Housing system has turned into wealth generator for wealth funds - Rory Hearne

Dr Rory Hearne asks: "What good is a supply of housing that is unaffordable, that people are going to be stuck renting?"
Housing system has turned into wealth generator for wealth funds - Rory Hearne

Dr Rory Hearne said the market was created for investors because successive governments failed to build affordable housing leaving people with no alternative.

Successive governments have allowed the Irish housing system to be turned into a wealth generator for vulture funds, one housing expert has said.

Dr Rory Hearne said investment funds view Ireland as an endless profit stream and criticised the years of Government policy which he said has promoted this.

Tánaiste Leo Varadkar argued in the Dáil today that investment funds have a role to play in the market, pointing to large-scale developments in Dublin and other urban areas saying they would not have been built were it not for them.

"An argument that the government has made is that we need these because we need more supply," said the lecturer in the Social Policy Department of Applied Social Studies, Maynooth University.

"I would put it back to them and ask what good is a supply of housing that is unaffordable, that people are going to be stuck renting?"

Dr Hearne said the market was created for investors because successive governments failed to build affordable housing leaving people with no alternative.

"People cannot go and buy an affordable home because there are none available."

Had the Government shifted its policy in 2013/14 and used NAMA to start building affordable homes on scale and building social housing, Dr Hearne believes Ireland would not have the homelessness crisis or the scale of the housing crisis that we have right now.

"NAMA should have been directed to no longer sell to investors because we needed to focus on affordable housing.

We needed to do something then and we still need to do something because these funds are after our homes.

Dr Hearne believes that if the Government had increased the supply of affordable housing to 5-6,000 affordable homes per year using public land, that would have brought down and modified house prices and modified rents.

Speaking to East Coast FM's The Morning Show, Dr Hearne warned: "The danger is that this is going to get worse. Ireland is on the map for these global investors now."

What has happened over the last number of years cannot have come as a surprise to the Government as the United Nations Special Rapporteur on the right to adequate housing wrote to them two years ago warning that bringing in this type of investors would make housing more unaffordable.

Speaking at an event in 2018, Leilani Farha said an unregulated private sector had been filling the void left by governments, including international investors who, she said, were “profit-motivated, not tenant motivated”.

"What they do is they evict tenants, they then get in higher-paying tenants, they increase rents, they lock out homeowners," Dr Hearne said.

"They have billions in their war chest, they can pay whatever price is needed. There is a real danger here."

Dr Hearne said that as well as increasing the supply of affordable housing, the Government must remove the Real Estate Investment Trust tax break and introduce a number of taxes that would make it less attractive for investors who are coming to Ireland and buying up properties.

Government policy has attracted the investment funds who are trying to maximise the profit they can make from the Irish housing system, something Dr Hearne said is a fundamental flaw.

"Our housing system's primary function should be to ensure everybody has an affordable, secure, decent home. I don't see why we are running around making our policy for investors."

He said rather than being a "wealth generator for wealth funds", the housing system should fulfil its primary function and ensure that everybody has an affordable and secure home.

After it emerged that a vulture fund had purchased the majority of the 174 houses in a new estate in Co Kildare, the Taoiseach said the role of institutional investors competing with first-time buyers in completed housing estates is "unacceptable" adding that it would be dealt with immediately.

More in this section

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.