The Irish Government will take actions towards curbing the buying up of entire housing estates by investment funds.
This decision follows fierce Opposition criticism of the Government on the housing issue, following reports that entire developments of family homes had been bought by investment funds, a trend that Opposition parties and housing campaigners noted has been squeezing families out of the housing market.
Irish Fianna Fáil politician, Taoiseach Micheál Martin said the practice was “unacceptable” and “will be examined”. He stressed that institutional investors were brought in “to add supply, not to displace supply” of housing and they had to “distinguish between good capital and bad capital”.
“We do not want institutional investors competing with first-time buyers. local authorities should not be effectively underwriting investments by property funds by promising long leases for social housing once the developments were complete, as has happened in some cases. I want to be very clear about this that no county council should be on the other side of this engaging in long leases with these institutional investors. There was some merit in short-term limited leases “but leasing overall long-term doesn’t represent great value.”
As revealed by the Irish Times, while there has been widespread Opposition criticism of the role that investment funds have played in the property market, there is a belief in Government that they should not be chased out of the market as they have an important role to play in providing funding for certain types of developments. Government sources briefed that they wanted them to fund “extra builds” that would not otherwise take place. There is little opposition in Government to the funds financing large-scale apartment developments for rental in urban areas.
Tánaiste and Minister for Enterprise, Trade and Employment, Tánaiste Leo Varadkar weighed in, saying investment funds mostly invested in apartment buildings before or during construction but there had been a change in recent months to whole housing estates or part of them.
He said: “It was never intended that they would enter into that part of the market and are taking away properties that could be bought by first-time buyers or upgraders . . . It’s working against the principle of home ownership.”
However, Ministers and senior officials have been alarmed by reports of entire housing estates being bought up, though there is legally nothing to stop the funds from doing so. One source said the funds were needed for their “original intention” but not for “plucking supply that is already there”.