Ireland after NAMA

We have come across some very detailed maps that identify precisely which 421 unfinished estates (or part of), and each of the 5,100 properties on them, are exempt from the local property tax.  An example of what the maps look like is below.  The red boundary denotes the exemption area, with any units inside exempt from the tax.

The maps are organised into local authority files.  In the list below, the local authorities without a link do not have any exempt unfinished estates.

Carlow, Cavan, Clare, Cork City, Cork County, Donegal, D/L Rathdown, Dublin City, Fingal, Galway City, Galway County, Kerry, Kildare, Kilkenny, Laois, Leitrim, Limerick City, Limerick County, Longford, Louth, Mayo, Meath, Monaghan, North Tipperary, Offaly, Roscommon, Sligo, South Dublin, South Tipperary, Waterford City, Waterford County, Westmeath, Wexford, Wicklow

A few weeks ago, before the return of the snow and rain, I spent a cold bright day visiting a number of unfinished estates in North Tipperary.  A former resident of one such estate kindly took me on a tour of some of the local unfinished developments.  Being from the area himself, and having worked on construction projects in the past, he was in a position to impart to me some background information about the developments.  Anecdotally, he was able to tell me that, having visited the estates himself in the past, some minor demolition work had been carried out in places.  Rather than finished houses, the demolition that had been carried out had been of partially completed structures: essentially where construction had been started but had barely gotten beyond the foundations.  Additionally, there had been some attempts to erect more secure fencing around the unfinished portions of the estates.

As a student of quantity surveying, my guide also had a research interest in what was being done about these estates from a policy perspective.  And during the day we also talked about the overall response to the problem.  I gave him my personal opinion that not enough was being done by the state to combat the problems posed by the estates.  Whilst it was clear that some small progress had been achieved with regard to individual estates, the mechanisms that had been put in place (primarily site resolution plans) were voluntaristic and somewhat ad-hoc and, consequently, offered little guarantee that uniform progress would be made.  We both agreed that the most pressing concern was the health and safety problems posed by the estates that, despite the €5 million safety fund made available by the Government, clearly remained an issue affecting residents on most estates.

We visited four estates that day.  All but one of the estates had residents living on them.  What we saw there was perhaps not shocking.  To a certain extent unfinished estates have become a normalised part the Irish landscape, places we anticipate and expect, especially in the more rural parts of the country.  But equally, these estates are not, nor should they be considered, ‘normal’ places for people to live.  I say this despite the fact that, for thousands of households around the country, living on estates such as these is the new normal.

We are now over four years into a crisis that was both precipitated by and reflected in a catastrophic property crash.  Unfinished estates quickly became the symbol of the crash, and the iconic monument of the ideologies and development politics that drove the Celtic Tiger era; the vast glut of physical excess all too perfectly symbolising Ireland’s ‘era of excess’, our ‘greedy decade’ (as various newspaper articles deigned to dub it).  For a while these estates were big news, offering an empty (or at least partially vacant) signifier into which various commentators could pour their anxieties and outrages about the crisis and their hopes for the future.  But four years on the media frenzy has died down and the estates and their residents have receded from public view.  In the intervening years the unfinished estates of the Celtic Tiger have been engulfed in the general din of the ongoing crisis, swallowed by the war of attrition that is austerity.   They became one more problem in a country beset by a million problems.

Within this context it is easy to forget just how shocking these estates initially were.  In the initial reportage (even allowing for a level of hyperbole) these were truly alien landscapes that left journalists reaching for visceral language and allusions to grasp the social and moral catastrophe that the estates represented.  Take, for example, these two descriptions from May 2010:

“It was like a scene from one of those Chernobyl documentaries. Empty houses rotting away, broken pavements, no street lighting, rubble everywhere and pools of water that you just knew stank to high heaven. Except there were some people living there, young homeowners who were trapped paying premium mortgages to live in an unfinished estate where sewage bubbled up outside their door in houses they knew were worthless because they were unsellable” (Irish Times, 15 May 2010).

