Cassandra Voices

Tag: housing:

  • Exit through the Vestry

    Vestry 

    /ˈvɛstri/                                         

    Noun

    • a room or building attached to a church, used as an office and for changing into ceremonial vestments.
    • a real estate investment trust (REIT), incorporated in the Republic of Ireland.

    There comes a moment when you discover a person the trajectory of whose business affairs appears to embody the rotten nature of Irish housing. Such people are often perceived as visionaries of the real estate market, top of their class in producing a return on investment through a system that permits widespread human suffering. One such visionary is Richard Moyles, director and largest shareholder of The Vestry General Partner DAC, one of Ireland’s most powerful landlords. Moyles is also a director of Be Lettings, the letting agent Vestry uses to manage its tenancies and properties. Characters like Moyles are endemic in our communities. We are told that their investments are what make the world spin. Sure, only for them, wouldn’t it all be so much worse? Or, as the American President laughed with the Taoiseach on the subject of the Housing Crisis, “It’s a good problem to have.” In this piece, I push against this narrative – with Richard Moyles as a touchstone, and paint a picture at the iceberg’s tip. This is not, however, Richard’s story. It’s the story of a mother and her young son with nowhere to go; the same story as thousands of other tenants whose lives are determined by the decisions of men and women like him.

    Jen has lived in an apartment in Dublin 1 for a decade, becoming Vestry’s tenant when the group acquired the property in 2021. Her son, Danny (aged 5), has known no other home. Vestry bought the apartment from Grant Thornton for €325,700, after the previous landlord went into receivership and Grant Thornton took control of the property. “The landlords were changing like socks,” Jen told me over the phone. She received a letter through the door, explaining that the property had changed hands, and that she would now be Vestry’s tenant. “No one asked me”, she said, “if they want to sell the apartment, I should be the first person they asked.” Vestry’s control over the property immediately made Jen and Danny’s situation insecure. Under the previous owner, Jen had signed a lease until January 2026. Vestry were under no legal obligation, however, to honour this agreement. “The law is on their side,” Jen said.

    Jen’s case is among the fifteen disputes between Vestry and their tenants that have come before the Residential Tenancy Board over the last six months. Her story is quite typical of many of those before the RTB – the landlord wants to sell, and the tenant, caught in the tempest of the housing crisis, cannot leave. Jen told me that Dublin City Council offered to buy the property under the tenant-in-situ scheme. Vestry, however, declined the offer which would have secured a “market rate” purchase for Vestry and a home for Jen and Danny. A win-win scenario, one would have thought. “My main issue is that there is no transparency between government bodies, landlords, and tenants. I don’t understand why it [the DCC offer] was so secret.” A representative from Be Lettings told Jen that they were looking for between €350,000 and €375,000 for the apartment. When Jen asked the DCC worker charged with acquisitions under the tenant-in-situ scheme what offer was made to Vestry, she was looked at “like (she) had two heads.”

    When I went to visit Jen and Danny, accompanied by members of the Mountjoy-Dorset branch of the Community Action Tenants Union (CATU), Danny’s energy and curiosity was infectious. Jen and the CATU members decided to knock on every door in the apartment building, with Danny’s exuberant voice echoing through the stairwells as his mother pleaded her case to her neighbours. He showed us his favourite book, Torben Kuhlmann’s Lindbergh – The Tale of the Flying Mouse. The book tells the story of what Danny described as a “genius mouse”, who is forced to flee Germany after the humans create a labyrinth of mouse traps, leaving himself and his friends on the run. The similarity between Danny and the little mouse was, frankly, striking. Surplus to Vestry’s requirements, little Danny and his mother must now make their way in a city filled with the sorrow and stress of displacement.

    One of the CATU members pointed to a leaflet poking out from under the door of one of Jen’s downstairs neighbours. He had left it there a couple of weeks previously. “Well, there’s no one in that house”, the member remarked. How could it be that this woman could be facing homelessness, while a perfectly suitable house seemingly lay vacant, right under where they slept? Such is the effect of a political economy whereby a basic human right, housing, is treated as a speculative asset for men like Moyles to gamble with.

    CATU are currently representing a number of Vestry tenants who are facing eviction by the investment trust. “⁠It’s typical that our members are being put at risk of homelessness due to no fault of their own. It’s also typical that private landlords are prioritising their shareholder profits at the expense of housing insecurity for our members and other tenants,” Lily Palmer, communications officer for CATU Mountjoy-Dorset told me. In response to the evictions, and fearing that Vestry may be carrying out mass, citywide evictions, CATU Mountjoy-Dorset have purchased a dedicated phone for Vestry tenants to contact them, should they want representation from the Tenant’s Union, called the “Vestry Hotline”.

    In 2023, The Ditch reported that Vestry controlled more than 850 homes in the Irish rental market, posting more than €20 million in profit. Company records show that Moyles is the company’s largest single shareholder, through an investment firm wholly owned by him, called Apsone Investments Ltd. Mr Moyles keeps good company with his fellow shareholders, a who’s who of property moguls. Let’s take Silk Shadow Ltd, who control 10% of Vestry. Silk Shadow is owned by property power couple Hilary and Christy Dowling . In 2011, Newlyn Homes Limited, which controls 100% of Silk Shadow had €22 million of its loans transferred to the National Management Asset Agency (NAMA). Christy is also a co-director of Vestry and Beo Ventures Ltd, along with Robert Kehoe and Andrew Gunne. Andrew Gunne, incidentally, was previously a director of Focus Ireland, a charity apparently tasked with alleviating the humanitarian crisis of homelessness. The Vestry group reveals a complex web of companies, all with their fingers in the Irish home market, or indeed, the Irish homeless market.

    Moyles, along with Vestry co-director, Robert Kehoe, are directors of Be Lettings. Be Lettings describe themselves as “a leading residential letting and management business with a nationwide portfolio of houses and apartments”. In at least one case Be Lettings has sold properties to Vestry itself. One effect of such ‘house flipping’ is rampant inflation in the housing market. For example, a 3-bed, 2-bathroom, semi-detached house in Dublin 15 was bought in November 2019 for €287,500.00. In January of 2025, the same property was sold to Moyles’ Vestry by Moyles’ Be Lettings for €400,050.00. Land registry documents show Vestry is this property’s current owner. It was surely no coincidence that Be Lettings facilitated the sale, allowing Moyles to benefit through his shareholdings both from the sale of the property, and from its future tenancies. According to Vestry’s accounts this home, and Jen’s, are listed as a security for a company called Situs Asset Management Limited. This means that should Vestry fall into financial trouble, the home can be seized by Sistus, with little recourse or security from homelessness for whatever tenant may be renting the property.

    Moyles currently has a case before An Bord Pleanála, which was lodged in October of 2024. The case concerns an application for a fire safety certificate for a property he leases at 21 Denmark Street, Dublin 1. The case file reads “for material change of use from flats/bedsits to B&B rooms with other material alterations”. This is precisely what Dublin does not need: more B&Bs at the expense of permanent residences.

    When I visited the property it was clear that work was ongoing in the building. Stacks of rubbish were piled high next to it, and the door was bolted shut with two heavy padlocks. This property – a listed building built in c.1790 – is not owned by Vestry, Moyles, or other associated entities. The building’s Land Registry file shows that it is currently held under a leasehold from a company by the name of Dubres Strategies Limited. This company is not registered in Ireland, but Malta, according to leaked documents found in the Paradise Papers. The Paradise Papers is a global investigation into the offshore activities of some of the world’s most powerful people and companies, led by The International Consortium of Investigative Journalists. A man named Rodney Lee Berger is Dubres Strategies Limited’s director. He and Corinne Hilary Berger are directors of Dubres Capital Limited, a company incorporated in the Republic of Ireland, with an address at 13 North Great George’s Street, a stone’s throw from the property at 21 Denmark Street.

    Vestry’s purchase of Jen’s apartment was not the first time Moyles had cause to deal with Grant Thornton, in their capacity as receivers. In 2011, when Moyles was a director of Shelbourne Development (Europe) Limited, The Bank of Scotland appointed Grant Thornton as receiver. According to the receiver’s abstract submitted to the Companies Registry Office, dated 18/12/2019, Grant Thornton collated receipts of €33,511,913. In 2014, National Asset Loan Management Limited appointed Mazars as receivers to Moyles’ Shelbourne Properties Limited. Remarkably, this is a different entity to Shelbourne Development (Europe) Limited. According to the receiver’s abstract presented by Mazars, they took control of €23,975,661.56 of assets associated with the former company. It’s strange how the same man can be a supporting character in the downfall of one property giant, dust himself off, and appear on the other side of the ledger, purchasing a stressed asset from the very same receiver who had previously confiscated his holdings. As Mac from the 2005 comedy TV series ‘It’s always Sunny in Philadelphia’ put it: “I’m playing both sides, so I always come out on top!”

    Artist’s impression of the ‘Chicago Spire’.

    Moyles shared his directorship in both companies with Garrett Kelleher, who tried to sue NAMA for $1.2billion in a U.S. court, after his Anglo-Irish Bank-funded “Chicago Spire” vanity project failed to get off the ground. In 2009, prior the  resignation of Chris O’Connell as the head of Shelbourne Development (Europe) Ltd, O’Connell told the Irish Times: “In the short term it’s (referring to the establishment of NAMA) going to mean uncertainty for developers, bankers and investors alike, but it’s the key to the resurrection of this market over the next decade and it’s going to generate significant business opportunities at a number of different levels,”. And indeed, the offloading of bad loans from the bankers’ books by NAMA has created significant business opportunities. It could certainly be argued that this mechanism has allowed Moyles, Kelleher, Dowling and the crew to continue their honest work as lowly property moguls.

