Social housing demand has been a problem for many years and with the halt in construction due to the pandemic crisis, the shortage is higher than ever. Dublin City Council has over 15,000 people on the housing waiting list. And that’s Dublin alone.

Buy to let investments allow an opportunity for Irish Property Investors to receive guaranteed rental income each month over a long term period of 20-25 years, while helping to alleviate this issue. In the Government’s action plan to help solve the housing crisis, local authorities and housing associations are seeking to lease tens of thousands of residential properties from private investors over the next 3 years, offering 10, 20 and 25 year leases under the Long-Term Lease Scheme.

“From the practical perspective of owning and maintaining a property it takes away that whole hassle of time and cost as the Government or Housing Association are responsible for maintaining the property,” explains Shane Flood, Director of Lending at Capitalflow. “So, if the boiler blows or there is normal wear and tear of a house over time that’s for the Government to sort out, not for you as a landlord.”

Capitalflow is in a position to come back to you quickly on any loans in this low-risk area. Once you get in touch with basic criteria we can let you know immediately if we can finance the deal. Capitalflow don’t do “slow no’s”. Allow a maximum of 4-6 weeks from application to final drawdown, with very competitive rates.

There are a few guidelines which should be met before you submit your application:

  • Borrower: Limited companies and pension loan – you will be required to set up a limited company for this scheme
  • Location: Nationwide subject to minimum 10,000 population 
  • Maximum Loan amount on a single transaction €7.5m 
  • Maximum Loan to value 75% – if the property is valued at €1m the maximum Capitalflow can lend is €750k 
  • Interest cover 1.3x – if your annual interest payments are €100k, your property should generate a minimum net rental annual income of €130k
  • Support a 30-year repayment profile – net rental income can pay annual interest and repay capital over a 30-year period. 

A quick conversation with the housing officer in the county council relevant to the property location, will establish if there is a housing need in the area where you are looking to make your purchase. If there is a need, the housing officer will give you their expectations on the fixtures and fittings, as there is a certain standard they require before they can take on a property. Oftentimes they will seek independent evaluation.

“They won’t give you any guarantees so there is a certain level of risk, but the risk is that you’ll just end up renting into the private market if anything goes wrong,” explains Flood. “But we very rarely see that because at the moment councils are under such intense pressure to pick up properties.”

“Now, the councils won’t pay above market rent, but they’ll pay either market rent or they will pay 20% below market rent for a house and 15% for an apartment in a managed complex. But again 15% – 20% below when it is guaranteed for the next 20 – 25years, with no voids – no investor should have an issue with that,” he says.

“The people we lend to certainly think it’s worth it and they are very happy. There is also the social side to it, at the end of the day the person going into the property is coming off the housing list. You can get that nice feel-good factor, knowing you are making a real difference to someone’s life, while making a safe, prudent investment at the same time,” he adds.