Northern Ireland not forgotten

Update 2 From Slugger contributor jenny: “The big question in NI is – why no brought forward cash for more social housing, to take advantage of lower land and labour prices at the present time?” It’s done already I’m told. Social Development minister Margaret Ritchie’s £250 million additional budget secured in the New Year will add 1,000 extra social housing units to an existing 600. Itll fall far short of meeting the full demand but its something. And she’ll announce a mortgage rescue scheme “unique to NI” over the next few weeks, which will allow the Housing Executive and housing associations to take over certain mortgages (which?) of people in difficulty and rent the property back to them. Housing finance experts please add and comment.

Update. As expected the raising of the threshold for paying stamp duty on house purchase from 125k to 175k hasn’t impressed generally. The best that can be said for it is that finally quashes rumours thought to have depressed the housing market still further, that stamp duty would be suspended altogether. For England and Wales. one big mortgage adviser says the move will affect only 50,000 would be house purchasers at today’s low lending levels. It also means the jump from zero to 3% stamp duty for houses selling at 250k and upwards becomes all the higher. But might it not mean that some prices at the lower end will drop in order to make the sale? This may l effect NI sales…. …..with predictions that average prices, which peaked at almost £250,000 this time last year, will fall to close on £200,000 by the end of the year. Might some prices squeeze down a bit further? Regardless of stamp duty, local estate agents have already been pitching hard “. Developers have reduced their prices so much they are practically at cost — they can’t go much lower.” Will buyers hold off to see what happens, as they have year’s grace before stamp duty is slapped on again? More “slashing to come?

A familiar plea has come from a contributor commenting on my earlier references to Gordon Brown’s housing help package being unveiled today. Wild Turkey asks the £50,000 question: “Aren’t the Brown proposals re the housing market exclusive to england/wales? As such they will not apply to Norn Ironland. Any comparable package would have to be developed and implemented by our hyper-active executive and assembly”. It’s a question we ask again and again and usually in my experience, the NI administration brings up the rear panting with a line or two.

This time to be fair, the said Executive, prompted of course by Whitehall’s example, have come up with a shared equity scheme as quick as you like.

“The government project is being piloted in the Maghon Park area of Portadown, County Armagh.
Barclays’ bank is to offer would-be buyers mortgages for the remaining half of the price without a deposit. The scheme will be launched by Stormont Housing minister Margaret Ritchie. In a pilot scheme, a total of 127 homes – 24 detached houses and 103 semi-detached – are up for sale with prices starting at £145,000. t is the first area in the UK to introduce an initiative, which will see developers and housing associations shouldering 50% of the property’s cost

Details are sparse and we don’t know yet ( 7,.30 a.m.) what follows about help for existing homeowners in trouble and social housing.

For England and Wales, Gordon Brown is promising “first-time buyers in England “free” loans of up to 30% of their home’s value, in an effort to reinvigorate the housing market. Households earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers.
This will help about 10,000 would be young buyers For existing homeowners who can no longer afford mortgage payments, the government says councils or social housing landlords can pay off the debt and instead charge tenants rent “at a level they can afford”

Are we impressed? Sceptics like the authoritative Financial Times believe the £1 billion scheme is only a drop in the ocean. On the other hand, the taxpayer can’t be expected to shoulder the entire burden of the credit crunch. The best that can be hoped for is that this will act as a jump start to revive the plunging housing market.
Roll up, roll up!. Meanwhile in a Daily Telegraph scoop, the Tories are announcing a rival attraction “Tories plan to raise inheritance tax threshold to £2 million.”

  • interested

    Just been announced that there will be a stamp duty ‘holiday’ on properties up to £170,000 for the next year.

    That will obviously apply to NI as well given that stamp duty is a UK wide issue.

  • steve48

    the scheme introduced in Northern Ireland has more to do with market support in maintaining prices rather than making houses affordable.

    People are still only getting half a house and will have to find the additional money for the rest at some point in the future.

    This will allow developers to realise the capital they need to make payments on loans but may not give them the confidence to start new schemes where the profits are marginal.

  • The full package in England and Wales includes bringing forward funding for social housing, although it’s not clear whether this is for new build only, or for buying up houses on the open market:

    http://www.communities.gov.uk/news/corporate/950558

    This press release also refers to DWP reforming Income Support for Mortgage interest from April 2009, which presumably applies across the UK.

    So although changing the stamp duty rules may have a marginal effect on the market, and shared equity helps some but as has been pointed out can still lead to high costs, the big question in NI is – why no brought forward cash for more social housing, to take advantage of lower land and labour prices at the present time? Surely there are some underspends around? Oh, but that would involve (i) joint working (ii) making a decision…..

