State plans to buy up Airbnb properties, says Housing Minister

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Christina Finn 12/07/2020
Source: Leah Farrell
In a wide-ranging interview, the minister said his department is drawing up a detailed submission which will seek to acquire properties.

THE STATE PLANS to buy up properties that, previous to the pandemic, were for rent on short-term letting platforms such as Airbnb.

There has been a marked increase in the number of rental properties available in Ireland and elsewhere as former short-term lets came back on the market amid recent travel restrictions.

In a wide-ranging interview with TheJournal.ie, new Housing Minister Darragh O’Brien said his department is drawing up a detailed submission for the government’s July Stimulus Plan which will seek to acquire properties that were once listed on Airbnb and other short-term letting websites.

The minister also told this publication that he is drafting legislation to deal with rental arrears, with plans also underway to continue giving people rental supports as they return to work as the country reopens. 

Taoiseach Micheál Martin met with O’Brien on Friday to discuss the July Stimulus which aims to restart the economy and boost employment after the Covid crisis.

O’Brien said there will be significant public housing initiatives, as well as infrastructural projects in the mix. His department is currently drafting a costed submission.

“There are opportunities now to do things quicker,” he said. Acquisitions is one area where the minister said the government will be ramping up activity.

“The Airbnb properties that are now not being used – is there an opportunity for the state to buy more of them? It’s something that I’m looking at, absolutely. It is something that I want to do frankly,” said O’Brien.

“If there are opportunities for the state to buy, at reasonable prices, so we can house people and then they can rent them on a secure basis from the state, then we should.”

While the minister said he could not go into much detail on the stimulus package, he said acquisitions of properties, such as Airbnb properties, will be included in the department’s submission.

“I think we have a chance to do some quite significant things right now,” said O’Brien.

Expanding the Help-to-Buy scheme

The minister said the Help-to-Buy scheme is also here to stay, and will be expanded.

The scheme was an incentive introduced for first-time buyers in Budget 2017, to try to help them reach the level of savings required to afford a deposit for a house.

The scheme entitles those buying new-build or self-build homes valued up to €600,000 to claim a tax rebate of up to 5% of the value of the home up to €20,000.

O’Brien confirmed that he is looking at a maximum relief limit. He claimed the scheme hasn’t been inflationary.

“It’s a support for first-time buyers right now. So potentially expanding it further, looking at the limits,” he said, adding that officials are currently working on the options.

“If we get to a situation, which I want us to get to, where there is affordable housing out there, then you reduce the need for the help-to-buy. But in the medium term, help-to-buy is here to stay and potentially expanding.”

Eviction bans

In terms of rental rights, the minister said there needs to be further strengthening of tenants’ rights.

“I’m working on that now. Things like rent arrears. Eviction bans and rent freezes aren’t going to stay in forever anyway. Anyone that says that is just not being truthful. We’ve got to be mindful of that too. So how do we further improve things for people? I’m working on a parallel piece of legislation on arrears,” he said.

“I think there’s a role that we need to know about arrears much sooner. So, if a tenant falls into arrears, then I’m looking at putting in an obligation that the copy of that arrears letter would have to go to the Residential Tenancies Board (RTB), where they would then get an early warning that there’s an arrears situation and then advise the tenants on what they need to do,” he said.

The RTB would then step in to assist with advice on rent allowance or emergency emergency financial assistance. 

The minister said that just less than a million people are either on the pandemic unemployment payment or the wage subsidy scheme.

“We announced an emergency rent supplement scheme. So for people who lost their jobs, or had their salaries reduced, there is help with their rent. We’ve only had 8,000 applications for that. I’d be saying to your readers, as well as people who have had their salary reduced or have lost their job, you should not be going into rent arrears. I am asking them to apply for the emergency rent supplement.”

While the support might have gone under the radar for some, the minister said he is now looking at the “flexibility” of emergency rent supplement, with a view to letting some people avail of it as they re-enter the workforce.

“That’s something I have to work with the Minister of Social Protection on, to get those supports for people coming back or whose salaries have been reduced, because we don’t need people to get into a rent arrears situation,” he said.

“Should they get into the rent arrears situation, I’m looking at legislation that flags that very early, and that the state can offer supports very quickly. So we don’t get into an eviction type situation,” said O’Brien.

AirBnb and short-term lets

The regulation of short-term let platforms such as Airbnb has been a talking point since the former Housing Minister Eoghan Murphy brought in new rules governing the sector this time last year.

“The problem is they were brought in quite quickly, they were a bit rough and ready… The biggest issue, when the regulations were put in place, was the resources to implement it and to oversee those regulations weren’t put in place.

“Some of those additional staff have started to come on stream, and I’ll be putting more in place… we need to kick start it again. Now is the time to do it, because a lot of those short-term lets are actually back in the market now, because there’s no foreign tourists coming in. So now is the time to get our lists right, get our systems right and to get our staff in place. It’s about a balance – is there a role for short term lets – there is, but we’ve got to look at the proportion,” he said.

On the issue of regulating the platforms, the minister said the websites should have to show that the house or apartment listed has been granted planning permission to be a short-term let.

“That’s something that we should be doing. So, that I think would make a big difference because then we have visibility.”

Home ownership

The programme for government commits to the rollout of affordable rent and affordable housing. It was a staple of the Fianna Fáil manifesto prior to the general election. 

Fianna Fáil prides itself as the party of home ownership, which O’Brien argues for strongly.

