UN criticises the Irish government of facilitating the “financialisation of housing”

David Grin

Home buyers are being stripped of the chance of buying a home as the Build-to-Rent investment model takes the Irish market by storm.

The UN recently singled out Ireland and five other countries for converting homes into instruments of trade and investment. The UN special rapporteur on the right to adequate housing Leilani Farha accused the Irish government of facilitating the “financialisation of housing” through preferential tax laws and through weak tenant protections, among other measures.

One major point of contention is the selling of entire blocks of housing units to investment funds and institutional landlords in build-to-rent schemes, effectively elbowing first time home buyers out of the market.

The selling of large blocks of housing units to one buyer who intends to rent them as part of an investment strategy has become increasingly popular in Ireland as the housing shortage continues to intensify.

These UN criticisms come as homebuilder Cairn Homes announced its intention to sell 282 properties still under construction in Citywest Quarter outside of Dublin as a single block to one buyer at a price of €90 million, averaging €320,000 for each unit.

UN Condemnations of the Irish Property Market

In the last decade, property investment companies like Ires Reit and Kennedy Wilson have ushered in a transformation of the private rental sector with institutional landlords purchasing property units en masse to rent on a long-term basis.

According to the UN’s assessment, “Almost overnight, multinational private equity and asset management firms like Blackstone have become the biggest landlords in the world, purchasing thousands and thousands of units.”

“They have changed the global housing landscape. Pouring unprecedented amounts of capital into housing, they have converted homes into financial instruments and investments…. Landlords have become faceless corporations wreaking havoc with tenants’ right to security and contributing to the global housing crisis,” the UN said.

Recent Build-to-Rent Transactions

Several property investors and builders have targeted the build-to-rent (BTR) market. Kennedy Wilson currently has 2,000 units built or in development, with a goal of securing 5,000 units to rent within four years. As of the end of last year, Ires Reit was reported to have almost 2,700 units let out to tenants. The investment fund Hines announced recently that it was looking to build 1,269 BTR units in Cherrywood, Dublin.

According to the Independent, “Property expert CBRE said last month that as much as €5bn is now targeting so-called build-to-rent (BTR) opportunities in Ireland’s residential market. This sees the funds build properties with the idea of renting them out, potentially buying sites ahead of other developers who might give people the chance to buy.”

Additionally, as European regulators pressure Irish lenders to purge their portfolios of under-valued loans, the state-owned AIB completed the sale of €1 billion of bad loans which contain thousands of buy-to-let properties.

Critics of the practice say that it is effectively depriving potential home buyers the opportunity to buy a home. Donal O’Donovan wrote in a recent piece for the Independent, “Cuckoos notoriously lay their eggs in other birds’ nests, where their hatchling take over by pushing the ‘real’ occupants over the edge. It’s hard to think of a better metaphor for the Irish housing market.” Even with the UN’s condemnation, it does not appear that the popular trend in BTR investment and building will slow down anytime soon.

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