  • DC

    Jenny, it would require them all to actually *meet* in the first instance!

  • bob Wilson

    Interesting is it not that on the main BBC News website the story on Stamp Duty includes a quote from the Conservatives in reaction to the Government’s move.

    The Stamp duty story on BBC NI’s website does not include any response from the Conservatives. Even though there is a local one avaialble http://www.conservativesni.org

    Yet another example of how BBC NI fails to cover National politcal stories properly in NI

  • Why should taxes, many of them paid by people compeltely priced out of the property market, be squandered in protecting the investments of property developers and speculators?

  • Jean Baudrillard

    Jenny: ‘Surely there are some underspends around?’

    From what I hear, is it not the case that the cupboard is almost completely bare and that Executive is actually looking around for lots of stuff to sell off?

    From what I gather they may need to sell soon – yes, right in the middle of this downturn.

    Anyone else hear something similar?

  • DC

    Well, there are those army/security base sites up for grabs and sale, which have apparently been held back in order to get the DUP to agree to move a little on policing in the context of the spirit of post-conflict agreement.

  • Driftwood

    And what developer in their right mind is going to buy those bases in the forseeable future?
    Retailers are going to find there is a little less money around soon. I wonder if the new Victoria centre will prove a mall too far.

  • Baudrillard – The funding of social housing is quite complicated. New schemes are built by housing associations, who get grant for individual schemes, which they bid for. About 50% (I think) of any scheme is grant from DSD, administered and monitored by the Housing Executive. Some of that grant is recycled from NIHE house sales and some is new public money. The rest of the cost is met from bank loans to the housing association and/ or HA reserves.

    The grant from DSD is a revenue payment, so I was thinking other allocated revenue budgets (including from other Departments) which were underspending could be used for social housing grant – but the banks would have to be prepared to chip in too, with extra loans. [any civil servants reading this please correct me if I’ve got any of this wrong] That’s why I said it would require joint working. It would be interesting to know where the extra cash has come from in England & Wales.

  • Dont know why the Assembly doesnt just pump a wee bit more money into the N.I.Co-Ownership Housing Association scheme rather than introducing fiddley wee schemes elsewhere. It’s not as if they are actually giving money away or anything. They (NICOHA Ltd) get a share of the price/value of the property between 25% & 50% which in the long run will give them good return on their investment and then get to charge a wee rent too.

  • I wonder if the new Victoria centre will prove a mall too far.

    It seems to be working (and is a massive Free Stater magnet) but it has added to the problems already apparent before it opened on Donegall Place and Royal Avenue. I can never remember so many vacant shop fronts on Belfast’s premier shopping street.

    The top end of Royal Avenue around the junction of North Street, always the cheapest end of the street, is already a royal shithole and there are vacant premises bang opposite Castle Court and even on Donegall Place.

    No-one else seems to be talking about this. Am I the only one to notice it? Am I going completely mad?

    FWIW, I think Titanic Quarter is heading to be the flop of the 21st Century. The ‘New Coke’ of Belfast development!

  • Cahal

    Why would any fool buy into a rapidly declining market? Wait a couple of years – NI house prices will drop *at least* another 35% from current levels.

  • Driftwood

    Sammy Morse
    Been through any of our small towns or villages recently? More boarded up buildings than ones in use. If lucky there is a pub, bookmakers, newsagent/spar ,Chinese, chippy, offy and possibly a home bakery. And that’s the ‘dormitory’ towns/villages close to Belfast. Elsewhere, grim.
    Personally I can’t visit Victoria or Castlecourt without thinking George A Romero.

  • The Raven

    A couple of comments:

    The stamp duty thing…quite illogical as a tax…I never quite understood why, if such a tax was to be levied, it wasn’t levied on the purchaser? Perhaps someone more versed in these matters could explain? Anyhoo – it smacks to me of “what could we do that will get us headlines, but cost us very little?”. I await November’s budget with anticipation, that will undoubtedly be unfounded.

    As an aside, can I mention the knock-on effect of the current house situation as it affects local councils? Building Control is a part of Council services that generally funds itself, and indeed for the past few years, has run at a profit. One Council I know of is facing a £130,000 hole in their current budget, as the revenue from new builds has dried up. What knock-on might this have for other Council services?

