By James Ward, PA
The purchase of completed housing estates by global institutional investment funds is “unacceptable”, the Taoiseach has said.
Micheál Martin has also called on county councils not to engage in long-term leases with such firms.
His comments follow controversy over a housing development in Maynooth, Co Kildare, where 135 of 170 houses at the Mullen Park estate were purchased by two investment funds, to be put up for rent.
Opposition parties have warned that this is pricing first-time buyers out of the market, because they cannot compete financially with such funds.
Mr Martin said: “First of all, may I state unequivocally that the purchase by institutional investors of completed housing estates is unacceptable and not consistent with government policy.
“We do not want institutional investors competing with first-time buyers. Our priority is first-time buyers.”
He said what took place was not compatible with Government policy, and a review of what took place in Kildare will be held.
He added: “Institutional investment was brought into the country over eight years ago, through various measures, to add supply, not to displace supply.
“That is the critical differential point.
“Government will examine what has transpired over the weekend, in respect of a suburban housing estate being purchased, en bloc, by an institutional investor. That’s not acceptable to government.”
The issue was raised at Leaders’ Questions on Wednesday by Sinn Féin and the Social Democrats.
Sinn Féin president Mary Lou McDonald said the purchase of the Kildare estate was a direct consequence of Government policy.
Messages for an Taoiseach: 1. Your Govts policy favours Developers, landlords and investment funds - what happened in Maynooth is a consequence of those policies. 2. A house priced €450K is NOT Affordable https://t.co/457d69rjof
— Mary Lou McDonald (@MaryLouMcDonald) May 5, 2021
She said: “The truth is that it is his government policy to incentivise and to support these private funds, to buy up housing right across the state.
“Indeed, Fianna Fáil and Fine Gael have rolled out the red carpet for them with a range of sweetheart tax advantages.
“These funds pay no corporation tax, they pay no capital gains tax, and minimal stamp duty.
“They also charge some of the highest rents in the state, and they pay no tax on that.
“This cushy regime gives massive financial advantage to very wealthy investment funds.
“And in truth no person trying to buy a home could possibly compete with them. Not in Maynooth and not anywhere else.”
“I listened to the Housing Minister yesterday say he didn’t want to do anything radical and risk unintended consequences.
“This begs a question: was what has happened in Maynooth, and elsewhere, an Intended Consequence?” asks @CathMurphyTD #homesnotinvestments pic.twitter.com/9vc2XBdcVl
— Social Democrats (@SocDems) May 5, 2021
She noted plans by Housing Minister Darragh O’Brien to limit what funds can buy to 70 per cent of a housing estate.
She added: “Well, woo-hoo. That gives nobody any comfort, Taoiseach, that is outrageous.”
The Taoiseach said he had consulted with the minsters for finance, public expenditure and housing on the issue.
He added: “This issue will be examined, across the board, in terms of ensuring that the purpose and objective of inward investment in the residential market is to add supply, not displace supply.
“And not to compete with first time buyers out in the suburban markets.”
Mr Martin said institutional ownership of residential units is less than 1% of the total housing stock and 5% of all rental tenancies.
“Just to give some perspective” he added.
Social Democrats co-leader Catherine Murphy told the Dáil that almost €4 billion has been invested by global funds in the Irish residential market since 2018.
She added: “In 2019, international funds bought a staggering 95% of the apartments that were constructed in that year.
“How are ordinary buyers who scrimp and scrape to save for mortgages supposed to compete with this?
“There is no mystery as to why these funds are here outbidding ordinary buyers, because they are being advantaged by the state.”
She also raised the issue of county councils engaging in long leases with such firms.
She said: “The other aspect of it is, it’s not just that they’re buying these estates, but you will find that the state will be on the other side, with long leases.
“Over 25 years they will be leased, and then refurbished and returned to the developer at the end of it.”
Mr Martin responded: “I want to make it very clear, no county council should be on the other side of this. Let that go out loud and clear now from Government.
“No county council should be on the other side of this, engaging in a long lease with these institutional investors of that estate.
“As far as I’m concerned, a limited degree of leasing had some degree of importance. But leasing overall long-term doesn’t represent great value for money, to be straight up with you.”