By Eoin Ryan
The ‘Housing For All’ plan is a major support for homeowners in Ireland, but does little to prevent surging rental costs across Ireland.
The average national monthly rent was €825 in 2013, and €1,148 in Dublin, making it a valid option to live in the city for work. The rents were much more affordable. Now the monthly rent is €1,414 and in Dublin 1,948. Wages have not even came close to duplicating this 40% increase in the last 8 years
Rory Hearne, a Maynooth Lecturer in the Department of Applied Social Studies and respected housing crisis, believes these issues could have been prevented years ago.
After the 2008 crash, “As the economy began to recover, and rents and house prices started rising, the Government was called on to implement rent controls and to build social and affordable homes. But it refused over and over to do this,” said Rory Hearne in an article for The Journal, “This is why we have the crisis.”
Vulture funds were allowed to thrive as the government sold housing units to private landowners to be rented out at growing prices, leading to the eventual homelessness and housing crisis in Ireland.
Currently, Fianna Fail and Fianna Gael are seen as the party for homeowners and landowners as the majority of current policies benefit these groups. Another point to note in this regard is that the latest Register of Members’ Interests shows 25 percent of current TDs have investment properties. This means a quarter of the people ruling Ireland have a vested interest in keeping rent prices high and improving their own profits in the process.
What the government does not make clear to the public is that they want high rents to support these landowners. The Government has prioritised inflating house prices and rents, in order to attract in the global property investment funds and to recover the profitability and balance sheets of the banks. If the TD’s openly admitted to doing this, however, they would lose a large chunk of their voters who are renting or currently searching for affordable housing.
Foreign landowners are well aware of this as The Investor’s Funds have said publicly that the risks to their profits include “Possible changes to the government’s housing policy to a more interventionist approach aimed at improving housing affordability.” For years, the government has made sure these investors were happy and able to profit by selling or renting housing units at inflated prices in the belief this benefitted and still benefits Ireland.
Leo Varadkar said that “one person’s rent is another person’s income” as confirmation he supports landowners over those struggling to find accommodation. This comment does not take into account the thousands of younger people locked out of the property market by rent prices taking up most of their salary. It is an attitude that benefits the investors with little regard to what rising rents means for those struggling to make ends meet.
Sinn Fein has criticised these policies, saying the Housing For ALL would inflate prices even further and condemned the current government for the low amounts of non-market affordable homes planned for construction.
“Reckless government side policies like Help to Buy and the Shared Equity Loan scheme will inflate prices further unless they are scrapped.” Sinn Fein TD Darren O’ Rourke says.
“We cannot continue to rely on the market alone to supply most of our housing. This dysfunctional housing system can only be fixed by the government with the political will to make the changes required,” O’Rourke continued.
If this continues, cities such as Dublin and Cork will be in a similar situation to London right as the housing crisis in England is much worse compared to ours. It is almost possible to rent a medium sized apartment on average wages in London, with the only affordable living spaces being one room apartments or studio properties. Suburbs are the only affordable place for citizens to work in the city and live in reasonably sized accommodation.
There is now €1bn a year for social housing via the Housing Assistance Payment (HAP) after a further €168 million was added, with 66,000 households using these payments. Comparatively, 2.5 billion made available to supply 9,000 new-build social housing units, and over 4,000 affordable homes.
Despite HAP supplying for more households, this is temporary accommodation that will eventually lead the government to pay more to landowners than social or affordable housing would ever cost. The amount of housing available for HAP is also an issue as only 5.5% of rental accommodation is within HAP limits According to a study by the Simon Communities of Ireland in 2020.
Our current crisis was foreseen all the way back in 1973 with the Kenny Report , which recommended the State adopt a system of “active land management”. This same report recommended giving local authorities the power to buy development land, using compulsory purchase orders. The 1973 report warned that the free market system had the potential to continually drive up land values, which is what we are witnessing at this very moment.
One of the most widely recognised solutions to this is provided by Ó Cualann Co. Housing. This is a not-for-profit provider of housing which is the only body in the country to actually build affordable homes in the last few years. These homes would then be for sale at approximately €250,000 per unit. Local authorities and ‘not-for-profit’ housing providers like Ó Cualann build the units themselves on state land. The housing provider then recycles the money made after selling the house to buy up more units and repeat the process.
The State pays a maximum of €50,000 per unit towards the cost of each house If the land is subsidised or if a site services fund is made available. The total maximum cost to the state is €0.5 billion per year, again easily managed from the exchequer. And because the State recoups €50,000 per unit in taxes from these homes the actual net cost is zero.
Sadly, this has not been considered by the government as of yet due to their current policy benefitting landlords and homeowners. Chances are no big changes towards rent prices will be made to the misfortune of every Irish citizen renting or struggling to find an affordable place to call home. The ‘Housing for All’ plan not only fails to deal with surging rent prices, but confirms that the current government will not prioritise supporting tenants for the foreseeable future.