Housing crisis: home truths for the new Cabinet

Radical approach needed to address escalating rents and house prices

The deadline for returning updated Local Property Tax valuations to the Revenue Commissioners on November 7th. Photograph: iStock

The deadline for returning updated Local Property Tax valuations to the Revenue Commissioners on November 7th. Photograph: iStock

 

The Government’s efforts to deal with the housing crisis have not been nearly enough. A more focused and radical plan is urgently required if escalating rents and house prices are to be brought under control anytime soon. Taoiseach Leo Varadkar appeared to acknowledge as much by giving newly appointed Minister for Housing Eoghan Murphy the task of reviewing the ‘Rebuilding Ireland’ plan within three months.

The Taoiseach told the Dáil that additional measures to increase the number of social housing units being built, consideration of a vacant home tax and ways of encouraging landlords to remain in or to enter the rental market, were among the issues to be considered.

There have been some achievements over the past year under outgoing minister Simon Coveney’s housing strategy, including the fact that 3,079 people exited homelessness in 2016 – the highest number ever – and the allocation of significant State funding for social housing. However, there is no escaping the fact that his strategy has had a limited impact – certainly within the timeframe required. Increasing the supply of new housing units is critical but whether this minority Government can take the bold decisions required to make this happen is in question.

A mixture of the carrot-and-stick is needed, with greater incentives to promote house-building combined with stringent penalties for those who hoard development land. Tackling the problem of vacant housing in a coherent fashion will also be a critical part of the solution because it offers the prospect of delivering more immediate results.

It is not just the Government but local authorities and wider society that need to face up to the situation. For instance, one of the measures that could contribute to alleviating the housing shortage in Dublin is a decision by the City Council to increase the height limit for buildings.Such a move would almost inevitably face vociferous opposition but it is a proportionate response in suitable locations.

Costs and site levies associated with construction also need to be examined by local authorities, while a Government decision to reduce VAT on houses to nine per cent would be a major help. In tandem with greater incentives for building, there must be stiff penalties for developers who hoard development land, in anticipation that it will gain in value, to force them to release it to those who are prepared to build.

Making vacant housing available for habitation would be of great assistance too. Many houses are left vacant as an unintended consequence of the Fair Deal system for older people who are being cared for in nursing homes. Families are currently incentivised to leave such properties empty rather than to rent them out.

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