September 11, 2023 • 42 mins
Ken MacDonald's illustrious career has shaped the Irish real estate landscape across five decades. Starting with a humble leaflet campaign back in 1967, Ken's journey has seen him play a pivotal role in the emergence of apartment living. Brace yourself for an anecdotal tour through time as Ken unravels the evolution of Irish property and its tryst with the new wave economy.
The conversation gets juicier as we dig into the culture of objections to development. We critically examine the political and legal systems and their role in nurturing an 'industry of objection' that has made securing planning consents an uphill battle.
Don't believe everything you hear about institutional investors! Our discussion seeks to debunk common misconceptions and emphasizes the importance of a balanced mix of small and large landlords in the rental sector.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 2 (00:22):
Though it is probably a rule that you shouldn't quote
Churchill on a podcast, he didhave a couple of zingers, but
farther back you can look, thefarther forward you are likely
to see.
This sentiment underscores thecrucial role history plays in
illuminating our path forward.
It reminds us that those we'dexperience provide us with a
treasure trove of wisdom.
Joining us today is a trueluminary in the realm of
(00:44):
property.
With an extensive careerspanning more than five decades,
he has seen booms, busts,crises, incentives, regulations
and multiple governments.
Through it all, he somehowremains an optimist.
His experience is unequaled inthis industry and even after all
these years, he still remembersdetails that I would forget ten
minutes after they happened.
(01:04):
Chatting with him was aprivilege and a pleasure.
Please enjoy this conversationwith Ken MacDonald.
Speaker 1 (01:19):
Thanks, rick, for the invitation.
I really love talking aboutproperty.
I could talk about it all day.
Speaker 2 (01:25):
Well, look, we'll put that to the test.
So today, so just like we'llkick right into it.
Ken, when did you start?
When did you get involved first?
Speaker 1 (01:36):
Well, I trained in San Diego of Alberta State
Agency, which is no longer there, and after two or three years
out there it was owned byJennings the builders.
I really felt I wanted to getinto town because the suburbs
were pretty quiet.
(01:56):
So I approached the late RonaldHook who had a small insurance
and auctioneering business in 25Peer Street, one room there.
We had a chat and we agreed toset up a new company and call it
Hook and MacDonald.
(02:17):
That was March 1967.
Speaker 2 (02:20):
Yeah, it was very different back then.
Speaker 1 (02:23):
Fifty-five years ago, yeah.
Speaker 2 (02:25):
So March 1967, fifty-five years on the go and
still young.
What were things like back then?
How did the property marketwork back then?
Was it just buying and sellingsecondhand property?
Was there a lot of newdevelopment going on, a lot of
new houses getting built?
Speaker 1 (02:43):
There wasn't much new development going on and there
wasn't that many secondhandsales taking place either.
So you had to generate activity.
In our very first week thephones just weren't ringing.
But then one person did ring apilot.
He said he needed to get ahouse near the airport.
(03:05):
So we printed out about 300leaflets and I went out and
delivered them to all the areasout around the airport that he
had an interest in.
And the next day somebody rangup and said I'm interested in
selling my house.
So we got our first sale.
Speaker 2 (03:24):
That was how he did it 300 leaflets.
Speaker 1 (03:27):
Yeah, but I always had an interest in building land
and builders and construction.
My father was an engineer inDublin as city council, Dublin
Corporation as it was known asthen and he used to bring me
around to sites when he wasinspecting foundations and that.
So I really got a good appetitefor the building industry.
(03:53):
I started to look for land andI'd call up to Tallah, various
parts of Tallah and Rad Michaeland Shankel and call into
farmers and chat to them andthen ask them if they were ever
going to sell their lands toWould they contact us?
(04:16):
So we managed to sell quite alot of land.
That linked us up then withbuilders and developers.
Finbar Hollands then wasstarting to build apartments
around Ballsbridge the lateFinbar Holland and he was very
innovative and he got usinvolved in selling apartments
(04:37):
at Northbrook.
We felt that apartments werethe way forward for high density
living.
So that led us on to taking aninterest in how to develop the
apartment market in Dublinparticularly and maybe further
afield.
(04:57):
We linked up with DublinCorporation and we ran a number
of conferences in Dublin Castleto generate interest in the
urban reluge in Dublin CityCentre.
We linked up with Cosgraves.
(05:17):
They agreed to buy a site inGardner Street.
They built 172 apartments thereat Custom Hall.
Speaker 2 (05:28):
When was that in Gardner Street?
Speaker 1 (05:29):
That was in 1992.
But even prior to that we wereapproached one day by an
architect from the North ofIreland architect and developer,
jared Hawke, and he said he hadbought a site at Stokey for 27
apartments.
So he asked us would we link upwith his architect and give our
(05:54):
input into what sort ofapartments should be built on it
?
So Pilot View emerged, or thesite emerged.
We went out one Saturday andsaid we were taking booking
deposits on a new development tobe built at Pilot View in Docky
at Bullock Harbour and justfrom the boot of the car.
(06:17):
It was a fine day.
We managed to sell most of theapartments off the plans.
Speaker 2 (06:23):
So no advertising or.
Speaker 1 (06:25):
Yeah.
Then one day we were approachedby the late Liam Carle and he
said he was building adevelopment at Ringsend, which
wasn't the most fashionable partof Dublin at the time, but he
Not like today.
Speaker 2 (06:44):
Not like today yeah, funny how that has changed right
.
Ringsend used to be the kind oflook down upon a little bit,
and now it's the centre of thenew wave economy.
Speaker 1 (06:55):
Yeah.
So he went to three agents andasked for proposals.
Apparently the other two toldhim it was there, wouldn't be
too optimistic about the sales,and we told him it was a
fantastic site and it would fly.
And so he appointed us and put.
(07:17):
The surroundings weren't themost salubrious at the time.
So we said we'd got a dustphotograph of a boat going up
outside it and with goodlighting, and we got that
photograph into the Irish Timesproperty section on the.
(07:39):
I think it was on a Wednesdaythat they came out.
At that time we said we were inthe ads, we said we were going
to open for a viewing on theThursday.
But we got a call on theWednesday from Liam Carle saying
you better get down here quickbecause there's a big queue of
people and they want to buy allthe houses and apartments.
(08:01):
So we rushed down to the siteand started taking deposits and
we sold out the wholedevelopment off the plans.
Speaker 2 (08:13):
When exactly was that the?
Speaker 1 (08:15):
1990s.
I think I'll just have to checkthe date.
Speaker 2 (08:21):
It was kind of amazing to me then, because
there were apartments that werebeing built, you know, in the,
in the, in the, and in thecontext of what we hear in the
media today about all theshoebox apartments that
allegedly are being built inDublin, even though, yes, we all
know in the industry that thebiggest apartments in Europe but
in the context, against that,these apartments that were built
(08:42):
in the 1990s, particularly downthe rings, and we're small-
yeah, we're small, you know sowhy was there such demand at the
time?
Was that just a case that therewas so little being built?
Or because they were soaffordable and people, that's
what people could afford, sothey bought an apartment.
Why is it so different thantoday?
When you say, if you were to godown to that same area today
(09:03):
and put up A block of apartmentsand try to sell them, you
wouldn't have a queue of people.
Individual purchase is outsideit anymore.
Yeah, so what do you think wasgoing on in the 1990s that made
that, made these things Tocreate so much demand from
people?
Speaker 1 (09:18):
Well, there was a desire from people to buy
property and Fisherman's Wharfwas predominantly houses, but
but Liam went on to build loadsand loads of apartment
developments but but theconditions were right for people
to to buy a home.
(09:38):
Also, there were a lot ofpeople who wanted to rent
properties, so there was, therewas a market for for investors.
At the time.
The Prices were very cheap.
When you look along the keys,we were selling at bachelor's
walk Apartments for 40,000Pounds each at the time at the
(10:03):
time.
Speaker 2 (10:04):
Was there a lot of social housing being being built
at the time, because I know inthe in the 1670s there was big
social housing programs.
In the 90s it seemed to maybetail off a little bit.