“How do you know you are in a ‘ghost estate”? Often, from the outside, they look like any other new housing estate. The houses are neat and freshly painted, lending an air of suburban order and respectability. They are quiet, but that could just be because the adults are at work and the children are at school. But when you get closer, you can tell. You notice, for instance, that the manhole covers and storm drains stick up out of the street because the final layer of the road surface hasn’t been laid.  And there are little lumps outside every door which, on closer inspection, turn out to be decaying phone directories and copies of the Golden Pages.  Where the doorbell should be, there is only a dangling wire…” (Irish Independent, 22 May 2010).

These examples are from a time period that perhaps constituted the most intense debates about unfinished estates.  And, of course, there is a certain inevitability that as these landscapes become more familiar they become less strange.  But paradoxically the inverse is equally true.  In a kind of parallax view reminiscent of a David Lynch film, these estates are so strange because for us they are now so normal.

This week the Government’s announced that of the 1,322 developments that were previously exempt from the household change only 421 developments would be exempt from the local property tax.  As Rob Kitchin suggested in his post yesterday, this substantial drop in eligible developments is the result of a reclassification of types of estates that qualify.  Thus, it is by no means guaranteed that substantial work has been completed on all of the developments that have dropped off the list, whilst it is extremely doubtful that these estates are now free of problems.  Furthermore, this latest episode follows similar statistical adjustments to the 2012 National Housing Development Survey that changed the definition of an unfinished estate.  There is a sort of politics of numbers happening here.  Judging by the figures being released by the Government, to the (very) casual observer it would appear that the number of unfinished estates that constitute a serious problem has reduced from 2,876 in 2011 to just 421 in 2013.  Any bit of research into the issue will suggest that this is not the case, particularly when we consider that housing vacancy (in the absence of outstanding construction work) is no longer considered a problem by the Government.

The estates I visited in Tipperary are all (with the exception of the completely vacant development) exempt from the local property tax.  It could be argued then that they constitute some of the more severe cases.  However, they didn’t particularly strike me as better or worse than many other estates I have visited, some of which have dropped off the list of exemptions.  Unfinished estates are not a homogenous category and individual estates face diverse problems.  ‘Unfinished’ is a slippery category and it is disingenuous to label any estate that is ‘complete’ as unproblematic when there are high levels of vacancy.  A vacant house may soon become again an unfinished house if it is not being maintained.  And the simple fact remains, the vast majority of these estates are still not the places they were planned to be and that were promised to the residents who moved into them.  They remain unfinished.  Before we find ourselves too jaded by crisis, it is worth reminding ourselves that we once found these estates very strange indeed.  They were not ‘normal’.  They are still not.

Cian O’Callaghan

Yesterday Minister Phil Hogan announced the unfinished estates that will be exempt from the local property tax (LPT).  In total, 421 developments consisting of 5,100 households will be exempt (the full list can be found here).  This is significantly different to the number of estates (1,322) and households (43,000) that were exempt from the household charge.  Hogan argues that over the past year “The number of properties eligible for a waiver reflects the progress made in tackling unfinished housing developments, as well as the more objective approach to categorisation applied to the 2012 National Housing Development Survey.”

The press release gives no specific information on how the 421 estates were chosen, but we know from the property tax legislation and answers by Michael Noonan in the Dail on 3rd February that:

“Minister for the Environment, Community and Local Government must satisfy himself or herself that the development in question is incomplete to a substantial extent. Examples of the criteria that the Minister for the Environment, Community and Local Government should take into account in such a determination include the state of completion of roads, footpaths, lighting facilities, water and sewerage facilities within the development as well as compliance with the terms of any planning permission applicable to the development and the extent to which roads, open spaces, car parks, sewers, water mains, drains or other public facilities in the development have been taken in charge by the local authority concerned. These criteria are set out in section 10 of the Finance (Local Property Tax) Act 2012.”

In other words, the 421 estates are those that the Minister deems to have major outstanding development work.** [I’ve spoken to someone in the Department of Environment and have more info on how the estates/parts of estates were selected – see Addendum below]

So, the questions is: Has there been significant progress on unfinished estates that would mean that 901 estates and 38,000 households that were exempt from the household charge are no longer exempt?

