Comments for Ronan Lyons http://www.ronanlyons.com Irish Economy | World Economy | Property Market | Economic Analysis | Ronan Lyons Sat, 13 Mar 2010 13:32:49 +0000 http://wordpress.org/?v=2.8.4 hourly 1 Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Ronan Lyons http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1497 Ronan Lyons Sat, 13 Mar 2010 13:32:49 +0000 http://www.ronanlyons.com/?p=1191#comment-1497 Niall, Many thanks for the Dail reference. For those interested, you can find it from this link, http://debates.oireachtas.ie/DDebate.aspx?F=DAL20100203.xml&Page=2&Ex=3480#N3480. The text of relevance is as follows: Deputy Joan Burton asked the Minister for Social and Family Affairs her views on further reductions to the rent allowance; the amount of money that is allocated for the rent allowance in 2010; if she will provide a breakdown of spending on the rental allowance by Dublin postal district for 2007, 2008 and 2009; and if she will make a statement on the matter. The reply: "The purpose of the rent supplement scheme is to provide short-term support to eligible people living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source. Rent supplements are subject to a limit on the amount of rent that an applicant for rent supplement may incur. Rent limits are set at levels that enable different types of eligible households to secure and retain basic suitable rented accommodation, having regard to different rental market conditions that prevail in various parts of the State. The objective is to ensure that rent supplement is not paid in respect of overly expensive accommodation having regard to the size of the household and market conditions. Setting or retaining maximum rent limits at a higher level than are justified by the open market can have a distorting effect on the rental market, leading to a more general rise in rent levels and in landlord income. This in turn may worsen the affordability of rental accommodation unnecessarily, with particular negative impact for those tenants on lower incomes. A review of maximum rent supplement levels is in process and will be completed by 31st of March 2010. Preliminary findings of this review confirm that rent levels have dropped significantly and continuously since their peak in 2007 giving further scope for reductions for rent limits. The provisional outturn for 2010 Rent Supplement is €509m, an overall year on year increase of 19m. This reflects the expected increase in rent supplement applicants in payment in 2010. In the time available it is not possible to provide statistical information requested." In short, quarter 2 - April-June - could be a period of adjustment in the market, depending on the findings of the review. Niall,
Many thanks for the Dail reference. For those interested, you can find it from this link, http://debates.oireachtas.ie/DDebate.aspx?F=DAL20100203.xml&Page=2&Ex=3480#N3480. The text of relevance is as follows:
Deputy Joan Burton asked the Minister for Social and Family Affairs her views on further reductions to the rent allowance; the amount of money that is allocated for the rent allowance in 2010; if she will provide a breakdown of spending on the rental allowance by Dublin postal district for 2007, 2008 and 2009; and if she will make a statement on the matter.
The reply:
“The purpose of the rent supplement scheme is to provide short-term support to eligible people living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source.
Rent supplements are subject to a limit on the amount of rent that an applicant for rent supplement may incur. Rent limits are set at levels that enable different types of eligible households to secure and retain basic suitable rented accommodation, having regard to different rental market conditions that prevail in various parts of the State. The objective is to ensure that rent supplement is not paid in respect of overly expensive accommodation having regard to the size of the household and market conditions.
Setting or retaining maximum rent limits at a higher level than are justified by the open market can have a distorting effect on the rental market, leading to a more general rise in rent levels and in landlord income. This in turn may worsen the affordability of rental accommodation unnecessarily, with particular negative impact for those tenants on lower incomes.
A review of maximum rent supplement levels is in process and will be completed by 31st of March 2010. Preliminary findings of this review confirm that rent levels have dropped significantly and continuously since their peak in 2007 giving further scope for reductions for rent limits.
The provisional outturn for 2010 Rent Supplement is €509m, an overall year on year increase of 19m. This reflects the expected increase in rent supplement applicants in payment in 2010.
In the time available it is not possible to provide statistical information requested.”

In short, quarter 2 – April-June – could be a period of adjustment in the market, depending on the findings of the review.

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Niall http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1496 Niall Sat, 13 Mar 2010 13:15:57 +0000 http://www.ronanlyons.com/?p=1191#comment-1496 Ads in the commercial property section of the Irish Times on Thursday last suggest that industrial/commercial units are already priced at well below their replacement cost. The oversupply makes a mockery of any idea that rental yields are not continuing to fall. Because of the artificial structures put in place around the purchase of many industrial units, the actual rent paid is quite opaque. Many landlords are connected parties to the tenant. In relation to Cian's point, the DSFA will shortly be publishing a review of rent supports. Already support limits are considerably above market rents in 90% of the country and a cut of 15% saving €75M is quite reasonable, See Dáil question Ref No: 5546/10. Retail rents will also have to come down quite considerably, if shops are to survive. Yes, Rónán your basic argument is correct, perhaps even understated! Ads in the commercial property section of the Irish Times on Thursday last suggest that industrial/commercial units are already priced at well below their replacement cost. The oversupply makes a mockery of any idea that rental yields are not continuing to fall. Because of the artificial structures put in place around the purchase of many industrial units, the actual rent paid is quite opaque. Many landlords are connected parties to the tenant.