Speaker 1 (10:14):
They started tailoring it off in the in the
90s.
All right, eric, the the socialhousing programs of the local
authorities were hugelysuccessful and the lack of
Dublin Corporation were veryproactive in providing a housing
, and the biggest mistake sincethen has been in the termination
(10:41):
of the building of socialhousing.
That is one of the main reasonsfor the housing crisis today.
And when we started out inbusiness also, people couldn't
get mortgages and there was onlyone lender in town and it was
(11:01):
the Irish permanent and you hadto deposit money with them for
For about five years beforethey'd even consider giving you
a mortgage.
And.
But then when the banks startedlending and they started seeing
(11:23):
the advantages of, say,apartment living, that opened up
the market and it's a hugenumber of people got housed.
But then there was a seriousdownturn in this in the 1970s
and and just nothing washappened happening at the start
of the 1980s and we we andothers and Suggested to the
(11:48):
government at the time RayMcSherry was the Minister for
Finance and that they shouldintroduce tax incentives for
Development and it had to be aparticular type of incentive
that would make a difference,that would really attract
investors.
So in the, in the finance billin 1981 they introduced section
(12:14):
23, which was hugely successful.
Overnight the market turned andthousands of people Entered the
market and started buyingapartments and it was a very,
very successful incentive.
The problem was the politiciansgot involved in it and the
(12:35):
politicians wanted their theirlocal area in Litrum or Claire
or Johnny Gall to get in on thesection 23 active Action and
that it should never have beenextended to those areas.
It was an incentive that wasreally for For high density
(12:57):
areas, that where there was astrong rental demand.
Speaker 2 (13:01):
Yeah for regeneration Right.
I'd like to say there was partsof the time that were almost in
ruin exactly yeah.
Speaker 1 (13:08):
So so I was so successful and I remember
listening to gay burn on theradio in 1992.
He was going through the papersand he said my god, they're
building apartments in GardnerStreet.
In no go area.
They're building apartments.
What is the world going to?
And anyhow, we we managed toget to her and it was Minister
(13:34):
for Finance to cut the tape andwe got a band on the street and
the guards cut off the roads andwe had a Great sale out of the
apartments.
Speaker 2 (13:48):
Street in the 1990s?
Yeah, 1992.
Speaker 1 (13:53):
Yeah, so that led to a huge thousands of apartments
being built, mainly in SouthDublin locations in Randall and
red car and both bridge, dokiand.
But it's just an awful pitythat they politicians wrecked
(14:16):
the section 23 and they gave ita bad name, whereas if we had a
the same Section 23 with thesame incentives today, you'd
have a massive house building orapartment building Program.
It would solve so much of ourhomeless problems overnight and
(14:37):
I don't.
Speaker 2 (14:38):
I don't disagree with you, but just because of the
age we live in, I have to askthis, otherwise will be accused
of being a bias and a shill ofthe converted industry.
Section 23 primarily Makes it atractor for people to own the
property, and so some would saythat it's a support to pricing
rather than Anything else.
(14:59):
What do you say to people whoclaim that Irish people are
different and they don't want tolive in apartments, that they
they might rent one for a littlewhile, but ultimately they want
to live in a three bedroom Semior four bedroom semi or a
detached house in some estatesomewhere?
What do you, what do you say tothat?
Because I I'm listening to thisfor since I started obviously a
(15:21):
lot less years in this than youare that we're different here
and that we're different thanevery other developed nation on
earth.
I not sense that we won't livein apartments.
Do you think it's true or doyou think it's just a?
Speaker 1 (15:33):
No, I don't think it's true.
There's a certain sector of thepopulation who wouldn't be
comfortable living in apartments, that they're much happier
living in a house, even if thathouse has three or four empty
bedrooms, and they still wanttheir house.
But the fact that 70% of ourpopulation are one, two or three
(16:01):
person households means thatthe most suitable type of
accommodation for them is anapartment, and it's also very
suited to retired people.
Unfortunately, we have aculture here at the moment of
objecting to developments, eventhough the people who are
(16:24):
objecting to them they'redamaging the prospects, proper
accommodation for their parentsor their kids.
You have at the moment in BlackRock and Rahini and other
locations at the moment,applications in for development
(16:44):
of senior citizens' apartmentsand you have local residents
objecting to them, which is justcracked.
Speaker 2 (16:53):
Well, the objecting thing has become both, in my
opinion, a sport and an industry, in the sense that people have
been conditioned now to beopposed to construction and
that's just been going on foryears.
And I have to.
I don't want to be one of thesepeople that criticize
politicians.
I know they have a hard job,but I have to lay some of the
blame for that at their door.
(17:14):
The fact that the localpoliticians pile on to planning
applications objecting to themas a little bit of a sock to.
I'm here standing up for you inthis area, when in reality it's
just nonsense, dog whistle stuffto be opposed to development.
All the people that live there,their houses were once built
(17:37):
and they were once a planningapplication, they were once a
green field and if we take thisattitude that we're going to be
opposed to everything, I meanthat's just a dead end road for
society in general.
But on the other side, theindustry of the objection is
something that people don'toften see right.
We're exposed to it very muchin the construction industry
because we get to see the otherside of it.
There are a host of solicitorsand planning consultants but
(18:02):
mostly solicitors who are goingaround actively trying to create
a business at a preventingdevelopment from happening and
they've been allowed that spaceby the political system and by
the legal system to effectivelyrender the planning system to be
completely halted.
The effect that that has oncosts we'll get on to that later
(18:22):
but is absolutely immense.
And the thing that I find justcrazy is you've been at this so
long.
The 90s Gardiner Streetapartments were built back then.
They provide a very low costform of housing to a lot of
people.
The nurse, the guard, peoplelike that could afford to live
there in the city center.
You would have no prospect ofgetting a lot of those planning
(18:44):
consents today, even though theywill comply with the
development plan, you stillwouldn't be able to do it.
So in the period that you'vebeen involved in the property
industry, you've really seenthat turn around right
Completely To the point wherepeople were lining up to buy
apartments where there was verylittle opposition to them being
built.
To now there's unbelievableopposition to them being built.
(19:04):
People can't afford thembecause the cost of producing
them is so high.
And you have collectively apolitical system that are saying
it's not our problem, it's yourproblem.
Speaker 1 (19:16):
Yeah, yeah, I know it's so wrong.
I mean they saw the case thererecently where somebody from the
South of Ireland objected to aparticular development in Dublin
here, a major development inDublin, and there was no reason
(19:39):
why their objections should havebeen even entertained and
holding up that development forover a year.
And then there was sort of anindication coming from the
objector that maybe if there wasa little bit of a compensation
for them they would pull theobjection.
Speaker 2 (20:01):
Yeah, so it's called rocketeering in other parts.
Speaker 1 (20:04):
Yeah, it is yeah.
So once the development is inline with the local development
plan under, the planners arehappy with it.
There shouldn't be anyconsideration of those
objections.
Speaker 2 (20:20):
We could spend all day talking about planning
objections.
I'm conscious I don't want touse up all your time, but I am
curious to hear your view on howthings have changed.
So back to the 90s right, we'rein Gardiner Street, cosgrove,
put up that apartment block.
You've got huge amount of sales.
Your band is playing on thestreet, the people buying those
(20:40):
apartments in the early 90s.
What proportion of those wereinvestors who were renting them
out?
Do you think?
I mean, I know that it's a longtime ago.
Speaker 1 (20:49):
Well, we've done surveys on that and because we
handled most of thosedevelopments, a lot of those
apartment developments built atthat stage were they were 77,
78% were small investors, andthe role that the small
(21:16):
investors played in the marketwas just so important because
they were modernizing the stockof rental accommodation by
buying these apartments and byletting them out to people who
might have been saving to buy ahouse or whatever.
They were all small investors.
(21:37):
A lot of them were buying themfor pension purposes or it was
none of this regulatory regimethat we have at the moment that
has scared the daylights out ofthe small investors and is
crippling the rental market.
Speaker 2 (21:54):
Yeah, absolutely.
