Stories
Two figures used by Minister for Housing Darragh O’Brien highlight the challenge his department faces in addressing social housing waiting lists. On the one hand, O’Brien regularly cites the government’s commitment under the Housing for All plan to invest €4 billion on social housing each year out to 2025. On the other hand, he recently announced that from next month local authorities would have discretion to increase Housing Assistance Payments (HAP) to tenants supported by the scheme up to 35 per cent beyond statutory rates.
This illustrates the double whammy resulting from years of insufficient investment in social housing. While the state needs to double down on capital spending to catch up with needs, it is also forced to fork out increasing sums to help those on social housing lists pay their rent in the private sector in the meantime.
HAP is the workhorse of this outsourcing of buffer social housing to private landlords, along with a less frequent form of support, the Rental Accommodation Scheme (where tenants find a rental home themselves under HAP, the local authority arranges the lease directly under RAS).
HAP was intended as a stopgap measure to help those on social housing lists on a temporary basis, gradually replacing older schemes such as the Rent Supplement. Instead, it has become a long-term way of paying rent for over 62,000 households and its cost has exploded. And yet, there are just as many households in need of social housing not covered by HAP or any other support scheme, according to the Parliamentary Budget Office.
Over one in five renting households registered by the Residential Tenancies Board is now supported by HAP.
HAP is paid directly to landlords according to a grid of over 200 monthly rates ranging from €180 for an adult in shared accommodation in Longford to €1,300 for a family with three children in Dublin. Last month’s announcement on local authority discretion rates means councils will now be allowed to pay up to 35 per cent above these rates on a case-by-case basis, as opposed to 20 per cent until now. (The Dublin Region Homeless Executive can already exceed the statutory rate by 50 per cent in the case of homeless households).
This reflects the fact that rates haven’t kept up with spiking rents and will, again, add to the scheme’s overall cost to the Exchequer. Despite the discretionary increases to the base HAP rate, many supported tenants pay a top-up to their landlord.
Now worth well over half a billion euro annually, HAP performs one of the largest transfers of taxpayers’ money to the private sector, yet there has been no information available on the landlords receiving this subsidy – until now. After a year-long freedom of information battle, The Currency has obtained details of the HAP payments made to the scheme’s 1,936 recipients operating as corporate entities in 2019 and 2020.
Data concerning individual landlords remain inaccessible. We won’t know, for example, how much Kerry TD Michael Healy-Rae received in HAP payments for any of the 16 buy-to-lets registered under his personal name at the time.
Some landlords collect HAP payments for their tenants directly, others go through intermediaries such as estate agents. The data obtained by The Currency identifies the payee only – those landlords going through an agent remain unidentifiable. This investigation details separately the corporate landlords receiving the largest direct HAP payments, and the agents handling the largest volume of HAP business.
It identifies multiple businesses receiving, in some cases, multi-million euro annual HAP payments. In the current climate of heated debates surrounding housing provision, a number of preliminary warnings are necessary.
HAP payments are widely dispersed among landlords. Of €435.9 million spent on the scheme in 2020, less than half (€185.5 million) went to landlords with more than 10 properties. Among those, this article concentrates on corporate entities, which collected €162 million. There is, however, no evidence that commercially-run landlords are capturing a significant share of HAP payments. Analysis of HAP tenancies by the Central Statistics Office based on 2019 data showed that over 85 per cent of HAP landlords had only one rental property in the scheme. The businesses detailed below are, therefore, the exception rather than the rule.
Finally, a landlord’s inclusion on the list of major HAP recipients does not suggest that it is unduly profiteering from the scheme. In a situation where government policy has resulted in one fifth of private tenants depending on the subsidy, any owner of mid-market or cheaper properties can be expected to end up housing a large proportion of those households. There are, in fact, more complaints about landlords discriminating against HAP tenants than the opposite.
With these caveats clarified, here are the largest corporate landlords collecting HAP directly. They are those with at least €200,000 in payments in 2020.
The specialist Dublin apartment investment firm IRES stands out as an outlier with just under €13 million collected from HAP that year. This accounts for 3 per cent of the government’s spend on the scheme. As the only corporate HAP recipient listed on the stock market, IRES offers detailed financial reporting, which allows us to assess the importance of the scheme to its business.
Of 3,688 homes owned by IRES in 2020 (and nearly all occupied), over one in four was supported by HAP. In financial terms, IRES reported €74.7 million in rent collections (inclusive of maintenance and service charges). This includes the €13 million in HAP receipts, which therefore account for 17.4 per cent of its revenue.
