Stakeholder Consultation on "Housing for All" Policy Statement and Action Plan IPAV Submission Appendix 1 - Department of Housing, Local ...

Stakeholder Consultation on “Housing for All”
      Policy Statement and Action Plan

               IPAV Submission
                  Appendix 1

                 4th May 2021

 Department of Housing, Local Government
              and Heritage

 'The Voice of Auctioneers and Valuers In Ireland'

This appendix forms part of IPAV’s response to the Stakeholder Consultation on “Housing for All”, to support
IPAV’s answers to the Department’s Survey Questions submitted online.

The Institute of Professional Auctioneers & Valuers (IPAV) was established in 1971 as a representative
professional body for qualified, licensed auctioneers, property service providers, estate agents and Valuers. It
is the only Irish representative body catering solely for the professional and educational requirements of
Auctioneers and Valuers. Among its aims are the representation of its members at national and European level.
IPAV currently has more than 1,400 members and one of its primary objectives is to protect, advance and
promote professional standards and competence among its members. IPAV is known as ‘The Voice of
Auctioneers & Valuers in Ireland’.

 1. Programme for Government: “Housing for All” - Key Objectives To be Considered
 The “Housing for All” section of the Programme for Government sets out a number of largely generalised
 aims and targets. IPAV believes these must now be broken down and translated into practical goals and
 targets. In addition, IPAV wishes to propose the following measures:

 1.      Establish a Housing Commission
 IPAV since 2013 has been asking that a Property Council be set up comprising of members from the property
 sector whose members would advise the government on issues inside the housing and wider property sector.

 The final paragraph of the Programme for Government (p66) states the Government “will establish a
 Commission on Housing to examine issues such as tenure, standards, sustainability and equality of life issues
 in the provision of housing.” IPAV urges that the immediate establishment of this Commission is now more
 urgent than ever. It should be much broader in its remit than outlined, represent all stakeholders and examine
 all aspects of housing. It would provide regular reports and advice on issues such as planning, density levels,
 and building standards, supply/demand issues, building costs, land acquisition, property prices and the rental
 market. Crucially, it would monitor the progress of the work of the newly established Land Development
 Agency (LDA) and the planning regulator and would guard against and identify solo runs or knee-jerk reactions
 that may address one or two urgent problems but fail to address the medium and long-term sustainability
 issues of the Irish property market.

 2.       Attract construction workers to return home
 Clearly, meeting the country’s housing needs will fall way short of the 35,000 plus per annum units needed
 due to Covid-19 and other factors. Firstly, in the post-pandemic period, effort must now be given to ramp up
 residential house construction and to take whatever action is necessary to ensure costs in the sector do not
 escalate further. A critical factor is the lack of qualified tradespeople in the construction industry. Innovations
 such as the enticement of workers back from abroad through tax incentives etc. should be considered as an
 urgent priority.

 3.      Remove VAT of new homes for a period.
 We need to bring the cost of housing down and not increase the amount of borrowing by FTB and other
 purchasers. VAT does not apply to new housing in Northern Ireland or the UK. With VAT, those who secure
 new homes by way of mortgage finance, must pay VAT as an upfront cost and continue to pay interest on
 that VAT for the lifetime of the mortgage.

 Currently, according to the Central Bank of Ireland, Ireland’s weighted average interest is more than double
 that of the euro area average. The removal of VAT needs to be done in agreement with builders in such a way
 that the saving does accrue to buyers and not simply add to builder/developer profits. It can be done with
 the help of an allowable claim back from the Government by the builder after a sale is closed.

 4.       Extend the Help-To-Buy scheme to second-hand homes.
 This simple initiative would take pressure of purchasers to buy a new home only, and would allow purchasers
 their tax back when they buy a Secondhand Home either.

5.       Radically overhaul the conveyancing process
  Principally through the introduction of a ‘Seller’s Legal Pack’. IPAV has already drafted ‘The Legal Sellers
  Pack for Buyers Bill 2021’ this bill will be brought through the Dáil by Deputy Sean Canney TD after the
  summer recess. This is a badly needed step to eConveyancing which the government should set up through
  the PRA and all parties such as Banks, Solicitors, and Auctioneers etc. who could all feed into the process.
  Presently it can take up to 15/25 weeks to compete a sale from the property going sale agreed to the deeds
  been transferred.

