Ireland's housing politics: hidden consensus?

The Week in Housing 27/11/24

Releasing this on Wednesday as it will be somewhat redundant by Friday! The below piece originally appeared in the Irish Examiner last week and got a great response. It sets out my take on how housing politics has changed radically over the last number of years, developing on ideas I first developed when research post-neoliberal housing policy and the electoral politics of housing. The below reproduces the Examiner article but I have added a table that summarizes the parties’ respective housing targets and spending commitments (although the latter involves a bit of guess work as the manifestos to not present the housing expenditure commitments very clearly or in a uniform manner.

If you’ve been feeling bamboozled by the plethora of housing promises coming from each party ahead of the election, you’re not alone. If there is one thing that stands out about the raging debate about who can deliver more housing, it’s just how technical it is. The recent RTE Upfront debate on housing is a case in point: the discussion ranged from whether or not banks would lend mortgages for the purchase of houses when the state retains a leasehold, to whether Help to Buy, which supports first-time buyers, has an inflationary effect on the price of new builds. But amidst the bluster from the candidates, the differences between the parties on the subject of housing delivery hide a much more important fact that politicians of all stripes would much rather you didn’t notice. There is now a large degree of consensus across all parties, of left and right, when it comes to housing politics. This may seem like an odd assertion given they have been at each other’s throats for the last four years. But when we look at the some of the biggest issues in housing policy, they are essentially in agreement.

Take social and affordable housing. We now have three main schemes: social housing, cost rental and affordable purchase. All parties agree that all three must be radically scaled up to meet our housing need (see Table below). This is a crucial point. What used to divide parties of left and right was precisely the role of public housing. The right traditionally believed the market could provide almost all housing because it was more efficient, fairer and cheaper for Government. In contrast, the left argued that a large public or ‘non-market’ sector is needed to balance the problems of unaffordability that can plague market housing, and ensure working and middle-income households have secure homes. The intensity, and intractability, of the housing crisis has pushed the whole debate very much to the left, blurring the difference between Government and opposition.

Another example is that of state investment, evident in the debate on who will deliver the most housing. All parties are dead set on throwing as much money as possible at the problem, dining out on our bumper corporate tax receipts, and raiding the Apple piggy bank. It reminds me of buying Christmas presents during the Celtic Tiger: everyone competing to see who can spend the most money.

Table: Housing targets and spend. SH=social housing; CR= cost rental; AP = affordable purchase.

To avoid the electorate noticing the growing consensus on the future direction of housing policy, the parties are focusing more and more not on what type of housing policy we need, but on the technicalities of how best to implement it.

But this doesn’t mean there are no important differences between left and right, Government and opposition. While everyone agrees on expanding social, cost rental and affordable housing, they continue to disagree when it comes to how to approach market housing. This is evident in three main areas.

First, the main Government parties want to expand their supports for first-time buyers purchasing private housing: the Help to Buy and the Shared Equity schemes. Both schemes are what researchers call ‘demand-side’ subsidies. They put more money into the pockets of punters to bring market housing within reach. Fianna Fáil and Fine Gael want to extend the shared equity scheme to second-hand houses (it’s currently only for new builds), while Fine Gael want to increase the maximum subsidy available under Help to Buy from €30,000 to €40,000.

The opposition parties, in contrast, claim that such measures are inflationary; by pumping up demand they put even more pressure on prices, and end up benefiting no one. They also cite Central Bank research showing most of the Government spend on Help to Buy goes to relatively well off first-time-buyers who already have enough money to purchase. Sinn Féin, the Social Democrats and Labour all argue that supporting the purchase of market housing is therefore pointless and unfair, and want to phase these schemes out in favour of an exclusive focus on the public housing options. In other words, they are much more skeptical when it comes to market housing.

Second, there is a subtle but telling difference between the rival parties on the Affordable Purchase scheme. As things stand, those who buy a home under this scheme can later sell at full market price. This means they will have a windfall gain, as Affordable Purchase housing is significantly below market prices. It also means the house in question will no longer be part of the affordable stock and will be back in the private market. Fianna Fáil and Fine Gael support this approach because they believe in private homeownership not just as a way to access housing, but also as a way to accumulate wealth.

The Social Democrats and Sinn Féin both want to reform this scheme. Sinn Féin will use a ‘leasehold’ system so that Local Authorities retain control of the land, and this will allow them to ensure that Affordable Purchase housing must be re-sold at an affordable price, thus retaining it as affordable housing in perpetuity. Meanwhile, the Social Democrats will achieve the same thing by using the planning system to zone land for Affordable Housing in a manner that will cap prices. In this way, they want to fundamentally divorce Government supported homeownership from the private market.

Third, the biggest difference lies in the question of reform of the private rental sector. Fianna Fáil and Fine Gael are proposing no new protections for tenants. In fact, in the recent RTE Upfront debate, Paschal Donohoe, current Minister and Fine Gael’s housing spokesperson, went out of his way to emphasise he wanted more landlords. All three main opposition parties, in stark contrast, are proposing radical reform of private rental housing. Just how radical these reforms are has not fully been appreciated. They all want to abolish the ability of landlords to evict tenants in order to sell the property. They also want to restrict the ‘family use’ clause that allows landlords to evict so a family member can move in. Most radically of all, Labour, Sinn Féin and the Social Democrats are proposing a temporary ban on evictions and a rent freeze. Sinn Féin and Social Democrats back a three year rent freeze. Not content with this, Labour are proposing to put rents on ice until ‘market conditions improve’, i.e. indefinitely.

I’m all in favour of rent regulation. But the reality is we already have, in the form of the Rent Pressure Zones, some of the strictest rent controls on planet earth. The current system caps annual rent increases at 2%. This means that tenants paying the average current rent for existing tenancies can get a max increase of €32, a paltry sum. Freezing rents will thus achieve very little in terms of affordability for renters. They’ll be able to go out for one extra dinner a year, but only if they skip the glass of wine and dessert. What it will do is scare the bejaysus out of landlords. The ‘landlord exodus’ has been much overhyped, but it is certainly true that the only two words landlords fear more than ‘income tax’ are ‘rent freeze’. And landlords would be right to be wary. As Milton Friedman once said, “Nothing is so permanent as a temporary government program.” Despite my misgivings about the reforms being proposed by the main opposition parties, at least they are offering something to beleaguered renters, which is more than can be said for their counterparts in Government.

As a firm supporter of non-market housing, I am more than happy that a consensus has emerged around this much needed aspect of our housing system. Without that kind of consensus, we have very little hope of getting on top of the housing crisis. Nevertheless, while most of the debate in the run up to election day will focus on social, cost rental and affordable, the new dividing line in Irish housing politics is really about how to approach the private housing market.

Events & News

Myself and others were on the latest episode of the Reboot Republic podcast talking about our research on Cost Rental Housing and what the future holds for the sector. The podcast also features a cost rental tenant talking about their experience. A recent Geary Seminar presenting finds of a field experiment on discrimination against refugees in the Irish housing market can be viewed here. I spoke at last week’s Housing Rights Northern Ireland PRS conference, the entirety of which can be viewed here. My presentation starts at 2hrs 50 m. The speaker before gave a good overview of the Renters Reform Bill in England which starts at 2hrs 38m in.

What I’m reading

With the election so close, I thought I’d share two of the most helpful analysis pieces of read over the last week. The first presents a really detailed and well-thought through critique of Help to Buy, the second presents fascinating data on the Parties’ respective spending commitments.