    “He doesn’t want to leave”, Jen told me, “he has his swimming lessons here, he has his little pals, his little life is going to be disrupted”. We must confront Jen and Danny’s reality, and the reality for some 15,286 people currently in homeless accommodation in this “Republic”, 4,653 of whom are children, with countless more contending with crippling rents, inflated high prices and insecure tenancies. If this is a “good problem to have”, who is it good for? Certainly not those people, and certainly not those paying exorbitant rent for mouldy studios. Is the problem housing supply, that “Ireland is Full”, or something else entirely? When we start asking the right questions we may start putting the pieces of the puzzle together. Once we establish, as a basic cultural norm, that little Danny’s right to a roof should take precedence over Moyles’ right to make money from that roof, then, we might start excavating what is rotten about Irish housing. Until then, the carousel of real estate investment will keep turning, and little Danny and his mother will remain on the sidelines, not knowing what comes next.

  • Housing: Vacancy and Dereliction

    In 1841 the population of county Leitrim stood at 155,297. By 1901, however, it had fallen  to 69,343, dropping further to 41,209 by 1951, before reaching a nadir of just 25,057 in 1996. The 2022 census records a population of 35,087 – a significant increase, but still a staggering 77% reduction on the 1841 figure.

    No other Irish county has experienced such a dramatic decrease over that period; although all witnessed varying levels of decline apart from two Northern counties, Dublin (which experienced a 289% increase) and its adjoining counties. The Western seaboard’s demographic pattern merits comparison with the impact of European colonisation on the native populations of the Americas.

    The presence of both abandoned stone cottages and tumbledown bungalows bear witness to this long-running decline; these are nestled in a bewitching but ecologically scarred landscape of craggy mountains, gushing falls and still pristine lakes. Lough Allen, the source of the majestic Shannon, divides a mountainous north from the flatter lands of the south. A short stretch of coastline positions the county on the Wild Atlantic Way.

    Perhaps unsurprisingly, according to CSO data the vacancy rate for Leitrim in 2022 was 15.5%, down from 19.9% in 2016. Indeed, Leitrim has the highest rate of vacancy of any county in Ireland, followed closely by its neighbours Roscommon and Mayo. In contrast 5.5% of Dublin properties were vacant – still an unsatisfactorily proportion given there are currently (as of February 10, 2023) just under six hundred properties available rent for all of Dublin city and county listed on daft.ie.

    There are various explanations for the stark population decline along the western seaboard since the Great Famine (1845-51), most obviously the Famine itself, but also a shift in agricultural priorities from tillage to pasture after the Napoleonic Wars in 1815 and the Repeal of the Corn Laws in 1847, which brought cheaper grain to the British market.

    As John Mitchel wrote sarcastically for The Nation in 1847:

    You may be surprised to hear of a country having, at one and the same time, a “surplus produce” and a “surplus population” – too much food for its people, and too many people for its food. Your surprise arises from ignorance of the great principles of political economy. All produce that can be spared for export is, in the technical language of that science, “surplus;” and all people who cannot get profitable employment are also “surplus.”

    Pastoral agriculture depends on low labour inputs for profitability, meaning few children from any family could stay on the land. After independence, it became state policy to encourage beef and dairy exports. Since then, European subsidies have calcified an agricultural system that produces (as of 2020) just 61,800 tonnes of fruit and vegetables for the domestic market, compared to imports of 890,000 tonnes.

    It is also notable that two railway lines serving Leitrim were dissolved in the 1950s: the Cavan and Leitrim Railway running between Dromod and Belturbet with a branch from Ballinamore to Arigna; and the Sligo, Leitrim and Northern Counties Railway, which ran between Enniskillen and Collooney near Sligo, taking in the north of the county, including Manorhamilton.

    Vacant Property Refurbishment Grant

    The Vacant Property Refurbishment Grant provides for a sum of up to €50,000 to refurbish a vacant property. It appears tailor-made for a significant proportion of the housing stock of Leitrim. As of February 7, 2023 there are 33 properties for sale under €100,000 in the county out of 197 according to the website daft.ie. Many appear suitable candidates for the Grant.

    In line with national trends, property prices have been rising steadily in Leitrim, albeit from a low base. Research on daft.ie indicates a 13.8% increase in the average price of property in the county over the course of 2022, the second steepest increase for any county apart from Donegal. Such a figure could be skewed by a few expensive purchases, but is a good indicator nonetheless.

    The prospect of purchasers receiving a Vacant Property Refurbishment Grant might lead vendors to apply a premium. Anyone availing of the Grant, meanwhile, must retain the property as a principal primary residence, and be a first-time buyer or qualify for the fresh start scheme.

    After receiving the Grant, if you decide to sell up or rent the property out within ten years of a successful application local authorities will claw back the Grant. If it is less than ten years, you must repay it in full; over five years, but less than ten, you have to repay 75%.

    Anyone availing of the Grant would want to be sure of their desire to live in a particular area, and of this fitting with their employment prospects. Moreover, the sum involved would hardly put a roof on many of the dilapidated properties dotted around the Irish countryside, given the current cost of building materials.

    The Grant does not apply where an individual is living in the house after the purchase. One contributor to boards.ie, who claimed to be sleeping on a mattress in a house in need of significant refurbishment, said he was denied the Grant on this ground alone, which seems unfair.

    Perhaps unsurprisingly given the onerous terms and conditions, there has been little uptake. Last year, 765 applications were made for the Grant. 105 of these were approved while another 102 were rejected. The remaining 558 are still in progress.

    One can understand a need for due diligence before pay outs are made. However, assuming the Department is insufficiently staffed to carry out numerous inspections, it is surprising to hear ads on the radio promoting the Grant. Perhaps this is simply to create the impression that a beleaguered Government is taking action on the hot topic of vacancy.

    Vacant Homes Action Plant

    On January 30 2023, Minister Darragh O’Brien launched the Vacant Homes Action Plan 2023 – 2026. In its preamble the Minister sensibly stated that the ‘most efficient home to deliver is the one which already exists’.

    The report points to Our Rural Future: Rural Development Policy 2021-2025, a Government policy launched in March 2021 that purports to provide a framework for the development of rural Ireland:

    One of its key objectives is to support the regeneration, repopulation and development of rural towns and villages to contribute to local and national economic recovery, and to enable people to live and work in a high quality environment.

    There is, however, scant evidence that Government measures are encouraging people to settle in rural Ireland, in contrast to insatiable demand for Dublin property, where almost thirty percent of the population lives. In contrast, less than 15% of the UK population inhabits London, which is generally considered disproportionate.

    The rather insipid planned actions include further budgeting for the Better Energy Homes Scheme; reference to the previously established Rural Regeneration and Development Fund; plans to harness European Regional Development Funding; and perhaps significantly a new programme for the Compulsory Purchase of vacant properties ‘for resale on the open market.’

    Compulsory Purchase Orders (CPOs)

    Use of CPOs is the most obvious means of addressing vacancy, as well as bringing land into use for housing and other development projects. Historically, Irish Governments have evinced a reluctance to use CPOs to generate land for housing, notably the failure to act on the recommendations of the Kenny Report (1973) recommending that local authorities should be empowered to acquire undeveloped lands at existing use value plus 25% by adopting Designated Area Schemes.

    Historically, the Courts have also generally weighed a constitutional right to property over what is, arguably, a concurrent constitutional right – flowing from a generalised Right to Life –  for citizens to secure reasonable accommodation. Father Peter McVerry has pointed to a paradox whereby a constitutional right to property is ‘being used to prevent Irish people getting their own home.’

    The Vacant Homes Action Plan is thin on ambition, merely stating that with ‘regard to compulsory purchases/acquisitions is being reviewed with a view to streamlining and consolidating the CPO process. This will arrive alongside a review of the Planning Act and the Law Reform Commission’s examination of the use of CPOs which is ongoing.’

    Although the Plan states:

    The Department in partnership with the Housing Agency will examine each local authority’s Derelict Sites Register with a view to identifying potential properties that could be brought back into use through compulsory acquisition. Local authorities will be requested to review these properties in the first instance with a view to engaging with owners.

    And that

    Under Action 19.9 of Housing for All, it was agreed that all Government Departments would examine their existing portfolio of properties and, subject to any obligations under the Public Spending Code, the Land Development Agency Act 2021 or the State Property Act 1954, would place them on the market if they were not required and may be suitable for residential housing.

    Existing Schemes

    The Plan also refers to the Ready to Build Scheme, which was launched in September, 2022:

    Under the Scheme, local authorities will make serviced sites available in towns and villages at a discount on the market value, to individual purchasers for the building of their home which will be their principal private residence. It is intended that the local authority will develop existing sites in their control or purchase sites.

    And to The Living City Initiative, a scheme of property tax incentives first enacted in the Finance Act 2013 and commenced on 5 May 2015 aimed at the regeneration of older heritage buildings in the historic inner cities of Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.

    The Plan acknowledges that there been a low take-up of this initiative, but points to a number of measures included in the Finance Act, 2022 aimed at accelerating uptake.