    Cahal, just this very day, I had to go into the Nationwide in my home town to renegotiate my mortgage for the next two years. I was looking for a couple of extra quid for some maintenance work, and I have to say, I was shitting myself about doing so. A couple of points. If the Bank of England drops their rate by a quarter per cent this month, I was told that that would only mean a reduction in mortgage rates of around 0.1%. Someone is going to have to grow some real cojones to drop the base rate further before real savings are shown. And secondly – and much to my surprise – I had NO problem in renewing. In fact, they offered me well over and above what I needed. I asked with wry smile, if business was good – the adviser said it had improved “significantly” in late August. So where do things *really* stand? As for the 35% point you make, I’m going to say 10% over the next six months.

    Jean, you are completely correct. The cupboard is bare. Seems selling off all that stock wasn’t such a good idea after all. The waiting list figure has been increasing slowly but steadily for the past year. One rural village I know of has a waiting list of 53, out of a 2200 population.

    Sammy, there was much-hyped redevelopment planned for North Street, which I believe involved a hotel? All on hold now, because of this credit crunch? I always thought it was a crying shame when “they” burnt out the Arcade. Truly an opportunity to retain part of “old Belfast” lost.

    Driftwood, I couldn’t agree more regarding your Romero reference. Very Dawn of the Dead.

    However, now that I have meandered this far, perhaps a little too far off topic (apologies), can I just say that what has happened down around the Harbour Commissioners offices is a outright disgrace. When finished, there will be virtually NO view of one of Belfast’s most beautiful buildings from the other side of the river. Just an edifice of glass and steel, that will be costed down to zero within 25 years. Personally, if I ever catch who granted permission for that, I’ll fuckin’ nail them.

    Cheers. I’ve been looking for a semi-relevant thread for that rant for at least four months!!!

  • niall

    A chance for the NI developers to squeeze a few more £ from the stupid with the congratulations of our politico’s and property advertising media no doubt.

    But didn’t the market start correcting itself this week with Fraser Homes selling 50 odd homes? So these moves are clearly bullshit.

    NI needs our entrepreneurs tobe engegd in activity that is not all about milking NI-centric giveaways that always end up being short term.

    The Housing market will correct itself no matter the tinkering of our elected idiots, just like they hadn’t a clue why their own buy to debt flats went up so much let them now work out the opposite themselves.

    As for social housing need i would like someone to explain why the need to buy when the need can be pushed onto greedy developers and speculators who have clearly build/are building too many “luxury” townhouses and flats?

    In my town there are loads of such houses for rent at around £390pcm. Thats cheap when the mortgage on the same at present is £1100.

    I know loads of people living in them and they are clearly on the social. Is the “need” for social housing just a way to keep the quangos and non profits busy?

    They are great houses by the way. My cousin and her fella had a kid and moved into one where they are struggling to pay their way but doing it in comfortable circumstances so not complaining.

  • The Raven

    Driftwood, I forgot to have a rant about your point too!!

    Your comment about our local villages is absolutely correct. There are many reasons for this. I’d like to address one.

    I’ve watched millions being poured into re-development schemes in Belfast and Derry. I see more “outlying” larger settlements getting amounts in keeping with their size. Even Portrush got a shitload of cash recently. But I see government agencies steadfastly refuse to implement larger schemes in rural villages. DSD washes its hands and says “it’s DARD’s problem”. DARD duly gets a rural development programme worth around £100m. And gives about £12m to village regeneration. For all of Northern Ireland. Actually no, I’m wrong there, as any settlement with a population over 5000 is ineligible to apply. So they can just piss off.

    The race to forget and indeed, be embarrassed about our rural heritage is staggering. One wonders how some of these Departments have the temerity to show their faces outside of Belfast, Derry and Lisburn.

    Oh that’s right….they don’t.

  • The Raven

    Niall wrote “I know loads of people living in them and they are clearly on the social. Is the “need” for social housing just a way to keep the quangos and non profits busy?”

    I think this article on Million Dollar Murray may be of interest to you, Niall.

  • Re. update 2: Glad to see the SDLP still has a rapid rebuttal unit. The Housing Executive estimates that 2,500 new social housing units a year are needed in NI. The figure of 600 units for this year was included in the draft NI Executive budget, a substantial cut on what was proposed and on previous years, and the extra 1,000 units represented a reinstatement of an original target in the final version of the budget (but still short of the 2,500) after effective lobbying by Ritchie and social housing organisations. The final NI Executive budget was published in January 2008 and the announcement of the ‘New Housing Agenda’ package was made in March. Both were before the worst of the decrease in house prices.

    These measures were in no way a response to the current housing market situation, and don’t address my point that more could be done now to front load the programme. But I do accept that increasing social housing output in the short term would require a change of emphasis by the banks, away from increasing loans to individuals (including those on the margins of home ownership, who would be most at risk of defaulting) and towards lending to housing associations, which is much more secure.

