Government proposals to alleviate the housing crisis in the face of criticism over the presence of institutional investors in the market have been labelled as “nothing short of scandalous”.
Housing Minister Darragh O’Brien will tomorrow bring proposals to Cabinet which would see 50% of homes in new housing developments set aside for first-time buyers in order to make the market more accessible.
It’s understood that the department will also seek to reduce the capacity of Real Estate Investment Trusts (REITs) to buy up housing in bulk by applying a density protocol which would see such funds prohibited from buying up developments with fewer housing units.
In theory that would see such bulk-buying focused on apartment builds, as opposed to housing estates.
However, the fact that the new measures will not apply to developments with existing planning permission means they cannot expect to have any measurable effect for a number of years, according to opposition TDs.
“This will take the guts of five years to have any effect,” Cian O’Callaghan, the Social Democrats housing spokesman, said.
“There are 80,000 planning permissions live in Ireland right now, and it takes a minimum of four years to see them built out. Take the Mullen Park example (the estate in Maynooth recently bought out by investment fund Round Hill Capital) - that got permission in 2014 but the sale has only just gone through now.”
Sinn Féin spokesman on housing Eoin Ó Broin agreed, stating it would be “deeply disappointing and totally unacceptable if the Government doesn’t bring some form of legislation for developments currently in train”.
“If the Minister restricts it to the future then you won’t see an impact for years,” he said.
Mr Ó Broin said that the fact the 50% level of new builds to be held exclusively for first-time buyers would apply to housing estates alone is “nothing short of scandalous”.
“At present, the Government is saying that rental alone is acceptable in city centres. It actively undermines its own housing strategy,” he said.
“This is a Government that won’t do anything on housing but wants to cod people that it will. If it doesn’t fix the problem now, then people will notice, because otherwise investment funds will keep buying up properties."
The Department of Housing said that the minister is “opposed to inappropriate purchases of housing estates by international investors”, while confirming that “any changes will apply to future planning permissions”.
Regarding the news reported over the weekend that the State had invested in a number of REITs via the Irish Strategic Investment Fund (ISIF), the Department said that ISIF is a matter for the Department of Finance.
The Department of Finance, in response to a query regarding its oversight of ISIF and the tax changes which may be necessary to run in tandem with the new housing proposals, said that ISIF’s investments are “designed to increase the supply of housing by acting as a catalyst for… investment in delivering more homes in Ireland”.
A spokesperson added that ISIF only invests in new builds, while the department’s “position” is that “the funds mentioned ‘forward fund’” new housing, that is supply which would not otherwise be built.
“We cannot comment on possible taxation measures,” they added.