    Photo ©Daniele Idini

    Vacancy

    The Vacant Homes Action Plan also says that in Budget 2023, ‘the introduction of a Vacant Homes Tax was announced. Legislation providing for the introduction of the new tax is included in the Finance Act 2022.’

    It estimates that 57,206 (3.2%) of all Irish properties were indicated by their owners as being vacant. A property is considered vacant for the purposes of a forthcoming tax if it is in use as a dwelling for less than 30 days in a 12-month chargeable period. Owners of vacant properties are to be charged at a rate equal to three times the property’s base Local Property Tax liability for 2023, which will apply in addition to a property’s LPT charge.

    This, however, will only apply in relation to vacant properties ‘that are habitable, and therefore suitable for occupation as a dwelling.’

    The Plan also provides for important exemptions to ensure, as it puts it, ‘property owners are not unfairly charged for temporary vacancy arising from genuine reasons.’ These include recently sold properties, or those currently listed for sale or rent.

    It would seem that simply by putting up a property on the market for sale or rent – at whatever price – the penalty may be avoided. We seem to be in the realm of performative politics again, rather than substantive action.

    Photo ©Daniele Idini

    Two Categories

    There appear to be two broad categories of vacancy in Ireland. An awareness of this distinction might inform policy and the law. The existence of designated rent pressure zones already distinguishes between regions of the country.

    We may observe the first category occurring in mainly urban areas – rent pressure zones – especially Dublin and its hinterland where housing is in short supply. Here, a dominant player, or players, could collude by withdrawing accommodation from the market in order to maintain, or generate an increase in, rental income. This is especially insidious and severe penalties should be available to stamp out any suspicion of any such monopolistic practices.

    A second category of vacancy arises in a rural county such as Leitrim which has experienced historic de-population, leading to the abandonment of many houses. Draconian penalties serve little purpose here. Instead, there should be greater incentives for renovation and refurbishment. Here at least, the Vacant Property Refurbishment Grant should not be restricted to principal primary residences.

    In the case of much of county Leitrim, even for people to live for a part of the year there would be a boon for retail and hospitality businesses, and could restore life to sleepy villages that have experienced emigration over many generations. For the Vacant Property Refurbishment Grant to inhibit sales for a period of ten years seems prohibitively restrictive, and would likely deter many from availing of it.

    It is in the public interest for the stock of quality housing to rise through the availability of such grants. A three year restriction seems sufficient.

    A second, ‘holiday’, home would offer an opportunity for residents of built-up urban areas to undertake small scale agriculture on a part-time basis in summer retreats, as one still sees in Central and Eastern European countries where an apartment in the city is often complimented with a rural residence that includes a market garden. The availability of alternative garden space for the summer months might lead “empty-nesters” and retirees to downsize from houses into apartments.

    A sparsely populated country like Ireland ought to have available a stock of affordable housing in low density rural locations for second homes, such as is the case in Scandinavian countries.

    Game Changer?

    Policy makers need to look beyond housing itself to encourage re-population of rural Ireland, while confronting car dependency. We require a radical improvement in public transport. Extending quiet ways on treacherous roads would also allow for safer cycling. E-bikes could be a game changer for rural Ireland, permitting extended journeys for older less physically fit people, while expending far less energy than even electric cars. Buses and trains need to offer free and secure carriage for bicycles.

    Hopefully the Department of Housing is working in conjunction with the Department of Transport, following Eamon Ryan’s recent proposal for rail lines to be restored in the West, to identify areas suitable for development in rural Ireland.

    Reversing the decline in Ireland’s rural population, especially along the western seaboard, requires joined-up thinking and innovative approaches. Cheap, modular housing might be considered for new housing arrangements that depart from the conventional idea of the family home in a changing society.

    Co-operative agricultural enterprises, inspired by the tradition of the Clachan, offer the prospect of sociability and affordability, while potentially reducing greenhouse gas emissions and decreasing reliance on imported foodstuffs.

    One way to address a seemingly intractable housing crisis concentrated in the city of Dublin is surely to make other parts of the country more attractive to live in, especially in an era of remote working.

    There have been encouraging trends over recent decades along the Western seaboard, with renewed appreciation of resilient traditions and greater opportunities for adventure sports – but there is a hidden Ireland, generally at a remove from the coastline, that tends not to see benefits from tourism.

    As we approach the bicentenary of the Great Famine novel approaches to life in Ireland ought to enter the mainstream. Government should act decisively and imaginatively to encourage more people to live in counties such as Leitrim.

    Feature Image: Carrigallen, county Leitrim.

  • A Solution to the Housing Crisis

    The penny drops as I listen to RTE’s Liveline. There’s a highly articulate woman in her fifties, who is renting. Holding out little hope for the future, she pleads with the powers that be to solve the Housing Crisis, in its entirety, no more sticking plasters: “Solve it for everyone,” she stresses, “even if 50,000 houses were built and delivered next year, I could not afford one.”

    This leads to the following questions: first, assuming she has a regular wage, why can’t she affort to own a home as her parents and grandparents before her would have expected? And secondly, is the housing market really broken, or is that our financing market is broken?

    Now let’s consider how we view the family homes market. Should we treat these as assets that appreciate in value and make us rich at the end of our lives, or something else?

    Why should we become economically confident when house prices rise? If we have more than one child, and we want them to own their own house, any increase in the value of our homes will be lost when they come to buy; our gain is their loss.

    Whenever a wealth manager – the financial advisor to a rich sophisticated investor – records a family’s net worth, they exclude the family home. This is because it is not a tradeable asset; it cannot be realised for alternative investments; it’s where a person lives and any investment strategy should not put that at risk; a roof over one’s head is a basic requirement after all.

    If we are to have any chance of solving this crisis of housing insecurity for a growing number of our fellow citizens, then we must accept that family homes are not investments, not a substitute for a pension. In any case with rising life expectancy and care needs growing, it’s an asset many of us won’t be in a position to leave to our children.

    It’s time to accept that family homes provide accommodation for the workers of this State. These are taxpayers who support the retired civil servants, and many other pensioners besides. It is vital that their cost of living is kept sufficiently low to ensure a decent quality of life, which ultimately underpins the productivity of labour in the State, and maintains the global competitiveness of our economy.

    We need to return to how we treated family homes in the 1970s and 1980s. This is not to suggest that councils building homes is the only solution we have. But we should return to the idea that homes are not, and never should be, treated as investments.

    Now ask yourself the question: how come our children and our fellow citizens cannot afford to purchase a home, but can service the commercial rent on the very same property?

    Let’s be clear, we don’t need to ‘fix’ the housing crisis or ‘deliver’ affordable homes. We need to ensure that each tax paying citizen of this country has the basic security of a home. In order to do this they must be able to access financing that will put them on a par with Vulture Funds, thereby allowing them to compete for this scarce commodity.

    Any solution must eliminate the inequality and injustice in such a way as to deliver home financing to our citizens. We therefore need to create a structure that can deliver competitive finance to all our taxpayers.

    If foreign investors can borrow from the banks at 1.2% and first time buyers borrow at 3.99%, who do you think will be in a better position to purchase any houses and apartments that come on to the market?

    Let me pose another question: why has the Central Bank of Ireland placed restrictions on our citizens, when buying a home, but placed no similar restrictions on commercial operators in the same market? This is grossly unfair. It is not a financial level playing field.

    If you are going to interfere in the market, interfere in such a way that it affects all parties. Put another way: why would you put your savings in the local Irish bank at a return of 0% when your kids borrow from that very same bank to buy their home at 3.99%?

    As things stand, I predict that there will be very few new housing developments delivered for sale directly to individuals over the next decade. Let me explain why I believe this.

    When a developer purchases a property he obtains planning permission, then seeks finance. In Ireland we only have two commercial banks operating on any scale, and both have been severely hurt by developers in the past and now have tightened lending limits on exposures to this sector.

    So the rational developer turns to international investors to finance a project. These international lenders are very cautious people, they don’t lend unless they are almost 100% sure they will be repaid in full; they don’t take punts. They also insist that the developer seeks out pre-sales. Pre-sales occur when the developer sells the entire complex or a significant element to an investment fund before it is built, thus eliminating the risk of the economy tanking, banks restricting their lending to individuals, a recession, a global pandemic, etc.

    So, hardly any properties are delivered for individuals to purchase. Small builders cannot access this market, it’s all sown up.

    This means that the generation growing up faces renting for the duration of their lives, and accumulating worries into their retirement years. This occurs even, sadly, when they could actually afford that property if there was a level financial playing field. I ask you: is this the kind of community you want to live in?

    There is a sinister explanation for why certain individuals might not want to define and solve the problem of property ownership. The more fair a system is, the less profit exists for existing home owners.

    Thus, there is an enormous conflict of interest right across the spectrum of those charged with this significant societal responsibility.

    Now we, the home owners, all need to ask ourselves, are we willing to give up the vast paper wealth that accumulates over time from owning a home. Or at the very least, can we share it?

    The airwaves are full of property experts, everyone has a view. But property is not just an asset, and no one ever talks about the financial aspects, and how we can improve access to finance.

    The international investors are not primarily property experts, they are financial experts and investment bankers. The Irish experts talk about vacant property development, Cuckoos, affordable housing, discounts to market rent, homes over the shop, etc. etc. But all the Vultures know, is the value of money, and how they can deploy it effectively. Unfortunately the Irish public has not developed this financial literacy, meaning the institutions will win every single time, until, that is, we wake up and understand the problem.

