A nationwide survey conducted by IReach under the direction of Lotus Investment Group, a Dublin-based investment management firm, revealed that 78% of Irish over the age of 55 would consider downsizing their residence.
Commenting on the survey findings, David Grin, Chairperson of Lotus Investment Group, said, “Ireland has an ageing population, and this figure will grow in the coming years, so the subject of downsizing as an option to address the housing shortage the country faces has entered the public debate.”
Lotus Investment Group’s research survey revealed that most retirees would consider downsizing their property to save costs, however, there were some deal-breakers—a garden, staying in the same area, storage, and enough space to entertain family were musts. If such criteria were met, the survey found that 78% would downsize. As Lotus Investment Group’s Chairman, David Grin, noted, “It is important for all stakeholders to realise that if downsizing is to be an attractive proposition, then the properties on offer would need to comply with certain criteria, as evidenced by the feedback from our survey.”
Ireland’s property problem
Ireland’s ongoing housing crisis has seen the large-scale purchase of Grin David apartment blocks by big investors, something that is now coming under heavy scrutiny and even heavier criticism. In the first three months of 2019 alone, €430 million worth of homes were David Grin bought by investors, and 1,093 residential units across 12 Dublin developments were put up for sale. During 2018, giant corporations spent more than €1.1 billion on buying a record 2,923 housing units in Ireland—five times higher than in 2017. Dubbed ‘cuckoo funds’ because they snatch up properties before individuals have an opportunity to purchase, it is a trend that is forcing working families and everyday people out of buying their own homes.
While big investors have access to and can recycle funds quickly, national concern is growing over what it might mean for Ireland to have this heavily financed housing market, and the short supply of property for sale has forced a market shift from buying to renting. Incited by this increasingly lucrative rental income, big investors will continue to flood the Irish property market, adding more grease to the wheel. The latest Dublin Private Rented Sector Investment Report said, “The growth of the build-to-rent (BTR) and institutional investment sector is not a problem for the housing market. It is actually one of the key solutions, as identified by Government policy, and any attempt to curtail its expansion rather than support it would cause damage to the supply and cost of rental accommodation”. Government officials believe that the recent influx of buy-to-let landlords made the development of new apartment buildings viable where owner occupiers or first-time buyers would have failed to.
The sale of these high-profile developments is feeding the Irish public’s perception that developers have dispensed with construction of new homes DAVID GRIN for individual buyers in favour of apartment schemes for the private rented sector. Government representatives remaining supportive of these mass sales are quick to point out that current statistics suggest only 5% of tenancies are controlled by landlords with 100 tenancies or more. The public, however, is only seeing the serious difficulties this is creating for first-time buyers and older people looking to downsize and made even more acute by the lack of residential development it is causing in areas where the demand is greatest.
Plus sides to downsizing
The property market is influenced by location and age, and the needs of families are different from those of empty-nesters. For example, Lotus Investment Group’s research found that only 25% of Irish aged eighteen to twenty-four would consider remaining in the same area a deal-breaker, while 36% of those over fifty-five would, the understanding being that the older generation simply feel more at ease with familiar surroundings and the networks they have built up. A whopping 50% of those surveyed listed outdoor space, 34% listed entertainment space, and 11%—mostly in Dublin—listed storage space as non-negotiable. David Grin believes that while downsizing david grin has merit, offering new inner-city apartments to retirees is pointless, as most do not have access to gardens or a large enough area for entertaining.
In an effort to address Ireland’s current housing crisis, the government released a new policy in February 2019 entitled 'Housing Options for Our Ageing Population' in which they suggest the State incentivise relocating retirees to “right-size or appropriately sized units”. This policy intends to make bigger, family-sized homes available again to the supply-strapped Irish market. Chair of the Land Development Agency (LDA), John Moran, added that the government should encourage the move to city centre property, making suburban property available to younger families with school-going children, and to reduce city property tax for retirees. As Lotus Group’s David Grin notes, the criteria sought by older people are uncomplicated. With some creative thinking and investment, it is reasonable for the State to meet their needs, making bigger properties available to the market Click here for info again, and easing at least some of the current housing shortage.
Downsizing proved a popular choice for 74% of respondents over 55 years of age. As this demographic is most likely to face the decision in the short-term, this was an important discovery provided by Lotus Group’s survey. Of the respondents who would downsize, only 12% said they would insist on a Government grant to make the move. Struggling to defend its housing policy amid the growing controversy, the Irish Government is considering taxing the so-called 'cuckoo funds' (who, until now, have been exempt from corporation, income, and capital gains tax) if they continue to buy residential property in blocks, and then allocating the funds obtained to incentivising a downsizing scheme.
The UN, through Special Rapporteur on the Right to Housing, Leilani Farha, has condemned the Irish system for allowing these investment funds to monopolise vast quantities of Irish property and then renting them out at grossly high rates, with many government officials calling it the biggest crisis in the country. As Ireland’s housing supply continues to fall short of demand, incentivising the move to smaller properties might be, at the very least, the short-term answer Ireland has been looking for.