The State must intervene in housing market

Rory Hearne: The Irish housing system is in an unprecedented crisis. This is visible in escalating rents, ‘economic’ evictions, mortgage arrears, repossessions, waiting lists, substandard accommodation and the growing numbers of those unable to buy a home.

It is a national emergency and without a significant shift in policy the crisis will only worsen. At the current rate of families becoming homeless there will be more than 6,000 children in emergency accommodation by 2017. This is deeply traumatic for children and their families. It is arguably a breach of the UN Convention on the Rights of the Child.



The current crisis results from decades of housing policy that followed the private ‘free-market’ approach which treated housing primarily as a commodity and speculative investment asset.
This continues today with the crisis being analysed as one of ‘demand outstripping supply’ and discussion focused on how to incentivise the property industry to build more housing stock.

However, during the boom there was plenty of supply and still prices rose to unaffordable and unsustainable levels contributing to the crash. This is because price is determined not simply by demand and supply but also by profit seeking, costs of investment, and government regulation.
Developers can and do sit for decades on land or leave property derelict until they consider it profitable to commence building. Right now there is 2,233 hectares of undeveloped zoned land in the wider Dublin region which could provide 102,500 new housing units.

The basic problem with a free market approach to housing is that the private market only caters for a ‘demand’ that can provide a profit. If you can’t provide a sufficient profit, as is the case with many low income households, then you don’t count. The current crisis is not just a once-off market failure - it is the modus operandi of the private housing market. Predominantly free market or neoliberal housing systems like ours are characterised by persistent boom and busts, affordability problems, and exclusion.

That is why the state must intervene to protect people from the market. It could do this in two ways which would fundamentally address the crisis. Firstly, there is an immediate need for rent certainty (where rents cannot be increased beyond a certain index such as inflation) and improved tenant protections in the private rented sector. Rent regulation exists in many European countries (who incidentally have plenty of ‘supply’).

There is no constitutional impediment to such a measure, as Article 43.2.1 of Bhunreacht na hEireann states that the right of private ownership “ought to be regulated by the principles of social justice” and the State may, “delimit by law” these rights for “the common good”. The introduction of rent certainty, as with other measures, is clearly a political choice and the Constitution should not be hidden behind as an excuse for inaction.

Secondly, a State Homes and Housing Agency should be formed to deliver a historic social, rental and affordable house building and refurbishment programme of well-planned, sustainable, and mixed communities. This would be a partnership between local authorities, government departments, housing associations, NAMA and the Housing Finance Agency. It would have access to land, finance and institutional expertise. It should have €1.5bn of annual capital funding from the state. The current allocation of €500 million to new social housing building in the Capital Investment Plan is inadequate as it will only provide 1400 new units nationally next year with fewer than 300 of those in Dublin City.

The Agency could build on the 30 hectares of land that Dublin City Council is currently being forced to sell off through a Public Private Partnership because it does not have the finances to build on it itself. It could redirect into social use the €4.5billion NAMA plans to invest with various vulture funds on high end office and apartment developments. A Housing and Homes Agency could draw on finance from the European Investment Bank. It could also compulsory purchase vacant and derelict buildings and take over buy-to-lets in arrears and convert them to low cost rental housing.

As it currently stands the 20,000 units the government has outlined NAMA will provide in order to address supply will not be social units but are to be delivered on a ‘commercial basis’ and are more likely to be sold to international investment funds rather than as ‘starter homes’. Indeed NAMA’s promotion of and involvement with global wealth funds in the Irish property market must be questioned as to how it is benefitting the Irish housing system. It is facilitating the trend where housing is increasingly becoming a global investment asset for the wealthy 1per cent.

Problems in our housing system are affecting economic competitiveness, contributing to rising deprivation, inequality and poverty, and lowering educational and employment prospects of those affected. The 2008 crash should be a stark warning that a rising property market is not necessarily a ‘good thing’. The housing system will only be fixed when policy treats housing in the first instance as a home, a social necessity and a human right, not a speculative investment asset or commodity.

Dr Rory Hearne is Senior Policy Analyst at TASC. Follow him on Twitter @RoryHearne

This article originally appeared in The Irish Times on Thursday October 22nd 2015

Dr Rory Hearne     @RoryHearne

Rory Hearne is a postdoctoral researcher in the Maynooth University Social Sciences Institute (MUSSI), working on the Re-Invest Participatory Action Human Rights and Capability project in relation to social investment with a particular focus on homelessness and water infrastructure.

He has a PhD in political and economic geography from Trinity College Dublin. He is also a former policy analyst with TASC and has worked as a policy researcher and community development worker with Barnardos on social housing regeneration and human rights in Dublin's inner city. He was lecturer in human geography in the Department of Geography, Maynooth University and has researched and published extensively in the areas of housing and social housing, political economy, human rights, social movements, and politics.

He is author of Public Private Partnerships in Ireland (2011) and co-author of Cherishing All Equally (2016). He is also a regular economic and social analyst on various national media.