Social-housing providers have defended their role in the housing market following suggestions that their bulk leasing and buying of homes was squeezing out first-time buyers.
The Government plans to clamp down house purchases by large investors by increasing stamp duty to 10 per cent on the purchase of more than 10 houses, and by introducing new planning rules to limit bulk-buying.
Some property industry figures have pointed out many of these homes are leased or purchased by local authorities or approved housing bodies (AHBs) for social housing. However, social-housing groups said they were not competing with first-time buyers.
Donal McManus, chief executive of the Irish Council for Social Housing said long-term leasing accounted for about 5-10 per cent of AHB housing.
“It wouldn’t have a big impact in terms of AHBs’ housing delivery, the majority would be turnkey or construction.”
With turnkey purchases the housing body is buying from the developer, but Mr McManus said this was different from an investor buying up an estate from the market.
“It’s not like an investor buying our units at the 11th hour. It’s usually the case that we would be coming in early in the process, with a long lead-in time if units were being acquired.”
In the majority of cases the homes in question would not have been advertised for sale.
“The local authority would be aware the AHB was going to acquire the units, and there would be no mystery facing people. In many cases they wouldn’t be units that were ever earmarked for owner occupiers.”
Brian O'Gorman, chief executive of Clúid Housing, said his organisation didn't favour leasing arrangements.
“The organisation is largely against leasing, on the basis that our objective is to secure long-term rental properties that are available in perpetuity, not 25 years. So we generally develop or acquire our own.”
Mr O’Gorman said that while it was unusual for AHBs to buy entire estates, more recently Clúid has bought out apartment blocks.
“We wouldn’t generally buy whole estates. We would buy section of estates, and we have bought apartment blocks. Particularly with Covid, more of our programme has been acquisition.”
Clúid recently bought a block of 40 apartments in Raheny in Dublin, but this was after an investment firm which had planned to rent the block privately had pulled out, he said.
“We do recognise we are a significant player in the market, but I’m not sure how much evidence there is that those units would have been sold to individual buyers.”
In many cases estates would not be built if housing bodies did not agree to buy a proportion of the homes, Mr O’Gorman said.
“Having the guarantee that we are going to buy a certain number of units enables the developer to build out the rest of the estate. We are providing additional financial security that takes out the market risk,” he said.
“There’s not a set definite proportion we would buy but it could be 20 or 30 per cent, but you have to weigh that against the prospect that it might not get developed, other than if we buy a proportion of the scheme.”
Stamp duty
Mr McManus said the stamp-duty increase for private buyers may help the social-housing sector. “Investors will run their numbers and see does it still add up to buy, but it may assist AHBs in acquiring properties, because they are exempt from stamp duty.”
However, he said, all international investors were not the same and it was important that “ethical” investors were not deterred from the market.
“AHBs would work with ethical property investors who are not in it for short-term extraction, but for long-term investment in housing. We wouldn’t want to see anything that would discourage ESG [environmental, social and governance] funds.”
Francis Doherty of the Peter McVerry Trust said there could be unintended consequences for social-housing providers as a result of the Government's decision to exclude apartments from the bulk-buying restrictions.
“We are mostly housing people in apartments, and there might be difficulties for us in excluding them from the bulk-buying legislation as it could push the funds into that area. We might then find ourselves competing with those big-money funds.”
