survey is downloaded.

Report by LOUISE ROSENGRAVE - Irish Times

Wednesday, 22 June 2011

Personal Debt Crisis Solutions...

Finding new ways to solve the personal debt crisis

Many homeowners have trouble making monthly repayments but there are ways to ease the burden...

WITH about 86,000 homeowners now struggling to repay their mortgage, and four times more debtors seeking free legal advice than did in 2007, Ireland is in the midst of a personal debt crisis.

We need solutions, and we need them quickly. What could they be?

Write off mortgages

A homeowner who is battling to repay a massive mortgage should be allowed to write off some of their loan, according to Michael Dowling, spokesman for the Independent Mortgage Advisers' Federation. This should make their mortgage more affordable and prevent them from either having to sell their home at a lower price than they paid for it -- or having it repossessed.

"We need long-term solutions," said Dowling. "No one should be asked to leave their family home. But to make the debt-forgiveness solution palatable to other homeowners who are managing to repay their mortgage, a homeowner who has some of their debt written off should lose part of the ownership of their home. Their shareholding in the property might be reduced to 80 or 90 per cent, for example. Otherwise, people who can afford to repay their mortgage might say 'Well I may as well stop paying my mortgage and get my debt written off'."

After a bank writes off some of a householder's mortgage, the homeowner should be given an incentive to meet the repayments on their new mortgage. "The homeowner could win back some of the property portion they lost if they continue to meet their mortgage repayments as required over the next five or 10 years," said Dowling.

Cap mortgage repayments

With 441,000 people on the dole, many of those who took on mortgages during the boom years have either lost their jobs, or have a spouse or partner who is out of work.

Dowling believes that mortgage repayments should be limited to a portion of a borrower's current income. "If someone has lost their job -- or has taken out a mortgage with someone who is out of work -- the repayments should be capped to a percentage of their income," he says. "This will give them time to work themselves out of the difficulties they're in. Repayments could be capped by extending the term of the mortgage -- or allowing the borrower to repay only the interest on the loan."

Improve state support for struggling homeowners

If you are struggling to repay your mortgage, you may qualify for the mortgage interest supplement -- a state scheme designed to ensure that your income after paying the interest on your mortgage does not fall below a minimum level.

However, many of those struggling with mortgages are not able to claim the supplement because the income threshold for the scheme is too high, according to Paul Joyce, a senior policy researcher with the Free Legal Advice Centres who was also on the debt review group appointed by the then government last year.

"The mortgage interest supplement is still very restrictive," said Joyce. "The income threshold could be reduced."

Reform THE bankruptcy lawS

Most debtors are dragged through the courts by those seeking to get back the money they're owed.

Joyce believes that an out-of-court solution must be introduced for those struggling with debt. "Most debtors can't afford the huge cost of going to court," said Joyce. "A lot of these people don't engage with the courts as they are seriously intimidated by the legal system, don't have access to representation and feel the odds are stacked against them. But bankruptcy should still apply to high-end debt cases where assets have to be valued and so on."

One such out-of-court solution could be a debt-settlement arrangement, similar to a system in Britain known as an Individual Voluntary Arrangement (See below).

"The debt-settlement arrangement should be enacted as soon as possible," said Jim Stafford, managing partner of Dublin-based liquidator Friel Stafford. "This arrangement would be for debtors who 'can pay' at least some of their debt.

"Under the arrangement, the debtor and creditors would make a legally binding commitment in which the debtor would repay an agreed amount of personal debt to creditors over a period of up to five years. At the end of this period, the debt would be deemed to be repaid in full and the debtor would be able to make a 'fresh start' without having any damage to their personal credit rating."

Stafford said that debt-settlement arrangements would only be available to people who acted in good faith and were honest about the assets they own.

"If they do not, the arrangement would automatically end and the debtor could be prosecuted," said Stafford.

But some debtors need a more radical solution. Debt-relief orders, similar to those already in Britain, must be considered for people who have no income and no assets, according to Joyce.

"These orders may be needed for people in debt whose only source of income is social welfare," said Joyce.

With debt-relief orders, creditors are not able to chase a debtor for unpaid debts. If the debtor's financial circumstances have not improved a year after the order is issued, the debt is usually written off.

Article by Louise McBride - Irish Independent

Tuesday, 21 June 2011

World's Worst House Price Falls...

IRISH house prices plummeted at almost the fastest rate in the world last year, new research has revealed.

Ireland was placed in 48th position in a rating of house growth across 50 countries for last year, with prices dropping by 11.9pc.

Russian houses plummeted by as much as 13.7pc in the same period while Malta was also above Ireland's fall at 14.1pc.

Meanwhile, one of the fastest growing economies in the Dubai house prices fell by 8.2pc for the year, according to the survey by Knight Frank.

Asia remains the top-performing continent with a recorded 8.4pc growth over the last 12 months, but even this figure is a significant fall from 17.8pc a year earlier.


Head of residential at Knight Frank, Liam Bailey, said that at first glance at the results table, it would suggest it's business as usual, with Asian countries firmly implanted at the top of the table and both Europe and North America languishing behind.

"But there are a few less predictable results," he said.

"In most of these cases, with the notable exception of Germany, the housing market is reflecting the wider economy's performance as well as responding to domestic policy decisions."

France has jumped to sixth place in the rankings, up from 30th a year earlier, while Sweden and Germany, by comparison, have experienced several quarters of positive growth only to fall back in quarter one 2011.

Report - Evening Herald

Monday, 20 June 2011

The European Debt Crisis...

In Oscar Wilde's Importance of Being Earnest, Lady Bracknell memorably remarks that: "To lose one parent… may be regarded as a misfortune; to lose both looks like carelessness."

The Euro-zone's need to rescue three of its members (Greece, Ireland and Portugal) with three others (Spain, Belgium and Italy) increasingly eyed with varying degrees of concern smacks of institutionalised incompetence.

Executed with Northern European creativity, charm, flexibility and humility and Mediterranean organisation, leadership diligence and appetite for hard work, the European rescue plan – "the grand compact" - is failing.

European Debt Crisis returns

In little over a year since the announcement of Greece's debt problems, the European debt crisis has ebbed and flowed with markets oscillating between euphoria (resolution) and despair (default or restructuring). The European Union's (EU) "confidence-boosting", short-term "liquidity enhancement" programs, unfortunately, have failed to resolve deep-seated structural problems.

The most recent concern about the peripheral countries was triggered by concern about Greece. Having repeatedly failed to meet economic targets prescribed by the EU, European Central Bank (ECB) and International Monetary Fund (IMF), Greece needs additional financing or a fresh bailout to meet its financial commitment. An immediate concern was the suggestion that a further tranche of 12 billion euro might be withheld making its impossible for Greece to meet its commitments to repay lenders on a maturing bond in mid-July.