And therein lies another littleparadox of what's going on at
the moment is that the role ofinstitutional investors here in
recent years has been castigatedas some sort of toxic nightmare
.
Where they're coming in hereand they've been referred to
both sort of pejorative namescuckoo funds, vulture funds,
(22:15):
whatever word they can come upwith at the time.
But that aside, why do youthink that has shifted to the
point where, okay, you had loadsof small investors, but
essentially all of an apartmentblock was rented out, right,
Almost all?
Speaker 1 (22:29):
of us.
Speaker 2 (22:30):
And today all of an apartment block is rented out,
but just by one landlord.
There's not really anydifference there, right?
In terms of the impact onsociety.
Both apartments are beingrented out to somebody who wants
to rent them and they're beingprovided.
Why do you think, or when didyou see that start to change?
Like we didn't have anyinstitutional investment in the
1990s?
(22:51):
right, there was no pensionfunds buying no large pension
funds buying properties in bulk.
That never happened.
That started to happen when,around 2012, like in the
aftermath of the crash.
Speaker 1 (23:03):
Yeah, it was certainly you guys were the
vanguard there.
Speaker 2 (23:07):
You were the leaders on that.
Speaker 1 (23:08):
Oh yeah, no, we were they.
It really got going in 2015,2016.
I went a number of thosepension funds and institutional
investors and expressed interestin purchasing apartment blocks.
So they are just replacing thesmall investors, which they're
(23:33):
providing a fantastic servicebecause they are providing
seriously high qualityaccommodation with great
community facilities, residentfacilities.
Why they've been misdescribedas a result of certain people
views, flawed views about therole that they're fulfilling.
(23:59):
Without having those investorsthat have built these, say,
16,000 or 17,000 homes in thelast six or seven years, the
rental market today would beeven much worse than it
currently is and the Irish statecan't fund the entire housing
(24:20):
program each year.
The institutional investorsplay a hugely important part in
funding part of the housingdelivery program, but they're
just part of the solution andit's totally wrong.
I agree with you.
It's totally wrong that they'rebeing misdescribed.
Speaker 2 (24:44):
And they're a very small part of the solution,
right, because as it stands, Ibelieve Irish is the largest
land private landlord right theyhave about 4,000, 5,000,
something like that units andthey're constantly in the media
whenever they have the results.
They're constantly beingcriticized as state's largest
landlord.
In fact, I learned the other daythat there's several affordable
(25:05):
housing bodies have more thantwice that number of units in
their ownership.
If we're going to have a rentalsector in the country, is it
not better to have people likeIRIS, who, by all accounts, run
a very good business, provide avery good service to their
tenants, adhere to all the laws,have public scrutiny on them
because they're so big, to makesure that they adhere to the
(25:26):
laws?
Or is it better to have 40,000individual landlords where this
is maybe their only property,where they are struggling
financially to make it workbecause of the regulation, where
one bad tenant and admittedlyit's a small problem, but one
bad tenant can ruin them by notpaying their rent and refusing
(25:48):
to leave the property, wheretheir ability to respond to
maintenance issues is reducedbecause they have just one
property and they have anotherjob?
Or IRIS that have 24-hourcall-out, huge amount of
properties.
One bad tenant's never going tosink them.
20 bad tenants isn't going tosink them allows them to produce
, invest, grow, which is thebetter outcome, because there
(26:10):
seems to be this schizophreniawhere they're like we have to
stop small landlords leaving themarket, but we don't want big
landlords.
Why can't we have both?
Is there a reason why we can'thave both?
Do you think?
Speaker 1 (26:21):
There's no sound reason.
In some cases it's a verydishonest narrative that's out
there from certain parties aboutthem for ideological or
political reasons.
But they are fooling a lot ofpeople who don't understand the
role they're playing and in somecases some of those rates are
(26:47):
being described as investors.
But they're actually building.
They're carrying on a buildingrole.
Look at Island Bridge andseveral hundred departments.
Speaker 2 (26:58):
And that project was stalled for years until Kennedy
Wilson came in and invested init.
Speaker 1 (27:02):
Kennedy Wilson stepped in.
It was just an abandoned siteand they have built it out and
done a fantastic job on it.
The quality of accommodationand services that are provided
in those modern developmentsowned by institutions are just
(27:23):
fantastic.
It's far better to have theinstitutional investors who are
delivering and owning thoseproperties than, as you say, a
multitude of small investors whoare just piling out of the
sector anyhow.
Speaker 2 (27:42):
Yeah, and so that's another thing I wanted to ask
you about, because you probablyhave good visibility of this.
Having sold a lot of theseunits to people 20 or 25 years
ago when they were entering itas an investor, you might be
seeing them now exiting.
Do you have people come backthat bought units off you 20
years ago and say, ken, I'mgetting out?
Speaker 1 (28:01):
Oh yeah, it's becoming an avalanche at the
moment.
Something like between 30 and40% of second-hand sales in a
lot of locations at the momentare the small landlords exiting
the market.
That's amazing, really thathigh, yeah, in a lot of the
(28:22):
established rental locationsthat's what's happening.
That is really at the core ofthe dilemma in the rental market
at present.
That's why rents are so highand that's why there's such a
shortage of properties.
Speaker 2 (28:42):
But another thing to follow on from that, because we
often hear this then thecomplaint that people have that,
oh, the landlord's selling, sohe's evicting his tenant.
And it's not terrible.
And as you know and as anyonewho's listening to this will
probably know who didn't liveunder a rock I was involved in a
controversy a number of yearsago when we decided to exit a
single family rental business inTirlstown.
(29:03):
We wrote to our tenants and wesaid, hey, we're going to get
out of this business, we'regoing to sell the houses.
Your lease has a year to run.
We're giving you that muchnotice, whatever it is.
And also, do you want to buythe house that you're living in?
We'll sell it at this price,fair price, no competition, no
active bidding.
And that blew up into anabsolute shitstorm because of
(29:29):
misinformation about what wasreally going on.
And the reason we were leavingthat business is because it
wasn't profitable for us tocarry it out anymore.
We're not a charity, so we didnothing wrong.
I'm sure there's a lot ofpeople that would dispute that,
but in fact we sold a lot ofthose houses to the tenants and
some of them got to buy theirfirst house, as it turns out,
very, very cheaply.
The fact that that's stillgoing on five years later, right
(29:56):
, people are still rotating outof being landlords five years
later.
Speaker 1 (30:02):
It's a very serious problem that the regulation it's
overregulation.
Now the scaring all thesesmaller landlords and if it
keeps accelerating, the problemis just going to get much worse.
It doesn't matter if we up thehousing completions to 40,000 or
(30:27):
50,000 or 60,000, which weshould be doing anyhow every
year it's just going to keep.
That's just going to keep beinga drain on it and the
regulation just keeps comingdown the line and there is no
reason for it and the likes ofhaving a cap on rental rises has
(30:49):
been shown to becounterproductive.
Speaker 2 (30:52):
Yeah, it has never worked anywhere and yet
proponents of it keep saying,yeah, but we want to.
I mean, what I find amazingabout the cap on rent, you'll
notice that the inflation crisisthat took over recently after
the war started in Ukraine, noone talked about a cap on food
Right, food is more important.
(31:13):
Food and water right, and theprice of eggs, price of cheese,
price of all these things wasrising dramatically.
Nobody brought up the idea thatwe should turn around to Tesco
and say, hey, we don't care howmuch it's costing you to provide
those eggs and the cheese, butyou're capped at 2% growth per
year.
Nobody turned around to Ford orto Toyota and said we don't care
(31:36):
what your production costs are,because they know that what
will happen in that scenario isthat Tesco will just say thanks
very much.
Here's the keys of all ourstores, good luck, as will Ford,
as will Toyota, and nothingwill get sold.
The only reason that they do itin the property industry is
because the property isimmovable, so they tax it or
they limit it because they can,and so it's always been this
(31:58):
eternal well that successivegovernments could go to to
either tax or to regulate inorder to placate, or to
seemingly placate, in the hopethat it would work.
And it hasn't worked here,right, because what's happened
since that cap has been broughtin right?
