Paul Melia: Rents and prices on the rise once firesales began
Published 23/04/2016 | 02:30
SOLVING any crisis takes time, but it seems to be manifestly wrong that investors can buy up housing when a country's citizens cannot purchase or rent a home to call their own at an affordable price.
The figures outlined today show that the wheels of commerce continued to turn when the country was experiencing its darkest hours. Spotting an opportunity, property funds went on a spending spree. They were investing billions of euro when the government was desperately trying to ramp up delivery of social houses and kick-start the construction industry.
But these figures are only one part of the story. It is understood that on top of the 9,000 units purchased since 2010 across most counties, property funds also bought more than 30,000 mortgages on buy to let properties - meaning they control in the region of 40,000 houses and apartments.
The spending really began to take flight from 2012, when more than €120m was invested. It's probably no coincidence that this is around the time that property prices and rental costs began to rise, according to data from the Central Statistics Office and Private Residential Tenancies Board.
But what to do? Very little legally, it seems. While some, including acting Environment Minister Alan Kelly, have suggested that property rights are the problem, legal sources suggest that the State simply cannot ride roughshod over the constitution.
A legal entity, such as a company, has rights too, including the right to equality before the law. While banning investors from buying anything may seem to be an easy solution, it's far more complicated than that.
Aside from the fact that the investment made by some of these funds was welcomed at the time, particularly those who plan to remain in the market over the longer term and provide a decent standard of rental accommodation, it sticks in the craw that units were bought for as little as €6,000.
The question is why the State didn't snap up these homes, complete the developments, and sell some on the private market and use others for social housing to create mixed-tenure communities.
There's a number of reasons why. County managers would suggest that part of the problem was the fact that approval was needed from the Department of the Environment was needed before units could be bought on the open market.
If that sale was happening in a tight timeframe, the council inevitably lost out because it couldn't move quickly enough. The system has since been changed so only one approval is needed for purchases of 15 units or sales of €2m or less, but it's a layer of bureaucracy the private sector needs not cope with.
But there's deeper issues. If an apartment block for sale has sitting tenants, there isn't funding available to councils to purchase these units. In one case, a Dublin apartment block was for sale for €3.5m, but half the units were occupied. The local authority could have purchased the block outright, providing much needed homes in a mixed-tenure community, but the sale never went ahead because of the private tenants. The block sold shortly after for €5.5m to an investor.
What's really needed is an agency with experience and commercial staff - some of which could readily be found in Nama - with the ability to write a cheque and decide what to do with the units after the purchase goes ahead, allowing it compete with the private sector and help solve this crisis.