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Irish property crisis could see change of government

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Ireland has a housing crisis with more people seeking accommodation than the number of properties available particularly in the nation’s capital city. As Ken Murray reports from Dublin, failure to address this problem before the next general election could pave the way for left-wing Sinn Féin to take office.

When the cost of renting a property every month is more expensive than your average mortgage, then your housing policy is clearly not working.

When your central bank changes the rules whereby the deposit for purchasing a house or apartment increases from 10% to 20% thus making property ownership even more elusive, then your society has an even bigger problem and all that before one deals with exotic vulture funds that are buying up property developments and then renting them out to desperate young couples at inflated rates to make a lucrative quick buck!

Ireland has an accommodation problem like never before and the three-way coalition Government comprising of Fianna Fáil, Fine Gael and the Greens is getting it in the neck from an angry ‘generation rent’!

As the Taoiseach Micheál Martin told The Dáil [Irish Parliament] last week much to the dismay of COVID-19 sufferers and a frustrated industrial sector which has seen business annihilated due to the Corona virus pandemic: “Housing is the number one priority for this Government.”

Micheál Martin was forced in to telling this house-chasing section of the Irish electorate what they needed to hear after it emerged that two British investment companies namely SFO Capital and Round Hill Capital had purchased over 250 houses in different estates in the greater Dublin area with a view to renting them out at exhorbitant rates to young couples struggling to get on the housing ladder!

The news opened a flood gate of anger with many young couples ringing in to radio phone-in programmes saying that they had experienced the same brutal practice in various towns and cities around the Country.

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“It’s going to have a big impact on first-time buyers. I’ve been contacted by several people who are very upset. It’s a sign of things to come,” Social Democrats co-leader Catherine Murphy told the Sunday Business Post newspaper.

In Ireland, owning a home without being at the mercy of a ruthless greedy landlord is firmly established in the national DNA with traditionally close on 9 out of every 10 families owning a house they can call a lifetime home.

Anger towards the Government amongst would-be young house purchasers was exacerbated when it was reported that State policy was structured to facilitate outside investors to enter the Irish market and fund such housing developments!

In other words, the Government is seen to be conspiring to make vulture fund investors rich at the expense of young struggling couples trying to get their toes on the property ladder.

According to Eoin O’Broin of the left-wing Sinn Féin party: “This isn’t a new phenomenon, it’s been happening for a number of years. 

“These investment firms don’t pay Capital Gains Tax, they don’t pay corporation tax and they don’t pay any tax on their rent roll.

“What they’re doing is they’re going in, buying at high prices, charging high rent and then using that to flip the properties after a short period of time and to not pay any Capital Gains Tax.”

With growing rage amongst Ireland’s 20-35 age cohort, the failure of the State to tackle the housing crisis is playing in to political opinion polls and possible future voting intentions.

A combination of frustration towards the Government parties over handling of the Covid crisis and rising property costs has seen Sinn Féin rise to a point in numerous opinion polls that the Party appears to be on course to winning the most seats at the next expected general election in 2025!

A Behaviour and Attitudes poll for the Irish edition of the Sunday Times published on March 1st last put Sinn Féin’s popularity at 35%, ten points ahead of its 2020 General Election performance when its seat tally of 37 was just one behind Fianna Fáil, which currently leads the coalition government.

In the same Poll, Sinn Féin Leader Mary Lou McDonald emerged as the most popular Party leader on 53%, 22 points ahead of Fianna Fáil’s Micheal Martin with Leo Varadkar of Fine Gael on 27%.

Such is the seriousness facing the ruling three-way coalition government, MEP Billy Kelleher of Fianna Fáil tweeted last week: “If something isn’t done to tip the balance in favour of home ownership and disadvantage investment funds, we will be tenants again, like we were a hundred years ago.

“The only difference is our landlords will be investment funds based in London or New York.”

Unlike Germany for example, where just under half of the population rent for life but with legal security of occupation, no such law exists in Ireland as the phenomenon of ‘generation rent’ for married couples is relatively new but politically unpopular.

The average cost of a house in Dublin City is €400,000 approximately and €270,000 beyond the Capital but a combination of factors has seen prices and rental rise significantly in recent years.

The British-Irish Peace Agreement of 1998 saw the Republic of Ireland (pop: 4.9 million) change a clause in its Constitution by referendum to grant citizenship to people born on the island, a move designed to embrace catholic nationalists in Northern Ireland.

However, the law of unintended consequences kicked in and the Country experienced an influx of close on 500,000 immigrants, many of whom were women entering the State in the last days of pregnancy with the apparent plan that their new-born would automatically become Irish and therefore, EU citizens!

This huge level of immigration has created accommodation pressures on housing stock, hospital beds and school places.

Such was the number of immigrants entering the Country from outside the EU, the Irish Government was forced to change its citizenship rules following a Referendum in 2004 to discourage immigration from outside the EU.

However, with demand for accommodation now much greater than supply and a mass exodus of trades people from the construction sector leaving the Country after the 2008 collapse of the economy, successive Irish administrations have been struggling to get the housing demand/supply balance right.

The fact that the Republic of Ireland adopted the Euro currency in 1999 hasn’t helped its plight at this difficult time as forfeiting the right to adjust interest rates has prevented the Government from slowing down housing inflation.

The Government in Dublin is promising to change the rules to ensure that more young people hoping to get on the property ladder can do so by the time the next election rolls around.

The under-pressure man of the moment, Housing Minister Darragh O’Brien, told reporters in Dublin at the weekend, “I am preparing a suite of options.

“What I want is a level playing field for first-time buyers. We don’t want these big funds hoovering up family homes,” he said.

Whether or not the government can deliver on its promise, remains to be seen.

In the meantime, Sinn Féin is waiting in the wings, observing developments and biding its time.

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