  • Driftwood

    Jenny
    The point about co-ownership. I got my 1st house through NI Co-ownership back in the day when house prices were reasonable, and i am very grateful to that excellent institution. I agree with whoever said its remit should be expanded.
    Raven
    Are you talking about the 29 storey edifice being built on Donegall Quay? Words like ‘vibrant’ and ‘breathtaking’ are being advertised. It’s a frigging tower block no matter how they advertise it.
    Re: small towns and villages. Planners could care less. Community infrastructure vs the Conglomerates. It’s a no win for the former. As a result we will have a social geography that will only increase isolation and decrease socialisation. Fragmentation. But that’s progress I guess. Sure isn’t Belfast etc ‘buzzing’.

  • niall

    Not really Raven. I lived in the US and have worked in the most genuinely disadvantaged parts of the UK. I think I appreciate the economics of the underclass. NI housind “crisis” is a very different thing.

    Fact remains there are too many houses in NI and people are holding out for ridiculous “valuations” at present in hope that there will be a recovery/bail out. Too many people in NI made long term crap investments. Tough shit. Let house prices crash and the state pick up some bargains to house people of genuine need.

    The only way the govt can really “help” people escape negative equity is wait until everyone comes back from school holidays in euroland (this week) then thrash the pound.

    They should of course prepare people over a period of months for rampant inflation, knowing of course that they’ll haggle over wages allowing a couple (5) years before wage inflation matches anything like real inflation.

    Therefore in 5 years time the average salary will be £50k, a loaf will cost £5 and the price of a rabbit hutch “luxury” apartment in Belfast will be what it is today.

    Of course the chancellor wouldn’t brazenly thrash the pound the week most families return from euroland tho so i must be a lunatic…… is that a full moon?

  • runciter

    The point about co-ownership. I got my 1st house through NI Co-ownership back in the day when house prices were reasonable, and i am very grateful to that excellent institution. I agree with whoever said its remit should be expanded.

    Encouraging people to buy into a collapsing property bubble is madness. It would also be a gross abuse of taxpayers’ money.

    Any potential first-time-buyers with an ounce of sense will carry on renting until the dust has settled.

  • In my town there are loads of such houses for rent at around £390pcm. Thats cheap when the mortgage on the same at present is £1100.

    For my current gaff the rent is £600 pcm including rates and someone to do the garden paid for by the landlord. There are two identical houses within 6 doors of me on the market for a price that would require mortgage payments of about £1700-1800 pcm. Am I going to buy? Do I look like I came down the Lagan in a bubble?

    Fact remains there are too many houses in NI and people are holding out for ridiculous “valuations”

    I like most of your analysis but I’m not sure I agree with this bit. The situation in NI is not identical to that South of the border where there clearly are far too many houses. There is still demand for good single family homes in Greater Belfast – although not quite at the current asking prices – as demonstrated by the way that Fraser Jnr was able to offload his 80 previously unsellable houses up the Hightown Road in a matter of minutes by offering deep discounts.

    On the other hand, there are hundreds of flats in Belfast City Centre which there simply isn’t credible demand for under any circumstances other than a total collapse in property values followed by a mass DSD/Housing Association buy up. Before you take into account the unwanted apartments in places like Glengormley and Dundonald. And before that, you need to think about the unwanted apartments in places like Portadown, Newry or Ballymena.

    One depressing thing is how the BBC, recently getting better at questioning the whole logic of overinflated real estate as a measure of economic success, today spent their time interviewing talking heads from vested interests slagging off Brown and Darling for not doing enough to support the housing market without any countervailing view. When the government has promised an end to boom and bust, will never countenance serious inflation (for all sorts of good reasons), and has based its reputation for economic competence on an unsustainable asset bubble, someone has to point out the emperor has no clothes.

    Even if it pisses off the National Association of Estate Agents.

  • niall

    Sammy,

    I honestly don’t blame the estate agents. They are in my experience idiots of various levels of greed. They were always reliant on and guided by what banks would lend (whether they understood ths or not!) and clearly wanted to drive the market on as any sales people would.

    I’d love it if I had a business to sell stuff and I had a few really aggressive EA types doing my sales, despite their terrible dress sense, haircuts, tacky cars and shit conversation.

    I agree there are areas were there is a need for family homes but crap planning and the panic over housing means there will be loads of shoe boxes built in those areas, but there are loads of empty family houses all along the border at present and have been for a year or so.

    I’m waiting for a 50% pay rise or a crash. And I’m happy to wait while the 26 year old “property Entrepreneur” subsidises this gaff and I stick £600 into other investments each month.