Gavin McLoughlin: 'Investment funds have role to play - but we need a level playing field'
Maddening though it is to see massive investment funds making big profits from Irish citizens' high rents, these funds will have an important role to play in solving our housing problems.
The number of units built this year will probably be around half of what is required, and we simply need foreign capital in the country to get this sorted out.
Even if the Government had proved itself to be effective at tackling the problem - and it certainly hasn't - the country is still spending more than it's earning and labouring under a heavy debt burden.
That leaves us exposed to another downturn, which is bound to come at some stage whether it's Brexit or Trump that causes it. Simple economics are at play in the housebuilding sector. When demand exceeds supply, prices rise. That incentivises more supply to come on stream in search of a profit, until prices start to come down again.
It's true that some of the new builds are going straight to big landlords - depriving first-time buyers of the opportunity to buy a home. In a more normal market, there would be space for these funds to invest and for people to be able to buy their own homes. Unfortunately, this is not a normal market and it's probably skewed too much in favour of funds.
But it's probably no bad thing to have a solid supply of rental stock in this country. For some people, renting may be the preferred option, as can be the case on the continent - it's simply more flexible. And from society's point of view, perhaps it's better to have more rented properties if the alternative is to have a higher amount of mortgages that ultimately prove unsustainable. We all know who picked up the tab the last time the banks got into trouble.
It's important to remember that big investment funds fall into different categories. Some are the 'vultures', who aren't afraid of getting involved in messy situations in the hope of making a quick buck. Others may be pension providers seeking a steady stream of income for their clients, and indeed Irish Life has previously spoken about funding social housing in order to generate income.
Still others may be investors looking to make money from development. Many of the experienced developers who found things difficult during the crash - but actually know how to build houses - are back building again, this time with the support of investment funds.
None of this is to say that investment funds shouldn't be subject to the same standards as banks or small-time landlords when it comes to how customers or tenants are treated.
That's why moves to give the Central Bank the power to investigate these funds, as well as take enforcement action if necessary, are probably a good idea. The banks and the funds should be on a level playing field when it comes to regulation.