In November 2017, when a neighbouring apartment to her own was up for sale at an auction, Shannon Chance went along to see how much it went for.
It was the mirror image of the rental apartment she lived in, and still lives in, in Smithfield Lofts on North King Street, she says.
As she remembers it, the guide price was €235,000. It sold for €305,000.
Chance didn’t bid, she says, as she wasn’t sure of the process. But she wanted to buy her own apartment, something she tried to do before it was sold in 2018.
She wasn’t able to though, and is still confused as to why Deloitte, the receiver, bundled it in with others in the block and sold them all in one go to a big international fund at a lower price instead, she says.
“We could have paid more than that. We were poised to be able to buy, we had always been good solid tenants,” she says.
For Chance, the experience led her to wonder why tenants aren’t offered first dibs on their homes if they’re being sold, a rule that exists in France and Denmark. And one that, she says, should be brought in here.
A Lower Price
Smithfield Lofts, which was designed by Grafton Architects, is a really nice building, says Chance, who is an architect.
It’s near the city centre, which she loves too, she says. Availing of “the cultural capital that a city has when people live tightly together, that makes a city exciting and interesting to live in”.
Yet “it seems that cards are stacked against those of us who want to live in apartments, who like the benefits of a reduced environmental footprint, not needing a car, being close to the action”, she says.
Chance loves her apartment, she says, but she wants to refurbish, to swap out the carpets that have bald patches from a moth infestation. It’s difficult, though, to know how much work to do on a rental home, she says.
The couple are keen to start paying down a mortgage soon too. But it is difficult to buy an apartment in Dublin at the moment when so many are sold in bundles to investors, she says.
When she moved in in 2012, she repeatedly asked the “owner’s representative” about the possibility of purchasing it, she says.
But she never got that opportunity. A few months after the auction, in February 2018 the receiver Deloitte sold Chance’s home for €195,000 and sold other apartments in Smithfield Lofts for as little as €141,000.
The loans had been under the control of NAMA. A spokesperson for NAMA says that NAMA is a secured lender whose role is similar to that of a bank.
“This sale was conducted in early 2017 by Savills on behalf of a receiver, Deloitte, which has a legal obligation to sell assets for the highest achievable value, based on independent professional advice available to it,” said the spokesperson for NAMA.
“They went for far under the market value,” says Chance, as evidenced by the auction price fetched by the identical apartment.
She was surprised when the government recently said that it intended to ring fence some houses for owner-occupiers but that apartments in cities would be excluded from those measures.
“I’m really disappointed that the government is distinguishing so much between houses and apartments,” she says.
Chance is American. She says it’s fairly obvious that in Ireland there is a cultural preference for houses over apartments but thousands of households do live in apartments, she says – and they are family homes.
“The implication is we are a little bit expendable,” she says. “That we are not a core part of this society.”
Why Do It?
A spokesperson for NAMA said that the receiver got independent professional advice that this was the best price they could get and it was a higher price than selling the homes individually.
“As was prominently reported in national media at the time, the sales price achieved for the 50 units in this sale was €750,000 higher than the guide price and was achieved following a highly competitive bidding process featuring 6 bidders,” he said.
The tenants were able to stay in their homes, whereas selling the apartments individually would mean evicting the tenants, he says.
“All sales of units from the NAMA portfolio, whether to individual buyers or institutions, are carried out in the manner that generates the highest achievable price in accordance with NAMA’s legal obligations,” says the spokesperson.
Often sellers do so in bulk, because even taking a lower price, bulk buying can save money, says Michael Byrne, a lecturer in political economy at University College Dublin.
Sellers see it as advantageous because it can reduce transaction costs, delays in transactions, and other risks of selling to individual purchasers, he says.
“I think it is fair to say that it gives bulk purchasers an advantage in the housing market,” says Byrne.
A Right to Buy
Several European countries have regulations that disrupt this though, allowing tenants first dibs on buying their own home in some circumstances.
“A (mostly limited) preemption right for tenants exists in several EU States,” says Prof. Christoph U. Schmid at Bremen University, in Germany, who has carried out research into tenancy laws in the EU.
“For example in Germany it only exists if the apartment in question was converted into a condominium apartment and is then supposed to be sold,” says Schmid in an email. Or if the rental contract stipulates the right of first refusal, he says.
In Germany, if there is a right to preemption it means that the tenant can “enter into a contract already concluded by the seller with another party, thus displacing the original buyer”, says Schmid.
If the tenant matches the best offer they have a right to purchase the property, he says.
In France, if a landlord wants to sell a property, they must offer the sitting tenant the option to buy the home.
This is called “droit de préemption” (right of preemption), according to the Tenancy Law and Housing Policy in Multi-level Europe (Tenlaw) National Report For France.
There are exceptions, such as if the owner wants to sell the property to a relative.
But in general it goes like this: the owner gives the tenant six-months’ notice that they plan to sell, and in that notice they indicate the price of the property. That notice is considered an offer to sell the property to the tenant.
The tenant then has two months to decide if they want to buy the home. If they do, they have another two months to sign the deeds, or four months if they require a mortgage.
If the owner gets a better offer, they have to go back to the tenant and give them the opportunity to match that offer.
In Denmark, tenants regularly clubbed together in the 1990s to form co-ops to buy their apartment buildings, according to the Tenlaw National Report for Denmark.
According to the Rent Act, introduced in the 1970s, “in properties used wholly or in part for residential purposes, the landlord shall offer the property to the tenants on a cooperative basis before disposing of the property to a third party”, says the report.
The Danish tenants’ union website explains the law as follows. The Danish act of tenancy has a special regulation on the “right to buy”, it says.
The tenants have the right to buy their rental homes if they can match the price that the owner can get on the open market.
“The rental houses change into a co-operative housing association owned by the members, of which many were the former tenants,” says the website.
Chance says she would like to see a system introduced like France’s or Denmark’s, where tenants can get the opportunity to buy their rental home if the owner is selling it anyway.
She’s still living in Smithfield Lofts because it’s lovely, she says, and she’s looked so hard for somewhere that’s close to the neighbourhood.
“I’ve looked and looked and looked but I really feel like I’ve missed the boat,” says Chance.
She still wants to buy her apartment. She recently asked a local estate agent if he thinks she might get to buy it.
He told her that the fund that owns it might well want to sell it at some stage – but she still won’t be in with a shot.
“His impression was that it was very unlikely, because when it gets sold it will probably get sold in a package,” she says.