Housing Crisis
Action needed to address our National Housing Emergency
A basic human need
Housing is a basic human need. Without housing many aspects of a citizen’s life break down. Physical and mental health starts to deteriorate. A family’s ability to provide healthy nutrition falls apart. Education and work life are next to impossible without a home. The human condition disintegrates without a home.
Ireland is suffering from a prolonged National Housing Emergency. The level of human misery being caused is unprecedented in housing terms. Up to 1 million people are in housing crisis either through mortgage distress, homelessness, spending years on housing waiting lists or grossly unaffordable rents and mortgages. This crisis has been going on so long that the media and the political establishment have become desensitised to it.
It is one of the primary responsibilities of a government to make sure that families have access to reasonably priced homes and that those who cannot afford market prices have alternative routes to a home. In this the government have completely failed.
Speculation: Houses as Commodities
Housing and homes have had another role within Irish society for the last 3 decades. While housing always contained a speculative aspect within their supply, demand and price, this aspect has become radically more pronounced in recent years.
The investment and speculative aspect of housing has been fuelling property bubbles and crashes that have in part destroyed the Irish economy. Only 10 years after the last devastating crash, house prices in this state are dangerously close to property bubble proportions again. While the collateral damage of the last crash – those in serious mortgage distress – are still winding through the courts system we have prices rocketing throughout the country yet again.
House prices have on average risen by €100,000 throughout the state since 2012 and have increased by well over €160,000 in Dublin. These radical swings in house prices are a disaster for families and they are dangerous for the economy. Shockingly Fine Gael admitted in 2015 that spiralling house prices are a strategic objective for the party.
Housing Dysfunction
In a normal well managed society houses prices should equal roughly 2.6 to 4 times annual income. In the South of Ireland the average salary is €44,000 and the average house price is €340,000. The average house price is 7.7 times the average salary. Average rents in the state are €1,100 per month. In Dublin they are €1,600. In Dublin families on the average wage are paying well over 50% of their after tax income on the average rents. For people on the minimum wage both renting and buying is impossible.
This has a number of effects. It prevents large sections of society buying their own houses. It forces them into renting which chases a limited supply and forces up house rental prices. Exorbitant rental prices force families to depend on limited Social Housing supply and many find themselves homeless.
Another outcome of housing dysfunction is the sprawling commuter belt. Many families have had to surf a wave of affordable rent westward in order to stay housed. This has often meant multiple moves from counties such as Louth, Meath, Kildare and Wicklow to towns and villages in Ulster, Munster and Connacht. These multiple moves are disruptive to family life and education. It has also led to long commutes and significant traffic congestion due to the lack of public transport alternatives in these areas and it is adding significantly to transport related carbon emissions.
The Economic Effects of Housing Dysfunction
House price inflation and the increasing costs of commercial buildings are damaging Ireland’s cost competitiveness. Nurses, Gardaí, teachers and many workers in the private sector are being forced to seek wage increases due to the fact that accommodation in the areas that they are working in is spiralling. House price inflation is a direct cause of wage inflation and is damaging to the economy.
Foreign Direct Investors have publically made known their concerns with regards housing unavailability. There is no doubt that housing dysfunction is a brake on economic development.
Damaging Government Policy
Fine Gael pride themselves on being the party of the Free Market. Ironically much of the dysfunction in the housing market is due to Fine Gael distortion of the market function.
At the bottom of the housing slump Fine Gael rolled out the red carpet to International Residential Investors and vulture funds in an effort to put a floor under the market and to improve the balance sheets of the Irish banks. They achieved this through extremely generous taxation policy and light touch regulation. As a result International investors have piled into the market, made above average profits, have pushed prices through the roof, and pushed first time buyers out of the housing market.
These International investors have taxation advantages over indigenous small landlords, they have interest advantages of first time buyers in this country and they have significant power within the market. This power needs to be reduced by reducing their unfair tax advantages.
Vulture Funds have been allowed to buy distressed mortgages at knocked down prices. Families, small business owners and farmers who have invested life times into their homes and farms are being refused to buy their debts at the same level that the vulture fund could sell them at after repossession. These same Vulture Funds have refused to come before the Finance Committee in Leinster House but have free range into the Department of Finance.
Potential Shocks to the Market
While the credit bubble does not exist in the same manner that it did during the Celtic Tiger, there are still significant exposures within the market to international shocks. The business model of Real Estate Investment Trusts (REITs) relies on low international interest rates and low taxes. Interest rates will increase and taxes on REITs should increase. It’s important that these changes are carried out in an orderly fashion to ensure an increase in supply to the market and protect against shocks.
Solutions
Social and Affordable Housing.
A significant increase in the supply of housing is the key element of resolving the housing crisis. The government has a massive role in achieving this. Firstly the supply of social and affordable housing needs to be ramped up. In the 30s, the 50s, and the 80s in tough economic times social and affordable housing was built at far higher rates. Fine Gael has been allergic to the building of social and affordable housing. They radically reduced output at the start of their administration. This cut in supply has led in part to where we are today.
While we hear practically every day about government plans to increase social and affordable housing the truth is last year only 60 houses were built on average by each Local Authority. 70% of the government’s Rebuilding Ireland policy is provided for by private tenancies. This does absolutely nothing to increase the social housing supply and actually pushes up prices in the general rental market. The government have provided zero affordable houses in 2016, 2017 and 2018.
