Ireland’s hostility to build-to-rent apartments is taking on the quality of a moral panic.
Taoiseach Micheál Martin’s call for more private investment in the rental sector has sparked a fresh round of pious indignation.
“What we need are affordable homes that people can buy and rent – not more ‘build to rent’ apartment blocks delivered by vulture funds,” responded the Social Democrats.
Build-to-rent has a reputation for being expensive because investors are most interested in the top end of the market. But it need not be expensive for that part of the market, as its costs should be lower. A combined developer-owner-landlord can manage a building far more efficiently than hundreds of owner-occupiers, individual landlords and tenants.
The Coalition took action during its last term to discourage investment funds from buying up entire new housing developments to rent, due to public outrage at the practice
Some lenders and investors complain that build-to-rent developments spend more than the industry average on maintenance, because their owners are better equipped and motivated to preserve the value of their asset. That might push rents up a little, or profits down a little, but on the whole it is a boon for everyone to have large residential buildings professionally maintained.
Extending the build-to-rent model to ordinary suburban housing, as happened in the United States, could be a disaster for home ownership and all the social and economic advantages it brings. However, that is plainly not the Taoiseach’s intention. In his comments on attracting more private investment, he specified “apartments” and “financing construction”.
The Coalition took action during its last term to discourage investment funds from buying up entire new housing developments to rent, due to public outrage at the practice. It is improbable that the Government would encourage build-to-rent housing, even if it might get more housing built. Apartment buildings are different, however, especially high-rises in city centres. It is rarely appropriate for individuals to take on ownership in such buildings, as residents or landlords. The responsibilities and liabilities are too great.
If private high-rise apartments are to be built at all, build-to-rent is the best way to do it. Public hostility is worth confronting to make that point.
There is clearly no fundamental reason for the Irish left to turn up its nose at build-to-rent
The Social Democrats are correct that most people aspire to home ownership, but are wrong to imply that this is not served by building expensive rental apartments. Extra supply at the top of the market relieves pressure on the whole market. This is one form of trickle-down economics that can be seen to work.
Build-to-let apartments are a particularly pure form of supply because they are largely immune to the problems of speculation. They cannot be flipped or hoarded because they are not for sale. Tenancies are secure and dependable for the long-term - the entire building might be sold but nobody should face eviction or higher rent as a result. Sub-letting and short-term letting are generally banned. Professional supervision of the building means these bans will be enforced.
One common criticism of build-to-rent is regular rent rises. Nobody avoids an increase for being a good tenant. On the other hand, rises are set in out tenancy agreements, so nobody suffers the whims of a bad landlord.
Standard contracts from accountable companies highlight a key advantage of build-to rent: it is much easier to regulate in almost every regard, from rent to safety.
There is some evidence from other countries that corporate landlords squeeze out small amateur landlords by enabling governments to tighten regulation, until owning a few ageing properties becomes uneconomic. This is not bad news if it proceeds slowly enough for lost supply to be replaced. Higher standards, better tenancies and more ex-rental houses put up for sale would meet a range of policy goals for Government and Opposition parties.
And build-to-rent could play a significant role in easing immigration tensions. Aspiring homeowners across Ireland feel they are being outcompeted by wealthy foreign buyers. A more dependable rental market provides more appealing housing options for expatriate managers and foreign professionals. Once that option is available, it becomes easier to restrict house sales to non-nationals without deterring overseas companies and staff. Public demand for such restrictions appears certain to grow.
Build-to-rent has a reputation for being expensive because investors are most interested in the top end of the market. But it need not be expensive for that part of the market
There is no guarantee that build-to-rent will deliver any of these promises, but it will soon be possible to judge its potential by examining Belfast, where planners have been been approving major schemes since 2019. The first is due for completion next year, offering 800 waterfront apartments beside the Titanic visitors’ centre.
Sinn Féin is the largest party on Belfast City Council, and chairs the planning committee. It has been happy to approve build-to-rent projects, as has People Before Profit. Both parties have insisted one-fifth of units be social or affordable, or that developers provide an equivalent contribution, but only since the council introduced that requirement for all new private housing in 2023.
So there is clearly no fundamental reason for the Irish left to turn up its nose at build-to-rent. From the North, it increasingly looks like a strange southern notion.
