Half of new builds to be ring-fenced for first-time buyers under government plans

Senior Government Ministers also refuted suggestions that State funding was being used by investment funds to bulk buy new homes.
Half of new builds to be ring-fenced for first-time buyers under government plans

Residential housing under construction at Janeville, Carrigaline, Co Cork. Picture Dan Linehan

The Cabinet will tomorrow sign off on plans to ensure that up to 50% of future housing estates be reserved for first-time buyers.

Ministers will be told that the plan intends to tackle the controversial bulk sale of housing estates to investment trusts on what government sources describe as a density basis.

The intended effect is that so-called cuckoo funds will no longer be able to bulk-buy estates which contain less than 50 houses per hectare.

This will prevent housing estates in suburbs being “swallowed up” but it is not intended to prevent them from continuing to bulk-buy new apartment blocks, ultimately for rent, in large urban areas.

Applies to future construction 

While developments must provide for 10% social housing and a further 10% affordable housing at present, Housing Minister Darragh O’Brien will be proposing legislation that a further "between 30% to 50%” of future housing estates be available for first-time buyers only.

Crucially, this provision will only apply to future local authority planning permissions and not to developments already approved.

As a result, the rule change will mean that between 60% and 80% of future developments would be reserved for social housing, affordable housing and first-time buyers.

These proposed new conditions will be attached to planning permission for new housing estates and enforcement will be a matter for local authorities to resolve.

Sources have said that this is to done by way of a Department of Housing circular to local authorities, as opposed to new legislation.

State investment in cuckoo funds

Speaking on Sunday, Government Chief Whip Jack Chambers said: “We will do everything we can and use all levers of the State to support home ownership.”

Meanwhile, Finance Minister Paschal Donohoe has insisted he had “no role” in where State agencies decide to invest monies for development.

Minister for Finance Paschal Donohue has said he has "no role" in where State agencies decide to invest monies for development. Picture: RollingNews.ie
Minister for Finance Paschal Donohue has said he has "no role" in where State agencies decide to invest monies for development. Picture: RollingNews.ie

Responding to weekend reports that the State invested in a so-called cuckoo fund that bulk-bought hundreds of homes in two Maynooth housing estates, Mr Donohoe said that as the Strategic Investment Fund must invest commercially, the Minister for Finance has no role in individual investment decisions.

It was reported that more than €225m of government funding that aimed to stimulate housing supply was ultimately used by funds to buy up houses and apartments before they could be put on the open market for regular buyers. Urbeo, an institutional fund majority-owned by a US-based company, received a €60m investment from the Irish state in 2018.

The ISIF is vested in the Minister for Finance but, under the NTMA Acts, ISIF implements its investment strategy and has an independent investment committee that oversees ISIF’s investments, a spokeswoman for Mr Donohoe told the Irish Examiner.

Construction funded through investment

Foreign Affairs Minister Simon Coveney countered by saying the government has been funding vehicles that can effectively forward purchase developments primarily apartments, to ensure that they get built, and that builders can actually fund the building of them.

“My understanding is about 90% of apartments that have been built in Dublin, over the last number of years have been funded through that type of vehicle,” he said.

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