The supply of housing continuesto decline.
Speaker 1 (32:17):
It just was wrong in so many ways yeah.
Speaker 2 (32:24):
Well, look that's.
We're not going to changeanyone's mind, I don't think on
that.
You're either on one side ofthat debate or you're on the
other.
But I think that history andeconomics and just playing
goddamn arithmetic shows thattrying to cap any the price of
anything in a market economy isjust nonsense.
It's just nonsense.
It never worked.
Yeah, turning away from theinvestor side for a minute house
(32:48):
prices generally right Forsomebody that wants to buy their
first home, be it a apartment,be it a three bed, be it a
whatever.
The prices in the last coupleof years have run up pretty
significantly, not maybe likethey were in 05, 06 when the
kind of the madness washappening, but still quite
significant in the last twoyears.
(33:08):
What's your view on that?
Like, obviously there's ashortage, right, so that's going
to drive up prices.
But at the same time and I'mspeaking from the billers
perspective here the profitmargins in construction have
been declining, so the priceshave been going way up and the
profit margins have been goingdown.
Do you think that prices aresupported now?
I mean, I know that in yourrole as an agent you don't want
(33:31):
to be saying that the propertymarket's overvalued, but do you
think prices are supported, likethey've come up an awful lot in
the last two years.
If you were saying to somebodynow we said, okay, should I buy
my first home Is now a good time.
Speaker 1 (33:45):
Well, I think you have to go back to the 2005,
2006, when there was 87,000 newhomes being built.
Speaker 2 (33:55):
Isn't that like astonishing that we all forget
that?
Sometimes I think well, Iforget it when you hear it said
out loud 87,000 units a year.
And we did what?
30,000 last year.
Speaker 1 (34:05):
That's under 30,000 in 2002.
Yeah, no, I think it's allrelative.
I mean, I remember back in the1980s, 1990s, and people had
said, oh gee, that's costing40,000.
Yeah, that's very expensive,but it's all relative.
Speaker 2 (34:30):
The levees now are nearly done.
Which right I mean?
Irish water is 5,700 euros perunit, and you were selling
houses the entire house for40,000 pounds.
Speaker 1 (34:41):
Yeah, now I think, to be fair to the government, the
assistance they brought into thelikes of first-time buyers, the
first-time buyer grants.
The help to buy scheme.
That's a fantastic scheme andthat has helped so many young
(35:02):
people to buy homes.
Speaker 2 (35:05):
And it doesn't cost the taxpayer a dime right,
Because it's a tax refund of thetaxes that were paid.
Speaker 1 (35:11):
And it has pulled thousands of people out of the
rental market and has helpedthat scenario.
And yet you get peoplecomplaining about certain
politicians who, you'd have towonder, do they really want the
housing crisis to be solved?
Speaker 2 (35:31):
at times, I think that they probably don't want
the government to solve it.
Speaker 1 (35:37):
They want it to transpire that they are the ones
that could solve it.
Speaker 2 (35:42):
That's human nature for you.
Speaker 1 (35:44):
But I want to ask you a question, though I do think
that anybody who can afford, whohas the deposit, who can afford
to go out and buy a home,whether it's a house or an
apartment at the moment, I don'tthink they can go wrong.
There's going to be acontinuous shortage.
The cost of materials,inflation, the build costs are
(36:07):
going to keep rising.
I mean, they went up by aconsiderable amount last year.
Speaker 2 (36:14):
So that does seem to support the argument that
housing is not going to getcheaper it's just not going to
happen.
Speaker 1 (36:19):
Certainly not new housing right.
Speaker 2 (36:22):
At the same time, I look occasionally at friends of
mine, say, oh, I'm thinkingabout buying this, I'm thinking
about buying that, what do youthink?
And I'm dragged into the vortexthat is my home and daft.
And then inevitably, like theinternet, I go down a black hole
at looking at things and Istart seeing apartments,
individual apartments, which Iassume our landlord selling
right, exiting the rental marketSeemed to me very good value to
(36:44):
me that you can buy anapartment In in Dublin city
center for very little for whatit is, considering the areas
that sometimes that they're inlike in Dublin 8 Places like
that.
What's your view on that?
Like, if so, for a starter home?
I know everyone's very focusedon the new house and everything
but apartments that were builtlike in in the 2000s.
I know there's some, there's alot of.
(37:05):
It's terrible the issues aroundaround fire safety that I've
only affected certain certainblocks, but they do seem to be
cheap, right apartments on anindividual basis.
Speaker 1 (37:15):
Yeah, I am.
Well, they are.
They are relatively cheap andthey are.
They are good value compared towhat it costs to Replace that
home.
You do need to take intoaccount, though, that Whoever
buys that is going to haveenergy costs Much higher, yes,
(37:38):
than than the new, the new build.
Speaker 2 (37:42):
Yeah, that is a fair point and it's some of them.
Even though they're, they'renot bad Even if the difference
actually, and that the scale forenergy is a bit confusing
because People might think B andwhat's the difference in B and
a was actually a lot.
Speaker 1 (37:54):
Jump from.
B day is a huge amount, sothat's something that people
should really take account of.
Speaker 2 (38:01):
You see any light at the end of the tunnel?
You're involved inconversations of policymakers
and politicians and people.
Do you think that that the thatthe problems are understood?
Speaker 1 (38:11):
and and oh, I do think they are understood, but
there there seems to be a.
They seem to be frozen indecision-making and they keep
looking over their shoulders.
I would be very optimistic now.
(38:32):
I'm an optimist by nature, yeah, but I would be optimistic that
In this situation has got sobad now that radical action has
to be taken.
And if radical action isn'ttaken, it's going to be just a
disaster scene for home buyersand renters, and politicians
(38:54):
can't afford to let that happen.
And you know, when you look tothe United States and where had
the construction industry inareas where Housing is needed,
they're incentivized and theyhave to bring in incentives here
.
And, irrespective of whatPeople, some people might say,
(39:20):
it's, it's, it's it's justhelping developers, it's not
just helping developers.
If you help developers, you'rehelping the home buyers, whether
it's a subvention or whetherit's an incentive.
And Radical action has to betaken, and very, very quickly.
The government proved there'swith the when the pandemic came.
(39:42):
This radical, urgent actioncould be taken and They've been
praised for it and they did agreat job on it.
They need to do the same onhousing.
Speaker 2 (39:53):
Well, I was gonna ask you if you had a magic wand
that you could change one thing,but you gave me about seven
things there that you change.
So your, your magic wand is, isvery special, counting We'll,
we'll, we'll, we'll give it toyou because of your, your
experience, and but no one willtake it from you.
I've owned last question foryou.
Speaker 1 (40:12):
Yeah.
Speaker 2 (40:13):
Knowing what you know , seeing what you've seen, would
you encourage yourgrandchildren to go into the
property industry?
Speaker 1 (40:23):
Definitely.
Yeah, it's one of the bestcareers or industries out there
and I know my own Is sound,donald and daughter Rena, and
absolutely love what they'redoing.
You have new challenges everyday, but there's some great
(40:44):
people in property here inIreland with a better reputation
and and rightly so then a lotof the practitioners in in the
UK and and further afield.
It's very well regulated.
It's a very professionalindustry here.
I I I would definitelyencourage young people to look
(41:08):
look at us, which I would alsoencourage them to look at other
aspects of the constructionindustry, whether it's the
trades or Whatever.
Him you know anyone who getsinto carpentry or electricians,
electrical work or anything.
They, they move on and theythey do well.
Speaker 2 (41:32):
And there's very good Careers to be had.
Actually, yeah, there may be,you know, sitting in a nice
office every day and that's notfor everybody, but the rates of
pain, everything are very, verygood.
So yeah, for those, those trades, and should be encouraged.
More people are going to it.
So Well, look, ken, thanks alot.
That's been great real, realhistory lesson for me, even
(41:53):
though I know I regularly getthem from my own father, but
it's.
It's nice to hear about whatwent on, it's nice to hear about
how far the whole thing hascome and it's also nice to hear
that after that many, 55 years,you're still an optimist.
