Is cost rental making a difference?

The Week in Housing 04/11/22

This week I am delighted to bring you a guest post written by Fiona Dunkin, Housing Policy Manager with Clúid Housing, which looks at the early experience of cost rental in Ireland. A very big thanks to Fiona for this piece.

The policy rationale for cost rental housing is straightforward. The market is simply not providing homes at affordable prices or rents, even for the middle-income cohort. The basic economic tenet of supply vs. demand does not apply neatly to housing. Housing takes a long time to develop, and it cannot always keep pace with demand. Also, it cannot, in theory, be physically moved to align with shifts in locational demand. In addition, housing has been financialised and commodified to a large degree in recent years, with large swathes of global capital pushing up prices across the world. This has made housing unaffordable for all but a very few in Ireland. For example, currently in Dublin, in order to pay an ‘affordable’ rent, or spending no more than about 35% of your net income on rent, you would need to be earning over €6,000 a month, and, in Cork, just over €4,000.

Cost rental housing, in Clúid’s view, is the solution to this. If we perceive housing to be an essential resource for everyone, like health and education, providing housing on a purely cost basis, with the profit margin and motive removed, makes sense. Prior to its introduction, there had been calls for a cost rental model in Ireland for many years, most notably in a report in 2014 from the National Economic and Social Council (NESC). This was accompanied by calls by academics, politicians and social housing providers including Clúid. We were therefore delighted to see the introduction of a government loan for cost rental housing in 2020. 

So, the question that we now must ask ourselves, even at this early stage of development, is whether cost rental is doing what it should be doing. Is it reaching the cohort we wanted it to reach and is it positively affecting their lives? Across the Clúid cost rental resident base, it seems that the answer to this question is, yes, it is.

In terms of income, the maximum eligible household income threshold for cost rental housing is €53,000 net. The main Clúid cost rental income band, across our first schemes, sits at a median of approximately €42,000. So, it is reaching those below that threshold, of course, but not too far below so as to stray into social housing threshold territory. This is essential, on the basis that the income indexed rents in social housing are most appropriate for lower income cohorts, as an anti - poverty measure. 

In terms of employment, many of our cost rental residents are employed in retail, hospitality, and healthcare. Again, this is important, as, while such sectors can offer secure employment, associated wages and salaries are not necessarily very high, and, importantly, such positions usually require a physical presence on-site. One can’t necessarily work from home in retail, hospitality, and healthcare, and, therefore, living close to work is really vital. If we want to maintain vibrant, liveable cities, we cannot be without shops, restaurants and hospitals. 

With respect to household composition, most of our cost rental households comprise a couple and two children. While cost rental is for everyone, and single people, with just one income, also face massive barriers in accessing housing (we do provide one-bed cost rental units), it is positive to see families taking up these tenancies, particularly considering the spiraling costs of childcare in Ireland and the importance of access to schools and other family resources. Cost rental is intended to be viewed as a long term, secure option for households, and so it makes sense that families would view it as an attractive option. 

In order to offer a closer insight into the impact of cost rental, however, Clúid undertook a small-scale survey of residents in our cost rental units earlier this year. A total of 65 residents were surveyed, with a response rate of almost 30%, 19 responses. We looked at a particular set of themes, including the perception of cost rental as either a short/medium- or long-term option, the furnishing of cost rental units (as they come semi as opposed to fully furnished, as is usually the case in the private rental sector), the value for money of the rent, whether there was any room for improvement of cost rental as a tenure and overall satisfaction levels. 

The results, overall, were very positive. The vast majority, almost 90%, were very satisfied with their cost rental home, and approximately 68% of people had little difficulty in meeting their rental payments. Importantly, a large majority, over 94%, also viewed their cost rental home as a long-term option, and 94% liked having the ability to furnish their own home. Indeed, a large part of the rationale for cost rental housing is to provide secure housing, on a long-term basis, something which is currently difficult to access in the private rental sector, so this is encouraging to see. This suggests that cost rental may represent a real alternative to home ownership, with respect to security. Regarding furnishing, a number of studies (see 2019 IGEES study here) have suggested that, for many, a large part of the reason for wanting to own one’s own home relates to the ability to put one’s own stamp on it, which is not usually possible in the private rental sector, so this feedback is also very welcome.

The verbatim feedback from cost rental residents was also, in the main, very positive, including statements such as:

·         No crazy increase in the cost of rent

·         We won’t need to move and gives us some security

·         We can have a home of the appropriate size for our family with security of tenancy, that is not available in the private rental market

The themes of security, stability and safety are recurrent here, suggesting a positive impact on resident wellbeing, as an organisation with a vision of a society where everyone has a great place to live, is one of our ultimate aims.

While the above survey results are illuminating, further large-scale and detailed research on cost rental is warranted, in order to ensure that we are appropriately responding to people’s needs and, vitally, so that we can continue to advocate for the continuation of funding for cost rental into the future. The true extent of the value of cost rental will only be realised in long-term, as the maturation process kicks in, loans are paid off, and rents begin to materially impact on the stabilisation of the overall housing market in Ireland. Granted, there do exist several challenges with regard to the current funding structure for cost rental, that Clúid and others are working to address, to ensure that we can continue to deliver and to make cost rental housing even more affordable for households. That said, on cost rental, Clúid, along with our existing and future residents, is in it for the long haul.

Fiona Dunkin – Housing Policy Manager – Clúid Housing

Fiona Dunkin is Housing Policy Manager with Clúid Housing, where she has worked for over 3 years. Clúid is one of the largest approved housing bodies (AHBs) in Ireland with over 9,000 social and cost rental properties in management. Prior to this, Fiona worked in policy and communications in other housing/non-for-profit organisations, including Co-operative Housing Ireland and ALONE.

Events

On Thursday 17th at 6.30pm I’ll be speaking at an event organised by Type as part of the Housing Unlocked exhibition at the Science Gallery. The Housing Agency have published the programme for their 2022 Housing Conference, taking place on the 24th November. They’ve a great line up this year, including Josh Ryan Collins from UCL, Michelle Norris from UCD, and Michaela Kauer of the Brussels Office of the City of Vienna.

What I’m reading

Two new publications of mine have seen the light of day in the last couple of weeks. The first is co-authored with Rachel McArdle and looks at tenants’ everyday practices of home-making and resistance in the PRS, drawing on qualitative interviews we did a couple of years ago. The second analyses recent changes in the Irish PRS through the concept of post-neoliberalization (open access version available here). It was developed on the basis of this issue of the Newsletter from last December, and tries to figure out how we can understand the nature of the PRS, and housing policy in general, in an era characterized by a move away from ‘market rule’, yet still shaped by neoliberal political economy. In terms of new Irish data, the Irish Council for International Students published the rather worrying results of their survey into the experiences of international students accessing accommodation in Ireland. Richard Ronald and Rowen Arundel, both whom are always well worth reading, have edited a new volume on property and wealth that looks very promising. Finally, the Bill banning evictions from the PRS temporarily has been published, read it here (check out this excellent interview with Gavin Elliott of Threshold on the ban).