Editor’s note: We’re very pleased that political economy lecturer Andy Storey will be writing for Dublin Inquirer every second week about economic issues facing Ireland’s capital city.
Dubliners are facing interlocking crises of homelessness, emergency accommodation, home repossessions and rising house and apartment prices.
Irish house prices rose 15.8 percent in the year ending May 2015, stoking fears of a new price bubble. Rising prices are primarily a Dublin phenomenon, and they feed into rising rental costs. The annual average cost of renting a home in Dublin shot up by a staggering €1,200 – 7 percent for houses, 10.9 percent for apartments – during the course of 2014, four times the national rate of increase.
What this means in human terms has been described by June Tinsley of Barnardos: in February there were 803 children living in emergency accommodation throughout Ireland, 40 percent up on June 2014 (when figures started being compiled). This is typically dormitory-style accommodation in overcrowded hostels or in B & Bs that require families to leave during the day. Often, space is limited, as are facilities to cook and do laundry or homework. (These are conditions familiar to those who know how direct provision for asylum-seekers works).
To compound the problem of rising/unaffordable rents, Tinsley points out that rent supplements (cut back in recent years) are not covering rental costs, and that many landlords refuse to accept tenants with those supplements. Amongst other proposals, Tinsley calls for the introduction of rent controls.
Many economists, however, oppose rent controls. For example, former Economic and Social Research Institute (ESRI) professor John Fitzgerald claims that rent controls could drive landlords out of the market. But it is equally obvious that there are serious problems, in parts of the sector at least, arising from too little regulation, with a recent report finding that 85 percent of flats in Dublin were of sub-standard quality. In the words of councillor Mannix Flynn, “rat-infested dwellings, complete breaches of fire regulations, no natural light – these things are common”.
Given such problems, why rely so much on the private rented sector? Why not have government build greatly increased amounts of social housing and make it available for purchase or rent at reasonable cost?
This is happening to a very small extent – the government plans to facilitate the construction of 1,700 social housing units by 2017. But, as this will only provide houses for 2 percent of the roughly 100,000 people now on the social housing waiting list, homelessness campaigner Peter McVerry has described it as “insignificant”. That waiting list will likely grow, as the rate of home repossession orders granted by the courts rose by over 500 percent in the first three months of 2015 compared to the same period last year, with Dublin once again topping the table.
So why does the state not step up its building programme? Part of the answer is that the government cannot increase public spending if that breaches certain EU deficit and debt limits – the scope for any large-scale programme of direct investment is thus constrained, especially if the government prioritises tax cuts instead. Another part of the answer is that rising prices for private property boost the balance sheets of developers, banks and NAMA – and allow the government to claim that the economic recovery is secure.
This latter factor also probably lies behind the lack of decisive action regarding the high number of vacant houses and apartments in Dublin. The owners of these could be forced to make them available for sale or rent through ‘use them or lose them’ rules, but while this would clearly be socially beneficial, it would be anathema to the private interests that current policy largely caters to.
Some citizens are, however, willing to take action on the question of vacant properties. In Dublin, 30 people made their own homes by occupying unused buildings at a site in Grangegorman. These are mainly young people who could not afford private rents. A community garden and kitchen was established, providing services to residents and non-residents alike.
Unfortunately, a court order has been granted to allow a private developer take control of the site and bring it back into the for-profit system that is so plainly failing us. There could be few better examples of all that is wrong with the current approach to housing.
Good points Andy. while the issue is more visible on Dublin streets, the same process is happening in the commuter belt – but some people facing homelessness go to Dublin because of the perceived possibility of getting something in the city. We also have rising rents, repossessions, total absence of social housing, three generations living in very overcrowded housing. The promised billions have not materialised – yet – and a big chunk is going to private developers. It seems to me that at a time when Denis O’Brien is being exposed as a big beneficiary of the crash, the question of paying his written-off debts (and those of the other speculators) should be raised: specifically, repudiation of the Anglo-IBRC debt and non-issuing of the bonds currently being held in the Central Bank. A town-and-country link up?