While an immediate crisis may be avoided, the stage is now set for a slow, Wagnerian drift towards a future debt restructuring for some of these peripheral countries and a European banking crisis. Greek interest rates of around 18 per cent (for 10 years) and 30 per cent (for two years), Irish and Portuguese rates of over 12-13 per cent (for two years) and around 10 per cent (for 10 years) testify to this trajectory.

Markets put the chance of a Greek default at 80 per cent chance. The chance for an Irish and Portuguese default is around 40-50 per cent.

Greek Death Watch

The peripheral countries may not be able to ever pay back the debt they have incurred. Bailout programs, designed to rehabilitate over indebted economies, have failed, despite protestations from politicians and central bankers that things are "on track".

The basic plan was temporary loans, combined with some fiscal and structural steps by the countries, would restore growth, competitiveness, financial health and access to commercial financing sources at acceptable costs. The plan was always difficult if not impossible – a case of wishful thinking.

In Greece, the austerity program has led to a deep recession with Gross Domestic Product (GDP) falling by 4.5 per cent in 2010 and forecast to fall by over 3.0 per cent in 2011, a result worse than the IMF plan forecast. Unemployment, currently around 15 per cent, is expected to rise further. Greek public finances have deteriorated as tax revenues have fallen faster than government spending.

The 2009 budget deficit was revised from 13.6 per cent of GDP to 15.4 per cent and public debt went from 115 per cent of GDP to 127 per cent.

Slow progress means that the 2010 budget deficit came in at 10.5 per cent of GDP, against a target of 8.1 per cent. Debt is now close to 145 per cent of GDP, a level above that expected to be reached by 2013 under the EU/ IMF "rescue" plan.

Despite some progress, structural reforms are proving difficult and slow to implement. A plan to privatise 50 billion euro of assets looks optimistic, with a number of even 15 billion euro looking difficult to achieve.

Claims by the intelligentsia of the EU and ECB that Greece is "solvent" assume that most of the desirable bits of Greece, the Parthenon, other antiquities and the nicer Aegean Islands, can be sold to some Russian and Chinese oligarchs.

Pain Sharing

Ireland's initial self-imposed and subsequently EU-mandated austerity has had similar effects to that in Greece. GDP has fallen by around 20 per cent from its highest point and unemployment is in the mid-teens. According to optimistic commentators, living standards have deteriorated only to the levels of the early 2000s. Emigration out of Ireland has risen, reversing the trend of recent years.

Ireland's problems are exacerbated by its ailing banks, whose property loans made at the height of the country's boom have unravelled. The decision to originally guarantee the banks' borrowing and also de facto nationalise many of the banks is looking increasingly ill-advised. Having already committed around 50 billion euro, if Ireland commits an additional 50 billion euro (a not unlikely figure) to support the banks, Irish government debt would increase to 195 billion euro (130 per cent of GDP). Given projected budget deficits, Ireland's debt would easily reach around 240 billion euro (160 per cent of GDP) over the next five years.

Portugal's fate, under its still-to-be-settled austerity program required to obtain its own bailout, is unknown but unlikely to be fundamentally different. The early signs are not good. In the course of bailout talks in April 2011, Portugal indicated that its deficit for 2010 was actually 9.1 per cent of GDP, above the 8.6 per cent previously indicated and 25 per cent above the government's target of 7.3 per cent. A continued concern is the risk of the contagion affecting Spain – which may be "too big to fail" but may be also "too big to save". While economic fundamentals are better than some countries that have required bailouts, Spain remains vulnerable.

The Iberians have adopted the "best" of Greece, Portugal and Ireland - low rate of growth, poor competitiveness, significant structural issues within its economy and also potential problems of its banking system. Spain experienced a significant real estate boom in the lead-up to the crisis. Banks, especially the smaller cajas, community savings banks, remain vulnerable as the bulk of the expected property price correction and resulting loan losses are yet to occur. The Bank of Spain's estimate of bank recapitalisation requirements of 15-20 billion euro conflicts sharply with Moody's forecast of 120 billion euro.

There are other worrying signs of Spain's potential problems. Reminiscent of announcements by Greece early in 2010, the Spanish prime minister claimed that China had committed around 9 billion euro in Spanish bonds. When the Chinese denied any such commitments, the Spanish sought to explain it away as being a problem of translation. Suggesting significant internal political tensions about policy, Spain's prime minister Zapatero indicated he would not contest the next election creating a decision-making vacuum, strikingly similar to that in Portugal. Most worryingly, Spanish finance minister Elena Salgado bravely told Bloomberg on 11 April 2011: "I do not see any risk of contagion. We are totally out of this."

A Sea of Troubles

The problems faced by the troubled peripheral economies include low rates of growth and high levels of indebtedness with rising debt servicing costs. The combination of reduction of government spending and higher taxes is literally strangling these economies. The austerity programs prescribed by the economic automatons of the EU, ECB and IMF, as a condition of the bailouts, reinforce this pernicious slide into economic oblivion.

The peripheral countries are trapped in a vicious cycle. A weak economy increases budget deficits which, in turn, drives higher government debt. This requires even greater cuts in government spending and higher taxes to reverse the deterioration in public finances, leading to further contraction in the economy. This drives a deteriorating credit rating outlook, reduced access to commercial financing and higher funding costs which contributes to a further declines. As some of these countries are also heavily dependent on external financing from banks and investors, around 60-70 per cent for Greece, Ireland and Portugal, a financing crisis becomes almost inevitable.

The difficulty of escaping this maelstrom is evident by the rising proportion of tax revenue committed to making interest payments on government debt. Greece currently needs over 30 per cent of its tax revenue to meet interest payments. The comparable figures for Ireland, Portugal and Spain are 18, 14 and 10 per cent respectively. Italy, another vulnerable nation, currently requires 17 per cent of its tax revenue to meet interest commitments.

Ireland illustrates the problem. Assuming its debt peaks at 240 billion euro (160 per cent of GDP) then financing it at 4 per cent per annum (well below current market rates) would cost nearly 10 billion euro a year in interest payments, equal to 80 per cent of the government's income tax revenue. As most of this interest is paid to external creditors, 10 billion euro in interest every year requires Ireland to grow its GDP (150 billion euro) by at least 10 billion euro each year (6.7 per cent) just to stand still.

Unless growth reaches this level, the economy would start to shrink.

Economic growth is unlikely to reach the levels needed to make the current debt burdens on these over-indebted nations sustainable in the near term. This creates new financing problems for these countries, which prevent them from reducing their reliance on bailouts.