“Most people who are renting don’t want to rent. That’s the truth of the matter. Most people who are renting would rather own their own home. That’s why in September, I’ll be bringing forward an affordable housing scheme.

“For those who are stuck renting, they will actually be able to buy homes at affordable rates where the mortgages will be half of what they pay in rent.

“You shouldn’t be paying more than 35% of your net take-home pay in rent. Above that, it becomes unaffordable. I know people who are paying 50% and 60% of the net take- home pay. So they’re working to pay rent basically, and the quality of life is practically zero.”

There are people trying to save for a home, who feel completely hopeless, said the minister.

“I’m going to change that. It doesn’t have to be that way. It should be that way,” he said, stating he will deliver homes on a shared equity basis where the state takes a share in the house for prices of between €160,000 to €260,000.

He said affordable home targets will be set out in September, with O’Brien acknowledging people need to see delivery from the government.

“It’s all very well talking about it and some of the opposition are great at theorising and talking about delivering but it’s been done before. It will be done. And it will be done by this government, and it’ll be done by me as minister,” he said.

However, he added that it will take a “little bit of time to start delivering those first homes, there will be a lead in time”. 

Since 1991 there has been a substantial decrease in younger age groups owning their own home, with 30% of 25-34 year olds owning their homes in 2016 by comparison to 68% in 1991.

The minister said that trend should be reversed.

The Rent Pressure Zones haven’t really worked, according to the new minister. While they have “tapered the increase” rents are still too high, said O’Brien.

Affordable rent

He said an affordable rental scheme is needed in Ireland, and work is underway to set out what the affordable rent limits will be.

“Within about eight weeks, I should have those options,” he said, stating there’s an expert group that’s been working the rent limits. The will soon publish what an affordable rental scheme will look like in this country.

“There’s going to be variances, depending on where you are in the country and depending on what type of home or apartment it is,” said the minister.

However, generally the minister said the definition is 35% or a third of your net take home pay.

“You can get into a differential rents situation, whereby you have someone who’s working and might be earning €30,000 and renting somewhere pays less than someone who is renting the same place and is earning €50,000,” he said.

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“I’ve talked in opposition about the need for affordable housing. I now have an opportunity as minister to deliver on it and implement it and I am absolutely focused on doing it. I want to see, in my term, large amounts of people moving into affordable homes.”

While the minister stated he aims to buy up properties that were once used for short-term lets, he also wants local authorities to buy a range of properties with a particular focus on homes for single people.

“I’ve been asking local authorities to acquire more single units in particular. 40% of our people in emergency accommodation are single men and single women, and it’s a big, big issue. I want to make big strides in that area,” he said. 

In terms of homelessness, the minister said progress has been made on reducing family homelessness, particularly throughout the pandemic period.

“We’ve got to harness some of the good things that were done during the start of the pandemic,” he said, stating that the collaboration between housing and health departments cannot be lost.

“I know health are up for that challenge to. It makes a massive difference. We get better results when we work together,” he said.

“We’re going to let the local authorities off the leash to deliver homes themselves… Letting them be responsible for developments of 60, 70, 80 homes in their own area with oversight, but reducing the bureaucracy,” he said. 

“I’m looking to acquire more homes for families, there’s a fighting fund for homelessness in the programme so we can be buying homes with tenants in situ and taking them into the public housing stock.

The minister said family hubs should be a “stop gap for people”.

“The solution is permanent housing,” he said, stating that the Housing Assistance Payment (HAP) – which gives rental payments to private landlords – should also be a relatively short-term support.

Last year, the government ringfenced an additional €80m for HAP as part of Budget 2020, bringing the annual budget for the payment to €502.7 million.

However, O’Brien feels the last government were over reliant on HAP. He disagrees with how people are categorised when on the payment also.

“People were effectively taken off the [housing] list and said that you’ve been deemed housed and your housing need has been met. I don’t accept that,” he said.

“We need to reduce the reliance on HAP. That’s tricky for one reason, because when people are in a tenancy if you stop paying for it, well where do they go? So, we need to get that tipping point of increasing the public housing supply.

The pandemic has had an impact on housing output this year, with O’Brien stating that for three months the construction sector was effectively shut down.

“We’re probably going to be down to 14,000 house completions this year, where we were on track to get 25,000. That’s an issue, so we have to catch up,” he said.

On vulture funds, the minister said cuckoo funds buying up blocks of apartments and renting them out has been a big issue. He said it is impossible for first-time-buyers to compete in a shrunken market against big institutions.

“That’s the reason why I want to focus on the state-led affordable housing scheme, that no vulture fund or cuckoo fund can buy in. That it’s our stuff and it’s our stuff for our people.”

If ramping up supply is key, what does the minister think about high-rise?

“There shouldn’t be limits,” said the minister.

“There are areas in our cities that it makes sense that we go up. The Docklands. Absolutely. It’s beyond me as to why the highest building there is 24 storeys. What I’m told is that the height caps have been lifted. But the application of that seems to be rather strange as to how some of our local authorities make decisions,” said the minister, who added that he is precluded from speaking about any specific planning applications.

The minister said that buildings should be much higher than 24 storeys, with consultation with local residents, he said.

In appropriate parts of Ireland’s cities, looking at high rise, should be considered, he said. “Other countries are able to do it better than us,” he said.

O’Brien said he absolutely does not underestimate the challenge ahead of him, but housing is a priority of the new government. 

He said he plans to leave after his term in office with his head held high, having delivered affordable homes and rent for the Irish people. 

“We did this before, we can absolutely do this again,” he promised.