Thursday 24 January 2019

Families missing out as investors snap up thousands of homes for private rental

Prime Nama site pitched as 'opportunity' for private rental

Government has been accused of failing to tackle housing crisis Stock photo: Bloomberg
Government has been accused of failing to tackle housing crisis Stock photo: Bloomberg
Paul Melia

Paul Melia

FAMILIES are being squeezed out of the housing market as investors snap up thousands of homes, fuelling rental and price hikes.

The Government has been accused of failing to tackle the housing crisis as it emerged that a State-controlled prime housing site in the capital is being pitched for sale as a “significant opportunity” to develop more than 400 private rental units, which are expected to command high rents.

It comes after harrowing pictures this week showed a family forced to sleep in a Garda station due to a lack of suitable accommodation. Housing Minister Eoghan Murphy came under fire for his failure to tackle the spiralling issue.

Now new figures show how investors are ramping up spending in the market, shelling out more than €1.2bn last year alone on 4,745 homes as the crisis deepens. Homes under construction are also being bought before being offered for sale on the open market, with investors engaging in bidding wars to secure properties and land, often at the expense of the not-for-profit sector.

Housing charity Threshold warned that families on “good incomes” were now at risk of homelessness as they were forced to spend up to 50pc of their take-home pay on rent.

It comes as it emerged that one of the last major development sites in the Dublin Docklands is being touted as a “significant opportunity” to develop private rental homes.

Estate agents, acting on behalf of receivers appointed by Nama, say the one-hectare site with planning permission for 420 homes represents a “significant opportunity to develop a dedicated private rental scheme”. An adjoining site for commercial development is also available, and the sales brochure notes that residential rents are expected to increase until at least early 2020.

Nama defended the sale, saying receivers it appointed were required to “maximise the value” of the assets owned by its debtors, adding it had funded more than 7,000 new homes since 2014 with a target to develop 20,000 by 2020.

“These sales are consistent with the receiver’s legal requirements and Nama’s legal requirement to maximise the value of the loans it acquired,” a spokesman said. “On completion, these residential units will add to the supply of new housing in Dublin, which will be positive for people seeking to buy or rent a home.”

But new figures highlight how institutional investors have ramped up spending in the housing market since 2010 as families remain locked out. Just over 16,100 homes were purchased to the end of 2017 at a total cost of more than €3.6bn. Of these, 4,433 were new units.

In contrast, chair of housing charity Threshold Aideen Hayden said the Government was not making enough effort to provide affordable homes.

“Very few (units) are coming into the market at anything less than extortionate rents,” she said. “Legislation should be changed so these investors cannot take advantage of the severe housing shortage.

“We see people on good incomes spending more than 40pc and 50pc of their income on rent, and are at risk of homelessness. We’re not seeing enough effort on the Government’s part to bring forward affordable rental and purchase schemes.”

The Department of Housing defended the public housing programme, saying 2,000 hectares of residential land was in public ownership which would deliver 42,500 social and affordable units.

Some 930 developments covering nearly 15,000 new homes were in the development process, and affordable purchase and cost rental schemes were being developed in Dublin and other areas of high demand.

Asked if sales of landbanks and investor activity were in contrast to Government policy to promote home ownership, the Department of Finance said Nama operated in accordance to its statutory commercial mandate to achieve the best return for the State from the loans it had acquired, and was an independent agency.

“The Minister for Finance has no role in respect of Nama’s commercial operations or decisions, including the development or sale of sites that are secured against Nama loans.” t said.

But Sinn Féin housing spokesman Eoin Ó Broin said the Government had a “deliberate policy” of incentivising large-scale institutional investors through a series of tax breaks. “There’s no meaningful supply of affordable rental property and it’s crowding first-time buyers and downsizers out of the market.

“There is a need for an urgent review. The first thing is to close all those deliberately designed tax incentives for institutional investors. The second is incentivising supply with guaranteed affordability. The current Government is in office for seven years. It inherited an appalling mess but this crisis is a direct consequence of tax structures. This is its responsibility.”

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