    In essence, we need to create a co-operative housing body which can access finance on the same basis as the Vultures, and thereby deliver inexpensive money to all tax payers without risking taxpayer’s money. This is possible without breaching EU State Aid rules, without upsetting the banks, but it will rightly piss off international profiteers.

    Featured Image: Daniele Idini

  • Housing: A Banker Speaks Out

    It is often said the current Irish housing crisis is mainly the result of a lack of supply of new houses; a supply that slowed down and never really fully recovered following the burst of the property bubble in 2008.

    Developers lament a lack of initiative in governments past and present; housing plans replace one another, at least in their facades. The latest example is the Fianna Fail Housing Minister Darragh O’Brien’s Housing for All replacing, or rather refining Rebuilding Ireland introduced under Fine Gael’s Eoghan Murphy – all while multiple cranes never really stopped crowning Dublin’s skyline.

    The spin is that this lack of supply, in turn, generates scarcity, which translates into higher prices.

    Thus far, the solution we have been served is to create a tax-friendly environment: a de-facto tax haven, to attract reliable (and well-resourced) institutional landlords and investment funds – commonly referred to as Vulture or Cuckoo Funds – to accelerate badly needed developments, besides keeping the Irish banking system afloat.

    Apparently, such entities are best placed to pursue ambitious housing schemes, and the management and maintenance of as much of the national housing stock as possible. And supposedly, as in the Housing for All plan, it is the market that is best equipped to understand and deliver the population’s needs, down to every neighbourhood and community.

    Unfortunately, however, the nature of this demand, might not be guided by the community’s needs, but the obligation of a certain profit margin for a financial instrument; held in a pension fund – perhaps owned by a kindly grandmother somewhere else in the world – while enriching the asset managers of these private equity juggernauts.

    What actually gets built, and at what price, is increasingly under the control of entities that hardly take into account the repercussions for society at large. In some cases they simply up sticks to gnaw on bones elsewhere. The Cuckoos have been here for a long time, locking in the spread between ever increasing rents and the financial costs.

    The influence of the banking and financial sector over the delivery of housing has become ever more evident. Thus, the quagmire of basic supply and demand arguments have little or no bearing on how a complex infrastructure such as housing is managed.

    It is within the banking sector, and regulations set by the ECB and Irish Central Bank that a substantial proportion of the residential properties of this country are held, packaged and repackaged, and sold in bundles to foreign investment funds in a process called securitization.

    For most people, despite the shocking revelations arising out the 2008-09 Crash, the inner workings of those dynamic sytems remain out of reach. We therefore find it necessary to look for guideance from someone who really understands the relationship between the current housing crisis, and the financial markets underpinning this.

    Ben Hoey has worked in commercial and investment banking for the past thirty years. After leaving Ireland in the 1980s, he went on to become CFO of Merrill Lynch International:, CFO of Bank of Ireland Capital markets in the wake of the 2008-09 crisis, and managing director of Kennedy Wilson Europe until 2015. Then, as he likes to put it, he failed to retire.

    He is now in the process of setting up his own Fintech business, aimed at creating a Rent to Buy structure.

    It was while analysing a distressed home loans portfolio on behalf of the Not-for-Profit organisation called Right2Homes, that he awoke to the full scale of banking misconduct, and mis-selling of the mortgages in the first place.

    Hoey contends that up to one-hundred-and=fifty-thousand mortgages may have been affected, including some currently in the Courts for repossession hearings, and others that have already been repossessed by banks and Vulture Funds.

    He is now taking approximately one hundred test cases of misconduct and mis-selling of mortgages before the Financial Services Ombudsman: and that seems to represent just the tip of the iceberg.

    Today, Irish interest rates remain, intentionally, the highest in the EU in order to increase bank profitability. This allows the Vulture Funds to purchase swathes of property and maximise their returns. Nowhere else in Europe offers such attractive rates, and hence Ireland is plagued by the funds, who see us as easy picking. Distressed mortgage holders are simply the low hanging fruit.

    How can we explain why an entire generation is paying the highest mortgage rates in the Eurozone, or being forced to rent at at more than double the rate compared to ten years ago? Extreme commodification of residential assets lies at the heart of this.

    Image: ©Daniele Idini

    Ben Hoey: It’s all about cash flow. Property, as an investment, is valued based on its ability to generate cash. Cash is king, and that’s why these Vultures, even the Cuckoo Funds, can access so much low cost leverage. No one has a hope against them. That’s what’s wrong with the world. Capital markets are so cheap now that they can buy anything. And if you think that the current government policies and Central Bank policies is putting free cash into the system, you need to recognise that free cash doesn’t go to you or I. Free cash flows to the banks to make sure they are solvent and healthy. And it’s the banks that make the fortune out of the free cash from quantitative easing.

    Cassandra Voices: What would be the average rate that Vulture Funds will buy loans for? Is there an average or is it dependent on the amount of NPLs versus performing loans if it’s a mixed package, for instance?

    Ben Hoey: No, it will never be mixed. Even when Nationwide Building Society was sold off, it was broken into different portfolios of loans depending on the ability of the debtor to pay. For simplicity, there was the complete deadwood, ‘haven’t heard from them in years‘; to the guy struggling; missing every couple of months; to the performing ones [the loans that were regularly being paid off]. So even within the Non Performing world, they split them into different categories and then they’re priced accordingly per portfolio.

    In 2018/19, the average pricing for Irish bank’s non-performing residential home loans was circa 65 cents on the dollar. And that’s per portfolio. Nothing is ever priced per loan because it’s all priced on the cashflow of the portfolio. Cash flow primarily generates what price they’re prepared to pay for the portfolio in total. Then, once they work out that, they apportion the price back across the portfolio for tax and regulatory reasons. Other factors such as equity in the home, negative equity, etc. do play a role, but they don’t care much about the price per loan, as each loan position will be managed individually and the portfolio will be managed and funded in its entirety; the objective being to maximise the cash flow on every loan.

    Image: ©Daniele Idini

    Cassandra Voices: The narrative supporting the presence of Vultures Fund in Ireland is that their investment is a necessary precondition for a stable banking market, and consequently construction industry. Why are we still seeing massive sell-offs of loan portfolios to Vulture Funds? Are the banks still in a sort of intensive care unit and in need of continuous injections of capital, as in the wake of the Crisis?

    Ben Hoey: I don’t think so. The banks are generally a cash cow. But what happened in 2009 is that there was a liquidity crisis as international investors and depositors withdrew their cash from the Irish banking system. NAMA was formed to solve that liquidity crisis in the banks. Most of the developer loans, which were completely dead in the water (with no cash flow), which were extensive relative to the rest of the banking market, were transferred to NAMA and again cheap, very cheap bonds were issued to support the purchase. All of those bonds were issued to the banks that transferred their loans. They effectively swapped their bad developer loans for low cost NAMA bonds which greatly improved their liquidity and capital position, as they could use those bonds to generate cash or liquidity in the market. NAMA was vital to addressing the liquidity issue in Irish Banking at the time.

    The interesting thing is that actually they didn’t start getting the residential loans off their books until about 2016, 2017 and 2018. So, there was clearly no rush as the liquidity crisis passed. The main reason that the banks in Ireland started to sell the residential loans was that the European Central Bank said: “guys, we are worried about the next crisis and you’re still living in the current crisis. So get your residential non-performing loans down below a certain percentage of your balance sheet.”

    It was typically seven percent on residential NPLs dropping to around five percent. So the Irish banks, faced with severe imposed capital costs, were strongly encouraged to sell their portfolios to hit these ratios. The European Central Bank brought in horrendous capital hits like a 100% reduction of your capital if you didn’t get below that level. So, for example, if you had a €100 million loan portfolio and you had provided say €60 million against it, your exposure to future losses was only 40, the ECB was saying: “if you don’t get below that ratio, then an ever increasing amount will be deducted from your capital, greatly limiting your ability to undertake new business.”

    We need a strong banking system which is ready for the next crisis. So after NAMA, there does not appear to have been a liquidity crisis for the Irish banks and, by their very nature, liquidity crises need to be solved immediately, as they are not like property and health service crises, which seemingly can go on for decades.

    In 2008-2009 the Irish government stepped in and did the craziest thing ever, which was to guarantee €400 billion of customer deposits, because all the international deposits were leaving the Irish banking system literally by the second. And they actually started to realize that, oh, my God, we have a bank account too that needs to be funded – and, they know, it’s going to run out of cash soon. And that was the problem. Nothing to do with lack of profitability. It was lack of cash or liquidity as it is better known in the industry.

    Cassandra Voices: So it was the withdrawal by investors, essentially a withdrawal of money by other banks or investors?

    Ben Hoey: By all the deposit base. Ok, not so much the Irish people, because they had access to the deposit guarantee scheme already. There was some stories of customers moving their cash to Switzerland and they all lost their shirts on the exchange rate. But no, in the main, it was the big institutional money that would have always chased the higher yielding banks. So, the Irish banks would have been paying a greater rate because they were less safe, because of country risk, etc. So as soon as those institutions got scared, they just pulled the cash out and the short term money markets closed to the banks. All right. And then that’s when the ECB had to allow Irish banks to start printing bonds. So they printed money. They issued bonds. But it was to save the banking system. Yeah, I think that was the bottom. Remember, you can only have a liquidity crisis over a short, very short, period. The liquidity crisis is a week or two weeks where – I always have to remind people – the truth is hard to establish, as each bank fights for survival and many assumptions have to be made by chief executives. It’s a very, very awkward position to be in.

