Bloomberg News

Irish Property Crash Helps Homeless as Charity Buys Flats

September 28, 2011

(Updates with NAMA CEO comment in eight paragraph.)

Sept. 28 (Bloomberg) -- The bursting of Ireland’s property bubble may benefit some of the poorer members of society, as apartments built in anticipation of the boom years continuing are sold to social housing projects to cover debts.

Cluid Housing Association, which rents dwellings for as little as 10 euros ($14) a week, is buying 58 apartments from a receiver appointed by Ireland’s National Asset Management Agency. The flats are located in an unfinished Dublin development, originally marketed as a “new high end retail, residential, office and hotel quarter.”

NAMA, set up in 2009 to purge banks of bad debts, is accelerating the sale of properties and other assets of indebted investors. Prime Minister Enda Kenny’s government is pushing the agency, which controls loans linked to about 10,000 residential units, to unload more dwellings and invest in unfinished developments. Thousands of properties remain vacant or uncompleted across Ireland, even with prices crashing 43 percent after the property boom.

“There is a perception at the moment that there isn’t any housing need because we have all these empty homes everywhere,” said Neil Bolton, director of operations at Dublin-based Cluid. “But a lot of people are struggling so the housing need is as strong now as it’s ever been.”

Cluid purchased units in the development at an average cost of 177,500 euros. A two-bedroom apartment in the complex is for sale for 340,000 euros, according to property website Daft.ie.

Housing Needs

Cluid plans to lease 24 of the apartments at market rates, with the remaining 34 to be leased to those in need of social housing, Bolton said. The association will have a dedicated housing officer working on the project and aims to get a “good mix” of tenants that may include people with disabilities or without fixed abodes, he said.

Cluid is also talking with another NAMA-related developer to buy about 30 dwellings outside of Dublin, he said.

NAMA Chief Executive Brendan McDonagh said today a government agency is reviewing residential properties linked to NAMA loans for possible use as social housing. McDonagh warned in an e-mailed statement that while NAMA is linked to one in five unsold newly built residential dwellings, mostly apartments, many may not be suitable for social housing needs because of their type, and concern “over concentration of social and affordable housing” in particular locations.

The state-run Housing Agency said Sept. 19 the number of households in need of social housing rose 75 percent to 98,318 between 2008 and 2011 as more people can’t afford to pay for their accommodation. Housing lists have lengthened as unemployment tripled since 2007 following the collapse of the country’s property boom.

‘Supply and Demand’

“What we are trying to do is marry supply and demand as far as we possibly can particularly through NAMA properties to facilitate the ever growing number of people on the housing lists,” Phil Hogan, minister for the environment, said in an interview on Sept. 7.

The agency has “relatively little exposure” to Ireland’s worst category of so-called Ghost estates, NAMA spokesman Ray Gordon said in an e-mailed statement. Gordon said while NAMA expects there to be more transactions of the Cluid nature, the projects must also fulfil NAMA’s “objective, which is to secure the repayment of debt owed to the Agency.”

House Prices

NAMA has paid 30.5 billion euros to buy loans with a face value of 72.3 billion euros from the nation’s banks, Chairman Frank Daly said Sept. 9.

Bank of Ireland Plc’s Chief Executive Officer Richie Boucher said Sept. 14 his bank isn’t offering mortgage holders write-offs on debt. House prices have dropped 43 percent since the 2007 peak, according to the Central Statistics Office.

Dublin apartment prices fell 6 percent in August from the previous month, the largest drop since the property crash, the CSO said. Nationally, prices fell 1.6 percent in the month.

Almost one in 10 Irish people believe they are “very” or “quite” likely to become homeless, according to a Ipos MRBI survey carried out earlier this year for Focus Ireland, a charity for the homeless. While house prices continue to fall, the average asking rent in Ireland in July was 823 euros a month, the same level as a year earlier, Daft, Ireland’s largest property web site, said in August.

With more people unable to make mortgage payments, Focus Ireland helped 5,300 homeless people or those at risk of homelessness by July, more than the total 2008 figure, said Joyce Loughnan, head of the charity.

“Finally some of this stuff is starting to shift and we are starting to put to use some of these fantastic assets, which are here lying vacant and is a squandering of our money,” Loughnan said. “What is costing us all our money is these buildings so let’s put them to some good use.”

--Editors: Peter Branton, Dara Doyle

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net;

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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