Cian O'Callaghan (Dublin Bay North, Social Democrats) | Oireachtas source

This day two weeks ago, I raised with the Tánaiste the sale of 435 apartments in Ashtown, Dublin 15, which were sold off to a foreign investment company that is based in Germany. I suggested this practice should be banned, and the Tánaiste stated I was being ideological. When my colleague, Deputy Shortall, raised the issue of international investment funds with the Tánaiste, he again accused us of being ideological, stating that he favours a practical approach to housing.

Let us be very clear. There is absolutely nothing practical about some of the highest rents in Europe being in our country. There is nothing at all practical about favouring build-to-rent schemes which are cheaper to build, more expensive to rent and impossible to buy. There is nothing practical about young people and, indeed, those who are not so young, being caught in a rental trap, unable to buy their own home as investment funds buy up more and more new housing. There is absolutely nothing practical about more than 120,000 households on housing waiting lists or in insecure HAP tenancies. There is nothing practical about more than 8,000 people and 2,000 children living in emergency accommodation. There is absolutely nothing practical about a child eating her dinner at the side of the street. There is nothing practical or inevitable about any of this. What would be practical would be the implementation of housing policies to ensure that people have access to the housing and shelter they and their families need, to rents that are affordable, to secure tenancies and to homes that are affordable to purchase and within reach. That would be practical.

Yet again, we have a situation where Fianna Fáil and Fine Gael are acting surprised at the outcomes of their own policies. Are we really to believe that they had no clue at all when they introduced tax avoidance measures for investment funds where they pay no corporation tax and no capital gains tax, and where they pursued policies where rents have run out of control, that they simply did not realise that this would lead to entire housing estates being bought out by these funds? Is the Government really just asleep at the wheel, completely unaware of the consequences of its own decisions and policies?

Comments from the Taoiseach and the Tánaiste over the last 24 hours have made it clear that while they have problem with suburban housing estates being bought up by international investment funds, they fully support global funds buying up apartments en masse. The Government still does not have any issue with that. According to the Construction Industry Federation, 95% of apartments in 2019 were bought out by institutional investors, leaving just 5% of apartments for everybody else. The Government has made it clear that it continues to actively support the buy-out of entire apartment developments by global funds. If this is not ideology, I do not know what it is. Are individuals and families who live in apartments to be excluded from the aspiration of homeownership and to be caught in a rental trap? What about our young people who live in cities? Should they not be able to buy a home?

There is a pattern here that we have seen before when it comes to housing policy. Developers lobby Government, making all sorts of promises, then when the inevitable outcomes of these policies materialise and the promises of the developers evaporate, we see Fianna Fáil and Fine Gael left scratching their heads, wondering where it all went wrong. We saw it with co-living. Developers promised a niche market, not unlike that of boutique hotels. Instead, what we got was 21st century bedsits where people are crammed into living spaces smaller than a parking space. We saw it with apartment standards. Developers promised that if apartment standards were reduced, apartments would be built that were affordable and within reach for people who could afford a home. Instead, we got some of the most expensive prices for new-build apartments in the world. We saw it with institutional investment funds. Developers promised that with tax avoidance measures for real estate investment trusts, we would see investment in a supply of housing that people could afford come on stream. Instead, what we got was entire housing schemes and estates and apartments being bought up by international investment funds with a view to keeping people trapped in a rental market while pushing up rent and house prices.

We now see it with the Government's plans for the shared equity scheme. Developers are promising more homes that are affordable. Instead, what we are going to get, and what we have gotten already, is price caps of €0.5 million for apartments in Dublin. We know from the UK experience that we will get inflated house prices and increased profits for developers.

Will Fianna Fáil and Fine Gael ever learn to stop letting developers write their housing policies? The Government is turning housing into an investment opportunity for vulture funds, driving up rents and housing prices for everyone. As part of this, the Government is turning social homes into an investment opportunity and commodity. Long-term leases, where the State pays off the full cost of building a home over a 25-year period and the developer retains ownership of the home at the end, are exceptionally poor value for money. Long-term leasing is a sweetheart deal for developers. The Bill that the Social Democrats are putting forward will help end this practice.

Shockingly, we see this Government pursue policies which seek to turn housing and social housing into profit-making opportunities for its developer and investor friends. Increasingly, we see the State signing up to these long-term leases with developers. There was a report last week of a social housing portfolio of properties in Finglas, Tallaght and Blanchardstown guiding at €21 million, a price guide informed by an annual gross rental income of just less than €1 million per year. The Irish Timesreported that the prospect of immediate rental income, copper-fastened by the security of a 25-year Government lease, is expected to see strong interest from investors. Analysis by Killian Woods in The Business Postshowed that of 11 Part 5 lease deals examined, there were deals involving long-term leasing on 384 homes, where the State is signing up to these leases instead of acquisitions. As part of these deals, an average rent of more than €20,000 will paid out for each home each year. This will equate to €181.6 million over the course of the leases. The State is in line to pay an average of more than €490,000 to rent each home - a price significantly above the sale market value of each home.

Long-term leases are exceptionally bad value for money, but the Deputies should not take my word it. A report from the Department of Public Expenditure and Reform has already advised that leasing property on a long-term basis in the current rental market represents bad value for money. The CSO estimates that a 25-year lease over which the investor will recover the full cost of delivering the home from payments from the State, covers only 31% of the economic lifecycle of a home, which it estimates to be about 80 years. Dermot Desmond has estimated that the outlay spent on long-term leases could provide about four times the amount of social homes if it was used to build homes rather than lease them. At the same time, we know that long-term leases will create a potential cliff edge of evictions when they expire in 20 or 25 years' time. Someone who is 40 now and is housed under long-term leasing, could potentially be evicted and uprooted from his or her community when he or she is 65 years of age.

This is a sweetheart deal for developers and investors. If the Deputies want evidence of this, they need look no further than the documents released to me under a freedom of information request, which show that the State has signed up to long-term leases with developers that are multimillion euro contracts, in some instances without carrying out any independent valuations and simply relying on the valuations provided by the developer. How could this be allowed to happen? I must ask whether the Government is asleep at the wheel on this issue. Why does it take the use of freedom of information legislation by an Opposition Deputy to discover this?

Long-term leasing artificially inflates rents. There is considerable evidence that some developers and investors of newly-built homes will leave them empty instead of dropping the price of rents to fill them. What happens when they cannot fill these empty homes? They look for a long-term lease from the State. This ensures that the drop in rents that should happen, does not happen. This increases rents for individuals and also increases the rents that the State is paying out. Analysis by The Business Posthas shown substantial evidence of this rent-fixing taking place. Given that there are millions of euro at stake in terms of long-term leasing, it is something that the Government should be actively investigating and challenging.

If the Government continues on this path, our housing stock will be largely in the hands of international investment funds, long-term security of tenure and homeownership will be for the privileged few and the many will be stuck in insecure accommodation with too much of their hard-earned income paying out high rents.

See this speech in context