    Cassandra Voices: Isn’t it the job of bankers to project a level of confidence that might exceed the reality of the picture?

    Ben Hoey:  The chief executive always has to take the optimistic view. Then, you know, you look at the Irish regulator at the time. He looked at that crisis. I don’t know where he got his information from. He came out and said that the Irish banks are well capitalised to weather the storm. So there was a man who wasn’t even a chief executive talking up the banking system in order to give it a chance of survival. I think a month later it was all over. But to have no liquidity is what kills a bank, not lack of profit, as the accounting rules are focused on the long-term profitability of the banking system.

    Image: ©Daniele Idini

    Cassandra Voices: But what happened to Iceland in your view? Did they do the right thing  when they more or less let their banks fail.

    Ben Hoey: They had no choice. There was no EU there to support them. You know what partially got us into the problem was joining the EU: the euro and cheap money coming into an economy that was used to expensive money. People thought, “I can service a million euros worth of tracker mortgage for six bob a week.” And so when we went into the crisis, the ECB helped us out. We are part of the euro. We couldn’t be brought down. But Iceland had no backstop. They were on their own. It was a common belief that the guarantee by the Irish Government of €400 billion of bank liabilities was stupid, but the markets ignored it. Do I think NAMA was a good thing. Yes, I think it saved the liquidity of the Irish banks.

    It’s after that period, after 2010, there was a tremendous opportunity for Irish banks to rebuild and innovate. And they didn’t. They just sank back in and took the cheap money and did the same thing day in and day out. And then they screwed their own customers, beat the shit out of them, treated everyone the same. Talked about moral hazard and how certain members of our community overborrowed and made a mess of it. I hope society never forgives them, but some people move on. So in answer to your previous question, after the liquidity crisis was solved they didn’t need to sell their NPLs, they wanted to sell them. They didn’t need the cash. In fact, the banks were overcapitalised in my view and wanted to repay capital.

    Cassandra Voices: So if the banks, after 2010, were not in need of cash, but they were forced by the ECB to sell most of their distressed loans nonetheless, why didn’t they consider more ethical solutions that would have protected family homes for example? Instead of selling to the American, Canadian or other international funds?

    Ben Hoey: Two reasons. Execution risk and moral hazard. The moral hazard in this case is: banks say we can’t give a discount to someone even though they might deserve it, or we may have lent them too much cash. We can’t restructure the loan fairly and write off some debt as their neighbours will want a debt write off too. You can argue all day as to whether that’s right or wrong, but that’s the moral hazard argument. So they have to sell to someone who would be seen to be not so fair. And there’s a lot of hassle and maybe a bit of shame. Moral hazard helps to embed that shame in people. So that’s the moral hazard,.

    Then there’s execution risk. If you consider, at the end of the day, you have a bank official charged with selling several billion euros worth of loans. So you have a small number of ambitious well paid people who want to continue to be successful. So do they sell to Brian Reilly and his not-for-profit initiative, who’s never done anything like this before, who appears to have the funding, but it’s never been executed? Or do I just give it to Cerberus, who will walk in the door with the cheque immediately?

    You know, the head of Lone Star, the richest Irishman in the world, John Grayken, visited some of the Irish banks selling assets, which is akin to Warren Buffett popping in for a chat; that’s powerful messaging to Irish bank officials who need a guaranteed sale. They are big talkers; you tell me the cheque you want and I’ll write it now. That’s execution risk. There’s no executive risks with the likes of Lone Star or Cerberus.

    Cassandra Voices: What do they ultimately want out of all of this if, at the end of the day, they’re buying something that’s not performing? The cash flow really isn’t there. Do they want the properties? What do they want out of this?

    Ben Hoey: The normal model was they would price the portfolio on the current cash flows and then, after the purchase, they would improve those cashflows or liquidate some loans, i.e. repossess. And, in certain cases, they do deals for guys to walk away. So, say the property was worth €100,000 for simplicity sake, and they gave the guy twenty grand to walk away. God knows what they bought the loan for, but they ask themselves: “is this the maximum cash we can get here?” So €100,000 sale price, minus the 20k that they gave them to walk away. That’s generated €80k today, and the today is very important. That would have fed into the model. So it’s all about maximizing the cash flow.

    When they couldn’t maximize the cash flow because the Irish courts didn’t cooperate, they minimized the cash outgoing. So, originally when you buy a non-performing loan book that actually has a bit of cash flow, you don’t use all your own money to buy it. You go to a London bank and they give you what’s called a loan on loan. So they lend you money, and probably at one and a half percent, up to 60 percent loan to value, secured on the loans you bought. So that’s really cheap. But your own equity needs are say, nine percent unlevered.

    After a while you think this is not going anywhere. I’ll just put the whole lot into securitization vehicle and then issue triple-A notes up to a high percentage, paying out 80 basis points. So, they drive down their funding costs, which again enhances the cash flow. Net cash flow.

    Yeah. It’s all about cash. Show me the cash. The trouble is that they couldn’t do deals with Irish people because there was so few who had any cash and had no access to cash. And the Courts wouldn’t allow them to repossess.

    Cassandra Voices: And what has all of this to do with the Housing Crisis? How does this affect supply and demand on the Irish housing market?

    Ben Hoey: You said “there’s no supply.” So how do you know that? Supply of what to who? No one has defined how many affordable and social houses our society can afford. We don’t actually know what supply we’re trying to meet. And, you know, like all journeys, if you start in the wrong place, you have no hope of getting to where you want.

    The pension fund, the Vultures, are just one mechanism of delivery. But who are we trying to supply to? The family paying a bit of tax, probably earning up to €80,000? They should be able to buy a home or rent it affordably. We’re not trying to supply housing to a German pension fund. They don’t need housing. They need profit.

    Cassandra Voices: But a larger section of society in Ireland actually needs housing. And instead, what you are saying is that we are supplying Vulture and Cuckoo Fund profits, through the delivery of housing for their needs, and not the Irish people?

    Ben Hoey: Can you imagine if Apple said they were going to build a new phone with special features and they were going to sell it to a German pension fund so they could sell it on to our citizens? That’s exactly what we’re doing here. We’re saying we’re building these houses for German and U.S. pension funds because they’re the only ones that can afford them. We put a profiteer in the middle – a middle man. And that’s what happens when you commodify an infrastructure, a key infrastructure like housing.

    Image: ©Daniele Idini

    Cassandra Voices: Is this by design where we are now in terms of housing?

    Ben Hoey: This is inevitable when you make something a tradable commodity. You’ve turned homes into an investment class. There’s no rules anymore. The cheapest money will get the deal. And that’s the fundamental issue.

    What would happen if the Vultures took the airport over and were charging everyone €300 a head to get through? It wouldn’t happen because it’s so obviously wrong. But so is just about everything obviously wrong with the family home market. And you can see the effects. You go to Dublin, North Docks and South Docks; There are thousands of beautiful apartments, worth €600,000 to a million sitting empty because the German and U.S. pension funds want that type of housing, as they were told there’s loads of wealthy young people living in the city. How’s that worked out? Again, their money is so cheap that they can leave those apartments empty, and wait for rents to recover.

    There’s no crisis for them, even though their flats are empty. We’ve actually allowed a particular type of Vulture investor to dictate the supply of family homes to the Irish market.

    Back in the 1990s and early 2000s, we started building stuff all over the country where it wasn’t needed. We’ve learned from our mistakes, but we’re building the wrong sort of property in the right place: and this kills me as a capitalist to say it but… stop treating family homes as a commodity that can be traded. It will make the cost of labour very expensive and the country very unproductive.

    Image: ©Daniele Idini

    Cassandra Voices: Would it be possible to gradually stop treating the residential property market as a tradable commodity?

    Ben Hoey: No, I think you have to go back to basics and look at the complete supply chain: who ultimately is the rightful owner? Is it the individual, the government, or is it a commercial operation? And then you’ve got to put the right structure in place. And the funding naturally comes. Everyone looks out to different models such as the Austrian model etc. And they do work, but you can’t just pick and choose bits of them. You’ve got to look at the whole structure, holistically.

    Cassandra Voices: Ultimately it comes down to a vision of the society that we want to live in. And in order to define this we need a political environment that is willing to build an economic system that takes into account the needs of the population at large, and as you said is willing to define, in the first place, what those needs actually are. In the case of the Irish housing markets, the problem doesn’t seem to to be about access to financial resources, but again, who has access to it.

    Ben Hoey: When I was listening to you there, I was thinking about how we got rid of the British landlords in the past, who took the land with the backing of military power. And we’ve replaced them with, private equity, the Vultures who have employed not military power, but their cheap money. If only you knew the pain they go through before they decide to buy or to build. If you watch that pain, that risk mitigation, you realize how naive we are. The governments says build, build, build. But the clever money agonizes before it decides what to do. The Vultures know exactly what they want. But we don’t. So we end up being picked off.

  • Housing: Enshrining the Gambler

    To understand the origins of the Irish Housing Crisis we also need to look beyond our shores, and excavate the substrate of the modern global financial order. This will reveal a slow journey towards the neoliberal financialisation of property as an asset today – overwhelmingly bought and sold regardless of the needs of society at large. Today, individuals act as private companies, but invariably lose out to better organised and resourced institutions, while the periodic burstings of speculative bubbles widen inequalities, and create conditions for Populist uprisings.

