Cassandra Voices

Tag: Ireland’s Housing Crisis

  • 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.

  • 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.

  • Ireland’s Response to the Coronavirus Pandemic

    The total number of deaths attributed to the Coronavirus in Ireland had reached 22 by March 27th, from 2,121 confirmed cases. However, with 14 of those occurring over the previous two day it suggests that number could rise steeply. Indeed, Taoiseach Leo Varadkar has warned that intensive care units may be at capacity ‘within a few days.’ Historically underfunded and mismanaged, the system of public healthcare in Ireland is at full stretch.

    Entrance of the Mater Hospital in Dublin on the North Circular rd. on 27 March 2020. Daniele Idini/Cassandra Voices

    Nonetheless, a concerted promotion of social distancing and enhanced hygiene, instigated in particular by civil society and the medical profession, and eventually led by an initially hesitant government, offers hope that the trajectory in the rise of the curve of new cases will flatten. This will bring vital breathing space to implement a detailed national action plan.

    The provisional success of containment measures came in the wake of doomsday scenarios being painted in the national media. On March 8th The Sunday Business Post led with a headline quoting a senior health official to the effect that 1.9 million – out of a total population under five million – were likely to catch the virus over a concentrated three-week burst. Collective minds were also focused by the harrowing accounts arriving, especially through social media, from Italy, leading to hording of foodstuffs.

    Daniele Idini/Cassanda Voices

    But air travel continued unabated to and from countries such as Spain and Italy, from where the first cases were traced from February 29th. At least the annual Six Nations rugby fixture against Italy, scheduled for March 7th in Dublin was cancelled. Nevertheless, ignoring the looming threat, as many as twenty thousand Irish horse racing fans travelled to and from the annual Cheltenham Festival in the U.K., between March 10th and 13th.

    Flight Zurich-Dublin, 19 March 2020. Davide Beschi/Cassandra Voices

    Importantly, the government announced the closure of schools and universities from March 13th, calming mounting fears and, after a rising volume of complaints on social media, elected to call off the annual St Patrick’s Day parades. This followed the decision of organisers in the small towns of Cobh, Middleton and Youghal to cancel.

    Pubs were not shut down until March 15th, however, by which time concerned citizens were uploading videos of crowded venues onto broadsheet.ie.

    O’Connell Bridge, 27 March 2020. Daniele Idini/Cassandra Voices

    On March 19th the Dáil passed emergency legislation containing financial measures assisting those affected, and permitting the Gardaí to close down mass gatherings and, potentially, to order people to stay in their homes; as well as providing for the detention of a person on foot of a medical recommendation.

    On the evening of St. Patrick’s Day, Taoiseach Varadkar, a trained doctor, solemnly addressed the nation. The competence he projected provided reassurance, even to his critics, that the State would henceforth deploy all means necessary to confront the contagion.

    An initial two-week lockdown, permitting walks within 2km of a person’s home, was finally announced on March 27th. It remains to be seen whether this delay in taking this course of action will prove costly. More draconian measures, however, bring their own health risks.

    Montjoy Square, 27 March 2020. Daniele Idini/Cassandra Voices

    A long-running housing crisis has seen Dublin becoming the third most expensive city to rent in Europe behind Paris and Geneva. This means almost 50% of young adults aged between 25 and 29 now live with their parents. Also, many immigrants, in particular, live in cramped conditions in large groups in the capital. These factors could accelerate the spread of the disease.

    One revealing development has been a massive increase in the availability of properties to rent on the Dublin market, especially near the city centre. This suggests these had been reserved for short-term, Airbnb lets, and that the authorities have not been enforcing regulations prohibiting short-term rents in pressure zones.

    As of March 24th, Ireland’s testing figures compared favourably with other European countries. The rate of 1,350 tests per million lagged behind Austria and Germany, but was ahead of the U.K. and France. Senior health officials are following WHO guidelines, rather than trialling risky hypotheses, like the flawed ‘herd immunity’ idea, initially floated in the U.K., and elsewhere.

    The pandemic has hit Ireland during a period of political instability after a February general election yielded an indecisive result, with Leo Varadkar’s government no longer commanding a Dáil majority. Notwithstanding the challenge of installing a new cabinet under emergency conditions, it sets a dangerous precedent for a caretaker government to be in power for a prolonged period.

    The pandemic appears to have increased the prospect of a united Ireland, especially given the U.K.’s mishandling of the pandemic. The Northern Ireland Power-Sharing Executive, containing politicians from both the Unionist and Nationalist communities, has already agreed to heightened cooperation with the Republic.

    Ireland suffers from a legacy of poor planning decisions, with sprawling developments and one-off rural housing commonplace, leading to reliance on motor cars. In the peculiar circumstances of a pandemic, however, this may prove advantageous as communal apartment blocks and crowded public transport seems to have exacerbated transmissions elsewhere.

    Henry Street, Dublin. 23 March 2020. Daniele Idini/Cassandra Voices

    Located on an island, albeit one with a portion under the United Kingdom, and having a comparatively young and well educated population, Ireland can control its borders easier than most. A best case scenario sees the virus being excluded in a matter of months.

    It is unclear, however, whether this can be achieved without curbing liberties to a point where national cohesion dissipates. There is also a danger that reliance on food imports, exposed as a weak point in Brexit negotiations, could drive up the cost of many staples, and even exacerbate long-term health inequalities.

    President Michael D. Higgins, who is almost eighty years of age, wrote a poem called ‘Take Care’ to reassure his people in a period of dread uncertainty. A portion reads:

    Belief
    requires
    that you hold steady.
    Bend, if you will,
    with the wind.
    The tree is your teacher,
    roots at once
    more firm
    from experience