Monday 21 October 2019

Charlie Weston: 'It is high time these voracious cuckoos' wings were clipped'


(Stock picture)
(Stock picture)
Charlie Weston

Charlie Weston

The cuckoo is a summer visitor to Ireland. It mainly eats caterpillars and other insects.

Unfortunately, a very different kind of cuckoo seems to be here all year around and gorging on much more than a few worms and creepy-crawlies.

'Cuckoo funds' are spreading their wings and causing immense damage to the housing environment. Cuckoos notoriously lay their eggs in other birds' nests, where their hatchlings take over by pushing the original occupants over the edge.

Replete with billions of euro to spend, the 'cuckoo funds' are gobbling up housing units in their thousands, pushing first-time buyers out of the market and are one of the main reasons rents are at record levels.

You wait years for new housing supply, and just when it comes on stream down fly the cuckoos and gobble up all around them.

Last year, a total of 18,072 new dwellings were completed, a 25pc increase on 2017, and this is forecast to rise to around 23,000 in 2019. However, this is still below the estimated figure of 35,000 per annum needed.

With not enough housing units being built it does not help potential buyers that institutional funds snap up whole blocks of houses and apartments.

'Cuckoo funds' spent more than €1.1bn on almost 3,000 residential properties in Ireland last year, smashing previous records. Since 2012, when the likes of US-based Kennedy Wilson and its peers first emerged as players here, almost 10,000 housing units have been bought by corporate investors.

This is at a time when affordability is a massive issue, with calculations by KBC Bank economist Austin Hughes showing house prices in Dublin are nine times average salaries. High house prices and tight lending rules mean new homes are less likely to go to first-time buyers.

The declining share of homes going to owner occupiers adds to the upward rent pressure. High rents make it more difficult for new buyers to get on the housing ladder.

The housing system is broken if it does not cater for working families.

Finance Minister Paschal Donohoe has defended 'cuckoo funds', arguing the funds are the driving force behind apartment units being granted planning permission.

And he defended the tax treatment of big investors after the United Nations claimed funds were getting a preferential tax deal in this country, with the UN complaining about the "financialisation of housing".

Mr Donohoe said tax rules have been introduced to facilitate collective investment. 'Cuckoo funds' were boosting the supply of apartments, the minister claims. That is all very well. Yes, we need more apartments to rent, but we also need more housing people can buy.

Having new buyers elbowed out by corporate buyers hardly seems like a good idea at the moment. Maybe it is time to change our planning laws to prioritise supply for families wanting to get on the property ladder.

Irish Independent

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