For example, Greece's rehabilitation plan agreed in May 2010 assumed that around 50 per cent of its 2012 borrowing requirement would be raised form commercial sources. Always unlikely, this is now impossible because of the absence of purchasers of Greek debt and the high cost of such financing.

Greece and possibly the other bailout recipients will need open-ended financing commitment from the EU, ECB and the IMF to avoid default. It is possible that over time Greece, Ireland and Portugal alone will need anywhere up to 500 billion euro in financing to meet maturing debt and also additional financing for its budget shortfalls.

The scale of the problem can be seen from the fact that the most heavily indebted Euro-zone nations (Greece, Ireland, Portugal, Spain and Italy) have to refinance maturing debt of around 1.6 trillion euro in the period to 2014.

Article by Satyajit Das -

Cut Price Homes For Sale...

Ballsbridge home for under €400,000 in distressed auction...

Developer and landlord David Grant will see his former home on Haddington Road in Ballsbridge, Dublin 4 go under the hammer for less than €400,000, a quarter of its original asking price, at the Allsop/Space auction of distressed properties next month.

Number 61 Haddington Road failed to sell at auction in 2006 with an advised minimum value of €1.6 million, but now it’s likely to be sold for about a quarter of the price next month.

The mid-terrace building is being auctioned ‘‘on the instructions of the mortgagee in possession’’ with a reserve not to exceed €395,000, according to the auction catalogue. Grant’s former home is situated on the south side of Haddington Road, just off Baggot Street.

The accommodation is arranged over lower ground, raised ground and first floors beneath a pitched roof. Internally it’s arranged as two-self contained residential units.

It is being sold with vacant possession. In October 2009, the Dublin County Registrar’s Court heard that Grant owed the Bank of Scotland (Ireland) an outstanding balance of just over €1.3 million on a house on Haddington Road, Ballsbridge. The bank was seeking possession of the property on foot of an unpaid mortgage.

Grant was the subject of an RTE Prime Time programme in 2007 that questioned his claim to be an architect. Afterwards he had set up business as Inspire Design in east London.

But in May 2009 he was charged and ordered by Stratford London magistrates court to pay a total of €6,000 in fines and costs for falsely listing himself as an architect in the telephone directory and on his company website.

More than 40,000 people have downloaded the catalogue on the Allsop/Space website since it was released over a week ago. Robert Hoban of Space said there had been considerable interest in number 61 and that between 40 and 50 people had viewed the property during the week.

He said other properties had not garnered as much attention, and named five investment properties that are to be sold in one lot in Tallaght as an example.

Five two-bedroom apartments in the Tramway Court development in Dublin 24 will go under the hammer as one lot with a reserve price on the day not to exceed €250,000, which equates to an average of €50,000 per apartment.

These apartments have Section 50 tax relief and will be sold with vacant possession.

In total 100,000 people downloaded the catalogue of properties in the previous auction of distressed properties last April by Allsop and Space. It’s expected that a similar number will be downloaded in the lead up to the July 7 auction.

Report by Michelle Devane - Sunday Business Post

Sunday, 19 June 2011

Struggling Families Now Eat At Care Centres...

Struggling families flock to care centre for meals...

ENTIRE families are going to homeless centres for their dinner every evening.

Before the recession, the Capuchin Day Centre for the homeless in Dublin would rarely have seen children coming through its doors -- but now up to 10 families a day are coming coming in to get fed.

Many of the families are struggling to pay large mortgages taken out during the boom.

They are worried about losing their homes and literally do not have enough money to put bread on the table, says Brother Kevin Crowley, who runs the shelter.

He says that there are four times the amount of people arriving today compared with a few years ago.

Some of those now seeking help are professionals such as engineers and architects who would have been earning a very good wage during the boom years.

"It's not just homeless people who come to us, its anyone who is in need. We are getting lots of families with children coming in," he says. "Many of them have lost their jobs, and are on the verge of losing their homes. All that has increased in the past few years."

Brother Crowley points out that before the recession hit, the centre would usually have about 100 people for dinner, but now more than 450 come to eat there each day.


The number of people collecting food parcels every Wednesday has increased from 400 to more than 1,000 in the same period.

"There are professional people -- some architects and engineers -- coming in who can't pay their mortgages and are in despair.

"It's really frightening for people," Brother Crowley adds.

The Capuchin brother yesterday launched a charity cycle from Dublin to Mayo in aid of the well-known centre.

A group of 24 gardai and prison officers who completed the trip are due to arrive on their bikes in Belmullet, Co Mayo, this afternoon.

They broke the marathon 310km cycle with an overnight stop in Carrick-on-Shannon, Co Leitrim.

The Capuchin Day Centre's running costs are €1.3m, of which €450,000 comes from the Government, with the remainder coming from fundraising events such as the cycle and charitable donations from the public.

For more details on the cycle challenge and how to donate to the centre see

Report by Fergal Gallagher - Irish Independent

Friday, 17 June 2011

A Pretty Ghost Estate...

GHOSTS WITH A CHANCE: Not all of Ireland’s ghost estates are half built and hopeless. Some of them have charm, such as this scheme in rural Waterford...

THE IMAGES broadcast to the world of Ireland’s ghost estates invariably feature bleak unfinished construction sites under glowering skies, half-built shells of terraced housing or ugly apartment blocks, surrounded by rusting scaffolding, open manholes and wasteland.

However among the 2,800 plus empty estates that blight the country’s landscape are a handful of high-end developments – a strange mixture of vanity projects and architectural follies – that stand out not just for their extravagance but because (unlike the bulk of abandoned developments) they are complete, and are situated in stunning, if sometimes remote, locations.

Several have ocean views, others are in exclusive suburbs, most push boundaries in terms of design, but all remained unsold when originally launched. In this series we look at luxurious estates that are lying empty, and ask why they were ever built, what is likely to become of them and whether they are too good to be condemned to the wrecking ball.

St James Wood in the village of Stradbally, Co Waterford, is perhaps the most jaw-dropping example of a developer’s labour of love that has – so far at least – brought nothing but heartache.

Tucked away at the top of a hill leading up from the village green, it presents an incongruous sight: 15 chocolate-box thatched cottages arranged in a horseshoe-shaped development.

With their quaint “eyebrow” (dormer) windows and wicker-trellised porches, the cottages look as if they’ve been plucked from a rambling rose garden in the Cotswolds and slotted, somewhat unnaturally, into this small estate.

Despite the West Country feel, the thatched design is in fact in keeping with local tradition. On the way to nearby Stradbally Cove is the award-winning thatched Cove Cottage, and the beautiful Copper Coast drive (to which Stradbally is a gateway) is dotted with many more examples of traditional thatched houses.