We need a bit more of that, Ithink, in the country.
So thanks very much for forjoining me and, yeah, the build
(42:24):
is hosted by me, rick Larkin.
Carrie Fernandez producesepisode.
Original music was written byCass.
If you have a suggestion forthe show or know someone we
should interview, please let meknow by email, rick at the bill
podcastcom.
Thanks for listening.
You can severity fire.
Though it is probably a rule that you shouldn't quote
Churchill on a podcast, he didhave a couple of zingers, but
farther back you can look, thefarther forward you are likely
to see.
This sentiment underscores thecrucial role history plays in
illuminating our path forward.
It reminds us that those we'dexperience provide us with a
treasure trove of wisdom.
Joining us today is a trueluminary in the realm of
(00:44):
property.
With an extensive careerspanning more than five decades,
he has seen booms, busts,crises, incentives, regulations
and multiple governments.
Through it all, he somehowremains an optimist.
His experience is unequaled inthis industry and even after all
these years, he still remembersdetails that I would forget ten
minutes after they happened.
(01:04):
Chatting with him was aprivilege and a pleasure.
Please enjoy this conversationwith Ken MacDonald.
Speaker 1 (01:19):
Thanks, rick, for the invitation.
I really love talking aboutproperty.
I could talk about it all day.
Speaker 2 (01:25):
Well, look, we'll put that to the test.
So today, so just like we'llkick right into it.
Ken, when did you start?
When did you get involved first?
Speaker 1 (01:36):
Well, I trained in San Diego of Alberta State
Agency, which is no longer there, and after two or three years
out there it was owned byJennings the builders.
I really felt I wanted to getinto town because the suburbs
were pretty quiet.
(01:56):
So I approached the late RonaldHook who had a small insurance
and auctioneering business in 25Peer Street, one room there.
We had a chat and we agreed toset up a new company and call it
Hook and MacDonald.
(02:17):
That was March 1967.
Speaker 2 (02:20):
Yeah, it was very different back then.
Speaker 1 (02:23):
Fifty-five years ago, yeah.
Speaker 2 (02:25):
So March 1967, fifty-five years on the go and
still young.
What were things like back then?
How did the property marketwork back then?
Was it just buying and sellingsecondhand property?
Was there a lot of newdevelopment going on, a lot of
new houses getting built?
Speaker 1 (02:43):
There wasn't much new development going on and there
wasn't that many secondhandsales taking place either.
So you had to generate activity.
In our very first week thephones just weren't ringing.
But then one person did ring apilot.
He said he needed to get ahouse near the airport.
(03:05):
So we printed out about 300leaflets and I went out and
delivered them to all the areasout around the airport that he
had an interest in.
And the next day somebody rangup and said I'm interested in
selling my house.
So we got our first sale.
Speaker 2 (03:24):
That was how he did it 300 leaflets.
Speaker 1 (03:27):
Yeah, but I always had an interest in building land
and builders and construction.
My father was an engineer inDublin as city council, Dublin
Corporation as it was known asthen and he used to bring me
around to sites when he wasinspecting foundations and that.
So I really got a good appetitefor the building industry.
(03:53):
I started to look for land andI'd call up to Tallah, various
parts of Tallah and Rad Michaeland Shankel and call into
farmers and chat to them andthen ask them if they were ever
going to sell their lands toWould they contact us?
(04:16):
So we managed to sell quite alot of land.
That linked us up then withbuilders and developers.
Finbar Hollands then wasstarting to build apartments
around Ballsbridge the lateFinbar Holland and he was very
innovative and he got usinvolved in selling apartments
(04:37):
at Northbrook.
We felt that apartments werethe way forward for high density
living.
So that led us on to taking aninterest in how to develop the
apartment market in Dublinparticularly and maybe further
afield.
(04:57):
We linked up with DublinCorporation and we ran a number
of conferences in Dublin Castleto generate interest in the
urban reluge in Dublin CityCentre.
We linked up with Cosgraves.
(05:17):
They agreed to buy a site inGardner Street.
They built 172 apartments thereat Custom Hall.
Speaker 2 (05:28):
When was that in Gardner Street?
Speaker 1 (05:29):
That was in 1992.
But even prior to that we wereapproached one day by an
architect from the North ofIreland architect and developer,
jared Hawke, and he said he hadbought a site at Stokey for 27
apartments.
So he asked us would we link upwith his architect and give our
(05:54):
input into what sort ofapartments should be built on it
?
So Pilot View emerged, or thesite emerged.
We went out one Saturday andsaid we were taking booking
deposits on a new development tobe built at Pilot View in Docky
at Bullock Harbour and justfrom the boot of the car.
(06:17):
It was a fine day.
We managed to sell most of theapartments off the plans.
Speaker 2 (06:23):
So no advertising or.
Speaker 1 (06:25):
Yeah.
Then one day we were approachedby the late Liam Carle and he
said he was building adevelopment at Ringsend, which
wasn't the most fashionable partof Dublin at the time, but he
Not like today.
Speaker 2 (06:44):
Not like today yeah, funny how that has changed right
.
Ringsend used to be the kind oflook down upon a little bit,
and now it's the centre of thenew wave economy.
Speaker 1 (06:55):
Yeah.
So he went to three agents andasked for proposals.
Apparently the other two toldhim it was there, wouldn't be
too optimistic about the sales,and we told him it was a
fantastic site and it would fly.
And so he appointed us and put.
(07:17):
The surroundings weren't themost salubrious at the time.
So we said we'd got a dustphotograph of a boat going up
outside it and with goodlighting, and we got that
photograph into the Irish Timesproperty section on the.
(07:39):
I think it was on a Wednesdaythat they came out.
At that time we said we were inthe ads, we said we were going
to open for a viewing on theThursday.
But we got a call on theWednesday from Liam Carle saying
you better get down here quickbecause there's a big queue of
people and they want to buy allthe houses and apartments.
(08:01):
So we rushed down to the siteand started taking deposits and
we sold out the wholedevelopment off the plans.
Speaker 2 (08:13):
When exactly was that the?
Speaker 1 (08:15):
1990s.
I think I'll just have to checkthe date.
Speaker 2 (08:21):
It was kind of amazing to me then, because
there were apartments that werebeing built, you know, in the,
in the, in the, and in thecontext of what we hear in the
media today about all theshoebox apartments that
allegedly are being built inDublin, even though, yes, we all
know in the industry that thebiggest apartments in Europe but
in the context, against that,these apartments that were built
(08:42):
in the 1990s, particularly downthe rings, and we're small-
yeah, we're small, you know sowhy was there such demand at the
time?
Was that just a case that therewas so little being built?
Or because they were soaffordable and people, that's
what people could afford, sothey bought an apartment.
Why is it so different thantoday?
When you say, if you were to godown to that same area today
(09:03):
and put up A block of apartmentsand try to sell them, you
wouldn't have a queue of people.
Individual purchase is outsideit anymore.
Yeah, so what do you think wasgoing on in the 1990s that made
that, made these things Tocreate so much demand from
people?
Speaker 1 (09:18):
Well, there was a desire from people to buy
property and Fisherman's Wharfwas predominantly houses, but
but Liam went on to build loadsand loads of apartment
developments but but theconditions were right for people
to to buy a home.
(09:38):
Also, there were a lot ofpeople who wanted to rent
properties, so there was, therewas a market for for investors.
At the time.
The Prices were very cheap.
When you look along the keys,we were selling at bachelor's
walk Apartments for 40,000Pounds each at the time at the
(10:03):
time.
Speaker 2 (10:04):
Was there a lot of social housing being being built
at the time, because I know inthe in the 1670s there was big
social housing programs.
In the 90s it seemed to maybetail off a little bit.
Speaker 1 (10:14):
They started tailoring it off in the in the
90s.
All right, eric, the the socialhousing programs of the local
authorities were hugelysuccessful and the lack of
Dublin Corporation were veryproactive in providing a housing
, and the biggest mistake sincethen has been in the termination
(10:41):
of the building of socialhousing.
That is one of the main reasonsfor the housing crisis today.
