FG DEFIES LEO AND TARGETS HOUSING MINISTER

As MoS reveals O’Brien’s 2008 ‘cuckoo’ fund

Minister Darragh O’Brien faces a showdown with Fine Gael TDs as widespread anger over his handling of the housing crisis threatens to disrupt the coalition.

The Fine Gael TDs and senators rejected a plea from Tanáiste Leo Varadkar not to order the Fianna Fáil Cabinet member to defend his housing strategy. Instead, Mr O’Brien has been summoned to appear before an upcoming meeting of the Fine Gael parliamentary party on Wednesday, May 19 – with his coalition partners expected to give him a fierce grilling.

It comes as the Irish Mail on Sunday reveals that Mr O’Brien was an early investor in a so-called ‘cuckoo’ fund. In 2008 he invested savings in a global REIT fund run by Standard Life Assurance.

The revelation will heap further pressure on Mr O’Brien, who bore the brunt

of criticism this week over the Government’s housing policies as the issue escalated into a full-blown political crisis for the coalition.

Opposition parties rounded on the Government after it was reported that a so-called cuckoo fund, Round Hill Capital, had bought most of the 174 houses in a new estate in Maynooth, Co. Kildare, in the process pushing first-time buyers out of the market.

The ‘cuckoo’ funds controversy that erupted is just the latest hit to the minister’s reputation, and he is struggling to maintain the confidence of his own party, with one senior coalition source noting: ‘He is beleaguered on all fronts.’

Mr O’Brien and Finance Minister Paschal Donohoe are scrambling to piece together legislation to prevent ‘cuckoo’ funds from bulk-buying housing estates across the country. It is expected they will try to find a way of limiting the number of homes a fund can purchase in a particular estate.

However, a growing number of TDs from across the coalition have questioned Mr O’Brien’s capacity to reform the country’s dysfunctional housing market.

The minister is also facing difficulties over his plans for affordable housing, the increasingly controversial shared equity scheme, building costs and the lack of rural housing.

One senior coalition source said: ‘This is the start of it. Darragh is being shielded by the current coronavirus crisis, but he is heading for the mother of all moments when that concludes, and people say “where’s my house?”’

Significantly, the Fine Gael members revolted against party leader Mr Varadkar, who was not in favour of Mr O’Brien being summoned to appear.

One Fine Gael source told the MoS: ‘The top table tried to keep the discussion to Covid-19 but after five minutes we were done with that. There was a spontaneous uprising of the peasantry and it was housing all the way. Confidence in the minister is on a knife-edge.’

Another source who attended the meeting said: ‘O’Brien was lambasted. Leo tried to hold the line with the “all working together” stuff but that was not cutting the mustard. No one was interested in that though. Seats are in jeopardy.’

Another Fine Gael source said: ‘There is a real attitude to bring him in to gut him. The leadership did not want the invitation to go out. They fear it will turn into a shooting gallery. They are right.’

Significantly, the motion to summon Mr O’Brien to appear before the meeting was tabled by party grandee and former justice minister Charlie Flanagan.

One source said: ‘That gave it a bit of weight, it wasn’t a [Michael] Ring or some other shouter. Flanagan was icy on the crisis in the commuter constituencies.’

Sources said that rural TDs and senators are particularly concerned over the housing crisis, which threatens their political survival.

One noted: ‘Some are looking to regain lost seats, others to hold what they have. All were deeply critical.’

Kerry TD Brendan Griffin told the meeting: ‘You cannot buy a house in rural Ireland.’ While the usually restrained Senator Seán Kyne said: ‘Fine Gael are losing votes in droves in rural Ireland.’

Cork-based senator Tim Lombard said: ‘What is the minister going to do about the scenario where we can’t build a house in rural Ireland? We have a planning regulator who won’t let us build houses. The cost of building houses thanks to the Greens is going through the roof. We can’t get water. Material and labour are going through the roof.

‘We are dealing with, and reaping the consequences of, Dublin’s problems to such an extent the farmer’s son can’t build a house on his father’s land,’ said Mr Lombard.

Meanwhile, Mr O’Brien is coming under intense pressure from backbenchers within his own party, Fianna Fáil.

At a turbulent meeting of the Fianna Fáil parliamentary party this week, veteran Dublin South-West TD John Lahart warned that house prices in the capital are both ‘a rural and urban issue’.

Mr Lahart said: ‘The problem zone may be Dublin, but when the children of the parents who vote for you say they can’t buy homes, it becomes your problem.’

Mr Lahart also warned that Ireland’s dysfunctional housing market is turning into a vicious cycle ‘where councils and ‘cuckoo’ funds were buying homes and the combination of both had squeezed all house-buyers out of the market’.

He added: ‘There is a 1,100 apartment development in my constituency and they will all be sold off for rent. No one can buy. It’s a generic problem, not a Dublin Bay South problem.

‘We are competing with billionaires who can get a 7% return on housing compared to 0% in the banks.’

Mr O’Brien’s signature affordable housing scheme is also now coming under fire from within his own party.

One minister admitted: ‘The affordable housing issue is no silver bullet. Affordable housing will only provide 6,000 houses over four years – that’s 50 houses per county. It’s a drop in the ocean.’

In an indication of his weakened position, Mr O’Brien is also facing the embarrassment of having his own Bill to take on ‘cuckoo’ funds, which he tabled while he was in opposition, being reintroduced by new Labour Senator Rebecca Moynihan.

Ms Moynihan said: ‘While in opposition, the now-minister for housing introduced a Bill that would see 30% of housing estates reserved for first-time buyers to block these investment funds, and also proposed changes to tax laws.

‘If the minister does not act on his own legislation, designed to help first-time buyers get on the market, the Labour Party will reintroduce this Bill word for word.’

‘We are competing with billionaires’