Just four months ago in November 2012 the Department of Environment published a report on unfinished estates that stated: “1100 of these or parts thereof are in a seriously problematic condition.” ** [again, see addendum below]  Of the 1,770 unfinished estates (statistically adjusted down from 2,876 by changing their definition) only 252 (8.5%) are active.  There are 16,881 units are vacant and 17,032 units are under-construction.

Site Resolution Plans, funded by a €5m fund, basically tidy-up estates and try to make them safe and secure.  It is not used to do major development work such finishing roads, paths, lighting, sewage, water, etc.

It is therefore difficult to believe that there has been such major development work on unfinished estates over the past year that would move them out of the ‘seriously problematic condition’.

My sense then is the Minister Hogan is going to get a number of challenges from residents who were previously exempt, who may well have paid large stamp duty payments for the privelege of living on an unfinished development, who would like greater clarity as to how the 421 estates were chosen and why their estate is no longer exempt.  It will also be interesting to see how many units affected with pyrite he makes exempt.  Based on what has happened with unfinished estates I suspect there will be a similar attempt to minimize those that qualify.

Addendum

For the household charge exemptions were given to all residents in category 3 and 4 estates regardless of the condition of the house and environs and the services they received.  For the local property tax an assessment was made of all units as to whether they have decent roads, lighting infrastructure, paving, sewage and water, and access to the usual services supplied by the local authority.  If a unit has those services and facilities then they have been deemed liable for the property tax in the same way as all other households have been.  The 901 estates and parts of estates that have dropped off the list either have all those services/facilities or they are fenced-off building sites in which no-one lives (thus seriously problematical, but unoccupied), so no-one is therefore liable.  The 421 remaining estates are those where residents do experience problems with services and facilities.

Rob Kitchin

The Revenue Commissioners have published a technical paper setting out the method used to calculate the estimated property tax values to guide home owners in the self-evaluation of the tax due on their property.  The model is a hedonic econometric regression model, which is the standard method of estimating and tracking property values.

In many ways, the problem for the Revenue has not been the method to use, but assembling a set of data that can provide robust estimates.  To this end, they have bought together property characteristics from a range of sources:

• Valuation data from the Revenue’s electronic stamp duty system, NAMA, and valuations commissioned by Revenue from professional valuers.

• Geo-Directory (the national address database): a list of all properties in Ireland, their type and location;

• Spatially derived data that indicate relative distances of all residential properties from a series of key amenities and services that add value to property;

• Geographically linked data from sources such as the CSO’s 2011 Census that provide characteristics about areas.

Sources of data used in estimating property tax

Having excluded a number of transactional data for various reasons (where the return indicates the transaction is a part of a larger series of transactions; where the return indicates a fractional interest in the property is being transferred; where the return indicates shared ownership; values under €25,000) the result is a dataset of 17,400, 15,000 and 19,200 transactions for 2010, 2011 and 2012 respectively.  This set is relatively small as it based only on transactions since 2010.

34,400 (67 per cent) of these 51,600 properties were successfully matched to a Geo-Directory address point, thus providing property values for units at known locations. These are spread:

• Dublin (Dublin City Council, Dun Laoghaire-Rathdown County Council, Fingal County Council and South Dublin County Council) – 15,693 properties;

• Other cities (Cork Corporation, Limerick Corporation, Galway City Council and Waterford Corporation) – 3,039 properties;

• Rest of the country (all remaining county councils) – 18,014 properties.

These properties with known values provided a basis on which to estimate the value of near-by property with similar characteristics in each Electoral District in the country. Ideally, it would have been preferable to provide estimates for Small Areas given the variation in stock in an ED, but the relatively small data set precludes doing this robustly and EDs are the best that can presently be achieved.

Given that the value of property varies geographically, rates differ across the country, with the highest mean values in Dublin and the Leinster region.

