Leo Varadkar: Outright ban on investment funds purchasing homes would be a ‘mistake’

Tánaiste Leo Varadkar said it would be “ideologically extreme” to ban investment on certain types of housing
Tánaiste Leo Varadkar said it would be “ideologically extreme” to ban investment on certain types of housing

An outright ban on investment funds buying complete housing estates would be “wrong” and a “mistake”, the Dáil has heard.

Tánaiste Leo Varadkar said it would be “ideologically extreme” to ban investment on certain types of housing in the country.

He added that investment funds have a “role to play” in the property market.

His comments come following controversy earlier this week over a housing development in Maynooth, Co Kildare, where 135 of 170 houses at the Mullen Park estate were purchased by two investment funds, to be put up for rent.

Opposition parties have warned first-time buyers are being priced out of the market, because they cannot compete financially with such funds.

Taoiseach Micheál Martin yesterday described the practice as “unacceptable”.

Today, Mr Varadkar was pressed on the matter in the Dáil by Sinn Féin’s Pearse Doherty who said the government had not only “facilitated” but “incentivised” and “rolled out the red carpet” for investment funds.

Mr Doherty said: “You’ve created this situation where these international investment funds are snapping up family homes and locking first-time buyers out of the market.

“That is the reality. You’ve frustrated the hopes and dreams and aspirations of many workers and families who aspire to own their own homes.”

In response, Mr Varadkar said the government believes in home ownership and is in the process of developing proposals for a “workable solution”.

“It needs to be a solution that resolves this problem, but also needs to be a solution that doesn’t have unintended consequences,” he told the Dáil.

The tánaiste added that investment funds “have a role to play” in the property market.

“There are housing developments in this city, mainly apartment blocks, mainly high-density developments that would not have been built if they haven’t got finance from investment funds,” he said.

“They weren’t able to get funds from the banks, and if they had not been built, we’d have fewer apartments, higher rents, higher prices, and perhaps even more people at homelessness.”

Mr Varadkar said that at present about 1% of the housing stock in the Republic is owned by investment funds, which is “much lower” than in other developed countries.

“Their correct role is to finance the construction of developments, not to swoop in and buy housing estates or developments that are already substantially complete,” he said.

“That’s what we need to change and that’s what the government intends to change with the actions it’s going to take in the coming weeks.”

He added that it would be “wrong to ban them outright”.

The tánaiste was also pressed on the matter by Social Democrats co-leader Roisin Shortall and People Before Profit’s Richard Boyd Barrett.

Ms Shortall said Fine Gael and Fianna Fáil were arguing over who was to blame for the country’s housing issues when both were to blame.

“Fianna Fáil crashed the housing market the first time round, and Fine Gael then let vulture funds loose on the carcass for a decade, with tax incentives and fast-track planning and now both parties have joined forces and have been destroying the housing market,” she said.

She questioned whether anyone in government had noticed that since 2018 funds have spent €4 billion on residential property in this country.

Responding, Mr Varadkar said: “What I think is ideologically extreme is the view from some, including as I understand the Social Democrats, that we should have outright bans on some forms of housing and outright bans on some forms of housing investment, I think that would be a mistake.”

He added that he believed any such ban would result in less housing.

Mr Boyd Barrett said the tánaiste was acting as if the "rampage and plunder" by cuckoo funds and vulture funds was all just some "isolated incident or inadvertent mistake" that he was going to rectify.

He added that the terms "cuckoo funds" and "vulture funds" used to describe investment firms are "too polite" and that they should be all called "bloodsuckers".

The Dun Laoghaire TD said the former finance minister Michael Noonan had, between 2013 and 2014, held 65 meetings with vulture funds where he had "invited them in to commence the rampage".

He said the National Asset Management Agency sold off more than €40 billion worth of land and property assets to "these bloodsuckers and now they had moved on to buying new housing estates as well".

"The consequence is that they are pricing normal working people almost entirely out of the market to buy their own homes," Mr Boyd Barrett said.

"We've an extraordinary situation, really one that beggars belief, that the situation is so bad that the minister for housing is describing affordable housing as €450,000 or €400,000, when you would need an income in excess of €90,000 or €100,000 to be able to afford the affordable house.

"Never mind the houses that these people are providing at full market price."

"We've tents littering the city as a result," he added.