Q&A: Ireland's latest housing controversy explained

Anger is growing over investment funds gazumping first-time buyers in buying up housing estates — but what is being done about it?
Q&A: Ireland's latest housing controversy explained

First-time buyers are struggling to purchase new homes against real estate investment trusts (REITs). 

Since the weekend, the political agenda has been dominated by the vista of large faceless global investment funds gazumping hard-pressed first-time buyers by gobbling up entire housing estates.

Sensing the potential danger at election time, anxious government TDs cried foul at their parliamentary party meetings on Wednesday demanding action be taken.

Taoiseach Micheál Martin and a succession of ministers have promised action, but what is not clear is what can actually be done.

What is the problem?

The Government has been reeling since the weekend since it was reported a large investment fund had bought up a large majority of a new housing estate in Maynooth. The Government has promised “it won’t happen again".

So what is being done?

Allowing big foreign investment firms to outbid first-time buyers is political kryptonite even though this problem has been brewing for years. 

Housing Minister Darragh O'Brien has said all measures would be considered to stop investment funds buying up full housing estates “up to and including” an outright ban.

The minister said he was committed to having proposals ready by next week which could be implemented before the end of July.

What are the other options?

Aside from an outright ban, it is clear the Government is looking to change the tax treatment of such investment funds in a bid to prevent them from buying up large part of estates.

But the sense is that whatever changes will not apply to large apartment blocks in large urban areas such as Dublin and Cork. Finance Minister Paschal Donohoe has committed to examining the tax system in this regard and said all options will be considered.

Planning regulations are set to be reviewed with a view to ensuring that at least 30% of homes in new housing developments are set aside for first-time buyers. A further 20% of homes of these developments would be social and affordable houses.

Who is responsible for fixing this? 

While Darragh O’Brien is the obvious person to think of, this has been a burning issue in recent days with a lot of criticism and attention centering on the role of Finance Minister Paschal Donohoe. There has been a deliberate attempt by Fianna Fáil to ensure Mr Donohoe is held to account.

Even Mr O’Brien noted that the Department of Finance has the power to “affect real change” on the issue by cutting back on the tax breaks currently offered to the funds.

But haven’t Fine Gael been in Government for 10 years? Why only move now?

The failure of successive governments to grapple with the housing crisis since 2013 is a large feature in this controversy. Fine Gael, in particular, is politically vulnerable as it welcomed the arrival of such investment funds a decade ago and established the tax breaks to allow them to operate.

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Wednesday, June 23, 2021

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