So what's all this about a housing crisis?
Ireland is gradually emerging from the Covid-19 crisis but, as the fog slowly dissipates, another crisis is hoving right back into view. It's been there all along but in a state of suspension – thanks to rent freezes and anti-eviction orders. But, as events this week have made clear, and to paraphrase a certain bearded politician, the housing crisis hasn't gone away, you know.
Why the sudden focus on it now?
Well, two separate events happened this week that refocused people's minds on the gargantuan challenge facing the Government in terms of housing. The first was Minister for Housing Darragh O'Brien's controversial Affordable Housing Bill. The second was reports in the Business Post and The Irish Times disclosing that a global property investment company, Round Hill Capital, had acquired (with a partner) as many as 150 houses in a residential estate in Maynooth and 112 houses in an estate in Hollystown, North Dublin. Once the houses are complete, they will be rented out as single-family homes.
But haven't investment companies and real estate investment trusts (Reits) been bulk-buying residential properties for years?
That's true. In 2013, then minister for finance Michael Noonan introduced a Reit regime to attract new sources of non-bank finance to Irish property. When formed, these trusts were exempt from corporation tax on income and also on gains from rental property. These and other companies bought up entire developments comprising hundreds of apartments and put them on the private rental market.
Politically, you could argue the toss in favour of this model. There were thousands of highly paid employees of social media companies such as Google and Facebook working here. Many were young and single. What they wanted were high-quality apartments close to where they worked. What they didn't want was to buy them. This would be home for only a few years before they moved on to live in another city.
When the planning laws changed to allow specific student accommodation (in effect co-living), investment funds also bought entire new developments which sprung up quickly in the major urban centres (in effect allowing co-living).
So what's changed?
Now big investment companies have extended their reach to the suburbs, by buying first-time family houses and then renting them out. This Government's Big Idea was to make owning a home affordable for a generation that until now has been locked out of the property market.
The residential housing market is already badly squeezed. Covid-19 has not helped. Instead of reaching the desired target of 33,000 homes being built this year, the industry is saying the figure could be as low as 12,000 units. This means demand for first-time homes will hugely exceed supply, thus pushing up prices. House prices have increased by an average of €20,000 in the past year and there is no reason to believe there won’t be residential property inflation again this year.
The news that 250 houses are being taken out of that reduced pool by an international investment company is very damaging politically. The impact of it could be seen at angry parliamentary party meetings on Wednesday where Fianna Fáil and Fine Gael attacked each other over the mess.
What is being done about it?
Everybody agrees something needs to be done quickly. Labour's Rebecca Moynihan cheekily said she would re-table word-for-word a Bill Darragh O'Brien published in 2019 when in Opposition which intended to block so-called cuckoo funds from buying up entire estates. The Bill provided that 30 per cent of all new developments be reserved for first-time buyers. He and Minister for Finance Paschal Donohoe are now urgently working on a solution which could see such mass purchases being restricted to apartment blocks in city centre cores.
