Tax breaks laid foundations for our current housing crisis

World of Politics with Harry McGee

Ireland is slowly emerging from the Covid-19 crisis but as the fog slowly dissipates, another disaster is hovering right back into view.

Of course the housing crisis has been there all along, albeit in a state of suspension – thanks to rent freezes and anti-eviction orders. But events of the past week have shown just how closely it’s bubbling under the surface.

Since Michael Noonan allowed the establishment of Real Estate Investor Trusts (REITs) when he was Minister for Finance, the vehicle has been controversial. Trusts have been set up in such a way that they end up paying no capital gains tax, no corporation tax and no tax on their rent rolls.

It was a highly lucrative way of making lucre and when the so-called vulture funds came in from abroad they came in at scale, buying up entire blocks of apartments in city centre locations – and then renting them out to the army of highly-paid employees of social media companies like Google and Facebook.

Then following a change in planning laws, some became involved in student accommodation developments (co-living in practice) in all the major urban centres.

Politically, you could argue the toss for the apartments. The investors put up the cash to allow the developments to happen.

There were thousands of highly-paid employees of social media companies like Google and Facebook. Many were young and single. What they did want were high-quality apartments close to where they worked. What they didn’t want was to buy them. For many, Dublin would be a staging post for a few years before they moved on. Renting was the preferred option.

For more, read this week’s Connacht Tribune.

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