Lotus Group and Ireland worried about proposed changes to Anti-Eviction Bill
Lotus Investment Group, one of Ireland’s leading property financiers, says many landlords will continue to leave the sector due to the ongoing tax and legislative changes being implemented.
The Irish Property Owners’ Association (IPOA) has been “inundated with calls from landlords” concerned about the proposed new laws, concerns which the IPOA raised on behalf of their members before the Oireachtas (Irish Legislature) Housing Committee in February 2019. As Lotus Investment Group chairman David Grin noted, “Irish landlords have had a constant flow of new legislation to contend with, each placing more pressure on the already strained Irish property sector.”
The new Bill proposes banning eviction of tenants on the grounds of sale and Ireland’s socioeconomic situation is making this a real problem.
The issues at hand
Dáil Éireann, the Assembly of Ireland, is the principal house of the Oireachtas, or Irish Legislature, and includes the President of Ireland. It is comprised of 158 members known as Teachta Dála, abbreviated as TD, who represent 40 constituencies. The house is the dominant branch of the Irish Legislature and has the power to pass any law it chooses, subject to the Constitution of Ireland.
In March 2019, the latest homelessness figures were released, an astounding 50% higher than in 2017. Solidarity TD Mick Barry, head of the ‘Solidarity–People Before Profit’ electoral alliance, criticised the current government for allowing 3,784 children to be among the over 10,000 homeless. During questions to Minister for Children, Katherine Zappone, TD Barry asked if she had “woken up yet”. In September 2017 there were 2,432 children in emergency accommodation in Ireland; this year, there are over a thousand more. According to Focus Ireland, the government-funded agency dealing with family homelessness, 69% of homeless families reported that their last residence was a private rental, and an April 2018 survey of tenants found that 70% had been renting for five years or more.
In his statement to the Joint Committee on Housing, Planning and Local Government on 20 February 2019, Solidarity TD Barry said, “it is insanity to continue to allow economic evictions to take place in the midst of the greatest housing and homelessness crisis in the history of Ireland”. Barry, and many like him, believe that the number one cause of homelessness is eviction from private rentals, and it is, in fact, his party, Solidarity–People Before Profit, that proposed the new Bill—Solidarity’s Anti-Eviction Bill. The Bill bans the sale of a property as grounds for eviction, as well as “renovictions”, the eviction of tenants for renovations. Similar laws have already been enacted in Germany, Denmark, Sweden and the Netherlands. The Bill also protects tenants if their landlord defaults on a loan and the property is repossessed by a bank.
Minister for Housing, Eoghan Murphy, has said he cannot accept the new Bill, highlighting, among others, its bias against landlords. As the Minister has said, and Lotus Investment Group has echoed, “the Bill does not consider when a sale is financially necessary, when renovations are essential, or the rights of property owners to simply sell.”
Both sides of the debate
Forcing landlords to maintain properties for tenants or prohibiting their right to sell poses economic and ethical problems, as does evicting tenants. Ireland is currently facing a well-documented housing shortage, which the country has attempted to address through the government-funded initiative ‘Project Ireland 2040’— calling for an additional 112,000 houses over the next decade. While a noble and needed cause, it does not address the immediate need for affordable housing. The European Court of Human Rights affirmed that interference with property rights is authorized only if it is in accordance with the law, is necessary in a democratic society, and is proportionate to the aim sought. The question thus begs, is a national housing shortage proportionate to restricting the rights of landlords?
Lotus Investment Group Chairman David Grin asserted that even with the regulations in the proposed Bill, there is no clear sense of what the long-term effect on the property market might be. If passed, the Bill could herald a rush to sell properties currently in the rental market, exacerbating the housing shortage. One view is that vacant properties fetch a higher market price at sale, motivating owners to sell their properties unoccupied. On the other hand, those in favor of the new Bill argue that the more the Irish rental system is driven by long-term yield, rather than fluctuating asset prices, the higher the value buyers will place on properties with an existing and secure rental. Likewise, a private homeowner rarely moves out when doing significant renovations, so the Bill argues that tenants should not have to move out either.
TD Mick Barry and supporters of the new Bill point out that an increasing number of people are living permanently in the private rented sector, and that demand for rental properties will soon exceed demand for sale. With the growing Irish workforce and economy, young families are opting for rent over mortgage because, for many, it is more affordable and less restrictive. The Bill, Mick Barry says, will help keep a third of Irish families from being made homeless. Conversely, House Deputy Fergus O’Dowd told the Committee that most of his constituents who are renting are waiting for social or council houses and do not want to live in rented property forever. He believes that as the availability of houses and choices increases, demand for rent will decline, and proposed a moratorium on evictions for a set timeframe instead.
In the midst of the greatest housing and homelessness crisis in Ireland’s history, there clearly is a need for legislation, guidance, and support that is fair to both sides. An investigation has shown that the main cause of the increased homelessness is eviction from rentals and the subsequent lack of alternative affordable accommodation once evicted. The proposed Bill aims to tackle that—prohibiting eviction on the ground of sale and eviction on the ground of renovation while imposing a moratorium might be a quicker, less drastic option.
The solution is not clear-cut, and there are points to both sides of the debate. The Irish Legislature has some work to do in addressing the short- and long-term concerns faced by their property sector, while investors like Lotus Investment Group remain hopeful a solution will be found.