Paul Hosford: New housing regulations are too late - the horse has already bolted
The new rules do not affect the thousands of homes already in planning, meaning it will be years before their impact is felt. File Picture Dan Linehan
On Thursday in the Dáil, housing led the way in Leaders' Questions for the seventh time in a row.
While issues that dominate the Dáil sometimes don't make their way into general conversation, housing is an all too real example of when it does. We all know someone who is struggling to purchase a home, paying exorbitant rents, or is worried about a long-term housing solution. In many cases, people are ticking all three boxes at once.
Indeed, housing is not just a major issue for this government, it is major issue and, this week, it was front and centre even as the medical data of the country was being held for ransom - and for good reason.
The revelation a fortnight ago had removed the veneer of fairness that homebuyers believed existed. Anyone attending a house viewing accepts that there is something of an arms race inherent in buying a home.
However, most of us anticipate that race is against fellow would-be buyers, and not international investment funds, such as that which had purchased 135 of the 170 homes at Mullen Park in Maynooth.
Such news drove home the idea that many buyers were bringing knives to a gunfight: when buying a home, we accept someone might have deeper pockets, but not €1bn deep, and certainly not armed with cushy tax arrangements given to them by the Government.
The Government's reaction to the controversy was swift and unequivocal with everyone from Taoiseach Micheál Martin to Housing Minister Darragh O'Brien saying that something would be done to bring some balance to the market.
What that something was was revealed at a press briefing late on Tuesday. There, Mr O'Brien and Finance Minister Paschal Donohoe laid out new plans - to allow councils to ringfence up to half of new-build developments for owner-occupiers and a 10-fold increase on stamp duty on the purchase of the tenth home and above in a development.
Both said that this would be a major disincentive for investment funds to make bulk purchases - the Government now means business against these funds gobbling up homes.
However, the rules won't apply to the 80,000 planning permissions in Ireland which were in the works long before the rules became active on Wednesday. What this means is that if a housing development you go to view in the next few months has had its planning permission before Wednesday, you may have already been outbid by a hedge fund - new rules or no new rules.
Granted, the increase in stamp duty will kick in when the house is fully sold, but Virgin Media News Economics Correspondent Paul Colgan laid out the maths of this move in a tweet on Wednesday, asking if the 10% rate would have deterred the Maynooth deal.
"To deliver a modest enough yield of 5%, the owners could charge rent of around €1,670 a month on each.
"Had the fund bought after today's legislation the price per unit rises to €440,000. To achieve a 5% yield the owner would therefore charge rent of approximately €1840 per month. That's around €170 in additional rent. Given high demand, would this have put off the fund?"
Would 10% stamp duty really put off a fund from buying houses in the likes of Mullen Park?
— Paul Colgan (@paulcolgan) May 19, 2021
I looked at the sort of rental yields they can still expect.pic.twitter.com/TxAGTjNbQq
The answer is, in all likelihood, no. These funds are currently faced with a 7.5% stamp duty rate on commercial property and that has made little impact on demand.
Meanwhile, across the city from the bi-party announcement, the third leg in the coalition let a Sinn Féin motion on housing pass in the Dáil by simply forgetting to vote against it.
Green Party junior minister at the Department of Housing Malcolm Noonan said it was "a momentary lapse of concentration" from him which allowed the non-binding motion which called for a doubling of capital spending on homes and the delivery of 20,000 social homes a year.
Mr Noonan put his hand up and admitted his mistake, but the sight of the Opposition scoring a win on housing while the Government moved to plug a gap of its own making - or one of its parties, at least - was an interesting piece of political optics.
Because housing is issue now. It was the second most important issue in the last general election and is issue of anyone aged 18 to 40 and many beyond. It has been suggested that the party which finally "solves" the issue will be rewarded at the ballot box in perpetuity.
But the Irish attitude to politics is not that ideological for the most part. We are a very transactional electorate which is now asking one thing - that a system be created which will enable people - ourselves, our children - to purchase a decent home or find a long-term rental solution at a reasonable price.
The time for lapses in concentration is long over.