The vast majority of properties are valued in the lower bands, reflecting the 50% fall in residential prices since 2008.  Indeed, 91.3% of residential units are estimated to be worth less than 300K, with 60.6% less than 150K.  I can imagine that the low estimated value of many properties might come as a shock to many homeowners and reveal the extent to which they might be in negative equity.

What this means is that the property tax value for 60.6% of residential property owners is estimated to be €225 or less per annum.  For another 22.7% it will be €315, 8% it will be €405, and 3.1% it will be €495.  Only 8.3% of residential property owners will pay €585 or more.

As with any model, the one developed by Revenue is not going to be 100 percent accurate and they provide some estimate as to the probability that the valuation is in the correct band.  91% are either in the right band, or one band above or below.

This suggests that there might be some horse-trading between property owners and Revenue as to whether they are in the right band or one very close to it, but in the main their estimates will be quite near to the actual value and the haggling will be over c.80-90 euro difference in cost between adjacent bands (with I suspect all challengers looking to move downwards).

To be fair to the Revenue Commissioners the approach they have taken is the industry standard and they have used all the possible data at their disposal. Their problem has been the small number of known valuations to work from and a lack of information about every property (type, number of rooms, etc).  As such, the model seems to be as robust as it can be given the data constraints, though it is not without its issues such as having to provide estimates for EDs rather than Small Areas.

Rob Kitchin

As in previous recessions, concern about gender equality has been one of the first casualties of this one.  On International Women’s Day, let’s take a moment to reflect on how, and why, topics popularly called “women’s issues” have disappeared from the front pages, and consider how the gender-blind implementation of austerity is reversing some hard fought gains.

The conundrum of care – and women’s roles in providing it – is at the heart of gender inequality.  When Betty Friedan’s Feminine Mystique inspired a second wave of feminist activism, the expectation that most care would be provided by unpaid, full-time homemakers was the principal obstacle to equality for women.  Since that time, changed social values and a dramatic increase in female labour force participation have transformed the lives of women and men.  But that transformation also brought changes in the provision of care that created new pathways to differences amongst women, and to the reproduction of gender inequality in society as a whole.  There are three parts to the story.

First, more women in the workplace means greater demand for services to support families as they strive to look after children, the elderly and others who require additional care because of illness or disability.  (We all require care, of course). In ‘liberal’ welfare systems like that of Ireland, many of these services are provided by low wage workers, workers in the informal or black market, and extended family members, including grandparents.  Most of these poorly paid or unpaid workers are women.

Second, much of the growth of comparatively ‘good’ female jobs can be attributed to the rapid expansion of professional care systems – particularly in health and education, and mainly in the public sector.  There is unequivocal international evidence that where the proportions of women employees are high, wages tend to be lower.  However, across Europe, public sector employment has helped to reduce the wage gap for women.  So as care work has expanded outside the home, it has tended to reinforce occupational segregation by gender – which has been shown to put downward pressure on women’s earnings in the long run – and to create (or worsen) sectoral divisions amongst women.

Third, even in good times, the challenges of combining paid work with family caring put significant pressure on women and their families, as they struggled to cope with the ‘second shift.’

The measures that have made Ireland the ‘poster-boy’ (sic) for the austerity agenda in Europe have worsened the situation for women and families across the board.  Cuts to home help for the elderly have directly hit comparatively poorly paid and unprotected female carers, and increased pressure on the families of those older people who are fortunate enough to have family members living nearby.  Reductions in pay and deteriorating conditions of work in the public sector will increase the gender wage gap.  The ‘reform’ whereby public sector pensions are calculated according to career average earnings, rather than final salary, will disproportionately affect women who tend to have lower lifetime earnings than men, largely because of how childbearing affects their careers.  Deteriorating public services push the burden of care back onto families, a burden which in practice falls disproportionately on women.

When I teach about gender inequality, I am often at pains to emphasize the degree to which women’s lives have improved in countries like Ireland.  There are legitimate concerns that opportunities for young working-class men have diminished.  However, our failure to address the conundrum of care – and its obliteration from public discourse in the crisis – means that gender inequality remains, and is worsening, in these sorry times.

Jane Gray