How the Government should tackle the housing crisis
We need rent control and a larger plan to deliver social housing
‘Nama could also play a major role in delivering social housing but instead is being directed to pursue a commercial mandate aimed at achieving “a maximum return” to the State’
The draft Programme for Partnership signals that the new Government will give urgently needed prioritisation to the housing and homelessness crisis. Positive measures include a commitment to “significantly” increase the delivery of social housing units, raising the level of rent supplement, developing “cost rental” housing, addressing mortgage arrears and progressing the right to housing in the Constitution.
Unfortunately, it also focuses on reviving the failed developer-led property market approach to housing. The private housing market in Ireland is not just temporarily dysfunctional but repeatedly produces crises and cannot be depended upon to provide affordable housing.
In the private rental sector, the two- year rent freeze provides a breathing space for some tenants but has not stopped rents rising further. Renting privately does not provide families and children with a secure and affordable family home, where they can settle down, go to the same school, or create a community.
This sector now houses almost a fifth of all households in the State but remains a cause of homelessness due to increasingly unaffordable rents. This situation is worsening as banks move to repossess, and vulture funds seek to buy and re-sell, the 30,000 buy-to-let rental properties in arrears.
Raising the rent supplement and Housing Assistance Payment by 15 per cent will provide much needed help to the 100,000 private tenant households reliant on these payments. But the average rent for a two-bedroomed apartment in Dublin is between €150 and €400 per month higher than the new rent supplement level available for a couple or lone parent with a child. Families will have to cover the gap (possibly leading to further poverty) or face homelessness.
That is why rent control should be introduced. Rents could be set by local authorities linked to inflation, standards or a maximum increase (eg 10 to 15 per cent) over four years. This would avoid the currently necessary rises in rent supplement chasing escalating rents. Greater security of tenure should be provided through longer leases (say 10 to 20 years) and removing clauses allowing landlords to evict tenants to sell their property.
The Supreme Court has already ruled in relation to Part V of the Planning and Development Act, 2000 (which required 20 per cent of private developments for social housing), that private property rights can be delimited by measures (such as rent control and greater tenant security) aimed at meeting “the principles of social justice” and “the common good”.
In relation to the 35,000 new social housing units in the draft, 23,000 of these are to come from private-financed, “off-balance sheet” mechanisms such as public private partnerships. But the Department of Environment has already been unable to find a viable proposal for these mechanisms.
State relianceThis leaves the “significant” increase in social housing reliant on State supports for private rental tenants such as the Housing Assistance Payment (which has not met delivery targets due to lack of private rental availability and should not be classified as social housing), and on exchequer-funded new builds by local authorities and housing associations.
But only 12,000 units, less than 2,500 a year, are planned by 2020 through new local authority builds. This is well below the estimated requirement of 10,000 new permanent social housing units per annum (based on the existing waiting list of 90,000 households and a third of all new households which will be unable to afford to meet their housing needs in the private market).
To reach that target, the housing capital budget needs to be increased from its current level of €500 million to €2 billion a year. Local authorities could increase their provision further if they were allowed to borrow from the Housing Finance Agency.
Nama could also play a major role in delivering social housing but instead is being directed to pursue a commercial mandate aimed at achieving “a maximum return” to the State. This means the 20,000 housing units it will provide by 2020 will not be affordable and are likely to be sold to vulture funds and investors. Nama should be made to prioritise its social mandate and provide 50 per cent of these units as social housing.
The only way to guarantee social and affordable housing is through a large programme of direct delivery funded by the State. Public housing can be built a third cheaper than private developer-financed housing due to lower costs of finance, reduced land costs (local authorities have huge land banks) and less profit taking. It will also reduce (and be a better use of) the current funding going to private landlords through various State supports for private tenants (now equivalent to the entire social housing capital budget).
Large-scale State-financed delivery can also provide the contracted builders and construction workers secure and quality employment. It can ensure housing is provided to the highest standards (to avoid future Priory Halls) and meet the sustainability needs of climate change.
EU flexibilityA New Housing and Homes Agency should be set up to lead and oversee this €2 billion a year State-funded social housing building and refurbishment programme that would provide affordable rental housing to a much wider range of income groups, including low and middle income workers, and include cost rental (affordable rental for low and middle income households charged at cost, not market rate, by social housing providers), co-operative and community land trust ownership models. Ireland should seek flexibility in the EU fiscal rules to enable social investment for housing.
Now is the time for innovation, ethical values and ambition in housing policy. The State can, if the will exists, guarantee affordable, secure, high-quality housing as a home and a human right for all our citizens.
Dr Rory Hearne is a senior policy analyst with independent progressive think tank Tasc