First Step Homes, a developer of properties for lease to local authorities set up by UK-based Trinity Investment Management, is considering scaling up its business in the State again on hopes of more favourable housing policies from the Government.
The low-profile company entered the market a decade ago and had 800 units at its peak across Dublin and other cities including Cork, Limerick and Galway, company director Richard O’Boyle told The Irish Times.
However, it has sold its portfolio down to about 300 homes, following the previous government’s decision in the Housing for All plan in 2021 to phase out long-term social housing lease schemes.
“We see a potential opportunity to scale the business again from here, but that’s still under review,” Mr Boyle said.
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It is understood that First Step Homes, where London-based Trinity Investment Management is backed by US real estate investment firm TPG Angelo Gordon, had previously been actively considering exiting the Irish market altogether as part of its strategy review.
“I think we’ve reached an inflection point and the penny has dropped with the powers that be that much more needs to be done to create supply in general,” Mr Boyle said. “The Government has a mandate to deliver houses.”
Taoiseach Micheál Martin said last weekend that the Government needed to “pivot more strongly to getting private sector investment in the market” and take “very difficult political decisions” as it targets the building of 300,000 homes by 2030 – equating to an average of 60,000 a year.
That plan includes the construction of an average of 12,700 new social homes annually over the period.
There were 30,330 new dwelling completions last year, well short of a government target of 40,000 and down 6.7 per cent from the previous year, the Central Statistics Office said. The number of apartments completed slumped 24 per cent to 8,763.
The Central Bank of Ireland has said that if the State was to deal with the crisis within 10 years then it needed to build 70,000 homes a year to address the housing shortfall and future demand.
Mr Martin said in an RTÉ Radio 1 interview last Sunday that measures being considered included an alternative to the current rent pressure zone (RPZ) regime, in which rent increases are capped the rate of inflation or 2 per cent, whichever is lower.
The objective, he said, was to protect renters, but one that “also enables people to have a clear, stable environment in which to invest”.
Approved housing bodies, local authorities and the State’s Land Development Agency have emerged in recent years as the main funders of apartment construction in the State. They have filled a gap created by a retreat among private rental sector investors, who stepped back amid a spike in interest rates and concerns about housing policy.
The previous government promised in 2021 to phase out long-term social housing leasing deals with private companies and funds by the end of this year. The long-term lease schemes had been criticised by Opposition parties Sinn Féin and the Social Democrats as a waste of taxpayers’ money. They favour boosting state-owned social housing stock.
Mr O’Boyle said, however, that First Step Homes hopes the decision to wind-down the long-term lease schemes will be reviewed as the Government considers ways to ramp up supply.
First Step Homes was established a decade ago and initially focused on buying and refurbishing existing housing units and leasing them to local authorities. It subsequently began to develop multifamily units and houses.
The company had dipped its toes into developing homes for sale and lease in the private market, but did not manage to build a business of scale before it started to sell down assets in the State, Mr O’Boyle said.
