Trickling Up From The Basement.

In #rabble9, Blog, Illustration, Politics, Print Edition by Micheal Taft.3 Comments

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You’re probably blue in the face hearing about the housing crisis, the increase in rent, the holy grail of owning the roof over your head. There are solutions to the problems though. Michael Taft details a few.

This housing crisis is having a devastating impact on the households affected and the wider economy.

In 2013, there were 90,000 households on the social housing waiting list – the majority waiting for over two years. In 2014, some local authorities are reporting a 40 percent rise in the waiting list. The waiting list has grown as social house building has collapsed, from over 6,000 prior to the crash to a mere 300 last year. No wonder there are an estimated 5,000 homeless at any particular time.

A feature of the housing crisis is rising private rents, especially in Dublin where rents have increased by nearly 10 percent in the past year while incomes continue to fall.

Another issue is the cost of buying a house for first-time buyers. In the mid 1990s, house prices were approximately four times the average wage. Today, the average home costs 6.5 times the average wage.

Rising house prices and stagnant wages is a recipe for more debt and home-ownership exclusion among low to average wage earners. Resolving the problems in the housing market will require a number of joined-up policies. But what is the starting point? One starts at the bottom in order to raise the floor for everyone. It is the application of what might be called ‘trickle-up economics’, a process that attempts to generate an upward spiralling benefit (of course, one could start at the top with traditional ‘trickle-down’ policies – the only problem with this is that the trickle stops well short of the ground floor, never mind the basement where so many people find themselves).

No one doubts that reducing the social housing waiting list would create greater social equity. But in the process of building these houses, thousands of unemployed building workers would be put back into work, economic activity would rise with increased demand, and tax revenue would increase while unemployment payments would fall.

Reducing the social housing waiting list would also increase the supply of private rental accommodation. 75 percent of households on the waiting list are in private rented accommodation, with most on rent supplement. Every 100 households taken off the housing list and put in permanent public accommodation results in 75 private rental units being freed up.

Rising private rents are being caused by higher demand and limited supply. More social housing should see a stabilising of rents and possibly even a reduction. That’s one way increased social housing will help those in the private rented sector.

It can also help housing prices. If people are faced with rising rents – in insecure and, in many cases, inadequate accommodation – they will seek to move into the house-purchasing market. Again, if we have too much demand for limited supply, this will only increase house prices.

If there is more social housing, freeing up more private rental accommodation, this can contribute to reducing demand in the house-purchase market which can hopefully temper rising house prices. This is how trickle-up economics works.

Of course, we need more policies for the housing market. We need investment in the private rented sector – something that is unlikely to happen as long as that sector is dominated by small landlords. Nearly 60 percent of rental dwellings inspected by local authorities last year failed basic minimum requirements. We need a major public investment drive in this sector. We need higher accommodation quality; greater security of tenure, controls over rent rises and more diversity to accommodate a number of different household types.

But there’s a real problem in all this. We have really dug ourselves into a hole when it comes to the social housing waiting list. Years of neglect now means that it would cost between €14 and €18 billion to both build and acquire housing for the 90,000 on the waiting list. And by the time we cleared the current numbers waiting, there would be tens of thousands more queuing up. It is not within the financial capacity of the state to launch the investment drive necessary to provide housing for all those in need.

We will need a radical redesign of social housing to attract the necessary investment. A number of European countries manage to build social housing without it appearing on the Government’s books. They do this because housing is provided by what are called ‘quasi-public corporations’. The Irish equivalent would be public enterprise. These bodies borrow, build, own and provide the housing with the government – either local or national – providing social transfers to those tenants that can’t afford the full economic rent.

We can go further and allow a new public enterprise company to offer rental accommodation on the private market in order to increase supply, quality and tenure security. This would allow the company to make a small profit which would be redirected into investment. In this respect, there would be no distinction between public and private tenants. This would allow a significant social housing building programme with no upfront cost to the state or impact negatively on our deficit or debt. But the economy would still get all the benefit from the economic activity. And people would get housed.

There are many reforms needed in the housing market to ensure that people can live in adequate, affordable accommodation. But all these must start in the basement, not the penthouse. It starts with housing the homeless, moving people from precarious to stable accommodation. Do that and the benefits will start to trickle upwards.

Illustration by BitThompt.

Comments

  1. If people are blue in the face hearing about it- imagine living it. I feel for anyone facing homelessness in any form and hope to see brighter Christmases in Ireland than the past two when the crisis was underground and so stigmatised that it wasn’t discussed, and now this year that it’s out, and not enough being done at all. Had to report a theft of my purse today in Pearse st Garda station and the reception was wall to wall, every square metre of floor and all seats, covered with sleeping homeless men. I am privileged I was reporting a theft and had come from a safe home. Put things into perspective over material loss.

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