And when we started out inbusiness also, people couldn't
get mortgages and there was onlyone lender in town and it was
(11:01):
the Irish permanent and you hadto deposit money with them for
For about five years beforethey'd even consider giving you
a mortgage.
And.
But then when the banks startedlending and they started seeing
(11:23):
the advantages of, say,apartment living, that opened up
the market and it's a hugenumber of people got housed.
But then there was a seriousdownturn in this in the 1970s
and and just nothing washappened happening at the start
of the 1980s and we we andothers and Suggested to the
(11:48):
government at the time RayMcSherry was the Minister for
Finance and that they shouldintroduce tax incentives for
Development and it had to be aparticular type of incentive
that would make a difference,that would really attract
investors.
So in the, in the finance billin 1981 they introduced section
(12:14):
23, which was hugely successful.
Overnight the market turned andthousands of people Entered the
market and started buyingapartments and it was a very,
very successful incentive.
The problem was the politiciansgot involved in it and the
(12:35):
politicians wanted their theirlocal area in Litrum or Claire
or Johnny Gall to get in on thesection 23 active Action and
that it should never have beenextended to those areas.
It was an incentive that wasreally for For high density
(12:57):
areas, that where there was astrong rental demand.
Speaker 2 (13:01):
Yeah for regeneration Right.
I'd like to say there was partsof the time that were almost in
ruin exactly yeah.
Speaker 1 (13:08):
So so I was so successful and I remember
listening to gay burn on theradio in 1992.
He was going through the papersand he said my god, they're
building apartments in GardnerStreet.
In no go area.
They're building apartments.
What is the world going to?
And anyhow, we we managed toget to her and it was Minister
(13:34):
for Finance to cut the tape andwe got a band on the street and
the guards cut off the roads andwe had a Great sale out of the
apartments.
Speaker 2 (13:48):
Street in the 1990s?
Yeah, 1992.
Speaker 1 (13:53):
Yeah, so that led to a huge thousands of apartments
being built, mainly in SouthDublin locations in Randall and
red car and both bridge, dokiand.
But it's just an awful pitythat they politicians wrecked
(14:16):
the section 23 and they gave ita bad name, whereas if we had a
the same Section 23 with thesame incentives today, you'd
have a massive house building orapartment building Program.
It would solve so much of ourhomeless problems overnight and
(14:37):
I don't.
Speaker 2 (14:38):
I don't disagree with you, but just because of the
age we live in, I have to askthis, otherwise will be accused
of being a bias and a shill ofthe converted industry.
Section 23 primarily Makes it atractor for people to own the
property, and so some would saythat it's a support to pricing
rather than Anything else.
(14:59):
What do you say to people whoclaim that Irish people are
different and they don't want tolive in apartments, that they
they might rent one for a littlewhile, but ultimately they want
to live in a three bedroom Semior four bedroom semi or a
detached house in some estatesomewhere?
What do you, what do you say tothat?
Because I I'm listening to thisfor since I started obviously a
(15:21):
lot less years in this than youare that we're different here
and that we're different thanevery other developed nation on
earth.
I not sense that we won't livein apartments.
Do you think it's true or doyou think it's just a?
Speaker 1 (15:33):
No, I don't think it's true.
There's a certain sector of thepopulation who wouldn't be
comfortable living in apartments, that they're much happier
living in a house, even if thathouse has three or four empty
bedrooms, and they still wanttheir house.
But the fact that 70% of ourpopulation are one, two or three
(16:01):
person households means thatthe most suitable type of
accommodation for them is anapartment, and it's also very
suited to retired people.
Unfortunately, we have aculture here at the moment of
objecting to developments, eventhough the people who are
(16:24):
objecting to them they'redamaging the prospects, proper
accommodation for their parentsor their kids.
You have at the moment in BlackRock and Rahini and other
locations at the moment,applications in for development
(16:44):
of senior citizens' apartmentsand you have local residents
objecting to them, which is justcracked.
Speaker 2 (16:53):
Well, the objecting thing has become both, in my
opinion, a sport and an industry, in the sense that people have
been conditioned now to beopposed to construction and
that's just been going on foryears.
And I have to.
I don't want to be one of thesepeople that criticize
politicians.
I know they have a hard job,but I have to lay some of the
blame for that at their door.
(17:14):
The fact that the localpoliticians pile on to planning
applications objecting to themas a little bit of a sock to.
I'm here standing up for you inthis area, when in reality it's
just nonsense, dog whistle stuffto be opposed to development.
All the people that live there,their houses were once built
(17:37):
and they were once a planningapplication, they were once a
green field and if we take thisattitude that we're going to be
opposed to everything, I meanthat's just a dead end road for
society in general.
But on the other side, theindustry of the objection is
something that people don'toften see right.
We're exposed to it very muchin the construction industry
because we get to see the otherside of it.
There are a host of solicitorsand planning consultants but
(18:02):
mostly solicitors who are goingaround actively trying to create
a business at a preventingdevelopment from happening and
they've been allowed that spaceby the political system and by
the legal system to effectivelyrender the planning system to be
completely halted.
The effect that that has oncosts we'll get on to that later
(18:22):
but is absolutely immense.
And the thing that I find justcrazy is you've been at this so
long.
The 90s Gardiner Streetapartments were built back then.
They provide a very low costform of housing to a lot of
people.
The nurse, the guard, peoplelike that could afford to live
there in the city center.
You would have no prospect ofgetting a lot of those planning
(18:44):
consents today, even though theywill comply with the
development plan, you stillwouldn't be able to do it.
So in the period that you'vebeen involved in the property
industry, you've really seenthat turn around right
Completely To the point wherepeople were lining up to buy
apartments where there was verylittle opposition to them being
built.
To now there's unbelievableopposition to them being built.
(19:04):
People can't afford thembecause the cost of producing
them is so high.
And you have collectively apolitical system that are saying
it's not our problem, it's yourproblem.
Speaker 1 (19:16):
Yeah, yeah, I know it's so wrong.
I mean they saw the case thererecently where somebody from the
South of Ireland objected to aparticular development in Dublin
here, a major development inDublin, and there was no reason
(19:39):
why their objections should havebeen even entertained and
holding up that development forover a year.
And then there was sort of anindication coming from the
objector that maybe if there wasa little bit of a compensation
for them they would pull theobjection.
Speaker 2 (20:01):
Yeah, so it's called rocketeering in other parts.
Speaker 1 (20:04):
Yeah, it is yeah.
So once the development is inline with the local development
plan under, the planners arehappy with it.
There shouldn't be anyconsideration of those
objections.
Speaker 2 (20:20):
We could spend all day talking about planning
objections.
I'm conscious I don't want touse up all your time, but I am
curious to hear your view on howthings have changed.
So back to the 90s right, we'rein Gardiner Street, cosgrove,
put up that apartment block.
You've got huge amount of sales.
Your band is playing on thestreet, the people buying those
(20:40):
apartments in the early 90s.
What proportion of those wereinvestors who were renting them
out?
Do you think?
I mean, I know that it's a longtime ago.
Speaker 1 (20:49):
Well, we've done surveys on that and because we
handled most of thosedevelopments, a lot of those
apartment developments built atthat stage were they were 77,
78% were small investors, andthe role that the small
(21:16):
investors played in the marketwas just so important because
they were modernizing the stockof rental accommodation by
buying these apartments and byletting them out to people who
might have been saving to buy ahouse or whatever.
They were all small investors.
(21:37):
A lot of them were buying themfor pension purposes or it was
none of this regulatory regimethat we have at the moment that
has scared the daylights out ofthe small investors and is
crippling the rental market.
Speaker 2 (21:54):
Yeah, absolutely.
And therein lies another littleparadox of what's going on at
the moment is that the role ofinstitutional investors here in
recent years has been castigatedas some sort of toxic nightmare
.
Where they're coming in hereand they've been referred to
both sort of pejorative namescuckoo funds, vulture funds,
(22:15):
whatever word they can come upwith at the time.
But that aside, why do youthink that has shifted to the
point where, okay, you had loadsof small investors, but
essentially all of an apartmentblock was rented out, right,
Almost all?
