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Kurt Wallander, the Swedish detective from the world-famous crime novels, often says at the outset of a case that sometimes the simplest explanation is correct.
As we try to understand the spectacular failure of the government to address the crisis in the private-rental sector, perhaps the time has come to contemplate the possibility that they simply don’t want to solve it.
Former Housing Minister Simon Coveney’s flurry of activity and policy reform in his brief tenure certainly lent an air of urgency. But don’t be fooled. Coveney was much like an inverted version of the proverbial duck: frantically beating his wings and quacking, but under the surface nothing is happening.
If we look at the major policy initiatives over the last two years, it is hard to draw any other conclusion. A national rental strategy was published in December 2016 that promised to deal once and for all with some of the major issues in our poorly regulated rental sectors.
And yet perhaps the most important issue in the sector, security of tenure, was almost completely ignored.
Civil society organisations, policy experts and homelessness charities all pointed out in their submissions during the consultation process that security of tenure is at the heart of the homelessness crisis and, moreover, also has important ramifications for rent certainty and affordability.
(Never mind that feeling secure in your home is a basic need which no human being should be deprived of.)
But the only real change brought about by the rental strategy was the extension of the standard tenancy term, known as a Part IV tenancy, from four to six years.
Given the myriad of reasons landlords can use to end a tenancy early – sale of property, family use and refurbishment chief among them – six years of insecure tenancy is hardly any better than four.
Last week’s Housing Summit was followed by the announcement of a number of new measures. Although full details have yet to emerge, it appears that the only change for tenants is that landlords will be required to inform the Residential Tenancies Board (RTB) when they kick a tenant out.
You will still be evicted, but the RTB will know you’re being evicted. Hardly much of an improvement.
Any attempt to regulate rents requires that tenants enjoy security of tenure: without it landlords can evict to dodge the constraints of rent regulation.
This brings us to the second key aspect of the government’s rental strategy: the introduction of Rent Pressure Zones. The capping of annual rent increases at 4 percent within designated RPZs does represent an extremely important development.
It signals a willingness to think beyond the logic of the market and to challenge the profiteering of landlords, both of which were previously policy no-go zones.
However, there is a glaring flaw at the heart of the RPZ legislation: no consideration seems to have been given to the enforcement and implementation of the 4 percent caps.
It is too early to tell the full extent to which landlords are ignoring the new rule, but this year’s first two quarterly reports from Daft.ie do not appear to show much of a slowdown in rent increases.
Threshold, the housing charity, noted in its recent pre-budget submission that it has encountered cases of landlords using “refurbishment” as a means to evict tenants and jack up rents.
Surely, you might protest, it is not the government’s fault if landlords don’t comply with what is otherwise sound policy? The reality, however, is that there was plenty of evidence of a culture of non-compliance among some landlords.
Dublin City Council data shows that that 78 percent of private-rental properties inspected under one programme between 2012 and 2016 did not meet the basic minimum legal standards for rental accommodation.
As an aside, imagine if 78 percent of cars didn’t meet safety standards or 78 percent of pharmaceutical drugs failed quality-control tests. These would constitute national scandals, but somehow when it comes to tenants the standards always seem to slip.
So we already had ample evidence that any policy for the rental sector is only as good as the implementation and enforcement strategy accompanying it.
Supply is the other big issue in the sector. Successive governments have talked up the idea of cost-rental housing. This is a model used in countries like Austria and Denmark which are widely recognised as having the most sustainable, affordable and highest quality rental sectors in the world.
The idea is not very complicated: not-for-profit housing associations make use of a mix of public and private borrowing to provide housing and set rent levels which are sufficient to cover the cost of provision, financing and property management and maintenance.
The cost-rental model produces high-quality housing that pays for itself and gives tenants affordability and security. Best of all, it allows government to control the supply of housing without undue burden placed on the exchequer.
Former-former Housing Minister Alan Kelly’s Social Housing Strategy 2020 and Coveney’s more recent rental strategy both made reference to the potential of cost-rental housing. Experts, housing providers, politicians, homeless charities and civil society groups have all come out in enthusiastic support for it.
