The go-ahead for a complex of 1,600 rental-only apartments near Croke Park has divided opinion. For some, such developments are the answer to the housing crisis, but others believe there are hidden costs. John Meagher investigates
On Monday afternoon, the news that Rob Curley had been dreading came to pass. An Bord Pleanála announced that it had approved a huge complex of 1,600 apartments at Clonliffe College near Croke Park.
Curley — an architect and advocate for sustainable urban housing — was not upset by the scale of the development in his area or the fact that it would include an 18-storey building. He is under no illusion about the severity of the housing crisis. But since plans were unveiled, he has been troubled by the fact that every single unit will only be available for rent — and not purchase — and that 70pc of the apartments there will either be studio or one-bedroom.
“I was disappointed, but not surprised,” he says, citing key changes in the planning laws introduced first in 2015 by then housing minister Alan Kelly and in 2018 by his successor Eoghan Murphy. “Decisions made by those ministers when it came to minimum size played into the hands of developers,” he says.
An Bord Pleanála gave permission to a development that breaks the Dublin City Development Plan, he says, because its officials feel they have to get a certain amount of new housing “on the board”.
We can expect to see to see more of this kind of development, he says: “an investment product dressed up as housing”.
“This is not designed to lower rents,” he says. “At no point are [Clonliffe developer] Hines or anyone else coming up with a build-to-rent scheme thinking, ‘I can’t wait until there’s enough of us in the market so we’re going to lower everyone’s rent’.”
Build-to-rent has become a dominant form of apartment construction in the past few years with overseas investment firms such as Hines and Kennedy Wilson among the key players. More than half of the homes granted planning permission in Dublin between 2018 to 2020 were build-to-rent, according to council and CSO figures.
In 2017, Tim MacMahon, then director of the Irish branch of CBRE, the world’s largest real estate services firm, wrote about the enormous potential of build-to-rent: “The sector has become increasingly attractive to investors, developers and funders alike and considering the severe supply shortages inherent in Dublin and many other Irish cities, it is a sector that we are going to hear a lot more about in the Irish market over the next few years.”
The phenomenon has become increasingly controversial, with detractors insisting it does little to bring down already inflated rents in cities such as Dublin, Cork and Galway. Others argue that it’s a form of accommodation that appeals to young, predominantly single professionals, especially those from overseas who come to Dublin to work in tech.
It has become a political football. On Thursday, amid heated exchanges in the Dáil, Minister for Housing Darragh O’Brien said that he would not be attending any proposed ‘roadshow’ for institutional property investors and accused Sinn Féin of trying to manufacture a controversy.
Ronan Lyons, associate professor of economics at Trinity College Dublin, says Ireland is chronically short of housing and build-to-rent developments will go some way towards solving the problem.
The extent of the housing crisis was writ large this week with the latest quarterly report from online property marketplace Daft.ie. Lyons was the chief author.
“The key takeaway,” he says, “is that availability is at an all-time low now [with just 1,460 homes to rent on the site in November] and yet, looking down the tracks of three to five years, we can see the situation improving in the Dublin area.”
Much of that optimistic prognosis, he says, is down to major build-to-rent developments getting the go-ahead. “In that Daft report, there are about 45,000 rental homes that are in the pipeline. I find it hard to believe that a huge influx of supply won’t bring rents down. If you add, say, 50,000 new rental homes in a city that has about 150,000 rental homes, and do that over four, five, six years, I just can’t see how that would have any effect other than improving the availability and affordability of rental stock in particular.”
Social media discourse on the subject is seldom anything other than emotive and frequently gets personal. Lyons has found himself under attack from those who vehemently oppose build-to-rent.
“We can legitimately disagree about the minimum standards for built-to-rent versus built-to-sell,” he says, “but you can’t make up a claim that has no scientific basis whatsoever. There is nothing to support the claim that if you build new rental homes, the existing ones will be able to charge a higher rent, which is what some people say.”
For Gary Gannon of the Social Democrats, the principal problem with the Clonliffe College development is the fact none of the homes will be for sale.
“This style of development will be to the detriment of the city,” the Dublin Central TD says. “I would love to have 1,600 mixed-use homes on that site — more even. It’s not about the number. I want housing and development on that site. That was a perfect opportunity for a development that would incorporate single units, of course, for people who need them, and a large proportion of units that would be ideal for families.
“But what’s happened is that nobody in the immediate vicinity or the wider city is going to be able to purchase a home there at all. This is a property solely developed for the purpose of profit and it will be similar to what we’re seeing around the IFSC — we’ll have a lot of vacant units because the prices they’re getting for renting them is so high that keeping them three-quarters occupied will be cheaper than actually lowering the rent.”
