Housing is an issue that is defining us as to what type of country we are and what we want to be. It has a profound impact on economic equality.
The (current) housing crisis affects a wide range of groups including:
• Renters facing high rents (at the moment in Dublin there are reports of ‘bidding’ wars between renters trying to find a place to live)
• Young people and families unable to buy a home due to rising house prices (couples are being forced to put off having children while they try get a home)
• People in mortgage arrears or mortgage distress (there are still 37,000 homeowners in long term arrears and facing repossession)
• Over 90,000 on social housing waiting lists –most of whom are stuck in poor quality or unaffordable private rented accommodation
• 1,500 children and their families are homeless. At the current rate of families becoming homeless there will be more than 6,000 children in emergency accommodation by 2017.
• Travellers left in substandard accommodation & asylum seekers left in poor conditions in Direct Provision
- Stalled and collapsed regeneration projects in disadvantaged local authority estates across Dublin, Cork and Limerick
At this point it is worth analysing what the current government has achieved in relation to housing in their five years of power.
There was a very promising start with a new Housing Policy in 2011 that aimed to re-balance housing policy towards being tenure neutral and recognising the role of the excessive support for home ownership in the cause of the crash. However, subsequent to the broad thrust of housing policy has had largely negative outcomes. To take a number of examples:
The incorrect view that rent controls would reduce housing supply resulted in policy inaction on escalating and unaffordable rents in the private rented sector. In reality there appears to have been an unwillingness to challenge landlord and property developer interests. The two year rent ‘freeze’ has provided some temporary relief to existing tenants but it is not stopping new rental property price increases and when it finishes next year there is nothing to stop rents sky rocketing again.
Tenant’s rights to longer leases and security of tenure remained largely unaddressed with the balance of power and rights left in the hands of landlords.
The budgets for social housing/local authority housing construction were decimated. And disproportionally cut more than other areas. Which meant that over the period of government we have had the lowest level of social housing building (local authority and voluntary and cooperative housing) in over 40 years (even lower than the recession in the 1980s) (see the two graphs below). This is at the root cause of the homelessness crisis as there is simply not the social housing available to addressing the rising housing need.
Local Authority Housing Completions (number of units) 2005-2015
Source: Department of Environment
Social housing provision has been privatised onto the private rented sector– which has meant a failure to achieve social housing targets and reduced private rental stock available to the wider population. The Social Housing 2020 strategy had a very welcome committment to putting local authority and social housing back as a central plank to housing policy but as always the devil is in the detail. Three quarters of the housing in the‘social housing’ strategy is to come from the private rented sector. This is not a 'social housing' strategy!
Rent allowance levels were not increased to match rising rents which forced families and children into homelessness – although exceptions were introduced in recent years these are not widely known.
The approach taken to the mortgage arrears crisis was to avoid evictions (which is a large reason why Ireland has not had the level of evictions as Spain) and to hope increasing employment combined with ‘restructuring’ arrangements with the banks would reduce the arrears levels (which it has done to a certain extent) although as mentioned earlier there are still over 30,000 homeowners facing potential repossession.
The government in a positive measure introduced a vacant site tax - but it doesn’t come into force until 2019. This resulted in a failure to tackle the issue of speculative land hoarding. This has meant land owners and builders can keep the housing supply low and force prices to rise so they can increase their profits.
The commercial strategy of NAMA was steadfastly supported. There was an option to change the mandate of NAMA to provide affordable or social housing but this was not taken. The government continued to support NAMA’s commercial mandate (created by Fianna Fail) to sell off its residential and commercial property and land (as will happen with the promised 20,000 ‘starter homes’) to international vulture funds rather than for Irish people who need the housing
The new apartment size regulations will create the ‘shoe box’ tenement apartments of the future.
The new Central Bank mortgage lending rules that are keeping house prices affordable are one of the few positive changes that have been implemented in the area of housing– it has slowed down house prices rising and thus keeping them more affordable. Yet Michael Noonan has publicly opposed these.
So what policies could solve the housing crisis?
The core of an alternative housing policy would be for the government to do six key things:
1. Implement rent control/certainty –where rent increases are linked to inflation and/or affordability & quality indexes) & give tenants the right to long term secure leases
2. Create a new Homes and Housing Agency (NAMA could be changed into this) to build affordable and social housing and lead the regeneration of disadvantaged estates across the country
3. Create a new State Housing Bank to finance housing and provide affordable mortgages for people
4. Hold a referendum to put The Right to housing and a home in the constitution
5. Change NAMA’s mandate to invest in social and affordable housing rather than offices and selling to vulture funds
6. Bring forward the vacant site tax to force builders and developers use vacant land to build and introduce the famous 1974 Kenny Report to control the speculation on the price of land
This would create a housing system that is based on meeting people’s need for a home and not based on relying on the private market – which is the property industry and speculators - which has failed over and over to provide affordable and secure housing. The private housing market just provides super profits for developers, banks, estate agents, solicitors and speculators.
These housing problems didn’t start with this Government. Governments during the Celtic Tiger boom years lead by Fianna Fail also caused the crisis by prioritising the ‘mortgaged home ownership’ developer-led housing system and allowing speculative land hoarding and development. When the crash happened they created NAMA to bail out developers, bondholders and the banks but left ordinary people to pay for it all. Unfortunately Fine Gael and Labour have continued these policies in relation to housing.
Interestingly, when we wonder what influences housing policy, Fine Gael is the party with the highest number of TDs who are landlords with 24 TDs who are landlords. Fianna Fáil has 12 landlords and Labour has ten.
Also a consultation was held in relation to the housing crisis by the Department of Environment in Croke Park in June 2015. But unfortunately it was mainly builders and NAMA who were invited. That’s where the changes in apartment sizes were first put forward. The Department of Environment's thinking appear to have been heavily influenced by a neoliberal private market philosophy and the interests of developers and builders.
We need to move away from mortgaged home ownership and housing being viewed primarily as an asset of wealth, a commodity, a speculative piece of ‘property’.
Instead the housing market should be strongly regulated with price and profit controls and there should be a new approach to funding provision of affordable, ‘not for profit’, cooperative and social housing.
That will require standing up to the property development industry, landlords and all those who currently profit from the existing housing mess. It also means Irish people changing their attitude to property and ownership and understanding that the current obsession with home ownership mainly benefits the wealthy, the banks and property industry.
The Irish housing system should, in the first instance, ensure affordable, high quality, homes are available to every citizen.
Dr Rory Hearne is a Senior Policy Analyst at TASC. You can follow him on twitter @RoryHearne