Want to Fix Ireland's Housing Crisis? Address the Elephant in the Room

The solution to Ireland's housing woes is staring underneath us

My Report on the history and solutions to the Housing Crisis is available here:

Ireland has a perennial problem with monopolies. Whether it was Ireland’s reliance on potatoes as a source of sustenance and economic growth that led to two successive famines one from 1740-1741 killing nearly a fifth of a population of just over 2 million and the Great Famine from 1845-1849 which engineered the mass emigration of one million and the death of another million Irishmen and women which the British administration had long sought to carry out on providential grounds, the Island’s long-standing inflexibility towards diversification has proven its Achilles Heel.

When Ireland achieved Independence in 1922, and the Free State came into fruition, the country was almost wholly reliant on the British export market. Up until the 1970s, when Dublin entered the European Economic Community (EEC), alongside the United Kingdom, Britain was home to over half of Ireland’s exports. The failure to broaden that market made European integration inevitable and indeed vital to ween ourselves off our old colonial masters and to achieve independence, not merely an appendage of Britain within an autonomous arrangement.

Indeed, despite embracing Euro integration on the grounds of combating dependence on London, Irish policymakers continued to suffocate the public with State-backed monopolies. As Senator Michael McDowell pointed out in the Irish Times recently, this infected every facet of the public apparatus from airline costs to energy production feeding into grueling costs for the taxpayer:

- The State owned the only airline, Aer Lingus, and participated in a high-price cartel arrangement with British Airways to make Ireland-UK air traffic the costliest in Europe.

- The State owned two shipping lines, B&I Line and Irish Shipping Ltd. Irish Sea services were dominated by the State-owned B&I and Sealink, a nationalised UK operator until 1984. All ports other than Greenore port were State-owned.

- All internal transport – bus, train and road freight – was subject to a State monopoly in the form of CIE. The State had a monopoly of mail and parcel delivery, An Post and a monopoly on phone services, Telecom Eireann. Both of those companies were hived off from the earlier Department of Posts and Telegraphs. No private competition was permitted.

- All energy production in the form of electricity generation, mains gas supply and commercial turf production was owned by the State through the ESB, Dublin Gas and subsidiaries, and Bord na Móna.

- In banking, there was competition but the State owned two banks, ICC and ACC. It also owned Irish Life, the biggest life assurance company. Health insurance was the monopoly of the State-owned VHI.

- The State had a monopoly in radio and TV broadcasting called RTÉ. Privately run radio was illegal and was described as “pirate” radio. The only competition came from UK channels available in some parts of the Republic.

- The State also established companies to manufacture fertiliser, Nítrigin Éireann at Arklow, and steel, Irish Steel at Haulbowline in Cork. It owned the sugar business, Comhlucht Siúicre Éireann, and entered the processed foods market with Erin Foods.

While 1980s Ireland is considered a bygone era of economic backwardness among policymakers and social purity among the public, the mindset or indeed inertia of the State in managing the monopolistic tendencies of public bodies has long persisted to this very day.

Whether it’s in banking which is dominated by only three players being Allied Irish Bank (AIB), Bank of Ireland (BOI) or Permanent TSB (PTSB) causing a duopoly in commercial banking – AIB and BOI - and an oligopoly in mortgage banking – PTSB – or insurance in which a few players from health to childcare dominate the market and engage in anti-competitive practices increasing premiums as a result.

In the context of the housing crisis afflicting Ireland currently, the lack of competition in land acquisition has allowed two dominant market players to hike the price of land feeding into housing costs. In some cases land costs can reach €100,000 - nearly half the cost of the house! Attempts to capture the “betterment” increase in land values as a result of development of water and sewage have long been a source of concern when addressing land inflation.

For years, due to Ireland’s failure to get a grip on land costs house prices have remained stubbornly high and out of reach for ordinary buyers. Statutory obligations including Part V requirements under planning legislation to initially reserve 10pc to now 20pc of developments for social and affordable housing have gone some way in addressing the issue.

However, two major players continue to dominate the purchase of land for development.

Recently, the two biggest players in the Irish property building market announced record profits these being Glenveagh Properties and Cairn Homes.

Glenveagh Properties released its trading statement for the year 2024. The homebuilder mentioned that they managed to complete and sell well over 2,000 homes – an increase of 77pc on the previous year. This amounted to a revenue rise of 43pc to over €800 million up from the previous €600 million with its profits before tax rising by over 100pc to €113 million from just over €50 million.

Meanwhile, Cairn Homes announced a rise in operating profits of €150 million – an increase of 32pc. The homebuilder completed 2,243 housing units – up 29pc.