Though a tad twee for some tastes, the olde-world charm of St James Wood met with a positive reaction when the cottages were launched on the market in 2006, and it was described in one media report as a fairytale development.

Certainly, no attention to detail was spared by developer Pat McCoy, who project-managed the site himself, having previously developed housing projects in the Sandycove, Dalkey and Killiney areas of Dublin. McCoy enlisted Irish wildflower specialists to landscape the gardens, some of which boasted fish ponds.

The large four-bed detached houses themselves were completed with all the requisite country-cottage touches – a half-door at the rear of the house, an Aga cooker and Belfast sink in the kitchen, lots of timber finishing – as well as all mod cons. Locals say that when the development was launched, it looked wonderful.

Five years on and it’s a different story. Now known locally as “the fat sheds”, all 15 cottages remain unsold and nature has made good inroads in returning the site to its original state. Weeds push up through broken cobbles, the meticulously planted gardens have run wild and the thatched roofs are showing signs of deterioration, with green moss sprouting here and there.

There is evidence too of petty vandalism – decking handrails and fences in the back gardens have been snapped and knocked down. The interiors of the cottages remain pristine, though, with several still dressed as showhouses.

So what went wrong? It depends on who you ask. McCoy says the cottages were launched as holiday homes. He decided to apply for tax-break status for the properties and this caused a delay of about four months.

He believes this is probably why the development “missed the market”. However it seems more plausible that the problem was the price, as the cottages started at an enormous €820,000.

Though the estate received a lot of coverage and a “reasonable” amount of enquiries, “it just petered out”, McCoy says. He even received some offers, but not at the level he was asking for.

An Englishman walking his dog on the village green tells us the developer would have had better luck if he had built half the number of cottages and “shaved off a few hundred grand”, adding that the back gardens are too small for the size of the houses. He believes the cottages were too expensive for anyone from the area to buy as homes.

His sister was interested in them, and was very impressed with the fit-out when she viewed one of the showhouses, but the price put her off.

Meanwhile the banter in the local pub is all about the cottages. It seems there is no detail about St James Wood – the history of the land it was built on, the merits of the different cottage designs, their possible uses – that hasn’t been thoroughly examined over a few pints.

Though one might expect people from the area to be annoyed about the empty estate plonked in their picturesque medieval village, the men in the pub take a reasonable view.

It’s not an eyesore because it’s tucked away out of sight up the hill, they explain. They’re more concerned it could devalue the properties around it.

Though Stradbally is in a tourist area, one man wonders why anyone would want to buy a holiday home now.

He wonders too whether the thatch might actually put people off the cottages. It is generally agreed, though, that the development looked lovely when it was properly landscaped and maintained.

What do they think will happen with them? “Come back in a few years,” one says. “They could be squats and you’d only get a few grand for them.” And if no-one wants them? “I’ll take ’em! I’ll put some cattle in ’em or goats to eat the weeds!”

A man who lives on the same street as the development is blunt in his advice.

“Knock ’em down,” he says with a rueful smile. He is surprised the developer completed the entire estate before selling any of the properties.

“Funny he didn’t just built one or two, sell them and then build some more,” he said.

McCoy told us he intends to relaunch the development soon. He said the site wasn’t maintained last year and that he has hired a contractor “to go in to clean the place up”. When we spoke with him he had not yet decided on pricing, but said “certainly prices are going to have to be reduced substantially”.

Interestingly the market for high-end properties in Stradbally has recently come back to life. After about a year and a half on the market, the Old Rectory (which is almost completely hidden, despite its central location beside the village green) sold to a Dublin buyer for less than €500,000.

The five-bedroom period property, which requires some work, had been on the market for €650,000 but sold once the price was dropped.

The auctioneer for the Old Rectory, John Shelley, says there is a demand for period property, and if the price is right you can get a buyer.

Another period property opposite the Old Rectory also sold recently after a similar length of time on the market.

Glenamara, a gorgeous five-bedroom Georgian house with coach-houses, stables and a walled garden, sold for about €600,000 (down from an original price of €800,000) to an English buyer. This suggests that McCoy will have to seriously slash his prices if he is to attract buyers.

One auctioneer believes the developer would be lucky to get €200,000 for each of the cottages.

For the time being, St James Wood remains something of an oddity in the village, a bizarre local point of interest.

On the day we visit, a Micra trundles slowly around the central green of the estate, its occupants staring out at the empty cottages. Two out-of-town bikers stopping for a break in the village decide to pop up to take a look at the strange development.

If this labour of love is to have a happy ending, its creator will have to accept the unpalatable new market realities.

Report by Caroline Madden - Photo by Patrick Brown - Irish Independent

Thursday, 16 June 2011

Affordable Housing Scheme Axed...

AFFORDABLE housing schemes will be scrapped under new plans to encourage people to rent, instead of purchase, their home.

Housing Minister Willie Penrose will today announce a major shift in housing policy.

The State will no longer help middle-income earners to buy a property by subsidising the cost.

Affordable homes were offered to first-time buyers who could not afford to purchase on the open market because prices were too high.

Affordable homes were different from social housing, where a local authority provided a house and the tenant paid rent.

Under the affordable scheme, owners had to live in the property and could earn up to €60,000 a year.

Subsidies of up to 40pc of the asking price were on offer, and in the region of 30,000 affordable homes were sold since the early 1990s.

However, the new housing policy says that "over-stimulation" of the housing market was a key factor in the economic downturn, and that people chose to buy homes "on the basis of investment".

It says that if a household has sufficient income to rent a "high quality home in a vibrant community" but lacks the money to buy an equivalent home, that household has no need of any state assistance.

"The concept of affordable housing reinforces the high value placed on owner-occupation that has been so detrimental to Ireland's society and economy," the policy says.


The collapse in the housing market has resulted in some 800 affordable units currently lying unsold.

Affordable units were delivered under controversial legislation called Part V, where developers were legally obliged to provide up to 20pc of units in a new development for the scheme or social housing.

This will now be suspended, but the provision for social housing will remain in place.

Local authorities also provided land to developers to build units on the condition that they were sold at a reduced price. This will no longer apply.

The new policy also notes that offering tax relief on mortgage interest encouraged people to buy property because it reduced the cost of servicing the mortgage. This will be abolished by the Government.

The introduction of a property tax next year will also help moderate house prices because it will act as a disincentive to purchasing a home.

Mr Penrose last night said that renting would become a "stable and attractive housing option", and that all homes for rent would be regulated.

Report by Paul Melia - Irish Independent

Wednesday, 15 June 2011

Over 60,000 Homeowners Behind On Repayments...

