The government strategy on housing is to constantly repeat “spending commitments” and issue estimates for house building projects. Patrick McCusker dons his number crunching glasses and looks behind the headlines of the government’s housing strategy in Budget 2018.
Overall spending is up to 1.9 billion in housing, which is a startling 46% increase on the 2017 budget. This figure includes 500m to meet a new target of 50,000 homes for those trapped on housing lists. There’s also a target of 3,000 exits from homelessness in 2018, as well as an increase in the Vacant Site Levy and 75 million for new affordable housing initiatives. It certainly is a lot more generous than last year’s budget or the near-total neglect of the issue before the time bomb erupted over the last few years.
This increase makes for great headlines and tweets. The same goes for the idea of a housing plan to build 50,000 homes and engineer 3,000 exits from homelessness (which is still less than the number of homeless children).
This budget is terribly forgiving to landlords, letting agencies and vulture funds. It’s as if the government wants to help those in dire straits without taking any steps to actually address the causes of the housing crisis. In this spirit, lots of money is being counterproductively thrown at the problem.
For example, 301 million euro is going into Home Assistance Payments (HAP) to add 17,000 new tenancies to the 39,000 existing ones to create a total figure of 56,000 people in HAP. This figure is complemented by 134 million for 600 new Rental Accomdation Scheme tenancies. Whilst this will undoubtedly be of huge help to those in need, it just enables the worst tendencies of the rental market in the absence of any strengthening of rent controls.
Even the 5 million increase in funding for the Residential Tenancies Board will merely lead to a stated goal of an inspection once every 4 years. And that’s in the best case scenario. Anyone who’s ever rented can testify as to how many combinations of tenants or even landlords can come and go in that time.
So if this budget does little to help private renters, does it at least alleviate the problem of supply by encouraging property owners great and small to bring vacant properties back into circulation? 9% of the housing stock in Ireland is currently unused, so it’s a good place to start. Unfortunately, the only answer is “not really”.
You could say that there was 32 million allocated to the Repair and Leasing Scheme, which aims to encourage landlords to renovate derelict properties so as to re-use them as social housing. It was introduced by Simon Coveney with the hope of creating 800 social houses by the end of 2017, and 3,500 by 2021.
However, this scheme is demonstrably a failure. Uptake has been a mere 15 of an expected 150 houses in Dublin city, 4 of 31 in Kildare, 1 of 25 in Dun Laoighre and, most damningly, 0 of 24 in Galway City and 0 of 41 in Fingal.
When the market for private developers is as good as it is now, it’s hard to believe anyone with property in a city is going to turn it over to the state at a massive loss to themselves. The increase in the Vacant Site Levy from 3% to 7% is doomed for the same reason. Doubling the Vacant Site Levy is unlikely to stir too many more owners of vacant properties into action when there’s a fortune to be made from bringing their own properties into the market.
There is some acknowledgement that the state has to get its own act together with regards to providing housing. Eoghan Murphy has set targets of 4,969 new social housing units to be built and another 900 to be acquired in 2018.
These claims don’t stand up to much scrutiny. If builds are to overtake acquisitions by a factor of 5 to 1 in 2018, it would involve a drastic turnaround in housing policy, particularly in Dublin. Acquisitions have consistently complemented or even overtaken builds over the last 20 years. As well as this, it pales in comparison to the 19,600 tenancies which a combination of long-term leasing, RAS and HAP are expected to create in 2018.
It also has to be asked just how the government expects the pace of construction of social housing to double in the course of a year. A recent study on The Journal.ie found that a mere 856 of the 2,500 builds announced for 2017 could be confirmed as being “practically completed” by the end of the first quarter of 2017. Whilst refurbishments also factor into these numbers, the uptake figures for the existing schemes don’t inspire confidence.
Although more and more people are being brought into the safety net, little is being done to stop them falling into it to begin with. Tenancies are being created through short term solutions such as HAP or RAS rather than anything more substantial for fear of interfering with the rental market.
It’s not hard to see a poverty of ambition when the increases and initiatives announced in the Housing Budget are set against the reality of the situation. There’s a willingness to spend money, but without drastic legislative measures to curb the worst excesses of the rental market and a demonstrably effective programme to build and acquire social housing.
It doesn’t have to be this way. There was a study by Dr. Mary Murphy and Dr. Rory Hearne of NUI Maynooth which was recently published in Village magazine and showed the awe-inspiring folly of the government’s reluctance to build.
If the current government’s housing policy is followed to its conclusion, there will be 1 billion per year diverted into the private rental market through schemes such as HAP by 2021. There will be 120,000 units provided by HAP by 2021, with no end in sight.
The study shows that it will be 32.9 billion more expensive to house these people via HAP over the course of 30 years than it would have been to construct local authority housing. As it stands, the government is pursuing a deeply counterproductive housing policy which unintentionally spends far more money in the long run.
The best Eoghan Murphy can hope to be remembered for in these circumstances are his efforts to manage the housing crisis. Without a change of tack, this government will have squandered the opportunity to do what they could have to solve it by pushing for bold legislative programmes and genuinely sustainable building plans.
Not only do we deserve better, it just makes more sense than the current mess that only suits landlords, letting agents and vulture funds.
When the market for private developers is as good as it is now, it’s hard to believe anyone with property in a city is going to turn it over to the state at a massive loss to themselves…
The government strategy on housing is to constantly repeat “spending commitments” and issue estimates for house building projects.