    In particular, it should be recognised that our capitalist system is not simply a market economy, of which there have been numerous variants through history, none of which, including our own, truly “free” in any meaningful sense. Capitalism in its current guise exhibits a dispassionate face, but ultimately relies on violent enforcement of interest-bearing loans by officers of the State. It arrived in the wake of widespread acceptance of what was previously considered the sin of usury – the practice of making unethical or immoral monetary loans that unfairly enrich the lender – by Protestant reformers during the Reformation.

    Markets in goods and services have existed since civilisations first emerged in the Middle East, but these were invariably softened by community solidarity, wherein laws and norms ensured trade was not conducted – as we see increasingly today – as an impersonal, zero-sum game between competing parties. Of course, there were various categories of people – including women and slaves – that were excluded from such commonwealths, nonetheless a sense of mutual obligation and reciprocity was more pronounced in the trading arrangements of pre-modern polities.

    It is only in recent history, as living standards have risen through technological advances, enhanced food supply and sanitation – along with the arrival of various forms of income redistribution associated with the welfare state – that property – in material terms shelter – has emerged as central to the achievement of a basic standard of living, and the good life we now expect. Its acquisition has become an all-consuming preoccupation in many countries, Ireland not least.

    Subsistence Level

    Even in Europe and North America, until the twentieth century the primary challenge for most families was to obtain sufficient food for survival. Due in part to a veneration of an economic philosophy of laissez faire, associated with Adam Smith, ample sufficiency was slow in arriving, despite increased supplies arising out of the Second Agricultural Revolution from the seventeenth century onwards; along with the arrival of subsistence crops from the Americas, including our beloved potato, and maize.

    In Europe, initially at least, the ascent of the bourgeois from the seventeenth century worked to the detriment of peasants and a new working class. Thus, despite technological developments, such as the invention in Europe of the printing press, and a more stable food supply in the years between 1500-1650 prices rose by 500%, but wages rose much more slowly.

    There were continuous interruptions to, and distortions of, food supply in a nascent capitalist market. The beginning of the seventeenth century witnessed grain surpluses in England as agricultural capacity exceeded the requirements of the population. Carryover inventories of food averaged between 33 and 42 percent of annual consumption. Therefore, in that period: ‘famines were man-made rather than natural disasters.’[i]

    The typical English subsistence crisis after the ascendancy of Henry VIII did not take place because of insufficiency but because ‘the demand for inventories pushed prices so high that labourers lacked the cash to purchase grain.’ In essence, merchants were hording, and the poor were starving.

    The Procession Picture, c. 1600, showing Elizabeth I borne along by her courtiers.

    During the late Tudor period ‘paternalistic’ authorities recognised this and acquired surpluses, selling it on at prices affordable to the lower echelons of society, much to the annoyance of millers, brewers and bakers. That progressive market intervention unravelled during the Civil War of the 1640s, when Roundhead mercantile interests began to exert authority over government decision-making.

    It was only in the 1750s, in the wake of food riots of ‘unprecedented scope’, that the State began to subsidise grain once again. As a result, by the early nineteenth century, famines had been conquered in England ‘not because the weather had shifted, or because of improvements in technology, but because government policy… had unalterably shifted.’[ii] Sadly that policy did not extend to Ireland.

    Today, in order to achieve social harmony it seems likely that governments, including the Irish, will have to treat property as an essential commodity, similar to food, wresting control from a system that has enshrined the gambler.

    Sealing of the Bank of England Charter (1694), by Lady Jane Lindsay, 1905

    Bank of England

    In the U.K. a financial system emerged associated with the creation of the Bank of England in 1693, when a consortium of bankers made a loan of £1,200,000 to the king. ‘In return’, according to David Graeber, ‘they received a royal monopoly on the issuance of banknotes … a right to advance IOUs for a portion of the money the king owed.’[iii]

    A system of credit enforced by military might went global during the colonial era, leading to the enrichment of a class of financiers operating out of the city of London in particular. Fernand Braudel characterises this form of capitalism as first and foremost the art of using money to get more money.[iv] The capacities of this system appear to have reached a perfect pitch in our contemporary era.

    But what system preceded this? And could there be an alternative? Prior to the arrival of paper money IOUs issued by the Bank of England, below the surface, older market systems based on mutual trust and solidarity operated. These were overwhelmed by the impersonal calculation that continues to characterise financial services, underpinned by the violent capacity of the State.

    Thus David Graeber observes: ‘Under the newly emerging capitalist order, the logic of money was granted autonomy; political and military power were then gradually reorganized around it.’[v]

    In his indispensable A History of Debt: The First 5000 Years, Graeber argues the ‘great untold story of our current age’ is of the destruction of an ancient credit system found in small towns and villages across England, and beyond. This was a complex market based not on coins, but on trust. In a typical English village: ‘the only people likely to pay cash were passing travellers, and those considered riff-raff.’ Reveallingly, he observes that ‘just about everyone was creditor and debtor’ and that ‘every six months there would be a public reckoning’ when the community would resolve their debts to one another based on a person’s ability to pay.[vi]

    Such a system reflects a passage in the New Testament (Matthew 20:1-16) in which a landowner pays workers the same sum at the end of the day despite each one working different hours. When one of the workers complains the landowner responds:

    ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as I gave you. Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’

    So the last will be first, and the first will be last.

    In any community there are those less fortunate than others, and a pre-capitalist system of resolving debt, and rewarding work, acted as an impediment to excessive accumulation of resources in a few hands. Importantly it was not simply barter, as value was ascribed based on an ability to pay, and material needs, as much as on the labour or other input into the good or service. A cobbler might therefore produce shoes for an impoverished widow at a lower price than that set for a prosperous miller. No doubt it wasn’t idyllic, but it seems to have led to a fairer and more harmonious existence than what followed in its wake.

    Graeber argues that ‘this upsets our assumptions [as] we are used to blaming the rise of capitalism on something vaguely called the market’, but these ‘English villages appear to have seen no contradiction between the two.’[vii]

    John Constable – Parham Mill, Gillingham.

    Money was Trust

    In this world trust was everything: ‘Money literally was trust.’ Neighbours appeared he says ‘quite comfortable with the idea of buying and selling, or even with market fluctuations, provided they didn’t get to the point of threatening poorest families’ livelihoods.’ Thus Graeber describes the origin of capitalism as ‘the story of how an economy of credit was converted into an economy of interest.’

    The new legal order of strictly enforceable loans had serious consequences for debtors, a position which was connected to sinfulness, and led to imprisonment. Graeber goes so far as to argue that this amounted to  ‘the criminalization of the very basis of human society. It cannot be overemphasised that in a small community, everyone normally was both lender and borrower.’

    He also argued that this transition provided ample space for swindlers and cheats:

    What seems to have happened is that, once credit became unlatched from real relations of trust between individuals … it became apparent that money could, in effect, be produced simply by saying it was there, but when this was done in … a competitive market place, it would almost inevitably lead to scams … causing the guardians of the system to periodically panic and seek new ways to latch the value of the various forms of paper onto gold and silver.

    Moreover:

    Only the wealthy were insulated, since they were able to take advantage of the new credit money, trading back and forth portions of the king’s debt in the form of banknotes.[viii]

    Eventually the price of bank notes stabilized once notes became redeemable in precious metal. This is referred to as the Gold Standard, which emerged following the South Sea Bubble Crash of 1720. But this crash was far from the last in what appears an inherently unstable system. As Graeber puts it: ‘it does seem strange that capitalism feels the constant need to imagine, or to actually manufacture, the means of its own imminent extinction.’[ix]

    Hogarthian image of the 1720 “South Sea Bubble” from the mid-19th century, by Edward Matthew Ward.

    Separate Legal Personality

    Companies were established in canon law by Pope Innocent IV in 1250, and applied to monasteries, churches, guilds and other institutions, but were in no sense profit-seeking enterprises in the modern sense. However, according to David Graeber ‘once companies’, such as the East Indian Company, ‘began to engage in armed ventures overseas … a new era in history might be said to have begun.’[x]

    The inherent danger of profit-seeking corporations was once widely recognised. Thus, between 1720 and 1825 it was a criminal offence to start a company in England, during a period of rapid economic expansion.

    In the United States until the nineteenth century there were two competing ideas regarding the purpose of companies: the first involved those with charters restricted to the pursuit of objectives in the public interest, such as canal building; the other regime issued charters of a general character, allowing companies to engage in whatever business proved profitable.[xi]

    The latter category emerged triumphant, divorced from responsibility to fellow citizens; an unaccountable abstraction with separate legal personality established in the landmark 1897 case of Salomon v. Salomon. Thus capitalism discovered the perfect vehicle for wealth accumulation, and as wealth begets wealth, increasingly multinational companies overwhelmed smaller family-owned businesses as a wander down any high street today confirms.

    Moreover, as corporations have swelled in size, a chasm has opened up between the pay levels of senior officers and rank and file workers. Thus, whereas in the 1950s the CEO of General Motors, then the model of a successful US business, was paid 135 times more than assembly-line workers, fifty years later the CEO of Walmart earned as much as 1,500 times as much as an ordinary employee.

