Was allowing REITs/Vulture Funds a bad idea?


#1

The topic du jour.

Goverment shocked funds are buying newly built houses.

This all started when we allowed REITs and other incentives such as no CGT on Property acquired between 7 December 2011 and 31 December 2014

I think the measures introduced worked for a few years to stimulate the economy, increase prices from their lowest point and paid for construction esp of apartments.

The Govt wanted rid of negative equity for voters, they wanted to bolster the banks’ balance sheets, etc. This worked but almost too well.

No we see propery prices too high again and funds now buying houses ‘meant’ for normal buyers and not to be rented. It seems Govt are happy for apartments to be funded by foreign buyers but not houses.


#2

Whatever about them being a good idea or not it seems very difficult for the government to shift gears. Why only the attention because it is 3-bed semi’s they are now also going after. One of the big issues I see with them is that they are happy to leave apartments empty rather than drop the price. I guess there is no easy way to outlaw such practice as it would then affect others not covered by REIT’s and they have votes. It there was some sort of empty tax which resulted in more rental stock then one would expect that to materialise in cheaper rents.

Question is now if they stopped funding/buying apartment blocks would that stop them being developed. I would have thought not but it seems to be the line the government are pushing. With all this increase in apartments we have not seen a reduction in rental prices, if anything it has been used to drive prices up even more.


#3

Only 50 per cent of the topic is getting any coverage ie the supply side.

Still no mention of the demand side factors ie more or less unrestricted inward migration.

It’s good that they’re finally talking about the issue but the solution lies in a percentage of housing being publicly funded ie built by the State, along with a properly managed immigration system that in turn allows for housing needs to be accurately estimated over the medium term.


#4

It will be very hard for the demand side to be addressed given the main party making hay on the issue (SF) are highlighting that something like 1000 AS who have been granted leave to remain are unable to move out of Direct Provision as there is no suitable acc for them.

Once travel opens back up after mid June or so then many STL’s might want to out their places back on Airbnb. As far as I understand the council moved many into Airbnbs once Covid kicked off. If they are now also going to have to be rehoused you are going to see even more pain for those looking to rent.


#5

There are many different players with many different agendas around this issue


#6

Still almost zero social housing being built by the State. They are buying privately built apartments/houses at top dollar or renting them on 20+ years leases.

We have sold off most of the social hosuing built pre 90s too


#7

The 2021 House price thread on boards is now getting lots of input from people who are starting to see that the issue is only going to get worse. I get Varadaker not being in touch with how this is affecting people on the ground but I would have thought Martin would have seen this coming a mile off.

I expect the policy reversal around REITs will not be the only one.


#8

Was lookng for social house building stats

Found this page with data to 2020. First section is new builds, rest is existing housing sources for social.

https://www.gov.ie/en/collection/6060e-overall-social-housing-provision/?referrer=http://www.housing.gov.ie/housing/social-housing/social-and-affordble/overall-social-housing-provision#


#9

Yeah some Local Authorities are still building some their own housing units, Wicklow for example. Numbers clearly quite low though.


#10

https://twitter.com/caulmick/status/1392199070047952899


#11

Callan’s Kicks had a joke around this on his show last week

One of his politicians was saying something like

“Yeah we know that this has been happening for years but that was only for apartments so we didn’t actually care”


#12

https://twitter.com/OCallaghanCian/status/1392435259736723457


#13

Maybe he’s been getting his info from his party colleague Gary Gannon-he knows a lot about this type of thing. :whistle:


#14

Answer: No (according to a key instigator of the introduction of REITs to Ireland) :grinning: That’s that settled.


#15

And what are the implications of adding €20bn to national debt. Because it’s the latest vogue to suggest that more and more national debt is no problem at all. Because National debt is never paid off.


#16

Well that is supposing that every house that he is referring to being in the pipeline (69,000) are all built by the state which would cost them €20b. That is not what happens in practice. A proportion of that 69k will be funded by institutional investors or on the premise that in the case of apartments a REIT will take them for BTL. Still a lot of the 69K is by private developers. That’s not to say the building of public housing wouldn’t cost a few billion, most are fine with that I’d have thought and Gov have budget for that.


#17

Section 23 tax relief was introduced in 1988 - Is this the Section 23 of current times coming back to bite the hand they fed it, another quality governetmn sortie into the house market that morphs and distorts it way through the social fabric and devaluing the common good, growing beyond it’s initial spec and perceived or desired outcome?

The best thing really is for the State to jsut step back form every single property intervention up to this point.

This Christmas Tree is so very heavily overdecorated it’s about to fall over, we’re past season too, on so many fronts. This would of course require a regime change beyond the scope of the average imagination.

However, all hoep s not lost, visit to Donnely might get him to apply some of that magical new-normal logical and get a S.I. out in the morning, to deem such activity as non-essential.


#18

No mention in the Journal (predictably enough) of who voted which way but it says the vote was carried by 38 to 19.

Wiki says this is the makeup of DCC

Fianna Fáil (11)
Green Party (9)
Fine Gael (9)
Labour Party (8)
Sinn Féin (8)
Social Democrats (5)
Solidarity–PBP (2)
I4C (1)
Independent (10)

Would the 3 Govt parties be voting together on this? Ie 29 votes? By the sounds of it the Social Democrats voted in favour of the proposal so that’s another 5.

It would be interesting to know who voted against.

At this point whoever has the balls to go full populist on this issue ie ramp up affordable housing supply and put a cap of inward migration per annum is going to attract the type of vote that DeValera got for Fianna Fáil from the 30s on. Fianna Fáil became the party of the Dublin working class until the most recent crash on the back of it. Presumably Sinn Fein are positioning themselves to deliver something similar. However will they have the guts to deal with the demand side ? Ie placing an upper limit on migration per annum. Cos there’s no exclusively supply-focussed solution.


#19


#20

Stopped clock! :dipso: