The second report from Dr Peter Bacon on the housing market, published yesterday, seeks to build on some of the changes introduced on foot of his first review. It recommends increased tax relief for tenants, a concerted effort to address the various infrastructural bottlenecks and a range of measures designed to improve the supply of affordable houses and to speed up a cumbersome planning process. Dr Bacon cannot provide a panacea: the problems facing the housing market are too deep-rooted and multi-faceted for that. But he deserves great credit for pointing the way towards a much more interventionist approach by government in the housing market. The Government also deserves credit for appointing him in the first instance, instead of allowing market forces free rein.
Dr Bacon's first report has already yielded several tangible benefits. The removal of mortgage tax relief on borrowings undertaken for investment in residential property has helped to curb the speculative frenzy in the housing market. At one stage last year, some 30 per cent of homes in some Dublin housing estates were being purchased by investors. Happily, this is no longer the case. Reform of the stamp duty regime has also helped first-time buyers. Disappointingly, the price of new homes has continued to increase, although there are some signs that the rate of increase is beginning to slow down. But few would contest the view advanced by Dr Bacon yesterday that his first report helped to break the psychology of house-price inflation and the expectation of further acceleration.
In his second report, Dr Bacon seeks to assist the often forgotten victims of the housing crisis; those in private rented accommodation. Tens of thousands of tenants are now struggling to cope with rent levels which have increased significantly in the past year - apparently, in parallel with the trend in house prices. Dr Bacon recommends greater tax allowances in order to provide some measure of comfort - the Government, astonishingly, has still to endorse this - and an examination of landlord/tenancy legislation. The Government, however, is to be commended for its decision in principle to establish a commission on security of tenure in the rented sector, which could herald a substantial improvement in tenants' rights. This is a welcome first step. But it is must be augmented by tighter regulation and more vigorous government intervention in the private rental sector. The rental market cannot be left to its own devices.
Other measures announced yesterday can have beneficial effects. The Government's decision to allow over 15,000 houses to be built in North Dublin - after accepting that temporary sewage treatment facilities would be adequate for the moment - is a welcome example of how infrastructural bottlenecks can be broken. Something of the same decisiveness is required to free up serviced land, to provide proper transport facilities for those living in Dublin's outer suburbs and its new commuter towns, to speed up the planning process and to provide a better geographical balance of economic activity. The scale of the housing crisis can scarcely be exaggerated. Years of neglect by successive governments means that there is quite a mess to clean up. But Dr Bacon has provided the right prescription.