We know that leopards never change their spots and that greedy little toads rarely morph into St Francis of Assisi. But isn’t life more tolerable if we assume the best rather than the worst?
So those of a sunny disposition assumed the best from a Sunday Business Post headline last weekend: "Minister warns developers not to repeat past greed." We liked the word "warns". It carried intimations of threats and sanctions. Maybe – ring out them bells – Minister of State, Paudie Coffey, had found a way to rein in the big cats of the construction world? Sadly not. He was simply saying that he wanted developers and other construction professionals to ensure that new homes are affordable. "I would be asking all sectors to reflect on [the Celtic Tiger] and look at their margins. Let's not be as greedy as we were in the past . . ."
As the Minister with responsibility for implementing the vitally important Construction 2020 programme, he can ask. But what are the chances?
Back in 2008, when Frank McDonald and I were researching The Builders (a book on the building boom), an insider explained how developers calculated house prices in a new development.
“Typically, the price of houses is decided at a meeting on Monday between the agent and the developer. There would be much chewing over it, seeing how other sites went, who was selling what for how much . . . Then they’d chew some more and just pull a figure out of the air. It’s all done in such a slipshod way; it’s about what they feel they can get away with.
“Later that week, the houses are duly advertised at that price, go on sale and sell well – and suddenly the builder is roaring at the agent, complaining they were sold too cheap. What happens then is that you call the next bunch of exact same houses ‘Phase 2’ and the price is hiked maybe 15 per cent. And that could all happen in a few days or in an afternoon. You could have five ‘phases’ in a development.”
This, remember, was happening at a time when young couples were queuing for days to shackle themselves to a bubble-era mortgage and financial institutions were piling the moral pressure on parents to release equity in their own homes to assist desperate offspring. The heart-tugging EBS “Familyfirst” mortgage campaign was probably the most brazen example; a blatant cash grab by the simple means of handing children a concrete proposal to bring to their parents. How many parents, under that degree of emotional pressure and indoctrinated by the gospel of invincible bricks-and-mortar, managed to resist?
Who knows how many ageing men and women are living in reduced or near penurious circumstances as a result. For them, the recent credit unions’ proposal to give mortgages to parents to help children meet Central Bank rules on house deposits, must seem like a bad joke.
Nonetheless, things are looking up for some involved in that merry dance. The State – in a hurry to boost housing supply – is planning to loan money to builders at low rates to pay for the infrastructure around the housing estates they build. You know yourself – those little extras like roads, footpaths and sewerage. It may also refund some of the development levies to them as a little pat on the back for finishing estates on time and to the required standard. Well, they could hardly be expected to do all that without incentives, could they?
Yet it’s just seven years or so since local authorities and many of those hapless new home buyers were left swinging by broke developers; stuck with the fiscal and living nightmare of housing estates abandoned with uncompleted roads, lighting and derelict sites. A “wholly insufficient” bond system introduced to discourage rogue developers from leaving estates incomplete was to blame, according to Labour TD Ciarán Lynch, back then. In 2008, it was estimated that developers owed €142 million in development levies in the Dublin City Council area alone. The outstanding amount nationally is now believed to be well over €300 million. How many of the same operators stand to benefit from the latest incentive schemes?
How many have even acknowledged to themselves their role in the economic collapse, never mind offered an apology ?
But fresh faces are appearing on the scene, too young to have contributed to the misery, so we and Paudie Coffey will hope for a streak of decency in the newcomers.
Greg Kavanagh for example is the 29-year-old developer behind New Generation Homes, a young man with the nous to have acquired substantial backers and €100 million to spend on residential land banks around Dublin since 2011, according to the Sunday Business Post.
Now he is planning to build thousands of houses on a string of sites across the suburbs, from Rathfarnham to Stepaside, Lucan to Kinsealy. He has been “heavily critical of constraints imposed by the Central Bank on mortgage lending, referring to restrictions to cool the market as ‘madness’, ” says the report. Apart from that, his LinkedIn profile lists his interests as “making money”. Given his stunning head start and the fact that he has described his business skills as being on a par with Ronaldo’s and Messi’s in football, that shouldn’t be a problem. One to watch.