Illustration: Catherine Tomkins
A number of myths supported the house of cards that led to the recent Irish property bubble. Peg Leeson takes serious issue with the dominance of these ideas.
The current mess we are in is often explained by an unusual obsession with bricks and mortar rooted in a colonial history. The Irish love to own their own home because those nasty Brits didn’t let us, it’s the spectre of the famine all over again. At best these myths obscure the true reasons behind Ireland’s current economic situation.
At worst they prevent us for identifying the landlordism that creates a yoke round the neck of the tenant or, by trying to escape it, has shackled a generation to negative equity. So let’s take a closer look at them.
Conor McCabe’s excellent book Sins Of The Father, methodically picks apart this first fable. Using census data McCabe demonstrates that Ireland’s 2006 home-ownership rate of 76% sits in the middle of EU league tables, a drop from its 1991 peak. This current level is a consequence of government policy and not some genetic urge to own bricks and mortar.
Countless policy decisions by both of the big Civil War parties encouraged a middle-class buy out of social housing and the selling off of the social housing stock. Had this privatisation not occurred McCabe estimates that Ireland would have a home-ownership rate of about 60%, below the EU average. During the last decades, tax incentives for buyer and developer have further encouraged the trend of owning your own home. Clearly, those that can, buy – well up until now; the economic ‘downturn’ has put a strangle hold on easy credit and left tens of thousands saddled with unsustainable mortgages.
The second myth is that this supposed predisposition for private property is historically rooted in our colonial oppression. The late 19th Century Land League’s rally call of the three F’s (fixity of tenure, free sale, and fair rent) did not stipulate private ownership. The emphasis was on fair and stable tenancy rights. Michael Davitt, one of the League’s founding fathers, supported land nationalisation.
A concept where land was held by the state and administered for the good of society. This son of peasant farmers, born at the height of the famine, understood the solution to the Irish problem to be a world away from individual small-holders irking independent livings. The message was lost by the Irish Land Commission; which implemented the transfer of private holdings from landlord to tenant, an early example of state subsidised private-ownership.
So what alternative is there to home-ownership? Not much. Only 8% of Irish households live in social rented housing, either provided by local authorities or housing co-ops compared while another 10% living in private rented accommodation.
Ironically nearly half of those who rent privately are in receipts of rent supplement. Which effectively keeps rent artificially high, increasing substantially the rental income of all landlords.The Irish state paid 804 million euro to private landlords in 2010. Couple this with a ledger book of tax reliefs, in some instances where landlords have multiple properties, and the state effectively picks up most of the bill for the cost of purchase, interest on property loans, the costs of renting the property and then the rent through rent allowance on top!
Its a sick system. One which plays on basic human rights, such as shelter, and concerns, such as security. The solutions often rolled out is to further cap rent allowance or to merge it with Jobseekers to form one bulk payment.
These are not the answers. The state needs to start implementing polices which encourage social rented housing provision and intervene in the private rental sector.
Only then will people in Ireland start to have real alternatives outside of money grabbing landlords or selling your soul to the banker.