State continues to look the other way on housing policy
LEGAL OPINION:Failure to regulate housing finance led to the collapse of the Irish financial system and intervention by the IMF and ECB. Recent developments, however, demonstrate that maybe not much has changed, with a policy disengagement from the housing system as a whole.
Scalded by accusations of fuelling house prices and distorting the market through tax relief and planning gain interventions, the State now confines its “social housing support” to those who cannot even afford to rent. The State
now pays a quarter of all private rents. Significantly, many buy-to-let mortgages are held by State-owned banks, suggesting a new meaning to “social” housing.
Yet, by leaving the political and public debate to house prices and “economic” indicators, the State is facilitating a type of contemporary laissez-faire approach. Dismissing the housing market and levels of housing debt is not the action of a courageous State. Narrowly focusing housing policy on the poorest, while salving the conscience of the liberal, the pious and the socialist, could result in further residualisation of social housing, and further “under-served communities”. Even in the area of enhanced protection for housing consumers, little State action seems evident.
There is a policy deficit in the development of effective overall governance and regulation arrangements for the housing system. When it comes to the housing system as a whole (market and non-market), there seems to be a confusion between intervention and regulation. The latter role can only be effectively carried out by the State, and it involves more than merely appointing financial regulators and increased compliance administration among mortgage lenders.
Where is the vision of an effective governance regulatory system for housing as a whole? Contemporary consensus (even after the comments in the Nyberg report of the groupthink in Ireland) still revolves around a meta-narrative based on a few neo-liberal economic factors and indicators. Conversely, some are celebrating the rise in renting as a vindication of communitarian philosophies, and antipathy to the social effects of privatised ownership.
The international literature on housing systems, endorsed by the World Bank and IMF, accepts that effective housing systems in contemporary market societies comprise five key elements: property rights systems; housing finance systems; sustainable residential infrastructure systems; effective regulatory systems; and housing subsidies/public housing systems. There is also a need to include the private rented sector. Treating all these elements of housing systems in isolation is myopic and can lead to major oversights.
However, the Irish State has yet to develop such a comprehensive approach. For example, the acclaimed new Residential Property Price Register by the Property Services Regulatory Authority (PSRA), while not claiming to be a house price index, had admitted that there are already errors in the published data. Of course, this raises an obvious question as to what use, if any, this register will be.
In the context of a coherent governance and regulatory approach, this register might have included information on age, condition, size, energy-efficiency, risk of flooding of houses, type of tenure, ownership, mortgages, other interests in the property or other information that might be valuable for consumers or regulators. Compare the accurate independent house price index of the Land Registry of England and Wales, which gives access to a flood risk indicator and title documents online.
In many ways, the planning framework for a sustainable and equitable housing system does not exist at present. Currently, there is little indication of establishing effective governance and regulatory approaches to the housing system as a whole, underpinned by recognition of housing rights – limited as these are.
Effective governance and regulation will require the commitment of banks and banking regulators, legal reformers and the Courts Service, consumer protection agencies, housing-related professional bodies and service providers, infrastructure and other investors, landlords and tenants, as well as advocates for social housing. Indeed, a new mindset for housing in Ireland might borrow some ideas from our international financial supervisors. How about a regulator for the housing system as a whole, regulators for housing standards, or regulators for improved quality of life on housing estates?
Dr Padraic Kenna school of law, NUI Galway is author of Housing Law, Rights and Policy (Dublin, Clarus Press, 2011)