Government to block investment funds from buying up housing estates
Move has been agreed between three Coalition parties, sources say
The Government will move to block investment funds from buying up entire housing estates, according to senior figures involved in the process.
Discussions are continuing within Government as to how best to implement the policy, but senior Coalition sources confirmed that the move had been agreed between the parties.
The decision comes after 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 said was squeezing families out of the housing market.
Both Taoiseach Micheál Martin and Tánaiste Leo Varadkar yesterday expressed their unhappiness with the practice, with Mr Martin telling the Dáil that it was “unacceptable” and “will be examined”.
But sources involved in behind-the-scenes discussions said the party leaders had taken the decision to bring the practice to an end and officials were examining ways of doing this. Senior officials are examining the options, though some sources fear that the process could be fraught with legal difficulties.
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.
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”.
Under fire from Sinn Féin leader Mary Lou McDonald in the Dáil, Mr Martin said 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,” Mr Martin stressed.
Earlier Mr 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.”
But Opposition parties continued to savage the Government on the issue. “It is government policy to incentivise and support private investment funds to buy up housing across the state. It is government policy to keep a whole generation locked out of affordable housing,” Ms McDonald said in a tweet, during a day when housing policy dominated sharp exchanges in the Dáil.
Mr Martin also said that 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,” Mr Martin said.
There was some merit in short-term limited leases “but leasing overall long-term doesn’t represent great value”.
Mr Martin said he had spoken to the Ministers for finance, public expenditure and housing about the matter and Minister for Finance Paschal Donohoe “will meet colleagues this afternoon on this”. However, The Irish Times understands that discussions have quickly moved on to banning the practice.