Housing Policy is unsurprisingly on the agenda of the parties negotiating the formation of a new government. The temptation will be to weld together a mishmash of previous politics, and personal and party leanings rather than try to come up with a lasting, coherent and implementable housing policy.
Some of the fundamental defects and anomalies in the present system include:
– selling council houses to tenants and not replacing them, and then wondering about the scarcity of social houses
– charging council rents that are well below the cost of management and maintenance, and being surprised at how many houses have become unusable
– imposing heavy taxes and other burdens on new developments yet complaining about the price and unaffordability of new housing
– driving small private landlords out of the market by high taxation on rents yet expecting that market to supply large numbers of social housing through HAP to make up for the failure to provide extra council houses
– and then being surprised that rents go up due to the scarcity of rental housing.
I have argued before that we need a housing system where all the dots are joined up, where we can avoid all these contradictions and produce a system comprehensively designed to deliver for everyone. This would be best achieved by broad political consensus as the new government is being set up.
We need a housing commission to develop a world class housing policy that can lead us out of the present housing morass. The challenge the country faces is even greater now given the impact of Covid-19 on homebuilding and the wider economy.
But what would a world class housing policy look like?
It would not start with the principle that everyone is entitled to a home.
The first principle would be that the State would subsidise a home to the extent necessary but only when and to the degree that is necessary. That subsidy would be delivered through the social welfare system and not by setting rent at levels that inhibit good management of the house.
The second principle would be to set up a European-style cost-based rent system with rents of about half the current market level.
There would be two strands of housing delivery. First, a rental strand and, secondly, an owner-occupier one.
On the rental strand, security of tenure would be an automatic right but within the constraints of good estate management so, for example, a long-term sitting tenant could not block a major refurbishment or redevelopment of an entire block necessary for others to have a home. Rents would be set at two levels: firstly a cost-based rent and, secondly, a market rent. Cost-based rental housing would be available to lower- and middle-income workers.
On the owner-occupier front, tax policy would be designed to support home ownership with mechanisms similar to those used in the 1970s, such as direct grants or tax concessions on starter homes to make them affordable.
The supply of cost-based rental accommodation would be supported by guarantees to the provider of capital through insurance or state-backed mutual fund arrangements – as is the case in many continental European systems where the guarantees allow for rents at half market levels.
The Residential Tenancies Board (RTB) should be strengthened to do its job with fast enforcement powers. The hugely-expensive rent subsidy schemes such as HAP, now costing the taxpayer nearly € 2 billion per annum, should be phased out over a period of 10 years, as should tenant purchase rights as the stock of cost-based rental housing grows.
Providers of homes at market rents would continue as at present with the current constraints on rental increases continuing on an indexed basis.
The taxation of housing would have to be on the policy agenda for a housing commission to ensure that occupiers pay a fair charge to cover the cost of public services – and to capture land value increases attributable to public infrastructure. Taxation would also be used to fund affordability measures, support the planning policies of greater urban densities and less suburban sprawl, and also support decarbonisation of our homes and lives.
Much of the above is simple common sense in a modern democracy. The way to achieve it is for all the political parties to sit down together with housing experts and develop a 10-year world class plan and transition timetable that builds on strengths and dispenses with obstructions. Please let’s get the inherited anomalies out of housing policy and politics and start with a real plan – not just for the next five years but for the next 50.
Dr Bill Nowlan is managing partner of Oracle Real Estate Strategies and has a Phd in Social Housing Finance from the University of Ulster.