Investment Firms Buying Estates

There's been a lot about this on the 2021 Irish Property thread, including over the last week.

https://www.boards.ie/vbulletin/showthread.php?t=2058146177

I don't think people, including the media, were that much interested 2 years ago as it was a lot of buying by funds of apartment blocks in Dublin and the belief that this would meet the needs of high tech mostly non Irish workers, plus our normal attitude to apartments in that they are not real long term options, because we just want to live in houses. This developed into the outcry over co living came just after that.

Developers, builders and all the other property professionals who work with them, weren't complaining. It was and remains, good and fruitful work, and that all starts with a normally very nice return for the landowner due to the high cost of land in the first place. So, we have a building and construction and finance industry, all quite content with how all this has evolved over the last 5/6 years.

Of course, no way is it for the common good as many people are now waking up to. One comment made on the other thread summed it up entirely. It describes in a couple of sentences how the need by the government to reach its social housing targets, and its failure to do so, has crashed into the private housing market, and not helping either out. See below.

This from Amadan Dubh early today sums it up perfectly.

The government has created a market of social housing/rental assistance tenants for private investors - it is a total housing bubble which has spilled into the main housing market. They have done this and continue to do it by competing with individuals in the private market, elbowing them out, which pushes up prices thereby making the private market unaffordable which means people can no longer afford their own home and need to be looked after by the government. Institutionals may have their place in a functioning housing market but definitely do not in a dysfunctional housing market which is what we have.

It's actually ironic. I remember reading multiple posts over the recent pre pandemic time of how we needed professional landlords and people were happy to see small landlords leave the market.

Well guess what it's happening and it's not how people expected. Our housing issues are a result of multiple reasons and not just a single factor.

Some of the reasons we are here. Few if any repossessions, few if any evictions (both private and social). Introduction of HAP, pandering to social tenants refusing good properties because they are not in the desired area while private buyers and tenants have to accept what they can afford. Tax treatment of REITs v private landlords. Acceptance that we need to increase supply by building up rather than out.

Increase in building standards without accepting someone has to pay for them . Reduced supplies of raw materials because of Covid. Inability of developers to secure finance.

Whether people want to accept it or not we need foreign investors. The big question is how do you encourage institutional investors to build what we want.

maestroamado wrote: »

We need high rise up-market apartments around the city centre in my view.
I have said this here before but surely this is is the only capital cit in the world that has single storied houses in the city centre.

Good luck with that.:pac:

Its gentrification and theres a lot of pushback against it.

The Student wrote: »

It's actually ironic. I remember reading multiple posts over the recent pre pandemic time of how we needed professional landlords and people were happy to see small landlords leave the market.

I seen this yesterday and thought it was interesting. 650 BTL mortgages in a decade!

How is rental accommodation to be supplied?

https://twitter.com/seamuscoffey/status/1391019876064632834

maestroamado wrote: »

The Government will quite simply have to start to develop social housing.
They can fast-track planning as has being done in other areas.
..

I'm not even talking about social. I'm talking about ordinary Joe's like myself working in a factory who needs a room or apartment to rent for a few months or 2 or 3 years.

The people who don't want to buy and would get laughed at if they asked for social. Theres waiting lists years long.

maestroamado wrote: »

So your view is we bring in foreign Cuckoo funds to buy up mass houses that were given planning to build family homes for families.
I said it here on another thread 2 years ago that these properties should have being (ring fenced) at the planning stage for families, local authorities are already are doing this with one-off houses.

These companies pay little or no tax and are taking the properties from the taxpayers, i cannot remember the detail as its a few years since i was thinking of this.
I do agree we need companies to develop our larger cities with high quality apartments for professional who have the money to live in these areas.
The knock-on effect be also good as people live close to work an no need commute for work, traffic etc...

Where exactly did I say that? If you read what I posted I said funds have a place. Funds can finance apartments which are traditionally more difficult to finance. But they will buy what makes them the highest return.

People should live close to where they work but what about those who don't need to be in an area but want to be there?

maestroamado wrote: »

https://www.msn.com/en-ie/news/newsireland/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds/ar-BB1gwzzG?ocid

Is it any wonder we have a family housing problem... are we not paying him enough..