These figures indicate that IRES is happy to take on tenants eligible for HAP, or that a number of tenants in its established properties became eligible for the scheme as their circumstances changed over time, such as job or income losses observed during the pandemic. As a mid-market property player with rents slightly below average, it is no surprise that IRES finds itself with so many tenants supported by HAP – they are the scheme’s prime targets.
The second-largest direct HAP beneficiary among corporate landlords in Ireland is LRC Group, with €2.1 million collected across 262 homes in 2020. The group describes its expanding residential portfolio here as “2,200 apartments, bringing under-utilised accommodation back onto the market”. LRC is a Cyprus-headquartered property investment firm with assets across Europe and collects HAP through seven Cypriot subsidiaries. It is led by British-Israeli investor Yehuda Barashi.
Developer Frank Fahy’s Shannon Homes group had two companies among direct HAP recipients, covering 113 homes. They collected some of the highest payments per property on this list, over €1,450 per month on average. This shows local authorities have used their discretionary power to increase HAP rates well above the €1,300 statutory maximum in Shannon Homes’ focus area of the outer south Dublin suburbs.
Some subsidised tenancies in the Shannon Homes portfolio may be owned by other landlords as the group also offers property management as a service.
Next comes the Comer Group run by Galway brothers Luke and Brian Comer. Among HAP recipients, The Currency has identified 26 subsidiaries of the group listed in our analysis of the Comers’ Irish investment drive published last November. They collected €1.5 million in total HAP payments in 2020 across 144 properties. Sansovino Property Company, the Comer vehicle that owns the Tallaght Cross East apartment complex in south Dublin, received half a million euro alone across 41 apartments.
The sovereign wealth fund of Singapore’s government, GIC, invests in Irish residential property through an ICAV called The Vestry, with local management provided by veteran Dublin property investor Richard Moyles and his partner Andrew Gunne through their company BEO Capital.
The Vestry is the registered owner of 690 properties spread across all 26 counties, from semi-Ds in Letterkenny to apartments in Castleknock. Of these, 144 were subsidised by HAP in 2020, generating just over €1 million in revenue for the Singapore-owned fund.
Moyles is also a director of two companies operating under the name MSN, which collected over €300,000 in HAP on behalf of 16 tenants. The companies are ultimately owned by Enniscorthy, Co Wexford-based property investor Aoife O’Connor and have been developing apartments on the Riverview site in Mulhuddart, Co Dublin.
A similar amount was paid to the Dutch property investment firm Orange Capital Partners and its Dublin minority partner Lugus Capital to support 165 tenancies. The properties are owned by vehicles used in the purchase of the Belgrave portfolio in late 2018 and early 2019.
As previously reported, Lugus had purchased a series of run-down pre-1963 houses in south-central Dublin, largely laid out as bedsits, and converted them into the 265-apartment rental portfolio with funding from Bain Capital. HAP records show that the majority of them then became eligible to the subsidy.
2020 was the year when Frank Kenny’s Urbeo Irish rental property investment fund was taking off. At that point, its only established property was the New Bancroft apartment complex in Tallaght and it was beginning to add more as investors poured money in.
The Bancroft subsidiary of Urbeo brought in over €788,000 in HAP payments that year, linked to 54 apartments. During 2020, other Urbeo vehicles, most notably in Citywest, also began to collect subsidies under the scheme.
Developers Richard and Michael Larkin’s Twinlite group had two subsidiaries among top HAP recipients. The largest, European Property Fund PLC, received over €400,000 in subsidies for 328 tenancies in 2020 as it wound down and sold the majority of its assets. This accounted for 17 per cent of its rental income that year. Another €332,574 came from 34 homes managed by Twinlite Services, which may be owned by the group or by its asset management clients.
Companies controlled by developers Vincent and Jackie Cosgrave, which own the Sheldon Park Hotel in Dublin’s Bluebell suburb, collected just under half a million euro in HAP payments on 30 homes. They are apartments built on land adjacent to the hotel in recent year.
The next two largest direct HAP recipients were pension managers collecting payments on behalf of customers who hold investment properties in their retirement funds. Wealth Options ran 45 individual client companies with between one and three subsidised properties each. Independent Trustee Company, meanwhile, received bulk payments of €369,556 for 43 client-owned buy-to-lets.
Owenass Developments Ireland is Co Laois developers Pat and Sean Flanagan’s company. Its 43 eligible properties generated €290,579 in HAP payments. Further down the list, other developers collecting subsidies on a smaller numer of properties include companies in the Gaughran Homes group and STYMC, a UK-registered vehicle for developers Fergus McCabe and Brian Stynes – both in Dublin. Rockview is part of the Manley developer and contractor group in Co Meath, and Co Kildare-based developer Dominic Fagan controls Tigginstown Construction.