In their statement announcing these gargantuan and, some may say, obscene profits Cairn mentioned the dilemma facing the “stuck middle” which sees ‘hundreds of thousands of young working people “desperately” trying to avail of housing’.

The irony of this statement is that Cairn Homes and Glenveagh Properties are contributing to the homeless plight of the stuck middle through their market dominance. Being the only major players in town has allowed them to hoard land with prices increasing dramatically in recent years as a result.

To examine this further it requires an overview of the history and recent controversies that have dogged these two entities.

Cairn Homes

Cairn Homes was established in 2014 by brothers Michael and Kevin Stanley. According to the Irish Independent, the Stanley family’s wealth stems from Shannon Homes, founded by the previous generation of the family in 1970 who were heavily involved in the Dublin housing market in the 1990s and 2000s. Michael became CEO of Stanley Holdings in 2005. Following the popping of the housing bubble in 2008, some of its loans ended up with the State’s ‘bad bank’ the National Asset Management Agency (NAMA) before being refinanced by Scottish financier Alan McIntosh of Sun Capital Management. They eventually set up Cairn Homes becoming the first listed housebuilder since the 90s. In 2015, Michael Stanley and McIntosh floated Cairn Homes plc on the London Stock Exchange and raised over €400million in equity. According to real estate services company Cushman and Wakefield, Cairn was the biggest purchaser of development land in 2015. According to Brian O’Boyle and Kieran Allen in their book Tax Haven Ireland, this allowed them to gift large amounts of land to private speculators thus controlling the building process and hoarding large amounts of land. Since exiting NAMA, the company purchased land that could accommodate 15,000 homes across 32 residential sites in Dublin. According to Colin Sheridan of Davy Stockbrokers, Cairn spent over €25 million on land acquisition in the first six months of 2024 adding to its already existing land banks of 17,200 plots. In 2017, Cairn acquired Montrose the land where the national broadcaster RTÉ is located for €107.5 million with the hope of commencing construction on the site by 2020. In July 2023, they applied for permission to build 608-unit of apartments for €345 million. In 2015, Cairn partnered up with Texas-based Vulture Fund Lone Star in buying the Project Clear portfolio from the recently exited Ulster Bank. This included 1,700 acres of prime residential land in west Dublin with the potential for 20,000 homes. According to Cushman and Wakefield, Ulster Bank “acted for Lone Star Funds on its joint acquisition with Cairn Homes of Project Clear from Ulster Bank for €503 million. Project Clear had a par value of circa €2 billion and comprised of approximately 20pc of the available residentially zoned land in the Greater Dublin Area”. The overall project included the disposal of land in Stillorgan that was supposed to go towards housing but instead would see the building of a sports hall leading Councilor Melisa Halpin (PBP) to question why Dún Laoghaire-Rathdown County Council was disposing of public land in the middle of a housing crisis: “This site is zoned for housing and we need every inch of land available to deal with the housing situation… by disposing of this site, we are increasing the value of the land for developers.” The other site included in Project Clear was a site in Blackrock for 355 built-to-rent apartments under the strategic housing development (SHD) scheme, which allows developers to bypass local authorities, which was denied planning permission for contributing to an “over-proliferation” of BTR in the area. In 2019, The Ditch reported that Cairn sought permission for 385 units in Marino, Dublin 9 while the inspector of the land Sarah Moran was in a relationship with Paul Hyde of the planning authority who approved the site. The site was given the green light without input from the local council with residents’ objections ignored. Much of the site was eventually sold to US asset manager Greystar which manages over $50 billion in assets. In another damning report The Ditch revealed that the recent planning reform bill titled the Planning and Development Bill 2023 was altered as a planning developer for Cairn was denied permission for a development in Co Wicklow. The changes would’ve prevented planning authorities from refusing permission because housing growth targets in a specific area had already been reached. Then Housing Minister Darragh O’Brien met with the strategic delivery and policy director for Cairn on four different occasions since the denial in May 2023 before the amendment was introduced into the Irish parliament, Dáil Éireann, with the Attorney General Rossa Fanning warning that the government was “being led by developers” in unpublished advice.

