Tuesday 12 December 2017

Election stand-off sees developers delay building social housing

The lack of a new government is leading companies to hold off on investment decisions

Richard Barrett of Bartra Capital
Richard Barrett of Bartra Capital
Peter Flanagan

Peter Flanagan

Developers and investors are ready to spend on social housing but are holding off until a new Government is in place, one of the country's most prominent property developers has said.

Former Treasury Holdings boss Richard Barrett told the Sunday Independent that his new venture, Bartra Capital, submitted plans to the Government to make social housing available. The plans were broadly accepted, but his and other firms cannot move forward until they know what the new political regime will be.

"Building 100 or 200 houses won't make any difference - you need thousands," he said.

Bartra is investing €1.2bn in social housing, residential homes in Dublin and healthcare, as well as renewable energy.

Social housing is where the "immediate need" is at present, Mr Barrett said, but made clear that until his team knows what the next Government will look like, there is little that can be done right now. And his company is not the only one that has stalled plans until the new government is functioning.

"We looked at, for example, buying up apartment blocks and leasing them to the likes of Dublin City Council, but that isn't really dealing with the problem. The problem is a lack of supply. We need to build more homes.

"The scale of the problem is so large that you need to build homes and it needs to be done sooner rather than later.

"The Government has our proposals and it has been broadly receptive to what we want to do, but we are waiting until the new government has been decided and we know what the regime will be," he said.

Mr Barrett's warning is the clearest sign yet that the lack of political leadership is now taking a toll on the day-to-day running of the country. Fine Gael and Labour remain in government while negotiations about the formation of a new coalition continue, but few people expect Labour to be involved in the next government, which could include Fianna Fail or a large number of Independents.

It is now a month since the General Election and there is no sign that a new government will be in place any time soon.

Up to now, most businesses have been seen to be carrying on as normal. However, there is a growing sense among firms which work with government departments or state agencies that the lack of clarity about which political parties will lead the country is now leading companies to stall investment decisions until negotiations among the parties have been completed.

Social housing has become one of the key issues in recent months, as the lack of new houses being built has put enormous strains on tenants who are seeing rents rising steadily.

The ESRI estimates that Ireland needs about 25,000 new homes per year. Data this week from Construction Information Services showed that work began on barely half that number last year.

Bartra expects to be one of numerous players in the social housing sector.

"The social housing space is worth about €24bn, so there is plenty of room for more funds and there are other people who have had proposals and have institutional investors ready to spend in this area," Mr Barrett added.

Sunday Indo Business

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