Monday 14 October 2019

Charlie Weston: 'Government tripping over charges laid at minister's feet'


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Charlie Weston

Charlie Weston

Oh what a pickle the Government has found itself in over housing. The charges laid at the feet of the Government, and specifically Housing Minister Eoghan Murphy, are many and serious.

The State has been accused by a United Nations Special Rapporteur on housing of facilitating and encouraging the activities of multi-national funds, leading to a situation where rents and property prices have soared.

This has benefited the vultures and other big funds but made housing unaffordable. It has not led to sufficient new supply in the market, the UN alleges.

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Coming from a body like the United Nations, the accusations have proven embarrassing for the Government.

Cuckoo funds - so called because they are pushing family buyers out of the market - are snapping up newly built units en masse, pushing up prices in the process.

Many of these funds are vultures as they have not been regulated here.

In what can only be described as a weak response, the Government has denied the claims from the UN official.

Big funds are needed as investment in the property market is in very short supply, the State responded. House prices are not back at boom levels, as the UN official contends. They are still 21pc off the peak.

And institutional funds are not responsible for rents soaring. A shortage of houses and apartments and a growing population is the culprit here, the response on behalf of Mr Murphy contends.

The multinational investors have begun to defend their actions by launching a lobby group, Irish Institutional Property. They argue there would be little investment in home building, office construction and hotel developments here if it were not for pension-fund backed funds. They have been behind the building of almost 5,600 houses here.

Banks won't lend, and anyway, bank-fuelled property debt landed us in the mire more than a decade ago.

There is no doubt institutional investors have a role to play in the market, providing finance that is in short supply from banks and other players.

But it is true too they have pushed up rents, as their role is to maximise profits, and they have preferential tax arrangements.

And in a market with scarce home building, the activities of cuckoos funds snapping up whole housing units is never going to be anything but controversial.

The role of institutional investors in the housing and rental markets would not be so contested if accommodation was not in such short supply.

Until that changes high rent-charging Reits and other institutional funds, along with big investor-backed builders, cannot expect to avoid criticism.

Whether they are part of the problem or part of the solution is an as yet unsettled question.

Irish Independent

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