6.       Overhaul the planning system
To reduce the huge time delays between applying for planning permission and the start of construction. This
applies, in particular, to local authorities.

There is a need to have the Planning regulator on the same page as planners. Co Councils need to zone more
land for building throughout the country instead of de-zoning land. There needs to be more houses built in
rural areas to accommodate the influx of people returning home and working from home. The planning
refusals and local needs of one off housing needs to be examined especially under the Flemish Decree.

7.      Review the current Residential Tenancy Acts
With a view to introducing a far simpler, and user-friendly Act that both tenants and landlord can understand.

8.      RPZ
A) The policy of allowing first time rental of new property to be outside the PRZ needs to be abandoned as its
causing the continuation of higher rents through the availability of comparable information.

B) When RPZ was introduced, private landlords, many of whom were receiving rents well below market rent
could not and were not allowed to increase their rents to market rent. This leaves it impossible for them to
sell those properties which are purchased for their yields with tenants paying current under the market rent
in situ. The landlord has no choice but to evict tenants to sell the property with vacant procession adding to
homelessness.

C) If the tax treatment between private and commercial landlords is equalized it will also help to stem the
exodus of private landlords from the market.

9.       Vacant properties
They need to be considered as a real alternative to new housing for FTB’s especially vacant residential and
commercial premises in our rural towns. The GEO Directory identifies some 95,000 of these properties. IPAV
recently carried out a small local survey and using those figures to come up with a national figure we believe
there could be as many as 125,000 vacant properties. Some of these properties are owned by people on the
fair deal scheme, and as they are being double or tribble taxed, they with neither rent nor sell them. These
properties need to be brought back into the housing living stock and now the amount of people working from
home has provided is an excellent opportunity to immediately tackle the problem.

The following will help to alleviate the problem:

A) A survey from each County Council area to form a national vacant homes index with the properties with
the best prospects of becoming livable immediately forming top place.

B) A target for each County Council to bring a percentage of these properties back to production each year.

C) Government grants and loans under the Rebuilding Ireland Home Loan should be extended to cover
Secondhand buyers, including a reduction of commercial stamp duty of 7.5% to the residential rate of 1% in
the event of vacant commercial shops been purchased and turned to residential use.

D) An extension of the FTB grant or part of it to Secondhand Buyers.

E) An easing of the CBI Macro Prudential rules to allow earners of up to €50,000 to borrow 4.5 times income
just like under the Rebuilding Ireland Home Loans.

F) A levy on vacant homes if after consultation with the owners on getting the house back to the livable stock
does not yield results.

G) Broadband services are as important now as rural electrification was in the 1950 or the EEC was in the
1970’s. A respectable broadband signal need to be rolled out immediately to rural Ireland and the current
scheme needs to post monthly figures so progress and accountability can be assessed by prospective
purchasers.

2. Overcoming Obstacles to Deliver Housing Across Tenures & Household Types

There is number of obstacles to the delivery of housing including the lack of suitably qualified tradespeople,
an over-burdensome planning system, lack of finance at realistic interest rates, etc.

Co-Development plans need to be reviewed through the country and extra land needs to be zoned to allow
extra building take place.

Local Authorities, in particular, appear to be hamstrung in the construction of houses by a myriad of
bureaucratic tendering procedures both domestic and European. These need to be reviewed urgently so that
local authorities can set to work to deliver residential housing schemes on a realistic timeframe.

As far back as October 2014, IPAV’s Pre-Budget Submission of 2015 highlighted in item 8 the need for a Rent-
To-Buy Social Housing Scheme (RTBSHS). This is very much still the case. The advancement of the current
standalone rental scheme over 20/25 years while is helpful for the current crisis is not the answer in the long
term. There has to be a purchase element linked and built into this scheme, if not we will find ourselves back
in the same situation after the 20/25-year term has elapsed with rents paid out and not one extra property
purchased.

IPAV made two proposals in its Pre-Budget Submission 2015

1)       The Local Authority and the property owner would agree a selling price; the Local Authority would
agree to pay the seller the equivalent of a mortgage, principal and interest on a monthly basis over a period
of time to be agreed with the seller.

2)      Over the same term as the mortgage agreement the Local Authority and the owner would both sign
a rental agreement at market rent, minus 10%, with a CPI built in over the term. The rent would be paid
monthly to the owner. The seller of the property would be given full tax relief on the money received for
rental purposes, along the lines of the forestry tax allowance. This would provide an incentive for the owner
of the property to engage in the transaction.

