Vulture funds have become passé. The latest fad taking hold in the property market is the cuckoo fund—aptly named, as they push the individual or family buyer out of their potential nest.
Officially called private rented sector funds, they are institutional investors backed by the likes of large pension funds. They work by buying up whole developments, such as apartment blocks, typically buying in cash and in bulk, elbowing out family buyers before letting out the same units to the same families for a tidy rental fee.
The first investments of this type began in Ireland about 2013, only becoming of interest recently because of their unexpected growth. According to a report this year from Savills, between 2012 and 2018 block purchasers bought 9,291 units in Dublin—8 per cent of all the residential properties that have been purchased. The majority of these cuckoo fund purchases—almost 3,000 units—took place last year alone, with €1.1 billion invested.
By the first of May there were 2,834 proposed units between Dublin city centre, Santry, and Dún Laoghaire—all planned for rental investors only. Under new design standards for apartments introduced in March last year, developers who opt for PRS-specific planning designation can benefit from “flexibility” on internal storage, unit sizes, unit mix and minimum car-parking provision—meaning they can make smaller apartments, with lower requirements.
It is now common also to include a clause in these developments to ensure that the block will remain in the ownership of a single corporate entity for at least fifteen years. Institutional landlords already hold approximately 4½ per cent of all tenancies nationally, heavily concentrated in the principal rental areas, such as Dublin.
It must be noted that this carries with it the risk that these monopolies will be able to engage in price-fixing in high-demand areas and their peripheries, driving up rents as they wish.
One of these cuckoo funds, the American firm Kennedy Wilson, is able to charge an average of €2,049 per month in Dublin—€300 more than in Los Angeles. Cuckoo funds are a lucrative money-spinner, with a high and quick return, making them particularly appealing. Dublin being such a profitable market, it is one that these companies are happy to expand within as the “rental philosophy” takes hold.
This “rental philosophy” has been touted as the Irish finally updating their attitude to property and embracing a more Continental approach. In reality this attitude is little more than an atmosphere of desperation and shortage, one that is being cultivated in a country where 1 in 10 renters are paying 60 per cent of their earnings in rent.
With growing homelessness (now more than 10,000 people in emergency accommodation in the 26 counties, 4,401 of these in Dublin), longer housing waiting-lists (in Dublin 31,196 households), daft.ie advertising bunk beds, and much worse, it’s small wonder that renters are grateful to get anywhere at all, and are afraid to buck the trend.
This is where another housing fad makes its entrance: “co-living.” Niche Living has two such developments planned in Rathmines and Dún Laoghaire, with a third at Cookstown, near Tallaght, just being refused planning permission. Depending on your point of view, co-living can be described as “campus living for the socially minded” or modern bedsits with a shiny gloss.
Those seeking to rent one of these co-living spaces rent only a bedroom, or “bedspace,” as Niche Living terms them, with a fold-down bed, and with access to communal kitchen and laundry facilities. In Dún Laoghaire this communal kitchen will be shared among forty-two bedspaces. Without the need for individual cooking facilities, more bedspaces can be squashed onto the same floor.
As co-living is supposedly intended only for short-term leasing, a few months to a year, these units also have lower requirements for light and space than standard one-bed apartments, and look more like hotel rooms than flats. Starting at €1,200 per month, these spaces are far from affordable for the majority of workers and totally unsuitable for those with children. With a shrinking number of affordable apartments and houses available, however, they may become the only option for many.
The rise of Airbnb was the first beginning of landlords siphoning off residences from the long-term rental market to the more lucrative and exploitable realm of short-term leasing. Rental postings began to shrink in Dublin as short-term leasing exploded; and co-living is the next step. With the Rathmines development at 104 bedspaces and Dún Laoghaire at 208, this is co-living on a scale not previously seen in Dublin.
Co-living bedspaces are marketed with the language of social consciousness and environmentalism and promoted as a new, alternative way of living. But the push to accept co-living isn’t for forming communities, saving the planet, or developing social connections, any more than renting is for having freedom. The drive behind them is to normalise the switch from tenant to contract-holder, without any of the rights or protections—meagre as they are—of those with conventional renting leases.
It’s all about applying pressure on renters to accept lower and lower standards and security in housing for ever-increasing rents. It’s about commodifying the basic human need for shelter, and using that need to ruthlessly exploit workers.
Co-living marketing is slick and stylish, but without it, co-living looks an awful lot like the despised family hubs.
The minister for housing, Eoghan Murphy, has publicly spoken of his support for both cuckoo funds and co-living apartments. Both of these, he has argued, are good for tenants, as they are supplying a desperate need in the market.
What he refuses to acknowledge is how this need has been manufactured and exploited by the ruling political parties, working in tandem with the landlord and developer class. The Government has been accused by the United Nations of facilitating the “financialisation of housing” through preferential tax laws and weak protection for tenants. This can hardly be surprising when more than a fifth of the Dáil’s 158 TDs are receiving income from properties they own and are renting out.
According to Engineers Ireland, more than 600,000 people are living in poor housing conditions, with leaks, damp, and rot, while it is estimated that nearly 2 million homes will require retrofitting within the next decade.
To solve this crisis we do not need investors playing with properties as profit dictates, or trendy new ways of living that force lower-earners to accept lower standards: what we need is universal public housing. It is only through every citizen having the right to a home, rented for a set and fair percentage of their income, supplied by the state, that we can fight back against the intensifying forces of neo-liberal capitalism and the total commodification of our homes.