The Government is happy to condemn those, who live in urban centres, to a lifetime of rent
The proposals brought to cabinet to deal with cuckoo funds bulk-buying homes are weak and will prove ineffective. The proposed planning rules won’t take effect for a number of years while the stamp duty changes do not go far enough to disincentivise investment funds.
Social Democrats Housing Spokesperson Cian O’Callaghan said:
“The measures announced by the Government this evening are weak and won’t work. Once again, the Government is putting the interests of investment funds ahead of those who want to own their own home.
“The Government’s proposed changes to planning laws will take a number of years to kick in. In the meantime, the vulture funds will feast on the homes already approved and the cuckoo funds will continue to knock first-time buyers from their nest. This is unacceptable.
“People want immediate action. Not another can kicked down the road. People also want action on all types of homes – not just suburban estates. Those who wish to buy an apartment shouldn’t have to compete with a billion-euro investment fund. Under the Government’s plans, they will.
“The majority of planning permissions last year were for apartments. The Government has now given vulture funds a green light to continue buying them in bulk. What kind of homes does the Government want those who live in cities to buy? Or is it happy to condemn those, who live in urban centres, to a lifetime of rent?
“The stamp duty changes announced today do not go far enough to make a real difference. To be effective, stamp duty changes would have to be high enough to put the investment funds off. A 10pc increase in stamp duty, for purchases of ten homes or more, means nothing to a big fund that is willing to spend hundreds of millions of euro buying up homes.
“At the moment, cuckoo funds are outbidding other buyers to the tune of €80,000 per unit. They are doing this because the rental market is so lucrative – particularly when the State is on the other side of eventual deals, entering long-term lease agreements with funds, at exorbitant rents, for terms of up to 30 years.
“Rents have doubled in a decade. This has served to encourage investment funds to buy up homes. As rents continue their inexorable increase across the country, funds will continue to swoop in and snatch up homes.
“If the Government is serious about tackling investment funds, then it must tackle the rental crisis. Currently, there is no rental cap on new builds or new rental units. Measures should be introduced to set rents on new-build homes at a much lower level – this would reduce the potential returns for investment funds and create a level playing field with first-time buyers.
“Measures to tackle vacancy, which is being cynically used by funds at the moment to keep rents artificially high, must also be urgently introduced.
“According to the Minister, he is content to wait until the autumn to make any changes to the rental regime. This inertia is characteristic of the government’s approach to housing. They say there is a crisis, but there is no sense of urgency. No radical reforms or innovative solutions.”
18 May, 2021