These proposals are still relevant today but need some modernization. Thousands of private landlords have
exited the rental market but there are new players, we are now speaking about international pension funds
buying into the social housing leasing schemes. These investors from Germany, Singapore, Amsterdam,
London, Zurich, USA and J.P. Morgan are examining the social housing leasing schemes in Ireland not because
they love us but because the present deal is too good to pass up. When these deals are set up they have a
very marketable product to flip for their shareholders or investors at the expensive of the Irish taxpayer for
large profits.

We have allowed and continue to allow the current International Funds and Professional landlords to remain
outside the RPZ when they purchase a new property hence keeping rents excessively high in Ireland. Every
time they buy a new property, they can charge whatever rent they can get for it as they are creating
Comparables. These Comparables is what determines the rents for the rest of landlords and tenants and also
the current social housing leasing schemes that other institutional pension funds are queuing to take
advantage of.

These schemes are a good idea but we need to add in the purchase of the rental properties over the rental
     term for the Irish taxpayers.

     IPAV proposes very simply:

     A)       Closing the door on the exemption of new properties from the RPZ.
     B)       The Formulation of Rent-To-Buy Social Housing Scheme (RTBSHS)

     The value of these properties can be agreed at open market value (OMV) on the day the scheme comes into
     operation and instead of a mortgage as in our scheme proposal of 2014 an equal share of this OMV can be
     spread and paid back every year to the investment fund. The Government gets very little tax from
     international funds in comparison to traditional private landlords, another reason so many landlords are
     leaving and have left the market.

     One of the major fallouts from the Covid-19 pandemic appears to be that many people will work either full-
     time or part-time from home in the future. This is particularly true in the financial and IT sectors. Therefore,
     it would appear that a large percentage of current space, particularly in Dublin and the larger cities, currently
     being developed for office use, could be converted for residential accommodation. A special Task Force to
     examine this area should be immediately established. Working above, or close to, the office or from a rural
     IT hub, could become the norm for many workers in the future.

     3. Recommended Action to take to provide Housing for all sectors of Society
    We have included a submission by a business trading in Nass, Co Kildare on the Nass Local Area Plan 2021/2027.
    The targets in this plan on current estimates will be reached by 2023. If this situation is allowed to continue
    throughout the country the target of 35,000 new homes will never be meet. Local Area Plans need to be frozen
    for a period until national figures are in line with the current building targets and working from home
    requirements are considered and can be built in nationally.

    Regarding the aging population and people with disabilities, an accurate survey should be undertaken as to the
    exact housing requirements of both these cohorts. Without this information, it is very difficult to plan for them
    in any meaningful way. In this regard, the representative bodies for older people and people with disabilities
    should be consulted. Retirement villages should be considered as a real option to the retirement homes of
    today, which can accommodate people from a younger age that will use the different accommodation facilities
    and services as they move through their older age and death.

    Incentives should be offered to builder/developers to make housing disability-friendly, with a percentage of all
    schemes designed with older people in mind. Given the aging profile of the Irish population, this will become
    more acute in the future.

    This appendix highlights just some of IPAV’s proposals on housing and related matters.

    IPAV has made numerous submissions on various aspects of housing to the Government in recent years, both
    in Budget submissions, submissions to the Department of Housing, Local Government & Heritage and to
    relevant Oireachtas Committees.

    These are readily available if required from info@ipav.ie

 Additional to this Appendix 1, the following documentation was uploaded with IPAV’s online submission:
- IPAV Submission 04.05.21 – Appendix 2 - Review of Rebuilding Ireland Action Plan for Housing and
   Homelessness - IPAV Submission August 2017
-    IPAV Submission 04.05.21 – Appendix 3 - IPAV Pre-Budget Submission 2015
-    IPAV Submission 04.05.21 - Appendix 4 - IPAV Pre-Budget submission 2021
-    IPAV Submission 04.05.21 – Appendix 5 - Rebuilding Ireland - Strategy for the Rental Sector - IPAV Submission
     November 2016
-    IPAV submission 04.05.21 – Appendix 6 - SF O'Reilly Naas Local Area Plan 2021-2027

IPAV
'The Voice of Auctioneers and Valuers In Ireland'

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Tel: (01) 678 5685 | Eircode: D02 HC84 |info@ipav.ie | www.ipav.ie

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