Lotus Investment Group’s nationwide survey conducted by IReach exposed that 78% of Irish over the age of 55 would downsize their residence, suggesting this might ease Ireland’s current dwelling debacle.
Ireland has an ageing population, and this figure will only grow in coming years, so it is natural that the subject of downsizing has entered public debate. Lotus Investment Group’s survey revealed that most retirees would consider downsizing their property, however, there were some no-go’s—a garden, staying in the same area, storage, and enough space to entertain family were musts. If, however, such criteria are met, the survey found that 78% would indeed downsize. This is a remarkable revelation, as that 78% of the population is occupying family-sized homes—homes which could be freed up to the younger generation wanting to buy their first house.
Ireland’s property problem
Government officials are calling it the biggest crisis in the country. The UN has condemned the Irish government for allowing it. This is Ireland’s ongoing housing catastrophe, being fueled by large-scale purchases of apartment blocks by big investors, which is finally receiving fierce criticism. In the first three months of 2019 alone, €430 million worth of homes were purchased by investors, and 1,093 residential units across 12 Dublin developments were put up for sale. Last year, giant corporations spent more than €1.1 billion buying a record 2,923 units in Ireland, making it five times higher than in 2017. These scornfully named ‘cuckoo funds’ snatch up properties before ordinary Irish have any chance, a trend that is forcing everyday people out of buying their own homes.
Big investors can access and recycle funds in record speed, inciting national anxiety over what it could mean for Ireland to have this kind of financed-to-the-hilt housing market. The short supply of sale property has forced a major shift from buying to renting, and hungry for this lucrative rental income, big investors will continue to flood the Irish property market. Nonetheless, the latest Dublin Private Rented Sector Investment Report said that the growth of the institutional investment sector is not a problem for Ireland’s housing market. On the contrary, they purport it to be one of the key solutions identified by government policy and believe any attempt to limit its expansion would damage the supply and cost of rental accommodation. Government officials believe that the influx of these buy-to-let landlords make the development of new apartment buildings viable in circumstances where owner occupiers or first-time buyers would fail to.
The high-profile sale of these developments is fanning the Irish public’s perception that developers have given up on the construction of new homes for buyers in favour of private rented sector housing schemes. Government representatives who support these mass sales are quick to point out that current statistics suggest only 5% of tenancies are controlled by landlords with 100 tenancies or more. The public, however, only sees the considerable strain this is placing on first-time buyers who cannot break into the market, and retirees looking to downsize. The situation is made worse by the lack of residential development this cycle is causing in locations where demand is greatest.
The way to downsizing
As evidenced by Lotus Investment Group’s survey, downsizing will only be attractive if the properties on offer comply with certain criteria. As an example, the survey found that only 25% of Irish aged eighteen to twenty-four would consider remaining in the same area a deal-breaker, while 36% of those over fifty-five would, the understanding is that the older generation prefers familiar surroundings and the networks they have established. Of those surveyed, 50% said outdoor space, 34% said entertainment space, and 11%—mostly in Dublin—said storage space was non-negotiable.
In the ongoing effort to address Ireland’s housing crisis, the government released a new policy in February 2019 called ‘Housing Options for Our Ageing Population’, where they suggest incentivising retirees to move to “right-size or appropriately sized units”. John Moran, Chairman of the Land Development Agency (LDA), said that the government should encourage the move to city centre properties by reducing property tax for retirees, thereby perhaps offsetting the requirement for a garden, and making the suburban property available to families. Of the respondents who would downsize, only 12% said they would insist on a government grant in order to move, but if the State incentivised it nonetheless, the number of retirees to take up the offer would surely increase. Struggling to justify the growing block-buying controversy, the Irish government is now considering taxing the ‘cuckoo funds’ who, until now, have been exempt from all relevant taxes, and then allocating that money to a retiree downsizing incentivised scheme.
The housing shortage was not lost on big corporates who swiftly seized the opportunity to cash in on Irish desperation, pushing the working force into paying inflated rentals just to have rooves over their heads. It seems the Irish government is finally seeing the full picture, and people remain hopeful for a solution. This brings us back to Lotus Investment Group: Perhaps their survey’s greatest finding was the 74% of respondents over the age of fifty-five years who would downsize if the price is right. If the bulk of Ireland’s majority ageing population relocates, thousands of family-sized homes will become available again. It is imperative, however, that the government safeguard these freshly vacated houses against corporate vultures and only sell to the Irish public, or the scheme would be pointless. On the face of it, a downsizing incentive is a radical and genius idea. This is where the government should focus efforts, at least in the immediate term, because it has the potential to produce relatively quick results, and it could well be the eagerly anticipated turning point in Ireland’s housing crisis.