Is Build-to-Rent Crowding Out Other Kinds of Homes in Dublin?

Dublin City Council has agreed to lease all 39 homes in a new complex at Poplar Row in Ballybough from the developer Bartra, said a council spokesperson earlier this week.

“This is a very welcome development in an area of very high demand for social housing,” said a council spokesperson, adding that the homes should be ready in March 2022.

But when Bartra applied for planning for the homes on Poplar Row, several councillors wrote to the council to express concerns around standards.

In the interest of their tenants and building sustainable communities, the newer social homes the council builds are generally designed to high standards. It’s one of the reasons they cost more, a council official said recently.

But big rental blocks like the one at Poplar Row only have to meet different lower standards.

That’s a potential issue not just social tenants but also for the many private rental tenants looking for a home in the next few years.

More than half of the homes granted planning permission in Dublin between 2018 to 2020 were build-to-rent, show council and CSO figures – and that’s not even counting student housing.

Building for What?

Special standards just for build-to-rent apartments were brought in in 2018, as part of new national apartment standards guidelines.

The housing minister at the time, Fine Gael TD Eoghan Murphy, called on the planning authorities, housing providers and residents to back the new regulations.

“We are providing new guidance on build-to-rent, addressing for the first time the concept of shared accommodation, co-living and communal living which enables new and exciting ways to meet the housing needs of key sectors of our society,” he said, in the foreword to the guidelines.

The new guidelines would be a “key element in developing a mature affordable cost rental sector at scale”, he said.

Build-to-rent apartment standards differ from the rules for building apartments in general, according to the guidance document.

The studios can be smaller than those that are built for possible sale. In ordinary residential developments the majority of the homes should exceed the minimum size standards by 10 percent, but in a build-to-rent complex they don’t have to.

In ordinary residential complexes, there should be a mix of apartment sizes, but that requirement doesn’t apply to build-to-rent developments.

When Bartra put in for planning in 2018 for the Poplar Row development, there were submissions from councillors and others objecting because of those lower standards.

Green Party MEP Ciarán Cuffe, a councillor at the time and an architect, pointed out that the development includes single-aspect north-facing studio apartments that were 38.6 sqm. (Single-aspect means that the apartment only has windows on one side.)

Independent Councillor Damian O’Farrell welcomed the extra housing but queried why the plans included no parking spaces, which is permitted in build-to-rent complexes. He said that council tenants are entitled to have cars and it was a “gross assumption that not one resident will be a car owner”.

Build-to-rent housing is supposed to include communal amenities, but several observations pointed to a lack of communal space at the Poplar Row development.

A spokesperson for the Department of Housing says that build-to-rent developments play an important role in delivering rental accommodation at scale, and managed professionally.

Build-to-rent developments “include the provision of support facilities such as waste management, laundry, building management”, he says.

But all the communal facilities are optional and like Poplar Row, they do not all have laundries.

Build-to-rent complexes can help to increase the supply of housing, he said. “The scope for BTR projects to augment existing housing delivery models by attracting new investment into the sector will also assist in this regard.”

Accommodation built according to the regulations has to be managed by the same company as rental accommodation for 15 years and not sold off, says the spokesperson.

But it can be leased, long-term, for social homes.

The Story So Far

Cities across Europe have seen waves of investment in rentals with, overall, rising flows of money into the sector.

In Dublin city, one impact on the ground has been that as many as 70 percent, and perhaps more, of homes granted planning permission between 2018 and 2020 were to be built for rent, and not for sale, suggest CSO figures read alongside council figures.

From the start of 2018 to the end of 2020, planning authorities granted permission for around 20,500 homes in the Dublin City Council area, shows CSO data.

Those planning permissions include roughly 10,900 build-to-rent apartments, show Dublin City Council figures.

They also include student accommodation – although, how much is unclear. A Department of Housing spokesperson said that from mid 2017 to February 2021, there were 7,870 student accommodation units granted planning permission in the Dublin area.

Conservatively, if even half of those student rooms were in Dublin city between 2018 and 2020, that would leave fewer than 6,000 homes that, if built, would be available for sale to homeowners. Although they could also be sold to investment funds.

