Opinion

State home-building scheme only way to tackle crisis

Housing crisis: Time ripe for cost-rental plan in the interests of all our Republic’s citizens

If the Government will not do the right thing, the ball is back in our court – those affected by the crisis and those in solidarity with them. Photograph: Getty Images

Nessa Ní Chasaide
Mon Dec 4 2017 - 01:00

Budget 2018 confirmed the continuation of the Government’s failing housing strategy: that of supporting private developers and landlords as the main providers of housing.

How so?

  • Significant funding in Budget 2018 will not go toward new builds but be channeled to subsidising escalating rents to private landlords through the Housing Assistance Payment.
  • Where the Government is establishing loan funds to encourage developers to build, there is no definition of what an "affordable" home should cost. This allows developers to continue to build expensive accommodation and make soaring profits, even in the area of so-called social housing.
  • The increased levy on vacant sites does not kick in until 2020, leaving plenty of time for further land and home price increases to offset it. Neither was a much-needed tax on vacant properties introduced.
  • Multinational vulture funds, that have been buying up land and property, still receive a number of tax exemptions on their purchases.
  • And most worryingly, the Government intends to sell off our public land to private developers, giving away the key resource which would help solve the crisis.

Housing Action Now – a collective dedicated to achieving housing for all – believes the primary solution to the housing crisis is the reintroduction of State-owned housing on a large scale. This is the only way to regulate runaway housing prices in the public interest.

The most effective way to achieve this is the creation of a “cost rental” housing model. As the name implies, it would be a self-financing approach involving State provision of housing which would be made available for rent to a mixture of households on medium or high incomes as well as those on the social housing waiting list.

The wealthier people would pay higher rents than those on lower incomes, thus providing a sustainable form of collective finance. In exchange, everyone would get security of tenure (rental contracts of at least 10 years) and all rents (even the higher levels) would be lower than the current unsustainable rates.

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State provision of high levels of rental accommodation would also dampen purchase- and rental prices more generally. And the inclusion of people from diverse income groups would ensure public housing is seen as a human right for everyone. The State would never envisage selling these homes. They would become a commonly owned national resource.

The cost rental model has a good record in other European countries. And it has no shortage of supporters in civil society here – including from groups actively thinking through how it could work in an Irish context.

Government policy on housing, Rebuilding Ireland, commits to exploring a cost-rental model through the formation of an expert group which is due to report before the year end. Yet no financing for such a future model was flagged in budget 2018. And each passing month brings with it increased prices for renters or would-be buyers, together with ongoing insecurity.

So what level of funding should the State be investing to deliver a cost rental model? The Nevin Economic Research Institute estimates that the State should build or acquire 70,000 homes over a five-year period. The institute estimates this could cost €12 billion, raised from an up-front State investment of €3 billion and cheap loans from a range of sources including the National Treasury Management Agency, European Investment Bank and other domestic and international financial institutions. These loans would be repaid through the self-financing nature of the model, that is from the rents tenants would pay.

The Government has continuously claimed that the EU fiscal rules (that seek to keep member state debt and deficit levels low) prevent us from spending on housing. That is simply untrue when it comes to a self-financing and independent semi-State body. For example, the fiscal rules don’t apply to the ESB – so why would they apply to its housing equivalent? Even Taoiseach Leo Varadkar, under public pressure, appeared to support the idea of a semi-State, but this apparent interest quickly evaporated.

Housing researchers recently noted that other areas of Government policy, such as the National Children’s Strategy, at least acknowledge the international human rights commitment of the State (despite its failing to live up to them). Yet, with housing, there is a glaring absence of any mention of human rights obligations on the part of the State.

If the Government will not do the right thing, the ball is back in our court – those affected by the crisis and those in solidarity with them. This is why the recent launch of a campaign for public housing is so welcome and deserves national support. The Government should be put on notice: it must entirely reverse its approach, or be forced to go.

  • Nessa Ní Chasaide is a member of Housing Action Now, a collective dedicated to achieving housing for all
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