More than 60,000 homeowners fall 90 days behind on repayments...

THE number of homeowners who are three months or more behind on their mortgage repayments has jumped to 60,000.

Ratings agency Moody's released statistics yesterday showing 7.62pc of the home loans that have been sold off to investors are now 90 days or more in arrears.

If this figure is applied across the entire 782,427 mortgages in the market, it means just short of 60,000 homeowners are now three or more months behind on their repayments.

Figures from the Central Bank last month put the number of homeowners in arrears in the three months to March at just shy of 50,000, or 6.3pc of all mortgages.

Now Moody's has produced figures for April showing the percentage in arrears has gone up from 6.65pc in February.

This means an additional 8,000 mortgage holders fell behind on their payments between February and April.

However, the Central Bank pointed out that the number of repossessions remained low at just 140 in the first three months of this year, while the majority of people were managing to repay their mortgages.

Moody's said the numbers in arrears for a year or more had also jumped.

There are 18,621 homeowners who are a year or more behind on their repayments. People who are a year or more behind on their repayments are at risk of losing their homes.


The Central Bank has told lenders to wait a year before taking legal action to repossess a house when a homeowner falls into arrears and fails to engage with the lender.

A research note from Moody's said it regarded mortgage accounts that were 360 days in arrears as a proxy for defaults.

And it said the outlook for residential mortgages was negative. This was due to rising unemployment, which was pushing borrowers into arrears.

"Irish unemployment rates will increase to 14.4pc in 2011 from 13.5pc in 2010," Moody's said.

"Falling house prices will increase the size of losses on defaulted mortgages. House prices have already fallen by 40pc between September 2007 and March 2011."

However, the agency took heart from the fact that an auction of distressed residential properties in April saw prices that were 60pc below the peak of the housing market.

"Although the sale underlines the severity of the housing market correction, we also see this as an indication of genuine demand from buyers for the first time in over four years and a potential floor in house prices," Moody's said.

Lenders were told last week by the Central Bank to have new rules in place for dealing with people in arrears by the end of this month.

Report by Charlie Weston - Irish Independent

Tuesday, 14 June 2011

Celtic Tiger Developers Scam...

Celtic Tiger developers trying to scam Nama – Taoiseach

Taoiseach Enda Kenny has declared concerns that developers could be buying back assets seized by Nama at knockdown prices. Mr Kenny said he had some indications that boom-time speculators who could not repay massive loans - now tied to the taxpayer - were attempting to repurchase their properties at their current prices.

Just over a week ago, the state toxic assets agency dismissed allegations repeated by a Fianna Fail senator about the practice.

Mark Daly had claimed the taxpayer was picking up the bill, running into hundreds of thousands of euro, for the plunging loan values while those who borrowed the money regained their properties at a fraction of the original price.

Speaking at the British Irish Parliamentary Assembly in Cork, Mr Kenny signalled his intention to meet finance minister Michael Noonan about the issue.

"I have had some indications of attempts to acquire property that was taken from developers through a variety of methods," he said.

"I hope that Nama are on top of that, and that where Nama have acquired assets that they don't find their way back to where they were acquired from in the first place."

Mr Kenny said he was "concerned" about the alleged attempts of Celtic Tiger developers using different strategies to take back control of their former property empires.

The Taoiseach added he was very anxious that people make offers to Nama for seized properties so they can be put on the market as soon as possible.

He said this would determine a bottom on the property market.

Nama has refuted the repeated claims by Senator Daly, saying he has produced no proof of the practice when asked.

The senator has accused the agency of not being transparent in its dealings.

He has called for the attorney general to appear before the Seanad on the matter and has questioned why Nama properties are not being publicly auctioned.

Mr Kenny also told the British Irish Parliamentary Assembly the coalition Government was working on a loan guarantee scheme to get Ireland's bailed banks lending again to small businesses.

He said he will press lenders to reveal what loans they are making available to business.

But he declined to give a timeframe for the measures along with the proposed strategic investment bank, agreed as a priority by Fine Gael and Labour when they struck a deal to share power.

"Not everything can be achieved in the first 100 days of office but that is an important element of the programme for government and discussions are ongoing about how best to implement that," he said.

Struggling traders have demanded bailed-out banks "come clean" on the scale of loan refusals after a survey found more than half have been denied vital funding in recent months.

Small businesses claim lenders are returning to their old habits as access to credit plunged to its worst level since the economic crisis began.

Report by Brian Hutton - Irish Independent

Monday, 13 June 2011

Resolving The Ghost Estates...

NOTHING BETTER encapsulates Ireland’s property crash than bleak images of “ghost estates”, which is why they have featured alongside the concrete skeleton of Anglo Irish Bank’s putative future headquarters in Dublin’s docklands in so much of the international media coverage of our current travails.

What we must not forget, however, is that thousands of people are still suffering from the inevitable consequences of the crash, none more so than the residents of half-built housing estates abandoned by their once gung-ho developers when the bubble finally burst. Yet the feedback from many local authorities to the Department of the Environment indicated that “getting positive engagement from developers, site owners and financial institutions responsible for the loans on such developments was proving very difficult”, according to Minister of State for Housing and Planning Willie Penrose.

As the final report of an advisory group set up to deal with this widespread problem made clear, “the primary objective of addressing unfinished developments should be to address the needs of the residents”; indeed, this is rightly seen as “imperative” and will apply, in the first instance, to public safety issues such as the lack of street lighting, or open drains that could be used by children as dangerous playgrounds.

The number of schemes with such works outstanding represents 58 per cent of the 2,846 unfinished housing estates examined in a survey co-ordinated by the department; most of these are located outside the main urban areas, primarily in the midlands and Border regions, although half of all the schemes surveyed involve 30 residential units or less.

The aptly-named Battery Court in Longford, once marketed as the town’s “most prestigious address”, is cited by the authors of the report, Resolving Ireland’s Unfinished Housing Developments, as a good example of what can be done. After the 90-unit scheme was put into receivership last year, the receiver arranged funding to finish its open spaces, public lighting, roads and services as well as completing work on unfinished houses and carrying out remedial work on others. Furthermore, unoccupied houses are to be taken over by a voluntary housing agency while Longford County Council “continues to take a proactive and co-ordinated approach to re-assuring purchasers of housing in the development”. If this success can be replicated elsewhere, “ghost estates” would become a thing of the past.

However, the first allocation of funding to remedy public safety issues – €1,493,556, to be distributed among 10 local authorities – is a mere drop in the ocean, given the scale of the problems to be tackled. Much more will need to be spent under the watchful eye of a national co-ordination committee, set up to oversee the implementation of action on unfinished developments, which will be chaired by Mr Penrose himself. It will also need to rely on what he described as the “pro-active co-operation” of Nama to address unfinished estates, which are now either under its control or subject to loans held by the agency.

