We all know timing is everything. Allied Irish Bank, the institution in which the Irish state has a 71% shareholding, issued a written report on housing resource in Ireland over the weekend with some suggested policy prescriptions.
Or alternatively, it didn’t release such report. But instead, it carefully planted components of the “unpublished” report in one of the newspaper. There, its contents were treated with all the current gravitas of our government green paper.
Maybe that isn’t so surprising after all; Such policy enforcement ideas from a bank or investment company which is overwhelmingly in state ownership would be presumed to carry the imprimatur of our government of the day.
However, That particular Allied Irish Bank report contains cocktail of proposals, a lot of which hark back again to the giddy days of the Celtic Tiger. A taxes cut for property developers by using lower VAT; lower building standard expectations; equity-release programs with bridge financing to allow individuals release some of the value of these homes; taxes breaks for the landlords; a soft-touch method of the vacant site levy which will not annoy builders; and a broadening of the help-to-buy scheme structure.
In isolation, some have merit; in aggregate, the impression is more one of tossing money pretty indiscriminately at a problem. This ignores a number of warnings granted from famous brands like the ESRI (Economic and Social Research Institute) and the Fiscal Advisory Council about the risk of the Irish overall economy again to overheat and the necessity for just about any investment on housing to be well balanced by tax boosts or spending cuts elsewhere.
Obviously, a far more dynamic property market offers more possibilities for the lender to benefit from the housing sector.
The report highlights the fact that the lender has geared up its team dealing with property developers and is also also analyzing new financing models for the housing industry. It has additionally added specialist bodies to its home loaning sectors.
Allied Irish Bank is “reviewing its credit plans” for real to observe how it provides “enhanced” financing for buy-to-let buyers. Which is eyeing up financing options – including presently unavailable bridge fund – to improve the equity-release market.
Maybe, in the end, this carefully leaked report was less of a planned prescription hidden in a new policy and more of a business arrangement for growing the bank’s revenue.