One vehicle, Positive Light Ltd, is part of a group of companies run by Sean Sheahan. The Limerick accountant discloses on his website that he “has recently focused on promoting inward investment into Ireland with particular emphasis on capital and social housing projects”.
The rest of significant direct corporate HAP recipients listed above are personal vehicles or family offices of wealthy Irish people, who have business interests in other sectors and own residential property as an investment:
- Folio Homes is controlled by David Maher, a Co Laois entrepreneur with interests in gardening and TV equipment trading businesses;
- Pexxus owns properties in Bettystown, Co Meath and is a vehicle of Isle-of-man based former Olympic marathon runner Mary Purcell and husband Peter. Mary Purcell controls the Irish pharmaceutical compliance consultancy Pharmafile PV;
- Andalusian Properties is a vehicle of communications professional Judith Hally, the former head of corporate affairs at Greenstar waste management;
- Three companies are run by Yong (Jack) Wu, the manager looking after the Irish affairs of the Collen Investment Group of Hong Kong-based investor Qing He (unrelated to the Irish construction company Collen);
- Crescere is owned by Dublin antiques dealer Rory Rogers;
- Kuaile Touzi is the family office of Fintrax executive John Duffy;
- McHugh Edenmore is part of the McHugh family business, which runs several supermarkets, restaurants and off-licences in Dublin – including at the mixed Edenmore commercial and residential complex in Raheny.
Beyond this are countless companies with small property portfolios, often small businesses with adjoining homes, such as flats above shops, or with additional investment residential properties for the benefit of the company’s owners. The majority of corporate landlords collecting HAP payments did so for just one home.
One category of investor is conspicuously absent from this list: The international investment funds that have been pouring money into Ireland’s private residential sector and were already active in 2020, from the well-established US property firm Kennedy Wilson to relative newcomers such as Germany’s Patrizia.
It is possible that they own HAP-subsidised properties and collect payments through some of the larger, corporate agents below. However, it is more likely that their focus on urban locations favoured by employees of multinationals has simply placed their portfolios out of reach of HAP-eligible tenants.
As recently reported in the case of Ardstone’s investors, overseas income funds are now interested in social housing provision in Ireland, but this usually takes the form of long-term leases to local authorities or approved housing bodies for entire blocks of flats or housing estates rather than isolated HAP-subsidised homes.
Agent to vulture funds tops intermediary list
A large proportion of HAP payments made to corporate bodies go to agents, each acting for a number of clients on which no data is available. The table below lists those agents with over €1 million in HAP receipts or 100 subsidised properties in their lettings portfolio.
Chartered Assets Property, the largest collection agent on this list, is based in Dublin but operates nationwide. Its publicly stated expertise in asset management is “developing strategies for distressed property assets”. Its clients include banks, receivers, Nama and Pepper Finance, the asset servicer of choice for CarVal and Goldman Sachs's Irish portfolios.
Many of the HAP payments it collects are likely to go towards repaying the bad property loans acquired on the cheap by US vulture funds after the financial crisis.
A number of agents on this list specialise in running apartment blocks or groups of houses for landlords. They include Multi-Unit Management Services in Dublin and Kersten Mehl in Limerick. Champion Lettings in Drogheda, Co Louth and Pro-Plan in Tralee, Co Kerry offer similar services on a smaller, more flexible scale.
The other HAP collection agents listed above are mostly traditional estate agents administering the scheme as part of their lettings business, with Ray Cooke Auctioneers handling significantly larger volumes of subsidised buy-to-lets than any of its competitors. It is one of a majority of the most active HAP agents located in Dublin.
Elsewhere in the country, Manor Properties and Smart Move had significant HAP-subsidised business in Waterford with over 130 tenancies each. Limerick Residential Lettings, and Dermot McGettigan Lettings in Letterkenny, operated the scheme on a similar scale – though the Donegal agent handled significantly smaller payments than its city-based counterparts due to the lower HAP rates applicable in the county.
Anthony Byrne Property Services in Drogheda, Co Louth; Peter Mills in Arklow, Co Wicklow; and Ocean Property Management in Galway were the most active HAP agents in other regions.
For all these businesses, the administrative work involved in delivering HAP payments to landlords can be expected to represent a portion of associated letting fees.
For landlords including the companies listed at the start of the article, the scheme is a guarantee that the taxpayer will pay rent every month on behalf of tenants who would otherwise struggle to meet its cost.
For the households living in these homes, HAP is the only hope they have of keeping a roof over their heads until social housing supply catches up with demand.