Report - Irish Times

Saturday, 11 June 2011

More Pain With Tax Hike...

More pain for PAYE workers as tax hike looks likely...

THE GOVERNMENT is on the brink of breaking its election solemn promise not to raise income tax.

The tax rise threat emerged as the European Central Bank (ECB) hinted that it is preparing to introduce a 0.25pc hike in interest rates next month -- which will add almost €400 yearly to the average €250,000 mortgage.

The blow to struggling homeowners will be further compounded by a new property tax and water charge set to be introduced in the new year.

Finance Minister Michael Noonan told the Dail yesterday: "I am not going to rule out any tax initiative, or any tax increase or any tax reduction."

He added that the "fraught" condition of our public finances meant he was not in a position to predict take hikes, including income tax.

The minister was also forced to concede that EU states such as France and Germany are looking to take an interest in the national assets of bailed-out states such as Ireland.


Fianna Fail accused the Government of doing "U-turns on an almost daily basis" since coming to power.

Hard-pressed families will be furious by the disclosures given that the programme for government reached by Fine Gael and Labour rules out an increase in income tax.

"The new Government will ... maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income," the programme states.

However, Minister for Public Service Reform Brian Hayes this morning hit back at criticism that the Government was reneging on its pre- election promises.

"What Michael Noonan said yesterday is no different to what any other finance minister has said previously," he said.

Mr Hayes accepted that the Government will come under fire from the public but insisted that the necessary measures are being put in place to bring Ireland out of its "inordinate and difficult financial hole".

Meanwhile, the head of the ECB, Jean-Claude Trichet, warned that rising costs threatened to fuel inflation, indicating that a 0.25pc hike in interest rates may be imposed next month. The increase will bring the interest rate to 1.5pc.

The ECB boss refuted claims that bailed-out countries would suffer most from the hike.

"We are anchoring stability and also anchoring confidence. It's good by definition for all countries," he said.

There were further reports yesterday of a rift emerging between Taoiseach Enda Kenny and French President Nicolas Sarkozy over the status of Ireland's corporation tax.

A senior French MEP and member of Sarkozy's ruling party warned this morning that Ireland will be told to accept "extra and tough changes" in the coming months.

Jacques Myard admitted that the "French political classes are annoyed" by our refusal to budge on the 12.5pc corporation tax rate.

Report by Niall O'Connor - Evening Herald

Friday, 10 June 2011

Falls In House Prices Wiped Out...

Rates wipe out benefits of decline in house prices...

BENEFITS to first-time buyers from drastic falls in property prices are wiped out by sharp increases in mortgage costs, new research shows.

House prices have dived by 40pc since 2007, which means potential buyers would need a much smaller mortgage.

But a series of mortgage-rate hikes by all lenders mean that the cost of servicing even a small mortgage has shot up.

Mortgage expert Karl Deeter accused banks of capturing most of the gains for potential buyers of lower prices by pushing up mortgage costs.

Mr Deeter of Irish Mortgage Brokers looked at the cost of a 30-year mortgage for a €350,000 house at the top of the housing bubble in 2007.

At that time buyers would have been able to get a good value tracker set at 1pc above the ECB rate. This would mean a borrowing rate of 2.25pc.

The monthly repayments for this mortgage at the moment work out at €1,337, without factoring in mortgage tax relief.

Mr Deeter said that those taking out a homeloan now would be faced with a variable rate of 5pc or more.

This meant property price drops were of little benefit to buyers.

"The banks are merely picking up the price drops in the profit margins they charge so that it serves their benefit more than the buyers. We don't have a functioning banking system so they are able to do this unimpeded," he said.

Report by Charlie Weston - Irish Independent

Banks Ignoring Ghost Estates...

Banks 'ignoring their ghost estates'...

BANKS are choosing to avoid the legal responsibility for cleaning up hundreds of unfinished housing estates.

Some 230 unfinished and dangerous estates have been abandoned by developers -- and banks which funded the projects have decided not to appoint receivers in an attempt to claw back the money.

If receivers were appointed the banks would be legally responsible for clearing up the mess.

Banks across the board have been blamed for refusing to address the problem.

According to Housing Minister Willie Penrose, in some cases efforts by local authorities to meet with banks and developers to discuss the problem had met with no response. Banks also failed to appoint people to deal with the issue.

He warned he would consider introducing legislation forcing the banks to take responsibility, or face the prospect of being fined.

"I'll be looking to the banks and developers to designate key contacts. I'm also examining the Derelict Sites Act to see if it needs to be amended," he said.

"If there is any reluctance or delay they will be hit with the act and other legislation where required.

A new report setting out how to deal with the problem of unfinished estates says there are 1,655 developments with outstanding works needed.

Of these, 230 have effectively been abandoned, where the developer or site owner is not contactable, where no receiver has been appointed and where there are "significant planning, building control compliance and public safety issues to be addressed".

One developer was traced to Australia where he is working as a carpenter, it emerged yesterday. No further details were available.

The Government says that work on making these sites safe will begin within weeks.

Some €1.5m has been allocated to 10 local authorities to complete basic safety works such as filling trenches, fencing-off building sites and installing manhole covers. Another €3.5m will be paid out over the coming months.

A National Co-ordination Committee -- made up of groups representing bankers, developers, the Department of the Environment and local authorities and chaired by Mr Penrose -- will manage the work at a local and national level.

The 'Resolving Ireland's Unfinished Housing Developments' report found that there are 23,250 complete and vacant units across the State, and another 9,976 dwellings nearing completion.

Bank of Ireland, one of the biggest lenders during the boom, said it would not comment. Irish Nationwide said its loans had been transferred to NAMA, while Ulster Bank added that each development was treated on a case-by-case basis.

There was no response from Anglo Irish Bank and AIB was unavailable for comment last night.

Report by Paul Melia Irish Independent

Wednesday, 8 June 2011

Irish House Prices Slashed...

Ailesbury Road pad for sale at 6th of price...

A PERIOD house on Dublin's Ailesbury Road will be offered for sale next month at €1.45m -- just a sixth of its boomtime value.

The large residence, with one of the city's most desirable addresses, would have been valued at over €10m at the height of the property market.

It is being priced at €1.45m in a sale of distressed properties on July 7 next.

Another impressive Rathgar property, which is now divided into five self-contained flats, could have reached anything close to €2m at one stage, but has had its reserve set at €495,000.

And a home at the foothills of the Dublin Mountains with almost an acre of land has been listed as one with offers from €450,000 -- slashed from more than €1m in 2006.