Glenveagh Properties

Glenveagh Properties was founded by private equity firm Oaktree’s Justin Bickle, developer and current head Stephen Garvey and former Chief Executive of global real estate company Jones Lang LaSalle and current Chairman John Mulcahy in 2017. But its origins lay bare the scale of monopolistic control it has over the planning process leading to sky-high profits and thus high house prices. Following his exit as Chief Executive of Jones Lang LaSalle, Mulcahy was instrumental in the State’s ‘bad bank’ known as NAMA. NAMA was set up following the crash to transfer distressed debt in residential, commercial and retail over primarily to private equity and/or vulture funds. These funds purchased this debt at rock-bottom prices and were facilitated by government-backed tax alleviation legislation to earn mega profits. Mulcahy was head of the asset management side of things at NAMA. Eventually, he became chairman of the Irish Property Investment Trust (IPUT) which is set up under the Qualifying Investor Alternative Investment Fund (QIAIF) model which allows it, under The Taxes and Consolidation Act 1997, to declare as ‘tax neutral’. He eventually transferred over to the Targeted Investment Opportunities (TIO) group on their Board of Directors as part of their strategic investments of development sites on the City Quay alongside Oaktree leading to the creation of Glenveagh with, as mentioned, Oaktree’s Justin Bickle. But who are Oaktree? Oaktree is a capital management company which following the Great Financial Crash (GFC) invested in distressed property with the hope of earning profit. Post-GFC the Irish State partnered Oaktree with the National Pension Reserve, which was raided to pay for the €64 billion banking guarantee, providing over €100 million to the company’s so-called Opportunities Fund V11 which bought distressed assets – homes – at low prices. Oaktree was just one of many purchasers of distressed residential, commercial and retail debt sold to them by NAMA facilitated by government-backed tax dodging schemes. According to the Irish Times, Mulcahy’s salary is now €300,000 per annum. Like Cairn, Glenveagh similarly tapped into the growing build-to-rent market which promises high returns via high rents. In 2019, Glenveagh sold the Herbert Hill development of over 80 apartments near Dundrum to a German investor for €55million. According to a report by the Irish Independent, Dún Laoghaire-Rathdown County Council had signaled its interest in securing the entire 90-unit development for use as social housing, but Glenveagh stopped this in its tracks. Eventually, Realis property entered a 25-year lease with DLRCC to rent properties at €3,000 p/m for social housing. Its most recent land acquisition includes close to 10,000 plots at an average cost of over €30,000 per unit. In September 2022, Glenveagh sold a development in Blackrock with permission for over 100 homes to a cuckoo fund based in Germany Union Investment with The Irish Independent reporting that the fund “has stirred protest in Ireland for displacing individual buyers in an extremely tight property market as they buy entire schemes before they are even built, meaning potential owner-occupiers never get a chance to bid for the homes”. In an embarrassing scandal for the developer, The Ditch reported that Meath County Council’s Chief Executive Jackie Maguire signed off on a development for Glenveagh for 138 homes while her son worked for the company. Nonetheless, the development was eventually denied planning permission as there were not enough homes being built on the site.

These litany of scandals and obvious displays of market dominance contextualize the negligence of the State to get a grip on inflated land values which makes solving the housing crisis an elusive pipe dream all the while developers and the investment funds they collude with laugh all the way to the bank with their high yield or what John Stuart Mill described as “unearned increment”.

Recent moves by the incoming government under the Programme for Government to grant greater Compulsorily Purchase Order (CPO) powers to local authorities and the Land Development Agency (LDA) may take the wind out of the sails of private developers and speculative overseas investment funds who profit off of high land values, however, the solution was spelt out in 1973 in The Kenny Report.

In 1971 the Minister for Local Government Bobby Molloy set up a Committee with Judge John Kenny acting as Chairman with a remit to come up with possible measures for controlling the price of building land in the interest of the common good as set out in Article 43 of the Irish Constitution Bunreacht na hÉireann. This eventually culminated in a report under the Chairman’s namesake which produced a majority and minority report.

The Majority Report suggested the creation of Designated Areas of land by the Irish High Court on the edge of urban areas which local authorities would compulsorily purchase at agricultural values, plus 25pc, which could be managed directly, or sold on to developers, thus reducing land costs for housing.

Meanwhile, the Minority Report by two representatives at the Department of Local Government suggested a pre-emption and levy scheme based on a Danish model with the land subsequently designated by the City or County Manager. The local authority would have first refusal on any land being sold in that area at market value with a number of levies attached.

Unfortunately, the majority opinion was declared unconstitutional in 1980 with the report largely shelved. However, given the scale of the housing crisis facing Ireland, the exercising of property rights on the principles of social justice and the common good as set out in Bunreacht na hÉireann must supersede the desires of speculators and land hoarders.

The 34th Dáil should dust off the contents of the Kenny Report and address the systemic issues outlined in land acquisition to combat the central issue facing heightened housing costs which can be found underneath us.