Government proposals to tackle investment funds bulk-buying housing estates have been branded “too little, too late” by Opposition parties.
Measures to tackle so-called cuckoo funds buying up housing developments from first-time buyers will be discussed at a second Cabinet meeting on Tuesday evening.
Minsters will consider a range of proposals aimed at increasing the number of properties available to the public, and limiting the amount that can be snapped up by investment funds.
Sinn Féin leader Mary Lou McDonald branded claims that it is not Government policy to support so-called cuckoo funds “absolutely bogus”.
She raised reports in the Sunday Business Post that revealed that the State invested in a cuckoo fund that bulk-bought hundreds of homes in two Maynooth housing estates.
More than €225 million of Government funding that aimed to stimulate housing supply was ultimately used by funds to buy up houses and apartments before they could be put on the open market for regular buyers, the paper reported.
Speaking during Leaders’ Questions, Ms McDonald said: “Money that should have been used for affordable and social housing was being used, in fact, to push ordinary buyers out of the market to push up house prices and rents.
“The truth is that you have known what’s happening. And your claim that this isn’t Government policy to support these funds is absolutely bogus.”
— Mary Lou McDonald (@MaryLouMcDonald) May 18, 2021
She claimed that plans to exclude apartment buildings from the proposed measures would see half of all new homes in Dublin exempted.
She said: “The reality is that half of all homes built in the county of Dublin last year would be exempted under the proposals as we have heard them speculated in the media.
“Six out of seven homes in Dublin City would find themselves exempted.”
She called for a large increase in stamp duty, and a tax on investment fund profits.
The Taoiseach responded saying the Government’s “fundamental aim” is to facilitate the largest social housing programme in the history of the State over the next five years.
Micheál Martin criticised Sinn Féin’s approach to housing, and said private investment will be essential to meeting Ireland’s housing requirements, with 400,000 new homes needed by the end of the decade.
He said: “We believe in supporting first-time buyers and supporting owner-occupiers.
“The flaw in your proposition is this: You see no role at all for the private builder, or the private sector.
“The State is now the main actor in housing. Of that, let there be no doubt, in terms of building and in terms of supporting agencies.
“We also need to get going as well. And this has nothing to do with funds. This is about getting private builders to build privately as well, so we can get the level of housing that we require.
“We need up to 400,000 houses, new houses by the end of this decade. That’s not all going to be done by the State on its own.”
There are two elements to the plans Minister for Housing Darragh O’Brien will bring before his Cabinet colleagues.
At least 50 per cent of homes in new housing estates will be ringfenced for first-time buyers.
In addition, a circular could be sent to local authorities preventing the sale of homes to cuckoo funds based on the density of developments.
It would mean funds would be unable to buy homes in suburban developments, where the number of homes per hectare is below a specified amount.
The measure would not prevent investment funds from bulk-buying apartment blocks, with Government arguing their investment is needed in this area.
A Dáil vote on adopting the proposals is likely to take place on Wednesday.
However, members of the Opposition were critical of the proposals.
Labour party Senator and housing spokesperson Rebecca Moynihan said the Government has to “go much further”.
She said: “It seems to be that it is only going to be targeted at first-time buyers.
“It’s not going to be targeted at people who may be trading up or may be trading down, and who want to be able to buy.
“But the main concern is, it seems to be only apartments. So there’s a different approach to the suburbs than it is to apartments.”
Social Democrats housing spokesman Cian O’Callaghan TD called for the introduction of rent controls.
He said creating a level playing field would require “setting a rent level for new builds, much lower than the levels at the moment”.
“Ultimately you have to get the return for investors down if want to create a level playing field for first-time buyers and other purchasers,” he said.
Rents on new builds also need to be capped as an immediate measure to tackle the activity of cuckoo funds, says @OCallaghanCian.
Average rents in Kildare are €1,450pm - but the rent being charged by cuckoo funds, for a two-bed in new developments, is nearly €2,000pm. pic.twitter.com/Di5Kxw6Q4z
— Social Democrats (@SocDems) May 18, 2021
People Before Profit TD Richard Boyd Barrett said he does not believe the Government has “a serious policy to address this issue”.
He said: “Simply limiting the number of houses that a cuckoo fund can buy or ring-fencing a small amount for first-time buyers is a completely inadequate response to the problems we now face.
“Cuckoo funds and the vultures need to be completely excluded from the housing sector.”