    Moreover, according to Theodore Zeldin: ‘In the twentieth century, the British colonial empire was replaced with a less visible but even more powerful financial empire compose of an archipelago of some sixty offshore tax havens presided over by the City of London.’[xii]

    As companies grow in size and internationalize, the pursuit of profit becomes an overriding purpose, and the connection between management and workers diminishes to a point where companies are no longer embedded in communities. This is particularly evident in financial services, where making money out of money has become a conjuror’s act, increasingly incomprehensible to the uninitated. It was surely only a matter of time before property would be adopted as a speculative asset to an all-consuming leviathan.

    Property Today

    For obvious reasons, throughout history land has been a paramount concern for peasant societies, primarily as a source of food, grown for subsistence and as a commodity. Agricultural land, however, must be worked, so speculation in rural land produces scant reward unless there is skilled labour and capital attached. A surviving aristocracy has continued to draw incomes from rural rents, but this has been severely dented by agrarian movements that emerged in Ireland and elsewhere to produce a class of petit bourgeois peasant proprietors.

    Similarly, at least until the end of World War II, in urban areas property brought significant trouble and relatively scant reward for any landlord, with tenancy considered a transitory existence associated with student years; while public housing schemes assisted the urban poor to leave tenement dwellings that had bedevilled many cities, including Dublin, which had the worst housing conditions of any city in the United Kingdom at the turn of the last century.

    However, since the post-War period workers, including those engaged in monotonous ‘unskilled’ work, joined forces to win a series of improvements to their conditions. These included a five-day week and eight-hour working day, along with aspirations to a living wage. It allowed scope for many, if not most, of those pointedly referred to as ‘the working class’ to enjoy a reasonable, and improving, standard of living across the Western world. Importantly, a steady job permitted home ownership.

    Moreover, in the wake of the so-called Green Revolution in agriculture after World War II – which led to a radical reduction in the cost of food – steadily rising living standards in the U.S and Europe brought a profusion of recreational activities including sports, and unprecedented access to the arts, especially film – the defining cultural form of the twentieth century – along with access to higher education, even for the children of the poor. In these circumstances property became an increasingly prized asset – pent-up demand ripe for exploitation if circumstances permitted.

    Crucially, from the 1970s, an ascendent neoliberalism led to governments around the world withdrawing from the housing market, leading to dramatic decreases in the stock of social housing. In 2015 in Ireland, for example, by which time economic growth for the year was at 7.8%, a mere 334 social and affordable units were built.[xiii]

    In the meantime, regular stock market crashes underline to financiers the reliabiity of bricks and mortar as an investment. Pension funds especially relish the assured income that property generates. Thus, even when there is a crash in property prices, as in Ireland, rents continue to be paid, and with assistance from the State – socialism for the rich – property prices rise once again.

    Throughout most of history the quest for a crust of bread has been the dominant struggle for the bulk of humanity. Today, in the Western world at least, somewhere to rest one’s head in a place of one’s own has become the overriding concern. At the heart of the housing crisis in Ireland, and elsewhere, lies a yearning for the good life that most us see as a right, but which is being exploited by a buccaneering class of financiers, many of whom survived the Crash of 2008, and continue to exert control over the institutions of the Irish state.

    It appears that just as governments had to regulate food supplies in order to avert famines and accelerate development in the early modern period, similarly today it has become necessary for states, especially the Irish State, to regulate a property market which is working to the detriment of a growing proportion of the population. More generally, whether we can do away with the rigidity of a capitalist system of debt enforcement, and return to a market based on greater social solidarity and reiprocity remains to be seen. But at least we should radically reform an inherently unstable and unfair housing market, which is failing to deliver the good life we have a right to expect.

    Feature Image: Stockbrokers, New York, 1966 from United States Library of Congress‘s Prints and Photographs division under the digital ID ppmsca.03199.

    [i] Roderick Floud, Robert W. Fogel, Bernard Harris, Sok Chul Hong, The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700, Cambridge University Press, Cambridge, 2011, p.116

    [ii] Floud et al, pp.117-118

    [iii] David Greaber, Debt: The First 5,000 Years, Melville House, London, 2011, p.49

    [iv] Immanuel Wallerstein, ‘Braudel on Capitalism, or Everything Upside Down’ The Journal of Modern History Vol. 63, No. 2, A Special Issue on Modern France (Jun., 1991), pp. 354-361 (8 pages) Published By: The University of Chicago Press.

    [v] Graeber, 2011, p.321

    [vi] Graeber, 2011, p.327

    [vii] Greaber, 2011, 327

    [viii] Graeber, 2011, pp.328-341

    [ix] Graeber, p.360

    [x] Graeber, p.305

    [xi] Theodore Zeldin, The Hidden Pleasures of Everyday Life. A new Way of Remembering the Past and Imagining the Future, Maclehorse Press, Quercus, London 2015 pp.232-233

    [xii] Zeldin, 2015, p.109

    [xiii] Dan MacGuill, ‘FactCheck: How many social housing units were actually built last year?’, 9th of February, 2016, www.thejournal.ie, https://www.thejournal.ie/ge16-fact-check-election-2016-ireland-social-housing-2587923-Feb2016/

  • Irish Housing: Historic Roots of a Crisis

    As a UCD undergraduate I recall Professor Tom Bartlett likening Irish history to a pint of Guinness, ‘with black representing ownership of the land, and the white froth everything else, including all the political movements.’

    Old habits die hard. The issue of property remains a paramount concern. By the year 2004 Ireland’s rate of private home ownership was the highest in the OECD at approximately 82%, a proportion that only declined, to 69% in 2014, after the Crash from 2008, precipitated by reckless lending, often to ‘sub-prime’ borrowers. This reflects the ongoing effect of a global financialisation of property as a speculative asset from the 1980s, leading to the exclusion of a substantial proportion of a younger generation from home ownership across most of Europe, North America and beyond.

    Ireland’s housing crisis is a special case however. In order to understand its long term causes – Dublin is now the most expensive city in the euro area primarily due to staggeringly high rents – it is necessary to explore an historic relationship with land, arising out of a colonial experience. This has brought an economy where the land grabber reigns ascendant.

    Photo ©Daniele Idini

    Urbanisation

    A nation derives characteristics from its relationship to the land it inhabits. Over recent centuries, in Ireland, as elsewhere, mass urbanisation, disproportionately directed at Dublin, has occurred, but we have built our cities on historical patterns of land ownership.

    There are two defining, and intertwining, legacies of the Irish relationship to property that have seeped into the broader culture. The first is the impact of English colonisation, in particular the Plantations, beginning in the sixteenth century, and the subsequent partial de-colonisation through the Land Acts of the late nineteenth and early twentieth centuries.

    The second is the dominance of pastoral, livestock agriculture, particularly since the late nineteenth century under a system of individual land ownership – as opposed to treating property as a collective patrimony under Brehon Law in Gaelic Ireland.

    Photo ©Daniele Idini

    It is incorrect to assume cattle-farming has always been the dominant form of agriculture in Ireland. Since the first human settlements emphasis has swung back and forth between tillage and pasture; and in earlier centuries cattle were kept for domestic milk production rather than to produce a (beef) commodity for export.

    Moreover, the introduction of the wonder crop of the potato from the seventeenth century created a novel opportunity for subsistence on small holdings, bringing marginal land into cultivation for the first time. Although, ominously, according to John Reader in The Untold Story of the Potato (2008), ‘the innocent potato has facilitated exploitation wherever it has been introduced and cultivated.’ It acted like cheap credit in generating a ready source of subsistence on small parcels of land, but the potato cannot be preserved for a long period like grain so cannot easily be traded, thereby impeding development.

    Over time, the impact of Irish agriculture, especially extensive grazing, on Ireland’s nature has been profound. According to Frank Mitchell in Reading the Irish Landscape (1997): ‘from about five thousand years ago when the first tree-felling axes made woodland clearance possible man’s hands have borne down ever more heavily on the Irish landscape.’ This left a mere twelve per cent woodland coverage by the 1400s, before the most intense period of colonisation at the end of the eighteenth century when a poet lamented:

    Cad a dhéanfaimid feasta gan adhmad? / Tá deireadh na gcoillte ar lár;
    Now what will we do for timber, / With the last of the woods laid low?

    Photo ©Daniele Idini

    Today among EU countries only Luxembourg has lower coverage, and much of our woodland is in the form of sitka spruce plantations that further degrade the land, while offering little scope for biodiversity.

    The sixteenth and seventeenth century Plantations trapped an overwhelmingly Catholic peasantry, denuded of a departed upper stratum of Gaelic society, in a Malthusian grip that culminated in the Famine.

    Portrait of Seán Ó Faoláin by Howard Coster, 1930’s

    Describing the acquisition of annual leases by small farmers, who had previously held land in common under the Brehon Law system, Seán O’Faoláin wrote in The Irish (1947): ‘The thirst for security is, above all things, the great obsession of the peasant mind. And, in a long view, a deceptive obsession.’ Security of tenure under the new dispensation was illusory, as land became an asset to be bought and sold, rather than a collective patrimony.

    Trade conditions shifted in the nineteenth century. The raising of cattle, often exported ‘on the hoof’ to England for eventual slaughter, began to enjoy a comparative advantage over tillage as the British discovered cheaper sources of grain after Napoleon’s blockade ended with the Battle of Waterloo in 1815. Henceforth, the cheap labour of the Irish peasantry – a substantial proportion unconnected to the market economy – were an anachronism to the British administration in Ireland.