He's got some neck on him!

Oh wait...

It seems the government are going to bring in laws to restrict these funds buying up entire housing estates in one go.

But what is noticeably missing is nothing is being said by the politicians about tacking their tax treatment which is one of the main reasons why they are really here. Private landlords have to pay a huge chunk of rental income in tax but these funds are using mechanisms to pay next to nothing, iirc it came out a few years back that IRES Reit with over 2,000 properties paid a few hundred quid in tax for the year. Tax treatment like that is hugely attractive to them to get involved in the market. So if their taxation doesnt change then they will continue on as before, only this time instead of being able to buy up 100% of houses in an estate it will be reduced to 70%. But it will still go on because rents are high and they get to pay little or no tax on the rental income.

The worrying thing really is long term because whats happening this generation now is that they are being forced into a lifetime of renting. Many will never be able to buy a house like their parents did even though they are on above average salaries. So fast forward 30 years and suddenly you've got hundreds of thousands of renters all coming to retirement and their income dries up and they cant afford rents on their pension. So another housing crisis pops up out of that and youve gotten pensioners being evicted and having to move far away from their home to afford rents. Then as theyve no house theyve no asset to lay against potental nursing home costs under the Fair Deal scheme, again another large problem arises

Muahahaha wrote: »

It seems the government are going to bring in laws to restrict these funds buying up entire housing estates in one go.

But what is noticeably missing is nothing is being said by the politicians about tacking their tax treatment which is one of the main reasons why they are really here. Private landlords have to pay a huge chunk of rental income in tax but these funds are using mechanisms to pay next to nothing, iirc it came out a few years back that IRES Reit with over 2,000 properties paid a few hundred quid in tax for the year. Tax treatment like that is hugely attractive to them to get involved in the market. So if their taxation doesnt change then they will continue on as before, only this time instead of being able to buy up 100% of houses in an estate it will be reduced to 70%. But it will still go on because rents are high and they get to pay little or no tax on the rental income.

The worrying thing really is long term because whats happening this generation now is that they are being forced into a lifetime of renting. Many will never be able to buy a house like their parents did even though they are on above average salaries. So fast forward 30 years and suddenly you've got hundreds of thousands of renters all coming to retirement and their income dries up and they cant afford rents on their pension. So another housing crisis pops up out of that and youve gotten pensioners being evicted and having to move far away from their home to afford rents. Then as theyve no house theyve no asset to lay against potental nursing home costs under the Fair Deal scheme, again another large problem arises

They'll only be able to by 75% of an estate

maestroamado wrote: »

This thread may have run its course but i am still interested in this.
It will be interesting to see what happens next week.
The proposals i heard do not go near far enough for me.
It be interesting to see what Mary Lou has to say...

If the leaks are true expect a slowdown in the new housing market as developers may find it difficult to finance developments.

We need foreign investment whether people like it or not. Most funds are looking at the build to rent model.

Why don't we let google, Microsoft etc. Build high density housing instead? Cheap rents to attract talent is in their interests and they have the appetite to help: https://m.independent.ie/business/personal-finance/property-mortgages/google-willing-to-build-irish-homes-to-ease-accommodation-crisis-says-company-ceo-sundar-pichai-38516031.html

maestroamado wrote: »

Personally i think we do need funds to build luxery apartment blocks in our larger cities with the build to rent you mention.
I think they should be a complete ban on they buying what were applied for as planning stage as family homes.
We have a few large developers so why are they not getting into this area as these companies are looking for properties...

Banks will not release funds for apartment blocks at the same interest rate as they do for houses. Housing developments are typically built in phases with the bank releasing fund for subsequent phases when some or all of previous phases are sold. Housing developments are less risky to banks.

Apartment blocks need to be completed before any apartment can be sold and hence more risky to banks.

Institutional investors don't have this issue.

For the record I don't agree with Institutional landlords becoming to big but at the same time I don't agree with the State potentially scaring them off.

I am a single property landlord who sees how one sided the rental market is to people like me and perhaps institutional landlords might level the playing field for me and others like me.