The sales are part of three further auctions of distressed properties lined up for Dublin after the massive run on discounted houses earlier this year.

Banks eager to get more properties off their books have turned to auctioneering companies Allsop and Space to put houses under the hammer.

The first event at the Shelbourne hotel in May was over subscribed and properties sold at a snip of their original costs. International buyers, mainly from the UK, cleared 20pc of the contracts.

Now an additional 90 lots of residential and commercial property are expected to pique interests at the sale.

Report by Claire Murphy - Evening Herald

Tuesday, 7 June 2011

Irish Property Prices Falling...

Property prices continue to slide...

House prices in Dublin have fallen nearly 50 per cent since their peak in 2007, the Central Statistics Office has said.

According to the CSO’s Residential Property Price Index, house prices in the capital are 46 per cent lower than 2007, while apartment prices have fallen 53 per cent since their high in February 2007.

Nationally, residential property prices fell by 1 per cent in the month of April. This compares with a decline of 1.7 per cent recorded in March.

The index, which looks at property on a national level, shows residential property prices throughout the rest of the country are 36 per cent lower than their highest level in 2007. Overall, the national index is 40 per cent lower than its highest level in 2007.

Dublin apartment prices fell by 1.8 per cent in the month of April and were 14.1 per cent lower when compared with the same month of 2010, while house prices fell 0.7 per cent and were 12.6 per cent lower compared to a year earlier.

Property prices throughout the rest of the country fell by 36 per cent in the first three months of 2011, and were 11.7 per cent lower than in April 2010.

Dermot O'Leary, economist at Goodbody Stockbrokers, said the national average price for a house was €180,000, back to levels seen in early 2002.

"It is clear that an unprecedented correction has taken place, but until the banking sector shows real signs of rehabilitation, facilitated by the restructuring efforts currently ongoing, there is little reason to believe that prices will rise," he said.

Report by PAMELA NEWENHAM - Irish Times

Sunday, 5 June 2011

Ireland Will Default...

We will default, so let's get on with it.

But it's not all bad -- a top financier thinks Ireland's glass is half full and our bank debts will be shared...

Ireland will default, when it does happen we should not do it alone but with Greece and Portugal; we should consider leaving Europe given how badly they treat us; we need to take a scalpel to our public sector and Ireland will take five to seven years from now to recover.

Those are the views of Larry McDonald, former Lehman Brothers vice president turned international best-selling author, who was in Dublin last week speaking at the Irish Funds Industry Association.

McDonald was, until September 2008, vice president of distressed debt and convertible securities trading at Lehman Brothers. He was heralded by many colleagues at Lehman for both his early 2006 call on the subprime crisis and the $46m in trading profits realised from it.

I sat down with him on Friday afternoon last in the heart of the IFSC to discuss his take on Ireland's future. And while his stark outlook may shock many, his candid, no-nonsense pronouncements are exactly what we need to see more of from our Taoiseach Enda Kenny and his government ministers.

A respected commentator internationally, McDonald, who predicted the sub-prime crisis in the US, had just come from a meeting with Central Bank Governor Patrick Honohan, who he described as "quite the poker player," when we met.

I began by asking him the biggest question. Will Ireland default or not? He was unequivocal in his answer.

"When you look at the way the bonds are trading, there will be haircuts [debt write downs], absolutely."

"These haircuts, which are called forbearance, is essentially extending the maturity. It's a technical default, but it's not a hard default."

Given Ireland's huge and unsustainable debt mountain, the market clearly believes some form of an Irish default is inevitable, he says.

"The subordinated bonds at the Bank of Ireland, which is an obligation of the State, of the Government, was trading at 55 cent in the dollar to this week 30 cent in the dollar. So there will be some haircuts, and there will be some pain there."

But what will that do to investors looking at Ireland?

"No doubt, that will scare the institutional investors, and that will scare the markets so we [Ireland] are in for some choppy waters."

He went on to explain that when the default happens, those institutional investors will immediately be scared away from Ireland, for a period of time, but he said the fallout would not be as bad as many are predicting.

"There may be haircuts around and across the eurozone, it's not going to be as bad as people think. If there are haircuts around the EU, it will shock the markets, there will be choppy waters, but it's not like Ireland will be the only one. I think Portugal and Greece and some others too possibly."

So I ask him to clarify, should Ireland seek to default with others or should we go it alone? Again, he is in no doubt. "Ireland should never default by itself, it should be part of a coordinated approach with other EU countries."

Since taking office, Kenny and his Government have revealed a shocking inability to distinguish themselves at European level, reflected in their failure to yet secure a better interest rate on the bailout or any major concessions to the deal itself.

Kenny and his government seem unwilling or unable to face up to the bully-boy tactics of Angela Merkel and Nicolas Sarkozy and the deeply abusive treatment of Ireland by the ECB.

McDonald agrees with my assertion that Ireland is being treated very badly by our European partners, and concurs that leaving the euro should be considered as a viable option.

"I think Ireland leaving the euro/Europe should be on the table for consideration. The powerful wealth creation of growth of an Irish currency that's weak compared to eurozone, would provide a lot of stimulus over time. The structural problem is leaving the euro is a five-year project," he said.

McDonald was also scathing in his critique of our public finances position and our system of "insane" welfare benefits.

"I have sat down with some pretty influential people this week and it seems there is a lot of fat to be cut. I know people don't want to hear that. The entitlements here are so much greater than they are in the United States."

McDonald's view echoed that of OECD economist, Patrick Lenain, who said he knew of no other country where more people received unemployment benefit than there were unemployed people.

He added: "This allowance for child, the child benefit, when there is no means testing. That's insane. Insanity. there is nothing like that in the US. Say you get a guy who earns €400,000 a year, and he is going to get €40,000 in benefits. Insane. If you cut that, there's €200m right there."

He called on the Government to be courageous and tackle the vested interest of the public sector to eliminate the fat.

"In every economic cycle, there are cuts and expansions. There has to be cuts in the public sector, the problem is that the public sector here in Ireland have the votes," said.

On the positive side, McDonald said that Ireland has the necessary tools to recover the ground and wealth lost since 2008.

"I think it's five to seven years, maybe 10 years, before Ireland fully recovers. I don't think it's as long as the 25 years some people are saying.

"The underlying economy in Ireland is really strong, the funds industry is a powerful engine of growth, technology. I mean you've got real strength here that other countries in the eurozone don't have. I think you have to look and say the glass is half full."

He added: "I see hope in Ireland. I have been all over the world. The underlying earnings of Ireland are very strong. The funds industry, the financial services industry, the technology sector are very strong compared to other countries across the world. It's just this overhang from the property thing that is slowing things down."