Balanced or Not

“The biggest problem I’d have is that people who want to buy a house to live in can’t,” says Cian O’Callaghan, Social Democrats TD and housing spokesperson.

People who want to become homeowners are stuck renting and elderly people who might want to downsize also cannot purchase an apartment in the city, he says.

We need some rental properties but in Dublin build-to-rent is “dominating supply”, he says.

The government is propping it up by leasing homes at the very top of the market, and that is artificially keeping rents high, he says.

Dublin’s housing market “needs to be rebalanced towards individuals who need to acquire homes”, he says.

The size of some of the [proposed build-to-rent] developments is a problem too, says O’Callaghan. Smaller schemes create a “better community and better sense of identity”, he says.

The largest development proposed in a single build-to-rent planning application was for 1,137 homes in Walkinstown.

At the old Player Wills factory in Dublin 8, the developer Hines is looking to build around 1,400 rental homes, some of which are not yet included in the tally above, because they are applying in phases.

Pat Farrell, CEO of the Irish Institutional Property, says that a high number of apartments in Dublin city were historically bought by investors.

Research by Hooke and McDonaldsays that from 1998 to 2008 around 75 percent to 80 percent of apartment developments were bought by investors, he says.

All supply is good, says Farrell, as “Dublin is facing a massive deficit of apartment units”.

It is undersupply that is pushing up rents, he says. “A combination of no new supply for years post the financial crash, borrowing caps and high development costs has limited new supply.”

That means that older stock is not coming down in price but the “pricing should adjust once new supply ramps up”, he says.

That supply should be delivered by the state as well as the private market, he says.

Backing Build-to-Rent

There may be an oversupply of high end build-to-rent accommodation coming down the tracks, says Lorcan Sirr, a housing lecturer at TU Dublin.

As more companies switch to remote working, the demand from young professionals may reduce. Some workers have already left Dublin because they can work remotely, he says.

But the investment trusts that back build-to-rent housing can’t go wrong, Sirr says, because if they build too much housing they can lease it to the councils for use as social housing.

A recent report from real-estate services firm CBRE Ireland notes “the emergence of demand from institutional investors for product leased on a long-term basis” to councils and approved housing bodies, “which is expected to attract keen pricing”. It expects that interest to grow more this year, it says.

As of March this year, the Dublin City Council counted 1,099 long-term-leased homes in the pipeline, says a report to the housing committee. It’s unclear how many of those are new builds under rental standards.

“Social housing is your new blue-chip investment product,” says Sirr.

The government would be better off to build its own homes though, says Sirr, as leasing social homes is “dead money”. “You pay a lot of money for a long number of years and don’t own anything at the end.”

Under the government’s Enhanced Long Term Social Housing Leasing Scheme, the council pays 95 percent of the market rent.

There are rent increases built into some of the deals so “even if the rent plummets the council is tied into the deal”, he says.

Sirr said it may not be appropriate to use build-to-rent housing for social homes, which are usually for long-term use.

Many of the homes will be very small and there could be a high number of one-bedroom apartments and studios in the complexes, he says. Any reduction in the standards of social housing is “sad”, he says.

Farrell of IIP says that the build-to-rent apartments are generally high spec and provide better layout, storage provision, standards and more communal space.

“This will help create better community dynamics within apartment developments and make them more sustainable for longer term residency,” he says.

Last year, Fine Gael Councillor Jim Gildea on Dún Laoghaire-Rathdown County Council objected to how social homes in an affordable development at Shanganagh Castle in Shankill were being built according to build-to-rent standards.

The model is not designed for permanent family homes, he said.

This article was written as part of the project “Cities For Rent: Investigating Corporate Landlords Across Europe”, which was coordinated by Arena for Journalism in Europe.

Its production was supported by a grant from the Investigative Journalism for Europe (IJ4EU) fund.

You can read more stories from across Europe here.

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Laoise Neylon: Laoise Neylon is a city reporter for Dublin Inquirer. You can reach her at [email protected]

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