The poster child for the dangers of vulture funds has become a new hope for social housing, writes Joe Leogue.
Aimee O’Riordan was facing into Christmas 2017 wondering if she would begin the new year homeless, and deliberating how she was going to tell her young son Alex that they were facing eviction.
“It was massive turmoil for him,” Aimee says as she reflects on the past two years, a period that saw both her and her neighbours become the go-to example for those warning of the dangers of vulture funds.
In 2017, Aimee’s home — Leeside Apartments at the corner of Bachelor’s Quay and Grattan St in Cork city — went on sale at a guide price of €7.75m.
The brochure said there was 87% occupancy rate in the 78 apartments spread across five blocks, which provided 175 bed spaces.
It also stated that, “in recent months, as apartments have become available, management have not re-let the properties to allow for new purchasers to carry out renovation works”.
In a line that foreshadowed the conflict to come, the listing also said the building was earning €676,000 per annum, with “strong potential to increase annual rental income through refurbishment and active asset management”.
The building was bought by vulture fund Lugus Capital, who had Larea Fa Fund Ii Designated Activity Company listed as landlords of the property.
In November 2017, the landlords wrote to the residents of Leeside Apartments, terminating their leases and citing €3m safety refurbishment works as the reason for their eviction.
Specifically, tenants were told they were being evicted to make way for the installation of new fire doors, the refurbishment of all common areas, installation of new flooring throughout common areas and apartments in the building, refurbishment and redecoration of apartments, and installation of new kitchens in apartments.
Aimee says the tenants’ efforts to find another solution that would avoid eviction fell on deaf ears, and she and her son were facing the real prospect of homelessness.
“I’m here seven years now,” said Aimee. “I was pregnant when I moved in. This is the only home he has ever known.”
“You’re trying to hide things from him, but they pick up on things. I sat him down one day and said ‘look, we might have to leave, but we’ll be okay’ and all that kind of stuff.
“He goes to school as well up the road and I’m in UCC, so this is where we built our lives. So it wasn’t just having to move, it was potential homelessness, going into homeless services.
The story went national, and was first raised in the Dáil by Solidarity-People Before Profit TD for Cork North Central Mick Barry in the winter of 2017.
“I express solidarity with all those who are homeless and those who are facing the threat of homelessness,” said Mr Barry at the time. “I also want to make my nomination this Christmas for Ireland’s Scrooge of the year 2017.
“That dishonour must surely go to Lugus Capital, the new owners of the Leeside Apartments in Cork city. This Christmas, the vulture fund is placing the threat of eviction over the heads of nearly 30 households, many with young children.
“It is a scandal. It is threatening to put young children out on the side of the road in order to maximise its profits. I send Christmas congratulations to the residents for choosing to fight these evictions and I look forward to joining them in marching in protest through the streets of Cork city.”
The fight was taken from the streets to the Residential Tenancies Board (RTB), which ruled in March 2018 that Lugus Capital needed to prove that the extent of their proposed works necessitated the eviction of the Leeside tenants.
That was seen as a victory for the tenants — but that was short-lived.
By the following June, the RTB sided with Lugus Capital, and said the notice to evict was valid.
It had received a submission from a director of the vulture fund who argued that “you could not buy the building without carrying out the refurbishment as it would not make commercial sense”.
A report compiled ahead of Lugus Capital’s purchase of the property said works of €3.2m would have to be carried out.
Despite this ruling, some tenants, like Aimee, stayed put while others vacated their apartments.
Mr Barry said at this stage, Lugus Capital essentially “sued for peace”.
He told the Dáil: “It offered to keep the residents in apartments if they agreed to switch apartments within the complex, pay higher rents under the HAP [Housing Assistance Payment] scheme and sign a non-disclosure agreement.
However, the long-term future for those who stayed was anything but certain.
But a major change came his March, when it was announced that housing agency Clúid had bought the property for €20m — and would secure the tenancies of those who stayed throughout the upheaval.
“I cannot say exactly when, but at some stage, Lugus Capital decided to sell up,” said Mr Barry. “Having 14 HAP scheme tenants in its new luxury apartments was never part of the plan.”
Lugus Capital completed the necessary safety works before the sale of the property was completed.
“I couldn’t have dreamed of this outcome really,” Aimee said.
“We just wanted to facilitate the works here with the original buyer, but for it to go into social housing and to have a home for life was something I never even thought was on the cards. I thought I’d still be a private rental tenant, you know, so, I’m ecstatic.”
So too was Alex.
“He was more ecstatic than me when he heard we could actually stay, and that this would be our home,” she said.
“It’s amazing, it’s better than what I could have hoped for. Clúid are willing to work with the residents. From day one, that’s all we said, we wanted to work with the owners, we wanted to compromise on things and to be able to have open dialogue and that’s exactly what Clúid bring, they always put the residents first and it’s a great way to move forward.”
Clúid bookended this story last week, when they officially unveiled the new-look Leeside Apartments to then-lord mayor Mick Finn.
“All credit to the who stayed here, all through the turmoil, the various incarnations of the various developers coming in and coming out again,” said Cluid CEO Brian O’Gorman.
“They stuck with it, and they organised people and they stuck to the task. They’re still here and they’re the bedrock of the new community that’s coming in.”
New residents will come from the City Council’s waiting list, and Mr O’Gorman said the collaboration between the two bodies is working well.
“They’ve been very supportive of us over the years, but this is now taking it to a new level,” he said.
While eyebrows may have been raised at the €20m price paid for the property, Clúid has estimated that to build a similar development in the current climate would work out some €5m more expensive.
“We value for everything that we buy, so we have to be able to stand over what we pay for it,” said Mr O’Gorman.
“And if the valuations come back well below what we’re paying for it, then we can’t proceed. But a location like this ticks all the boxes for us, it’s right at the centre, it’s close to all amenities.
“This is where people can actually build lives, where they’re close to all services where they can participate in society and contribute and give something back. So if we could develop in these locations, we do it all the time.
“You know, this is this is really a peach for us.”
The poster child for the dangers of vulture funds has become instead a new hope for social housing.
“With more than 10,000 officially homeless, the Leeside saga is rich in lessons and offers pointers on how the housing crisis might be tackled,” Mr Barry said.
“Lesson No. 1 is that evictions can be fought and defeated, even when the landlord is a powerful vulture fund. An important pointer is that the key to saving homes and creating new one was taking the building out of private ownership.
“The victory should provide inspiration for every tenant nationwide who is fighting eviction. It should not be a one-off. It should provide a strong element of a template for how the State should intervene in similar cases in the future.
“Last but not least, the Government should stop kowtowing to the landlord lobby and match the courage of the victorious residents by moving to ban all evictions into homelessness.”