Gannon’s issue is largely with Ireland’s quasi-judicial planning authority. “The manner in which developments happen is very concerning — An Bord Pleanála totally bypassing the City Development Plan and giving no say to local democracy or local consideration,” he says. “We elect local councillors to initiate a city development plan and it’s just been bypassed. That isn’t nimbyism. We need housing, but it also must be in keeping with the needs of the community, the city and the area.
“I get that we need rental units for single people. But I don’t necessarily think it’s for anybody’s benefit that they are all located in one place, as if this is some form of weird developer-led Tinder.”
Economist David Higgins believes there is a place for large, build-to-rent developments in Ireland’s cities. “I think [the opponents’] argument confuses the intent of the investors who run these places versus what actually happens.
“Of course, they want to get the highest rent possible and they’re going to be very reluctant to lower rents if the market begins to fall. But the reality is when new supply goes into an area, it does put downward pressure on rents in that area. There’s only so much resistance that any investor running a building can do to actually make that happen.
“The Daft reports show that in Dublin city centre, rents are, broadly speaking, unchanged year on year, but it’s outside of Dublin where the rents are going up substantially. That reflects the fact that there has been supply in Dublin in recent times and, perhaps, that people have been leaving Dublin — maybe working from [their childhood] home.”
Higgins, a research analyst at Carraighill, says he has “some sympathy” for those who say build-to-rent caters only for a transient population. “I myself have been renting and have found that I don’t put down permanent roots in an area. I tend to be looking around to move to the next part of the city. But you can’t simply wish away these people [transient residents] from any particular area. People need to live somewhere.
“We all want to have a city where home-ownership is much higher. You might think then, ‘Why build more rental accommodation?’ You build more rental accommodation because you bring rents down and then you can encourage people to save for a deposit and be able to buy.”
Higgins says he does not fall for emotive entreaties that too many small units are being developed. “There has been a massive imbalance in what’s been in Irish cities over many decades — there’s a lack of studio and one-bed apartments being built,” he says. “Unfortunately, to correct that, you’re going to have to build some blocks which have a high proportion of those sort of units in them. Otherwise, we’ll be decades more waiting to have that imbalance corrected.”
He says he has been a tenant of both a large investment landlord scenario and the more traditional variety, with a landlord owning a single or a small number of units. He is adamant that the conditions in the former are far better, even if the actual rents are higher.
“This aspect should very much be part of any discussion. The players that are coming in here to build these buildings are doing it for the long term,” he says.
“They are going to want to keep the buildings in good nick. I lived in build-to-rent for a few months earlier this year. We needed to get a new washing machine and they brought it out to us within 24 hours. It was the sort of instant service that I couldn’t have got from one of my old landlords — a small-time player — and it took months to get things fixed.
“And not just that, the security of tenure is much longer and more secure in build-to-rents because as long as there’s someone in the place, they’re happy to keep that person going for longer. The small-time player might want to move a family member in or sell it and there’s a risk that you’ll be kicked out.”
Higgins also points out that newer developments tend to be kitted out to higher specifications and are far removed from the rundown offerings in older buildings.
“There was a survey recently from the Residential Tenancies Board that found that about 10pc of properties have had mould reported at some point — you’re just not going to get that in a brand new building,” he says.
Both Dublin and Cork have no shortage of build-to-rent developments under construction and in the planning pipeline, but the trend is not mirrored elsewhere.
Ronan Lyons believes the rising tide provided by build-to-rent will not lift all boats.
“The lack of availability outside Dublin and Cork means the same unprecedented scarcity in, say, Limerick, Athlone, Sligo, Waterford — they’re not going to get solved any time soon.”
He believes the much lower rents commanded in those cities than in the capital make it far less appealing, financially, for developers to undertake major home-building projects outside Dublin.
It’s little surprise that the likes of Kennedy Wilson — behind the Capital Dock and Clancy Quay developments — is so keen on the capital. It charges some of the highest apartment rents in Ireland for the former, a complex dominated by a 22-storey building — the Republic’s tallest. And a new block of studio apartments opened this year at Clancy Quay on the site of the old Clancy Barracks in Islandbridge, with monthly rents starting at €1,700.
“They are prices that are being mirrored in build-to-rents across the city and they’re simply not sustainable,” Rob Curley says. “At the end of the day, very few people can pay those sort of rents and be able to save enough to buy their own place one day.”