It brings me no satisfaction to say the national conversation on housing in Ireland is currently dominated by voices of those with an irrational opposition to our sector.
Given the chronic lack of housing supply, emotive responses have to be expected, but conducting the debate around solutions that are neither logical or rational makes it harder for policymakers to do the right thing. Either through ignorance or in some cases through the deliberate misleading of the public, those with an irrational opposition to the private sector, and particularly to the institutional investment community, seek to create a cartoonish world of good guys versus bad, which demonises the very people who actually have a crucial role to play in solving the housing crisis in this country – namely, those providing the essential investment that helps build much-needed homes for sale and rent.
It is time to call this out in an effort to bring more objectivity to the critical debate that surrounds the housing crisis.
Housing for All, the recently-published landmark Government housing policy, identifies a target of 33,000 new homes to be delivered in this country every year up to the end of the decade. The plan specifically states that “working with and enabling the private sector to deliver on housing is . . . central” and says, “the domestic banking sector, international capital and State financial agencies will provide the essential finance to meet this requirement”.
Our recent report, The Significance of International Development Finance in the Irish Real Estate Market, supports these assertions. In the 2017-2019 period, institutional investment constituted more than three-quarters of total development finance for house building in Ireland. To double housing output in the next decade, that proportion will need to be even higher. The hard reality is Government and domestic capital, in aggregate can only supply about 20 per cent of the capital required to meet our housing needs.
In addition to the funding for home builders to develop houses for sale, much of what institutional investors are providing now in Ireland is private rented accommodation, stepping in where there is a massive exodus of individual private investors. This acutely-needed housing is dismissed as “developer led”, “built to shoebox standards”, (for the record, Ireland now has one of the highest space standards in Europe, for sale or rent) along with a completely false rhetoric that delivery of private rented apartments and houses is somehow bad public policy and does not provide any social dividend or taxes.
This is nonsense.
Private rented accommodation is an essential part of the housing mix of every developed country in the world, particularly in cities like Dublin. Not just for the many people who come to work in the dynamic technology sector for a few years and then move away again, but critically to meet the needs of locals.
Mistruths
And yet, completely defying science and basic economics the mistruths continue to be given airtime and column inches while the judicial reviews against new development keep on rolling in.
This emotionally led, misleading rhetoric is fuelling attempts to thwart the delivery of private rented homes by a variety of objectors, often including local and national politicians, and adding fuel to the fire in the continuing rental crisis in this country.
Last week showed this disconnect writ large. On Monday, planning permission was granted for the delivery of a major project containing much-needed private rented apartments in north Dublin, close to the city centre. Many of these homes are one-bedroom apartments, to meet the demand of young professionals that the city needs to house. The chorus of criticism from those who should know better was deafening.
Less than 48 hours later, daft.ie published its latest rental market report that showed rents were soaring and there were just 1,460 homes available to rent in Dublin.
Nobody in the public domain, apart from a few brave souls, made the connection between the attempts to strangle supply and the lack of availability on the rental market that was forcing rents up.
Another example of the skewed national debate is recent commentary on the Housing Assistance Payment (HAP) and the assertion that Government is feathering the nest of institutional investors. The reality is that HAP is a payment made to help people secure housing that would not otherwise be available to them, in light of the acute housing supply. Institutional investors do not discriminate against HAP recipients and nor should they.
The continuing glimmer of light here is notwithstanding the criticism levelled at them, institutional investors are continuing to fund and provide the much-needed high-quality sustainable housing supply that is available to provide accommodation to people who need social, affordable, and private market housing. Without this funding, supply would shrink to a fraction of what it is today.
Our sector has been variously described by some as “cuckoos” and “vultures”. This unnecessary characterisation indicates a stunning ability to deny the reality of the world around them – there is a housing crisis, and institutional investment is an absolutely essential part of the solution.
Everyone must remember their duty to see beyond their own prejudices and speak to the facts of the matter. If they don’t, public policy will continue to be skewed against those who simply want a roof over their head and to get on with their lives.
Institutional investors will continue to do what they do best – provide much-needed supply, to help address the housing crisis based on a funding model that seeks a moderate, long-term sustainable return.
Pat Farrell is chief executive of Irish Institutional Property
