Frank McDonald: Housing policy a litany of failure
Current housing policies benefit wide array of monied interests
“As things stand, it is impossible for developers to build apartments for sale in Dublin for less than €400,000 and still make a profit.” Photograph: Artur Widak/NurPhoto via Getty Images
Whoever forms the next government will have to deal with Ireland’s utterly dysfunctional housing sector and start connecting the dots between where people live, how they get around and the global climate emergency. Because based on current trends, we’re locking ourselves into widespread car dependency, long-distance commuting and growing traffic congestion in our cities and towns.
The crisis is at its most acute in and around Dublin, where the only new homes people can afford to buy are all located in commuter counties outside the M50, while all that’s being developed within the built-up area are buy-to-let apartments, student housing and co-living schemes. And this perverse outcome is being promoted, wittingly or otherwise, by the outgoing Fine Gael-led Government.
As things stand, it is impossible for developers to build apartments for sale in Dublin for less than €400,000 and still make a profit – VAT, at 13.5 per cent, is levied on the sale price, plus stamp duty, at 2 per cent, on top of development contributions and exorbitant charges for water connections levied by the Dublin local authorities. Not to mention the high cost of development land in the city.
This has the effect of “consigning purchasers to outside the M50 and renters within”, according to one developer. Lower standards for buy-to-let schemes that permit more studio and one-bedroom apartments with less storage, fewer lifts and car-parking spaces are acting as an inbuilt incentive for these slimmed-down developments, which are now being snapped up by foreign investment funds.
In the case of co-living schemes, which are also being facilitated by the Government, there’s no car-parking requirements at all if they’re close to public transport. Minister for Housing and Planning Eoghan Murphy rather unwisely compared co-living to “trendy boutique hotels”, catering for young mobile techies who appreciate the idea of being part of a “community” of like-minded people.
Residents would have their own rooms of 16.5sq m – admittedly, larger than a standard bedroom – supplemented by communal kitchens and livingrooms. What’s driving it, however, is that developers can effectively double their returns by providing four co-living units, each renting for €1,200 per month, in the same space that would be taken up by a two-bedroom apartment.
But “sustainable communities” cannot be created by renters alone, whether in co-living schemes or built-to-let apartment blocks. Given the still-inadequate protection of tenants under Irish law, compared with elsewhere in Europe, renting continues to be seen as a transient phase – even though so many people are trapped in it – so an element of owner-occupation is critical to making communities sustainable.
Significantly, many of the 10,000-plus people – including more than 3,000 children – who are currently homeless have been evicted from rental accommodation. Yet under the Government’s Rebuilding Ireland programme, most of the social housing provided so far has been rented from private landlords under schemes such as housing assistance payment (HAP) that cost the State €775 million last year.
Reliance on the private sector to provide social housing reached its zenith lately with a deal under which Glenveagh Properties pre-sold an entire scheme of 90 apartments in Dundrum to Realis, a German fund, for €55 million – on the basis that Dún Laoghaire-Rathdown County Council will rent the lot at full market value for social housing, with the gap between that and what tenants will pay made up by public subsidy.
Then there’s the Airbnb plague, which has removed more than 5,000 “entire homes” from Dublin’s housing stock – houses and apartments where people used to live that are now being more profitably short-let to tourists. And the regulations introduced by Eoghan Murphy last July are so weak, cumbersome and ineffective that they have had no discernible impact in the quest to recover lost housing stock.
Murphy’s almost indiscriminate planning guidelines to promote tall buildings – ostensibly intended to achieve greater urban density – have also backfired, with most developers using them to lever permission for high-rise hotels and office blocks. All the guidelines have done is to increase the already-inflated price of development land, based on new calculations on what could be built on any given site.
Meanwhile, private-sector rents have soared to record levels, leaving many tenants with less and less disposable income for everything else in life as well as depriving them of any realistic opportunity to save up for a deposit to purchase a home of their own. Even if they could raise the money, Central Bank rules designed to prevent over-lending by the banks exclude them from the market, especially in Dublin.
Land Development Agency
Neither can renters look forward to any relief from the Land Development Agency, which is to take charge of publicly-owned land and allocate it for development. Under its remit, 50 per cent of this land would go for “market housing”, with the balance divided between social and affordable homes. But if every site ends up in the hands of developers, rather than approved housing bodies, the prospects are grim.
The outgoing Government’s national spatial strategy, Project Ireland 2040, emphasises the need to consolidate existing built-up areas, but it effectively gives a free pass to bungalow-builders in the countryside.
And by endorsing major road schemes, such as the so-called Galway bypass and a motorway linking Cork with Limerick, ministers failed to understand that these would serve as the sinews for yet more sprawl.
High-speed rail between Cork and Limerick would be a much better solution; after all, there’s already talk of a high-speed rail line linking Belfast. Dublin and Cork. As for Galway, instead of spending €650 million on a big new road that would only induce yet more traffic, it should invest in a light-rail line or dedicated busway running from Barna through Knocknacarra, Salthill and the city centre to Doughiska in the east.
There can be no doubt that current housing policies have benefited real estate investment trusts, landlords in receipt of payments under the HAP scheme, co-living and build-to-let developers, cuckoo funds, Airbnb operators and other monied interests. Those in need of housing have been left on the margins, and only a determined programme of building affordable homes offers any hope of relieving their plight.
Frank McDonald is a former Environment Editor of The Irish Times