And yet we are approaching four years of complete chaos in the rental sector and not a single cost-rental unit has been built.
To sum up: the government published a strategy for the rental sector that ignored security of tenure; created a policy for rent regulation but forgot to think about how it would be implemented; and discovered the idea of cost-rental housing, recognised that it had a key role to play in the supply of housing for renters, but then didn’t actually build any cost rental housing. Why?
The simplest explanation, and to my mind the most convincing, is that they have no intention of resolving the crisis. House prices are rising and the banks’ balance sheets are recovering; from that vantage point all the indicators are positive and there is no housing crisis.
If this is the case, all of us, and particularly renters, need to recognise that this issue is no longer a policy issue but a political one. The debate needs to shift from “What can we do about housing?” to “What can we do about this government?”
Really good article Mick. This morning we hear that there are more ‘new measures coming’ from the minister and his offices. These piecemeal measures will tweak at the edges but provide no longer term commitment to the right to housing as you indicate. This government does not want to solve the housing crisis, not because they are not pulling the right levers of policy but because the ideas they have are grounded in the supremacy of private property above all.
Neither this nor any previous government (in the last decades) has shown any interest in affordable housing, or a decent rental situation. There’s no political constituency to make housing cheaper, to devalue land or the existing housing stock. It is NOT a popular idea.
The big issue isn’t with politicians, it’s with the electorate and the vested interests (in that order). The vast majority of Irish households and voters want their house to be worth more, and screw the social consequences of that. The politicians respond to that wish, not to the minority wish of non-houseowners. Until the political constituency gets big enough and powerful enough there’ll be no reaction from government – not a real one anyway.
Good article – reinforced by the announcement that Eoin Murphy thinks bedsits are the answer. FG-FF policy is a continuation of priority for the bank bailout and recovery of developer profitability. Significant numbers of cost-rental units, financed by public money or borrowings at low interest, would undermine private rental rates, rent profitability and the ability of buy-to-let landlords to pay their mortgages. This would, in turn, reduce overall private construction (developers today claim construction is ‘not viable’ if prices go below about €300k; why would people take on such mortgages if they could rent cheaply?); and maintain downward pressure on bank profits because of persistent non-performing loans and lack of profitable domestic investment. From a FG-FF perspective, the housing crisis is only a crisis for the poor; and social housing is residual: ‘poor housing for the poor’.
It is certainly true that many sectors in Irish society benefit from rising house prices: banks, property developers, landlords, estate agents, and as well homeowners. However, the political dynamics of this are changing. There are now over 800,000 tenants and private renting represents close to the majority in some parts of Dublin. Tenants are still a minority but as we know from history minorities can bring about change through collective political action. There are also strong reasons why a well regulated rental sector will benefit other groups. It brings down house prices, which is good for people who want to buy; by reducing housing costs it reduces pressure on wage growth which is especially good for export industry; and it makes Ireland an attractive place to live and that is good for attracting skilled workers. These are some of the reasons why the tech sector, for example, have been lobbying government on this issue.
To say that the Government doesn’t want to fix it is a rather sweeping statement. More than likely, it is Hanlon’s razor at work – a stupidity rather than malice. Policies where made (rightly or wrongly) but for something to do with housing it will take at least a year plus for it to filter through and till then we will be stuck with the horrible sight of increasing homelessness and struggling renters.
It seems that it is a supply side issue at all levels which is caused by a market failure. This can only be counteracted by the Government stepping in to build. This can be in whatever form however building homes/apartments is required.
As for the banks it does help their balance sheets however to an extent it will start to hurt them as they can’t do new mortgage business at a sustainable level. Additionally, most Irish banks still have large volumes of non-performing loans despite the price rises.
Great article Mick – of course the government currently has no interest whatsoever in solving the crisis. Why would they? As you say it is a crisis of the poor who FG has factored do NOT vote.
Since the inception of the State successive governments have refused to build social housing. The burden of providing social housing and rental properties has been left to the market and developers and has led to a widening gap in social inequality.
Why is that most other developed nations in Europe have come to the conclusion that the Government MUST step in and have a government-led body providing social housing and controlling the rental sector BUT Ireland?
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