Why Government response to housing crisis has failed

It defies logic to expect private rental sector to deliver the required number of units

The housing crisis is a social emergency and poses major risks to the economy. However, the Government's policy response, Rebuilding Ireland, has not only been inadequate, but has worsened the crisis.

The core failing is the over-reliance on a private market approach to housing provision. Only 15 per cent of the 134,000 “new” social housing outlined in Rebuilding Ireland will be built by local authorities and housing associations. The vast majority are meant to come from the private sector.

But the private housing market in Ireland is broken. And it defies logic to expect the private rental sector to deliver such a vast number of housing units given insufficient supply and the lack of long-term security for tenants. It is also not cost effective as State subsidies have to chase ever-rising rents. The over-reliance worsens the wider housing crisis by increasing demand and reducing supply in the private rental sector.

Rebuilding Ireland failed to reach its own 2016 target of 2,200 new social houses with just 650 units built. Only 175 of the 1,000 promised Rapid build social housing, which was supposed to provide housing to families in emergency accommodation, will be completed by the end of this year.


In order for Public Private Partnerships (PPPs) to deliver social and private housing the sale of up to 730 State-owned sites to developers are proposed. Thirty hectares of state-owned land is currently being advertised to "the market" by Dublin City Council in "three new development opportunities". Of the 1,300 housing units planned for this land just 30 per cent (390) will be social housing. This approach is more expensive than public provision and has major downside risks, visible in the collapse of PPPs in 2008. Private finance will dictate the delivery timescales and mix of affordable and private housing. It will inevitably entail a large transfer of public wealth to private investors.


These policies reflect an underlying obsession within Irish housing and economic policy of pursuing, despite the evidence, the financialisation of housing (where it is treated primarily as a commodity investment).

This is also visible in Government attempts to incentivise supply by increasing the “viability” (ie, profitability) of house-building through the apartment size reduction, tax incentives, and infrastructure funding. But this has worsened the crisis by facilitating the post-2013 rent spiral through delayed action on rent caps and helping fuel the latest house price bubble through “demand-led” policies such as the help-to-buy scheme and encouraging the relaxation in mortgage lending rules.

Yet there has been no major increase in private sector housing supply. Instead, vulture and global equity funds have bought up rental properties and land and invested in speculative office building, not housing. Some 18,878 houses were bought as an investment (by non-occupiers) in 2015, up from just 5,194 in 2010. Real Estate Investment Trusts (REITs) are opening up Irish rental housing as a financial investment asset for global capital. Nama has admitted that much of the land it has sold has been hoarded, as developers and vultures wait for rising land and house prices.

Wealth transferred

The result will be growing inequality as wealth is transferred from renters and the Irish State to global equity funds. Countries with successful housing systems such as Denmark and Austria show that only the state can guarantee a sufficient supply of affordable housing. Therefore, the Irish Government must take dramatic and radical action to rapidly increase the direct supply of affordable and social housing.

As part of a Roosevelt-like "New Deal" to address the housing crisis in Ireland there should be a new semi-State, not-for-profit, Irish Affordable Homes Company set up to build between 10 and 30,000 affordable rental homes per annum for a mix of household incomes. Local authorities should be directed and funded to provide tens of thousands of houses on their vacant lands. The majority of that housing should be social, affordable and co-operative, not private market. This would reduce the huge cost of the state rental subsidy currently going to private landlords.

Good quality permanent social housing can be built rapidly within six to eight months. The building of such homes should be prioritised rather than unsuitable emergency accommodation that has severely detrimental impacts on children. Any vacant site tax must be effective to stop hoarding. A vacant property tax and a non-resident speculation tax could help. Increased protections for tenants from unaffordable rents and eviction are required.

We do not lack solutions but the political will to implement effective solutions and a willingness to challenge the over-influence of property industry and investor interests on housing policy.

Dr Rory Hearne is a Post-Doctoral Researcher in the Maynooth University Social Sciences Institute