AN INVESTORS GROUP has argued that institutional investors are “part of the solution, not part of the problem” to solving the housing crisis in Ireland.
Irish Institutional Property (IIP) has suggested investment is critical to economic progress and provides capital that is not available from other sources.
Similarly, Tánaiste Leo Varadkar said in the Dáil yesterday that it would be “ideologically extreme” to ban investment on certain types of housing.
Varadkar said that investment funds have a “role to play” in the property market following controversy earlier this week over a housing development in Maynooth, Co Kildare, where 135 of 170 houses at the Mullen Park estate were purchased by two investment funds, to be put up for rent.
In a statement today, the IIP said that institutional investors are “net sellers of additional new homes to the Irish market both for sale and for rent and that would otherwise not be built”.
“IIP members include the largest house builders in the State who have currently in planning or course of construction 12,000 homes, approaching over 50% of total private market output. The majority of this output is for sale to individual home owners.”
Members of the IIP include BCP Capital, Glenveagh Properties PLC, and Hibernia REIT.
“IIP members have to date invested over €14bn in the Irish market, providing much needed offices and workplaces, retail, hospitality, and most importantly housing,” the group said.
“Our approach to the housing market is focused on providing much needed supply and we are long term investors. We do not believe it is acceptable to offer houses for sale to the general public, inviting people to start to plan their finances to buy a house and then to withdraw them at short notice.
“Where it is viable to do so, we would support the concept of a percentage of houses in a residential estate development being required to be available for sale to first time buyers and individual home purchasers generally.”
Yesterday, Varadkar was pressed in the Dail by Sinn Fein TD Pearse Doherty, who said the Government had not only “facilitated” but “incentivised” and “rolled out the red carpet” for investment funds.
Doherty said: “You’ve created this situation where these international investment funds are snapping up family homes and locking first-time buyers out of the market.
“That is the reality. You’ve frustrated the hopes and dreams and aspirations of many workers and families who aspire to own their own homes.”
Varadkar said the Government believes in home ownership and is in the process of developing proposals for a “workable solution”.
“It needs to be a solution that resolves this problem, but also needs to be a solution that doesn’t have unintended consequences,” he told the Dail.
“There are housing developments in this city, mainly apartment blocks, mainly high-density developments that would not have been built if they haven’t got finance from investment funds,” he said.
“They weren’t able to get funds from the banks, and if they had not been built, we’d have fewer apartments, higher rents, higher prices, and perhaps even more people at homelessness.”
Varadkar said that at present about 1% of the housing stock in Ireland is owned by investment funds, which is “much lower” than in other developed countries.
He added that it would be “wrong to ban them outright”.
People Before Profit’s Richard Boyd Barrett said the National Asset Management Agency “sold off more than 40 billion euro worth of land and property assets” to vulture funds and “now they had moved on to buying new housing estates as well”.
“The consequence is that they are pricing normal working people almost entirely out of the market to buy their own homes,” Boyd Barrett said.
Speaking on RTÉ Radio One’s DriveTime this afternoon, former Secretary General of the Department of Finance John Moran said that “the situation at the moment for people for housing is really really difficult because the market is broken”.
“We have so few houses for the people who want homes that you’re going to see problems all over the place,” Moran said.
“The reason that we looked at investment funds, particularly when I was in the Department of Finance… we are a relatively young country with few savings that we haven’t used up and we have huge demand for the growth of the country.”
Moran said that now, “as a country, we need to find a way to finance all these homes” that will be required in the future and to address a current backlog.
“I think the problem occurred – when investors were invited into Ireland in the crisis, it was because we had a market freefall, it was just continuing down and down because no one trusted in investing in Ireland,” he said.
“Some would come in who were prepared to take riskier investments, but that was really important to put a floor and have things turn around and go back.
“As soon as the market stabilised and as soon as we started to realise we know longer had a glut of housing but were running into a shortage, then we should have been able to turn on a tap to get more building happening in the country, and that didn’t happen.”
Earlier this week, members of Cabinet approved the new Affordable Housing Bill, which has attracted criticism from opposition parties.
With reporting by Lauren Boland
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