The truth is funding is still not sufficient to achieve the 10,000 new social and affordable housing units that need to be built on an annual basis. If the state invested €2.2 billion in capital spending a year the 10,000 housing units per year objective of the Oireachtas Housing Committee could be surpassed.
It is paramount that the government reduce the approval, tendering and procurement process for the building of public housing. Local Authority must be tasked with the development of mixed income public housing estates with Affordable Purchase homes, Affordable Cost rental and Social housing. Approved Housing Bodies have been to the fore of the delivery and management of Social Housing. They need to have their capacity and ability to deliver more enhanced.
End Speculation
Large land banks are lying idle around the country. Some of these banks are in areas of high need. With prices increasing there is an incentive to sit on land banks and watch the price increase. The government must not allow a situation arise that makes it is more profitable to sit on land than to build on land. Since 2014 we have been promised a functional Vacant Site Tax. Only 17 Local Authorities have populated a Vacant Site Register and out of these only 140 Vacant Sites have had a tax applied to them.
1 in every 33 houses in the state is vacant. This is a shockingly high rate of vacancy in a housing crisis. A carrot and stick approach needs to be employed to get these houses in to circulation. Funding must be made available to allow home owners who cannot afford to get housing fit for habitation to do so. The state must seek to buy some of these houses and return them to occupancy. It also must be accompanied with a Vacant Property Tax to be applied to vacant houses where owners for no good reason allow a house to remain vacant.
End the Eternal Regulation Change
The current housing minister has changed building regulation a number of times. As a result many builders expect further change which will allow more units to be achieved per site. This has the effect of slowing down the building of houses.
Tenants’ Rights.
Due to the dysfunction within the market and the lack of tenants’ rights within the law, many tenants are living in poor conditions, paying exorbitant rents and suffering due to the precarious nature of contracts. Indeed most of the people presenting as homeless are coming from the private rental sector. A number of reforms in this sector will stem this human tide.
Greater security of tenure must be provided. Tenancies of indefinite duration must be provided for. The grounds of sale should be removed from the Residential Tenancies Act. A rent cap tied to the inflation rate must be provided for. “Buy to Let” landlords who achieved tax breaks from the state should be prevented from issuing vacant possession “Notices to Quit”. We need to ensure that the Traveller Accommodation Budgets are spent and spent appropriately by each Local Authority. We need to increase investment into Domestic Violence Stepdown Accommodation. Aontú seeks an increase in the Local Authority Disability and Mobility grants.
Many small Landlords around the country have found themselves landlords by circumstance. Many have high mortgages and difficulties with a minority of tenants who do not fulfil their contracts or their obligations. Tenants who wilfully damage property, do not cover the cost, wilfully withhold rent, get involved in criminal behaviour, drug dealing and anti-social behaviour should be flagged to subsequent landlords. Landlords must be able to remove such tenants in a timely manner.
Traveller Accommodation
Irish Travellers are a distinct ethnic group who should be afforded the protection of the State. We need to have better laws in place to protect minority groups from discrimination, and to ensure that public services are more culturally friendly.
Service providers and local authorities should include Irish Travellers in their ethnic identifier policy, analyse the resulting data and take corrective action where the data indicates lack of uptake or unmet needs in relation to Traveller accommodation, health, training, education, and employment.
Nomadism is not the sole criterion of ethnic status for Travellers. Travellers living on permanent sites, social housing, private accommodation, or self-built sites, fill the aforementioned criteria for ethnicity.
Accommodation is a key issue for all Travellers. Accommodation needs to take into account extended family structures and reasonable preferences for facilitating extended family structures, nomadism and business practices.
Local authorities and government departments should examine the possibility to grant aid Travellers to develop their own sites, and to progress such incentives. This will not take the onus off Local Authorities to prioritise Traveller-specific accommodation when and wherever the demand is.
Agencies and authorities working with Irish Travellers should recognise the possibility of literacy problems with some members of the community. They should ensure that the Local Traveller representative groups are enabled to support and advise the community.
Aontú will look at the possibility of supporting a National Traveller specific accommodation agency that will fast track and deal with accommodation issues where local authorities have failed to deliver. Travellers will be included in all Consultation or annual reporting on services and supports to the Community. We will have a 5-year Traveller Accommodation Plan to prevent Traveller families becoming homeless. The implementation of this plan will be reviewed annually.
Aontú recognise the diversity of the Irish Traveller community, and are aware that the ‘one size fits all’ approach will not work. We will work with national, regional and local Traveller groups to meet the needs of the community. We will promote cultural education in schools for all ethnic groups, and ensure that Travellers have equal opportunity to third level and to be proud of their culture and identity.
Aontú is a party that believes in unity, and will work hard to build bridges and to have a community approach to facilitate all accommodation issues.
Start Now to Improve the Future
There is much work to do on the housing front in Ireland, however there are clear areas where action can be taken quickly and other areas where forward planning will allow a steady improvement in the housing situation. This will have a relative effect on social behaviour, community cohesion, employment, health, harmonious integration of minority groups and the general condition of the country and its people.