    The Famine (1845-1851) was, according to Charles Trevelyan the architect of Britain’s response ‘a direct stroke of an all-wise and all-merciful Providence’, which laid bare ‘the deep and inveterate root of social evil.’ Anticipating the Shock Doctrine, the Famine, he declared, was:

    the sharp but effectual remedy by which the cure is likely to be effected… God grant that the generation to which this great opportunity has been offered may rightly perform its part…

    Wood engraving, 1886. cc Library of Congress

    Strong Farmers

    The Famine was a catalyst for change that brought about the dominance of cattle agriculture, increasingly under the native so-called Strong Farmer. The key point about this mode of production was (and is) that profitability depends on a low labour input. It made no sense for numerous sons and daughters to remain on the land, and so the tsunami of emigration that formed during the Famine gave way to steady migratory waves. Over the long term this brought precipitous population decline throughout the nineteenth and twentieth century.

    As Joseph Connolly put it in his Labour in Irish History (1910): ‘Where a hundred families had reaped a sustenance from their small farms, or by hiring out their labour to the owners of large farms, a dozen shepherds now occupied their places.’

    This process should not, however, be attributed solely to remote authorities in Westminster working on behalf of absentee landlords, as is commonly assumed. Significant gains were made by Catholic Irish farmers holding farms above twenty acres. As Kerby A. Miller wrote in The Atlas of the Great Famine (2012): ‘an unknown but surely very large proportion of Famine sufferers were not evicted by Protestant landlords but by Catholic strong and middling farmers, who drove off their subtenants and cottiers, and dismissed their labourers and servants, both to save themselves from ruin and to consolidate their own properties.’

    As Ireland did not witness an Industrial Revolution, except in the North-East corner, this shift from tillage to pasture led to unprecedented population decline. Ireland is perhaps the only substantial country in the world with a lower population now than in the 1840s, when the population stood at almost nine million. In the same period the global population has increased seven-fold.

    National Independence

    The struggle for Irish independence was taken up by Strong Farmers, a comprador class selling their primary products on the Imperial market, who emerged with enlarged holdings after land clearances, to become the dominant faction of an overwhelming Catholic ‘nation’ at the end of the nineteenth century. Through a succession of legislative measures, culminating in Wyndham’s Land Act of 1903, the British administration sought, but failed, to ‘kill Home Rule with kindness’, allowing tenants to obtain freeholds over much of the country.

    This allowed their sons to set about dominating local government, the Irish Parliamentary Party, and later Sinn Féin. This cohort entered the professions, established a National University in 1908 (Maynooth University had also been established in 1796) and eventually won an independent state in 1922, wedded to an individualist and competitive approach to land, in contrast to collaborative arrangements typically associated with tillage, including the Clachan settlements of pre-Famine Ireland. The first Minister for Agriculture, Patrick Hogan (in office from 1922-32), was a cattle farmer, and duly aligned the national interest with the economic fortunes of his ‘grazier’ class.

    After independence in 1922, pastoral Strong Farmers continued to sell mostly cattle onto the Imperial market, notwithstanding the aspiration of idealists like Robert Barton, the first Director of Agriculture (1919-21), for a reversion to more labour-intensive tillage for domestic consumption; except, that is, for a period in the 1930s and 1940s when national survival demanded increased focus on growing subsistence crops.

    Photo ©Daniele Idini

    Individualist Outlook

    The outlook of the peasant-pastoralist has informed our laws and values since the inception of the State, spreading from rural Ireland into an increasingly urbanized society. As O’Faoláin put it:

    we have seen the common folk of Ireland rise like a beanstalk out of the Revolution of 1922 and, for a generation, their behaviour was often very unpleasant to watch.

    The arrival of mechanisation in the Green Revolution after World War II put tillage at a further disadvantage as, despite enjoying among the highest global yields, high levels of precipitation and humidity make Irish-grown cereals, apart from oats, unsuited to mechanised harvesting. The traditional method of ‘bindering’ – drying the harvest over months in stacks – became uncompetitive due to high labour inputs, and so the population drain form rural Ireland continued.

    Moreover, since the 1970s price supports from the European Community’s Common Agricultural Policy have reduced flexibility and dynamism in land use, by inflating values as farmers were guaranteed payments, even on poor land, without adequately addressing the associated population drain.

    Legal Protections

    As the sons and daughters of peasant-proprietors migrated to cities, especially Dublin, Ireland’s politics of clientelism embodied in the two main political parties took hold. An urban population with roots in raising livestock prizes land as an asset from which profit is derived, as opposed to a situation where crops are cultivated for the family table and traded within the community.

    An inherited skill in deal-making was readily applied to urban development, which is also reflected in strict judicial interpretations of private property, allowing enterprising developers to make a killing. Thus, State institutions have favoured the landed interest over the property-less, in a troubling reminder of a bygone era.

    In 1973 the Kenny Report recommended that land around the hinterland of Dublin should be compulsorily purchased by local authorities for 25% more than its agricultural value. According to Frank McDonald, the former Environment Correspondent of the Irish Times, Dr Garret FitzGerald, a member of the Fine Gael-Labour Coalition government that received the report could not remember why it wasn’t acted upon. ‘It just slid off the agenda’ he said, and no subsequent government acted upon it. McDonald said that ‘Ostensibly, the reason for this was that Kenny – a constitutional lawyer himself – had proposed something that would be unconstitutional. But no attempt was made to test this in the courts.’

    That was until Part V of the Planning Act 2000. This was referred to the Supreme Court which held that the acquisition of land for social and affordable housing did not offend against the Constitution. Unfortunately, however, that provision did little to ameliorate the housing crisis during the Celtic Tiger as developers evaded responsibility by paying over sums to local authorities, and successive Ministers watered down the provisions.

    The reluctance of politicians to implement the Kenny Report reflected a genuine fear that any such provision would fall foul of the Court, which has tended to vindicate a constitutional right to property under Articles 40.3.2 and 43.1.2 over competing interests of renters to security of tenure or a controlled rent.

    Thus, in 1981 the Supreme Court declared unconstitutional attempts to introduce rent controls under The Housing (Private Rented Dwellings) Bill, while the wide scope of Article 45 has been given little attention.

    This reflects a sectional bias as the common good (to which all constitutional rights are subject) should allocate a reasonable prospect of basic accommodation to all permanent residents.

    Photo ©Daniele Idini

    Unenumerated Rights

    The idea of an ‘unenumerated’ Constitutional right – in that instance a right to bodily Integrity – was first identified by the same Justice Kenny in his landmark High Court judgment of Ryan v Attorney General (1965). A right to adequate shelter may also be unenumerated. For instance, Kenny’s seminal Ryan judgment cited the papal encyclical Pacem in Terris (1963) which states that: ‘every man has the right to bodily integrity, and to the means which are necessary and suitable for the proper development of life. These means are primarily food, clothing, shelter, rest, medical care and finally the necessary services.’ Yet the Court has avoided vindicating a basic human right to adequate shelter.

    Now, underpinned by legal and political deference to the property interest, we see huge swathes of land and buildings that have been left fallow in urban areas: a 2016 report in The Dublin Inquirer identified at least 389 derelict sites. We are unaccustomed to urban density, or community developments, except as a sign of poverty – with the 1930s schemes of Herbert Simms a rare and inspiring exception. Strict demarcation between properties, and a lack of community spaces, may be interpreted as a legacy of extensive cattle-rearing for the imperial market.

    Furthermore, the sons and daughters of nineteenth century pastoralists, accustomed to low-density living with few neighbours on the horizon, sought distance from their neighbours, and the assurance of owning a motor car. This accounts for the sprawl, and prevalence of needless boundary walls, in Irish suburbia; as well as a preference for one-off housing.

    The commercial culture can also be linked to the pastoral outlook. It is revealing that few successful Irish businesspeople have been technological innovators. Rather, success has been built on buying low and selling high, just as a cattle farmer buys a calf and seeks to sell him at a higher price – the entrepreneur Tony Ryan was quoted as saying ‘you make your profit the day you buy.’ Thus developers often purchase land at a low price and sit on this until financial conditions improve. The Irish dream is built on living off the fat of the land, creating conditions to the liking of the vulture and cuckoo funds our government now accommodates.

    Photo ©Daniele Idini

    Historic Failings

    No Western economy experienced growth, at least in the period 1995-2007, comparable to that of the Celtic Tiger, but this was achieved, at least in part, through the availability of cheap, and ultimately ruinous, loans, by unscrupulous bankers. But like the wonder crop of the potato, these loans generated ultimately ruinous growth.

    Failure of both property and potatoes emanated from America. In the case of the Famine it was the dreaded blight, phytophthora infestans, which first blackened the leaves and then reduced the crop to inedible mush. The pin that burst the Irish property bubble, a large boil on a global wart, was marked with another American sign, that of the ruinous Lehman Brothers. Both the potato blight and subprime mortgages afflicted other countries, but perhaps nowhere as severely as Ireland.

    The austerity that followed may be likened to the extreme Shock Doctrine practised by Charles Trevelyan, while the feeding frenzy that occurred through NAMA recalls the land-grabbing in the wake of the Famine.

    In order to address Ireland’s Housing Crisis we must face up to the sins of our fathers, including an enduring bias in favour of strict individual ownership preached by the two main political parties in government, as well as the judiciary.

    A version of this article appeared in Village Magazine.

    Title Image: House in proximity to Dog’s Bay, Connemara. ©Daniele Idini