Speaker 1 (22:29):
of us.
Speaker 2 (22:30):
And today all of an apartment block is rented out,
but just by one landlord.
There's not really anydifference there, right?
In terms of the impact onsociety.
Both apartments are beingrented out to somebody who wants
to rent them and they're beingprovided.
Why do you think, or when didyou see that start to change?
Like we didn't have anyinstitutional investment in the
1990s?
(22:51):
right, there was no pensionfunds buying no large pension
funds buying properties in bulk.
That never happened.
That started to happen when,around 2012, like in the
aftermath of the crash.
Speaker 1 (23:03):
Yeah, it was certainly you guys were the
vanguard there.
Speaker 2 (23:07):
You were the leaders on that.
Speaker 1 (23:08):
Oh yeah, no, we were they.
It really got going in 2015,2016.
I went a number of thosepension funds and institutional
investors and expressed interestin purchasing apartment blocks.
So they are just replacing thesmall investors, which they're
(23:33):
providing a fantastic servicebecause they are providing
seriously high qualityaccommodation with great
community facilities, residentfacilities.
Why they've been misdescribedas a result of certain people
views, flawed views about therole that they're fulfilling.
(23:59):
Without having those investorsthat have built these, say,
16,000 or 17,000 homes in thelast six or seven years, the
rental market today would beeven much worse than it
currently is and the Irish statecan't fund the entire housing
(24:20):
program each year.
The institutional investorsplay a hugely important part in
funding part of the housingdelivery program, but they're
just part of the solution andit's totally wrong.
I agree with you.
It's totally wrong that they'rebeing misdescribed.
Speaker 2 (24:44):
And they're a very small part of the solution,
right, because as it stands, Ibelieve Irish is the largest
land private landlord right theyhave about 4,000, 5,000,
something like that units andthey're constantly in the media
whenever they have the results.
They're constantly beingcriticized as state's largest
landlord.
In fact, I learned the other daythat there's several affordable
(25:05):
housing bodies have more thantwice that number of units in
their ownership.
If we're going to have a rentalsector in the country, is it
not better to have people likeIRIS, who, by all accounts, run
a very good business, provide avery good service to their
tenants, adhere to all the laws,have public scrutiny on them
because they're so big, to makesure that they adhere to the
(25:26):
laws?
Or is it better to have 40,000individual landlords where this
is maybe their only property,where they are struggling
financially to make it workbecause of the regulation, where
one bad tenant and admittedlyit's a small problem, but one
bad tenant can ruin them by notpaying their rent and refusing
(25:48):
to leave the property, wheretheir ability to respond to
maintenance issues is reducedbecause they have just one
property and they have anotherjob?
Or IRIS that have 24-hourcall-out, huge amount of
properties.
One bad tenant's never going tosink them.
20 bad tenants isn't going tosink them allows them to produce
, invest, grow, which is thebetter outcome, because there
(26:10):
seems to be this schizophreniawhere they're like we have to
stop small landlords leaving themarket, but we don't want big
landlords.
Why can't we have both?
Is there a reason why we can'thave both?
Do you think?
Speaker 1 (26:21):
There's no sound reason.
In some cases it's a verydishonest narrative that's out
there from certain parties aboutthem for ideological or
political reasons.
But they are fooling a lot ofpeople who don't understand the
role they're playing and in somecases some of those rates are
(26:47):
being described as investors.
But they're actually building.
They're carrying on a buildingrole.
Look at Island Bridge andseveral hundred departments.
Speaker 2 (26:58):
And that project was stalled for years until Kennedy
Wilson came in and invested init.
Speaker 1 (27:02):
Kennedy Wilson stepped in.
It was just an abandoned siteand they have built it out and
done a fantastic job on it.
The quality of accommodationand services that are provided
in those modern developmentsowned by institutions are just
(27:23):
fantastic.
It's far better to have theinstitutional investors who are
delivering and owning thoseproperties than, as you say, a
multitude of small investors whoare just piling out of the
sector anyhow.
Speaker 2 (27:42):
Yeah, and so that's another thing I wanted to ask
you about, because you probablyhave good visibility of this.
Having sold a lot of theseunits to people 20 or 25 years
ago when they were entering itas an investor, you might be
seeing them now exiting.
Do you have people come backthat bought units off you 20
years ago and say, ken, I'mgetting out?
Speaker 1 (28:01):
Oh yeah, it's becoming an avalanche at the
moment.
Something like between 30 and40% of second-hand sales in a
lot of locations at the momentare the small landlords exiting
the market.
That's amazing, really thathigh, yeah, in a lot of the
(28:22):
established rental locationsthat's what's happening.
That is really at the core ofthe dilemma in the rental market
at present.
That's why rents are so highand that's why there's such a
shortage of properties.
Speaker 2 (28:42):
But another thing to follow on from that, because we
often hear this then thecomplaint that people have that,
oh, the landlord's selling, sohe's evicting his tenant.
And it's not terrible.
And as you know and as anyonewho's listening to this will
probably know who didn't liveunder a rock I was involved in a
controversy a number of yearsago when we decided to exit a
single family rental business inTirlstown.
(29:03):
We wrote to our tenants and wesaid, hey, we're going to get
out of this business, we'regoing to sell the houses.
Your lease has a year to run.
We're giving you that muchnotice, whatever it is.
And also, do you want to buythe house that you're living in?
We'll sell it at this price,fair price, no competition, no
active bidding.
And that blew up into anabsolute shitstorm because of
(29:29):
misinformation about what wasreally going on.
And the reason we were leavingthat business is because it
wasn't profitable for us tocarry it out anymore.
We're not a charity, so we didnothing wrong.
I'm sure there's a lot ofpeople that would dispute that,
but in fact we sold a lot ofthose houses to the tenants and
some of them got to buy theirfirst house, as it turns out,
very, very cheaply.
The fact that that's stillgoing on five years later, right
(29:56):
, people are still rotating outof being landlords five years
later.
Speaker 1 (30:02):
It's a very serious problem that the regulation it's
overregulation.
Now the scaring all thesesmaller landlords and if it
keeps accelerating, the problemis just going to get much worse.
It doesn't matter if we up thehousing completions to 40,000 or
(30:27):
50,000 or 60,000, which weshould be doing anyhow every
year it's just going to keep.
That's just going to keep beinga drain on it and the
regulation just keeps comingdown the line and there is no
reason for it and the likes ofhaving a cap on rental rises has
(30:49):
been shown to becounterproductive.
Speaker 2 (30:52):
Yeah, it has never worked anywhere and yet
proponents of it keep saying,yeah, but we want to.
I mean, what I find amazingabout the cap on rent, you'll
notice that the inflation crisisthat took over recently after
the war started in Ukraine, noone talked about a cap on food
Right, food is more important.
(31:13):
Food and water right, and theprice of eggs, price of cheese,
price of all these things wasrising dramatically.
Nobody brought up the idea thatwe should turn around to Tesco
and say, hey, we don't care howmuch it's costing you to provide
those eggs and the cheese, butyou're capped at 2% growth per
year.
Nobody turned around to Ford orto Toyota and said we don't care
(31:36):
what your production costs are,because they know that what
will happen in that scenario isthat Tesco will just say thanks
very much.
Here's the keys of all ourstores, good luck, as will Ford,
as will Toyota, and nothingwill get sold.
The only reason that they do itin the property industry is
because the property isimmovable, so they tax it or
they limit it because they can,and so it's always been this
(31:58):
eternal well that successivegovernments could go to to
either tax or to regulate inorder to placate, or to
seemingly placate, in the hopethat it would work.
And it hasn't worked here,right, because what's happened
since that cap has been broughtin right?
The supply of housing continuesto decline.
Speaker 1 (32:17):
It just was wrong in so many ways yeah.
Speaker 2 (32:24):
Well, look that's.
We're not going to changeanyone's mind, I don't think on
that.
You're either on one side ofthat debate or you're on the
other.
But I think that history andeconomics and just playing
goddamn arithmetic shows thattrying to cap any the price of
anything in a market economy isjust nonsense.
