It has been another week of political wrangling and legislative change for Irish housing, much of it counterproductive. There is still worryingly anti-investor sentiment dominating the conversation around vital new homes delivery, which is unhelpful at best.
CBRE Ireland managing director, Myles Clarke, tackled this very issue in The Irish Times this week, writing: ‘International investors crucial for delivery of housing now and in the future: Vilifying those financing construction of new homes distracts from real obstacles to supply’.
He starts by pointing out the demonstrable need for new homes for both sales and rental. He addresses the nuance of demand, referring to it as “multiple layered”, explaining that home ownership ought to be achievable for those who aspire to it, yet emphasising the importance of a “deep and varied private rental market” in order to satisfy the changing needs of the ever-mobile workforce.
While the term ‘silver bullet’ often gets bandied around as an excuse to do nothing, the reality is that any housing solutions need to be at least as nuanced as the housing problems. While there is no one single solution that will work at this stage, Ireland needs quick delivery of new housing supply at scale and there are many solutions that will enable this. Rather than pitting one solution against another, the State and the commentariat need to recognise the value that each piece plays in the overall puzzle of successful delivery. And, as the article explains, “delivering supply requires investment”. The author goes further to extoll the “ample capital” available in Ireland and abroad to fund the 35,000 to 40,000 housing units needed annually; “To vilify the investors behind that capital is to distract from addressing more fundamental blockers that inhibit further supply”.
The article refers to the genuine appetite from the international investor community to fund the delivery of new homes across Ireland and this diversified pool of capital ought to be embraced. In particular, pension funds taking a longer term view (20 years+) “are more focused on the return of capital over return on capital”. Significantly, the author points out that this class of investor understands that investment in housing is a societal issue, not just a financial one and, as such, are inclined to “respond positively to sensible policy around taxation, tenant rights and transparent governance”, which is at odds with the general media commentary.
This is coming partly because of the emergence of a new ‘multi-family’ sector within the Irish housing market, also referred to as built to rent, or BTR, which is blamed for condemning a generation to rent whilst locking out first time buyers and other home buyers. The practical reality is that Ireland has a dearth of both public and private rental stock – we need all that is planned and much, much more.
The above-mentioned article also references the massive increase in judicial review applications as an impediment to speedy delivery of new homes, although it looks like this will be mitigated somewhat later this year. Certainly, it is a time of change for housing policy. Whether or not these changes prove to be effective remains to be seen.
Lotus Investment Group