Cost-rental and social housing strategies are the way to kill dependence on private sector
House prices and rents in Ireland are unaffordable. This need not be the case. The Government has the opportunity with its new housing strategy – due this week – to provide hope for the many thousands desperate to find an affordable home. High house prices and rents are bad for the economy.
The starting point for the new housing strategy must be recognition of the need for a radical departure from an undue dependence on the private sector over recent decades. In particular, this would require that Irish housing policy would be underpinned by a new philosophy which provides a central role for the Government and key statutory bodies in the supply of housing.
It would mean that the Housing Agency, local authorities, housing associations, co-operatives and the Land Development Agency would become major providers of publicly owned social housing as well as self-financing cost-rental homes for those above the income threshold for social housing. The ensuing competition would reduce house prices and rents. In addition to increasing supply in this way, any measures which increase demand and hence house prices must be avoided.
The new housing strategy should be based on the premise that housing is a fundamental human right. This right is recognised in a number of international human right treaties which Ireland has ratified. In so doing, the Government committed itself to the “progressive realisation” of the right to housing and to ensuring that it would be enjoyed by every person in the State “without discrimination of any kind”.
The purchase by companies or institutional purchasers of large blocks of apartments for rent crowds out other purchasers and creates a further monopoly-type situation
The right to housing would not be fulfilled merely by the provision of basic shelter but rather requires that housing be affordable, secure and appropriate to need. Housing for All should thus recognise that housing is a right.
Commoditisation of homes
Across the world, housing has increasingly come to be treated as a commodity and an investment opportunity rather than a basic social good. The former UN Special Rapporteur on the right to housing, Leilani Farha, clearly set out how this global financialisation of housing posed a significant threat to affordability and the realisation of the right to housing. In recent decades, such financialisation has been all too prominent a feature of housing in Ireland with a range of policies enabling or at least permitting its continuance.
Of particular concern has to be the role which large-scale, institutional landlords now play in the Irish housing system. In Dublin, for example, multinational landlords acquired considerable numbers of apartments, free of capital gains tax, during the downturn and now charge rents far beyond the means of most families and individuals. Such landlords have, in effect, an anti-competitive monopoly in much of Dublin, which allows them to charge such high rents, often to local authorities on a long-term basis. In addition, the purchase by companies or institutional purchasers of large blocks of apartments for rent crowds out other purchasers and creates a further monopoly-type situation. It is imperative that the new housing strategy includes a commitment to taxation measures and the adjustment of planning regulations to counter such practices.
The new housing strategy also needs to commit to measures, including taxation, to ensure that development land, vacant sites and vacant dwellings can no longer be hoarded in anticipation of future capital gains. The proposals in the Kenny Report are as relevant now as they were in 1973.
The new strategy should set out plans for a large-scale increase in new social housing, provided through statutory and voluntary sector agencies. Irish housing policy for the future needs to be guided by the principle that long-term social housing need will be met by housing that is truly social.
State rental cost
As well as setting these ambitious targets, it is vital that the strategy should state clearly the intention to move away, as soon as is feasible, from the policy of using rent supplementation in the private rental sector as a means of responding to social housing need. That policy – another example of financialisation – has fuelled increases in rents in the private sector, left ever-increasing numbers of people who are eligible for social housing in a situation of housing insecurity and resulted in the State now spending almost €1 billion per annum on various rent supplementation schemes, without a single unit being added to the stock of publicly owned housing.
An increase in the supply of social housing must include significant additional provision for groups with specialised housing needs, including people with disabilities, Travellers and refugees. The forthcoming national housing strategy will be the first since Ireland ratified the UN Convention on the Rights of Persons with Disabilities. This obliges parties to recognise the right of people with a disability to adequate housing, including ensuring their “access . . . to public housing programmes”.
This new publicly owned form of housing would become a further competitor with the private rental system, thereby mediating rents
The recent Disability Capacity Review showed clearly that fulfilling these obligations would require a commitment of additional resources. There is a significant backlog in provision, evidenced in the number of people with physical or intellectual disabilities who are resident in congregated settings, or who live in the care of their parents or siblings, because of the lack of suitable housing options and care support to enable independent living.
As a further key contributor to supply, the publicly provided cost-rental model of housing, already commenced, should be expanded considerably. Cost-rental housing, as the name suggests, would be self-financing with the rental income covering the costs. If supplied on a significant scale, this new publicly owned form of housing would become a further competitor with the private rental system, thereby mediating rents. This would also help to dampen down house prices, since households would have the option of postponing purchase for a time or indefinitely.