In relation to Cian’s point, the DSFA will shortly be publishing a review of rent supports. Already support limits are considerably above market rents in 90% of the country and a cut of 15% saving €75M is quite reasonable, See Dáil question Ref No: 5546/10.

Retail rents will also have to come down quite considerably, if shops are to survive.

Yes, Rónán your basic argument is correct, perhaps even understated!

]]> Comment on Do the NAMA figures add up? A broader and more realistic assessment of long-term economic value by NAMA – a developer bailout – Smart Taxes Network http://www.ronanlyons.com/2009/09/17/do-the-nama-figures-add-up-a-broader-and-more-realistic-assessment-of-long-term-economic-value/comment-page-1/#comment-1494 NAMA – a developer bailout – Smart Taxes Network Fri, 12 Mar 2010 13:12:29 +0000 http://www.ronanlyons.com/?p=900#comment-1494 [...] just reallocates the flooding problem. The approximately €8.4bn in Irish residential projectscovered by NAMA translates into about 34,000 residential units, taking €250,000 as an average [...] [...] just reallocates the flooding problem. The approximately €8.4bn in Irish residential projectscovered by NAMA translates into about 34,000 residential units, taking €250,000 as an average [...]

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Ronan Lyons http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1493 Ronan Lyons Fri, 12 Mar 2010 08:57:03 +0000 http://www.ronanlyons.com/?p=1191#comment-1493 I haven't read through the EU's role in full, but that would warm the cockles of the heart. In addition, Karl Whelan, over on irisheconomy.ie, suggests that <a href="http://www.irisheconomy.ie/index.php/2010/03/09/new-guidelines-for-nama-pricing/" rel="nofollow">the EU may have increased the discount factor</a>, which seems like it's going to be used by NAMA in some sort of way to reduce prices (the whole thing is quite opaque!). If true, both are good things from the Irish taxpayer point of view (and also both make the nationalisation of the banks more likely). I haven’t read through the EU’s role in full, but that would warm the cockles of the heart. In addition, Karl Whelan, over on irisheconomy.ie, suggests that the EU may have increased the discount factor, which seems like it’s going to be used by NAMA in some sort of way to reduce prices (the whole thing is quite opaque!).

If true, both are good things from the Irish taxpayer point of view (and also both make the nationalisation of the banks more likely).

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Pat Donnelly http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1492 Pat Donnelly Fri, 12 Mar 2010 08:27:49 +0000 http://www.ronanlyons.com/?p=1191#comment-1492 Excllent! But the EU has to vet each transer does it not? One of the upsides of loss of sovreignty! Excllent!

But the EU has to vet each transer does it not? One of the upsides of loss of sovreignty!

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by david mc williams http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1489 david mc williams Thu, 11 Mar 2010 17:32:45 +0000 http://www.ronanlyons.com/?p=1191#comment-1489 great article ronan, best david great article ronan, best david

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by The Irish Economy » Blog Archive » Ronan Lyons on NAMA and Yields http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1488 The Irish Economy » Blog Archive » Ronan Lyons on NAMA and Yields Thu, 11 Mar 2010 12:19:32 +0000 http://www.ronanlyons.com/?p=1191#comment-1488 [...] has updated his analysis on property yields and its implications for NAMA and long-term economic value. It [...] [...] has updated his analysis on property yields and its implications for NAMA and long-term economic value. It [...]

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by UpsidedownA http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1487 UpsidedownA Wed, 10 Mar 2010 20:32:13 +0000 http://www.ronanlyons.com/?p=1191#comment-1487 RE: Yields on commercial property. Perhaps the Government is trying to ensure that the return to long term average will come through an adjustment in prices. This would explain the failure to sort out the upwards only rent reviews issue on existing commercial leases. RE: Yields on commercial property. Perhaps the Government is trying to ensure that the return to long term average will come through an adjustment in prices. This would explain the failure to sort out the upwards only rent reviews issue on existing commercial leases.

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Gavin http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1486 Gavin Wed, 10 Mar 2010 09:26:46 +0000 http://www.ronanlyons.com/?p=1191#comment-1486 Lenihan mentions it here: http://www.youtube.com/watch?v=pWlz1IKWfw4 Lenihan mentions it here:

http://www.youtube.com/watch?v=pWlz1IKWfw4

]]> Comment on Elephant in the room: NAMA’s yield problem hasn’t gone away by Foolish Penny http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/comment-page-1/#comment-1485 Foolish Penny Wed, 10 Mar 2010 00:31:30 +0000 http://www.ronanlyons.com/?p=1191#comment-1485 Excellent article Ronan - very clear explanation. We've linked from here www.no2nama.org. Excellent article Ronan – very clear explanation.

We’ve linked from here http://www.no2nama.org.

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