Given his experience of the Lehman's crash, and his first hand knowledge of a major bank failing, I asked him his views on how the previous government dealt with our banking disaster.

"Transparency was the big problem in Ireland. There was a horrific lack of transparency of the actual holdings of Anglo. Investors were deceived; there will be prices to pay. In the US, we had the same problems, but here it was far more concentrated, far more dangerous, far more painful."

He added: "In Holland, the government took on the bad assets of the bank, and that got them out of it. Unfortunately, here, the size of the bite relative to the economy was really big, we are finding out after the fact."

About the same time I was meeting McDonald, down in the Four Courts another major development in Ireland's banking crisis was being played out, one which looks like a victory for the oft neglected taxpayer.

Investors in AIB subordinated bonds were locked in a court battle with Finance Minister Michael Noonan over his intention to burn their investments.

In a highly surprising 11th-hour move, Abadi Co, representing subordinated bondholders in AIB, withdrew the challenge to a court order secured last April by Noonan, as part of an effort to achieve some burden-sharing by bondholders in AIB.

The minister said Abadi's withdrawal vindicated his view that the challenge was unfounded and that the State was proceeding in "a legally robust and fair manner to deal with a crisis that should not be borne entirely by the Irish State and the Irish taxpayer".

AIB's liability management exercise offered to buy back subordinated debt for as little as 10 cent in the euro -- under a tender deadline of June 13 -- to raise up to €2bn towards the €13.3bn AIB must raise by the end of July.

In a further bonus for Noonan, Abadi said it has agreed to participate in the AIB debt buyback it had initially opposed. A separate challenge against the April court order by the Cayman Islands-registered Aurelius Capital Management is proceeding on Tuesday, but given the Abadi move, a similar outcome is now expected.

It also emerged on Friday last that Bank of Ireland has offered to buy back debt from subordinated bondholders for 10 per cent or 20 per cent of its original value in return for cash, or double this level if they accept shares instead.

However, despite the positive news on Friday from the courts and Bank of Ireland, it has not been a blemish-free week for Noonan. His department has confirmed that senior bondholders in Anglo Irish bank will now not be burned, as previously stated.

Given the news last week that Anglo Irish and Irish Nationwide would not need any additional state funding, following their own stress tests, Noonan's department has confirmed that bondholders will be paid up in full.

Financial Regulator Matthew Elderfield said losses may be imposed on senior bondholders at Anglo Irish and Irish Nationwide if the cost of the two failed institutions rises above the current €34bn bill.

"As a purely political matter, I'd guess that if and when Ireland gets a lower rate on its EU loans, that may prove to be the moment that they admit they had to give up on haircuts for Anglo bonds," UCD economist Karl Whelan has said.

Leo Varadkar's solo run last week aside, the bottom line is that even many within government circles believe that because of our banking catastrophes, our rampant public sector bill, and now our ever increasing debt mountain (now half of all income taxes raised), we cannot meet our financial obligations.

A year ago, a number of us in this newspaper and others began saying default was the only option, and we were vilified for saying so. Now, as McDonald says so, default is seen as inevitable. Let's get on with it and put this country on the road to recovery once and for all.

Report by Daniel McConnell - Sunday Independent

Friday, 3 June 2011

Ireland 10 Billion Euro In The Red...

Ireland is now more than 10 billion euro in the red after the latest banking bailouts, latest Exchequer figures reveal.

The Department of Finance said the debt crisis would have improved significantly - by almost 700 million euro - if it had not been for massive payments pumped into Anglo Irish Bank and Irish Nationwide in March.

More than three billion euro injected into the doomed lenders from the public purse is largely to blame for a deficit jump from just under eight billion euro this time last year to 10.2 billion euro.

While income tax has increased - mainly because of the universal social charge - overall taxes were lower than predicted by department officials, the latest figures show.

This was mainly down to a shortfall on corporation taxes, which came in 140 million euro less than calculated.

There were also lower than expected capital taxes, including stamp duty.

The Department of Finance said the shock corporation tax figures could be partly blamed on "timing issues".

"It now seems that some corporation tax payments originally scheduled for collection in May will take place later in the year," a spokesman said.

Press Association

Thursday, 2 June 2011

New 'Property Tax' Will Happen...

Confusion as Hogan insists 'property tax' will happen...

Environment Minister Phil Hogan insisted last night that a new flat-rate household charge -- a precursor to a property tax -- would come in next year.

The minister's statement of intent came following confusion created by Taoiseach Enda Kenny and Tanaiste Eamon Gilmore, both of whom said no formal decision had been made.

The household charge will be used to pay for local services and will ultimately be replaced by a full property tax based on the value of the home.

The Government will also bring a separate water charge, once houses are metered. But the details of this rollout will also have to be sorted out by the Government.

Following the split over Enterprise Minister Richard Bruton's proposals to cut wages for low-paid workers, the Coalition was again forced to deny a clash between Fine Gael and the Labour Party.

Despite Mr Hogan clearly signalling a new property tax-style charge would be introduced from January 1, 2012, Mr Kenny and Mr Gilmore were giving off different signals -- saying no decision had been made.


In the latest example of muddled government communications, Mr Kenny failed to back Mr Hogan after Mr Gilmore cast doubts over the new tax.

When asked about the proposals, Mr Gilmore said the Government had not considered a household charge.

"What is in the Programme for Government is a proposal in relation to metering for water. The proposals on how that might be implemented has not yet been finalised by Government," he said.

Mr Kenny sided with the Tanaiste rather than supporting his Environment Minister's statement when asked if the charge would come in next year.

"The Government has not made a decision in regard to this yet and when the Government do make a decision on that, obviously everybody will know about it," he said.

"What we signalled here through the Minister for the Environment was the Government's intention of following through on the Programme for Government and the conditions that are attached to the EU/IMF bailout."

However, Mr Hogan said there was no change in his position -- with his spokesman reiterating that it was "the minister's intention to introduce a household charge in January next, pending Cabinet approval".

Mr Hogan continued to insist the new so-called household charge was not a combination of a property tax and a water charge.

He said the EU/IMF deal required the Government to introduce a property tax next year, which would be based on the value of a site.

Until sites were valued, an interim property tax -- the household charge -- would be put in place.

The money generated would be used to fund services provided by local authorities such as libraries, fire services and street lighting, but he admitted that some could be used to fund the water-metering programme which will begin next year.

"The household charge is a charge on each household for the purpose of providing money for local services," Mr Hogan told the Irish Independent.

"There'll be no flat-rate water charge. The only time you'll have a charge on water is when the metering programme comes to a conclusion in 2013/2014."

Report by Paul Melia and Fionnan Sheahan - Irish Independent