It's just nonsense.
It never worked.
Yeah, turning away from theinvestor side for a minute house
(32:48):
prices generally right Forsomebody that wants to buy their
first home, be it a apartment,be it a three bed, be it a
whatever.
The prices in the last coupleof years have run up pretty
significantly, not maybe likethey were in 05, 06 when the
kind of the madness washappening, but still quite
significant in the last twoyears.
(33:08):
What's your view on that?
Like, obviously there's ashortage, right, so that's going
to drive up prices.
But at the same time and I'mspeaking from the billers
perspective here the profitmargins in construction have
been declining, so the priceshave been going way up and the
profit margins have been goingdown.
Do you think that prices aresupported now?
I mean, I know that in yourrole as an agent you don't want
(33:31):
to be saying that the propertymarket's overvalued, but do you
think prices are supported, likethey've come up an awful lot in
the last two years.
If you were saying to somebodynow we said, okay, should I buy
my first home Is now a good time.
Speaker 1 (33:45):
Well, I think you have to go back to the 2005,
2006, when there was 87,000 newhomes being built.
Speaker 2 (33:55):
Isn't that like astonishing that we all forget
that?
Sometimes I think well, Iforget it when you hear it said
out loud 87,000 units a year.
And we did what?
30,000 last year.
Speaker 1 (34:05):
That's under 30,000 in 2002.
Yeah, no, I think it's allrelative.
I mean, I remember back in the1980s, 1990s, and people had
said, oh gee, that's costing40,000.
Yeah, that's very expensive,but it's all relative.
Speaker 2 (34:30):
The levees now are nearly done.
Which right I mean?
Irish water is 5,700 euros perunit, and you were selling
houses the entire house for40,000 pounds.
Speaker 1 (34:41):
Yeah, now I think, to be fair to the government, the
assistance they brought into thelikes of first-time buyers, the
first-time buyer grants.
The help to buy scheme.
That's a fantastic scheme andthat has helped so many young
(35:02):
people to buy homes.
Speaker 2 (35:05):
And it doesn't cost the taxpayer a dime right,
Because it's a tax refund of thetaxes that were paid.
Speaker 1 (35:11):
And it has pulled thousands of people out of the
rental market and has helpedthat scenario.
And yet you get peoplecomplaining about certain
politicians who, you'd have towonder, do they really want the
housing crisis to be solved?
Speaker 2 (35:31):
at times, I think that they probably don't want
the government to solve it.
Speaker 1 (35:37):
They want it to transpire that they are the ones
that could solve it.
Speaker 2 (35:42):
That's human nature for you.
Speaker 1 (35:44):
But I want to ask you a question, though I do think
that anybody who can afford, whohas the deposit, who can afford
to go out and buy a home,whether it's a house or an
apartment at the moment, I don'tthink they can go wrong.
There's going to be acontinuous shortage.
The cost of materials,inflation, the build costs are
(36:07):
going to keep rising.
I mean, they went up by aconsiderable amount last year.
Speaker 2 (36:14):
So that does seem to support the argument that
housing is not going to getcheaper it's just not going to
happen.
Speaker 1 (36:19):
Certainly not new housing right.
Speaker 2 (36:22):
At the same time, I look occasionally at friends of
mine, say, oh, I'm thinkingabout buying this, I'm thinking
about buying that, what do youthink?
And I'm dragged into the vortexthat is my home and daft.
And then inevitably, like theinternet, I go down a black hole
at looking at things and Istart seeing apartments,
individual apartments, which Iassume our landlord selling
right, exiting the rental marketSeemed to me very good value to
(36:44):
me that you can buy anapartment In in Dublin city
center for very little for whatit is, considering the areas
that sometimes that they're inlike in Dublin 8 Places like
that.
What's your view on that?
Like, if so, for a starter home?
I know everyone's very focusedon the new house and everything
but apartments that were builtlike in in the 2000s.
I know there's some, there's alot of.
(37:05):
It's terrible the issues aroundaround fire safety that I've
only affected certain certainblocks, but they do seem to be
cheap, right apartments on anindividual basis.
Speaker 1 (37:15):
Yeah, I am.
Well, they are.
They are relatively cheap andthey are.
They are good value compared towhat it costs to Replace that
home.
You do need to take intoaccount, though, that Whoever
buys that is going to haveenergy costs Much higher, yes,
(37:38):
than than the new, the new build.
Speaker 2 (37:42):
Yeah, that is a fair point and it's some of them.
Even though they're, they'renot bad Even if the difference
actually, and that the scale forenergy is a bit confusing
because People might think B andwhat's the difference in B and
a was actually a lot.
Speaker 1 (37:54):
Jump from.
B day is a huge amount, sothat's something that people
should really take account of.
Speaker 2 (38:01):
You see any light at the end of the tunnel?
You're involved inconversations of policymakers
and politicians and people.
Do you think that that the thatthe problems are understood?
Speaker 1 (38:11):
and and oh, I do think they are understood, but
there there seems to be a.
They seem to be frozen indecision-making and they keep
looking over their shoulders.
I would be very optimistic now.
(38:32):
I'm an optimist by nature, yeah, but I would be optimistic that
In this situation has got sobad now that radical action has
to be taken.
And if radical action isn'ttaken, it's going to be just a
disaster scene for home buyersand renters, and politicians
(38:54):
can't afford to let that happen.
And you know, when you look tothe United States and where had
the construction industry inareas where Housing is needed,
they're incentivized and theyhave to bring in incentives here
.
And, irrespective of whatPeople, some people might say,
(39:20):
it's, it's, it's it's justhelping developers, it's not
just helping developers.
If you help developers, you'rehelping the home buyers, whether
it's a subvention or whetherit's an incentive.
And Radical action has to betaken, and very, very quickly.
The government proved there'swith the when the pandemic came.
(39:42):
This radical, urgent actioncould be taken and They've been
praised for it and they did agreat job on it.
They need to do the same onhousing.
Speaker 2 (39:53):
Well, I was gonna ask you if you had a magic wand
that you could change one thing,but you gave me about seven
things there that you change.
So your, your magic wand is, isvery special, counting We'll,
we'll, we'll, we'll give it toyou because of your, your
experience, and but no one willtake it from you.
I've owned last question foryou.
Speaker 1 (40:12):
Yeah.
Speaker 2 (40:13):
Knowing what you know , seeing what you've seen, would
you encourage yourgrandchildren to go into the
property industry?
Speaker 1 (40:23):
Definitely.
Yeah, it's one of the bestcareers or industries out there
and I know my own Is sound,donald and daughter Rena, and
absolutely love what they'redoing.
You have new challenges everyday, but there's some great
(40:44):
people in property here inIreland with a better reputation
and and rightly so then a lotof the practitioners in in the
UK and and further afield.
It's very well regulated.
It's a very professionalindustry here.
I I I would definitelyencourage young people to look
(41:08):
look at us, which I would alsoencourage them to look at other
aspects of the constructionindustry, whether it's the
trades or Whatever.
Him you know anyone who getsinto carpentry or electricians,
electrical work or anything.
They, they move on and theythey do well.
Speaker 2 (41:32):
And there's very good Careers to be had.
Actually, yeah, there may be,you know, sitting in a nice
office every day and that's notfor everybody, but the rates of
pain, everything are very, verygood.
So yeah, for those, those trades, and should be encouraged.
More people are going to it.
So Well, look, ken, thanks alot.
That's been great real, realhistory lesson for me, even
(41:53):
though I know I regularly getthem from my own father, but
it's.
It's nice to hear about whatwent on, it's nice to hear about
how far the whole thing hascome and it's also nice to hear
that after that many, 55 years,you're still an optimist.
We need a bit more of that, Ithink, in the country.
So thanks very much for forjoining me and, yeah, the build
(42:24):
is hosted by me, rick Larkin.
Carrie Fernandez producesepisode.
Original music was written byCass.
If you have a suggestion forthe show or know someone we
should interview, please let meknow by email, rick at the bill
podcastcom.
Thanks for listening.
You can severity fire.
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