Labour's housing manifesto

The Week in Housing 15/11/24

Another week, another housing plan. This time its Labour’s turn as the party recently published a comprehensive and smart set of proposals which are quite radical in scope. The emphasis is on supply here, as indicated by the plan’s title: Build More Homes. It’s also interesting to see they place a strong emphasis on the Housing Commission’s report. The following is how Labour summarise their approach at the outset of the document:

·       Underpinned by the recommendations of the Housing Commission.

·       Built on our policy commitments to transform the housing system.

·       Premised on the creation of an overall Housing Delivery Oversight Executive.

·       Realised through the establishment of a State Construction Company.

As can be seen, the very first point refers directly to the Housing Commission, while the third point is one the HC’s principal recommendations.

If I have the time, I might try and do a post comparing the main opposition parties’ housing manifestos. But for the now, let’s dig into Labour’s big ideas under the headings of delivery, affordability, finance and the PRS. There’s a fair bit of other issues in there, too much to cover in one post, so the full document is worth a look.

Delivery

Labour want to increase the proportion of social housing to 20%, promising to deliver 13,400 units over five years, similar to the Housing Commission recommendation, although they recommend the 20% be made up of cost rental and social  housing. Labour also promise 6,500 Affordable Purchase Homes and 5,000 Cost Rental homes on average each year to 2030.

An eye catching element is the commitment to establish a State Construction Company. Although this idea, which has been proposed by ICTU as well as Rory Hearne (somewhat ironically as he is now running for the Soc Dems), is often criticized by housing experts, how they frame the concept is interesting. They focus on overcoming the ‘boom-and-bust cycle of the private construction sector’ which has ‘undermined long-term housing delivery and the retention of construction workers’, and argue a State Construction Company can ‘counterbalance’ the ‘for-profit delivery model’. Interestingly, Labour’s idea is to transform the LDA into this State Construction Company, and use €6bn of the ‘Apple money’ as seed funding. The SCC will, it is argued, drive down costs by absorbing land costs and by gaining new CPO powers.

Interestingly, the Labour plan has a section on ‘Empowering Local Authorities’ by providing block grants and setting up Regional Housing Executives which will pool the resources of local authorities, something mooted by the Housing Commission. Like many people, I feel Local Authorities could play a far stronger role in housing delivery and are one of the few areas of the Irish housing system which have not really been leveraged to address the housing crisis. However, I was disappointed to see Labour don’t include the idea of allowing Local Authorities to borrow (from the Housing Finance Agency). As my colleague Michelle Norris has long argued, the removal of LA’s ability to borrow (in the ‘80s or early ‘90s, if memory serves) played a central role in the undermining of the social housing sector.

I have mentioned in this Newsletter before how sooner or later the Kenny Report is brought up every conversation about Irish housing, and so it is here. The plan promises to ‘enable local authorities or the State Construction Company to purchase land at 125% of the existing use value.’ An idea I very much support.

Affordability

I almost spat out my coffee reading the section on affordability, which is worth quoting at length:

“During the passage of the Affordable Housing Act, Labour proposed that affordability of housing should be tied to incomes rather than market value… The current affordable and cost-rental schemes maintain the link to dysfunctional and inflated market rates. Labour will deliver genuinely affordable housing, with rents and house prices based on what people can pay, not what the market decides they should pay” (my emphasis).

Apart from the fact that Cost Rents are not, in fact, tied to market rates (one of those falsehoods in Irish housing debate which has no problem withstanding contact with reality), linking cost rents to income is impossible and essentially means either destroying or fundamentally reimaging the sector. I’d be very interested to hear the rationale for income-based rents in the Cost Rental sector, given we already have a Social Housing sector with income-based rents.

The plan goes on to say that Labour will ‘reduce cost rents by providing longer term financing of cost rental developments over 50 and 60 years as outlined’ and will also consider a leasehold model for land provided. Both of these ideas also make an appearance in SF’s plan. This left me confused: if the idea is to link rents to incomes, it is unclear why making finance cheaper would reduce rents. Maybe I have misunderstood something, so any Labour insiders who can help please use the comment function below (or indeed email me).

Not satisfied with throwing the principal of cost rents out the window, they also promise a Rent to Buy scheme for Cost Rental tenants who have been in the sector for at least three years. Crucially tenants would see a ‘portion of their payments converted into a deposit for purchasing their own home’, which looks very like the dwellings will be sold at a discount (or else the tenant’s purchase would be subsidised by central Government). These ideas on affordability really depart from the Housing Commission report, which otherwise features heavily in the document. They would also be fiercely resisted by the AHB sector.

Finance

Some interesting ideas in the section on finance. They propose a long-term financing product (which is finance-speak for a loan) with a 3% interest rate and a 50/60 year loan period. Presumably this would take either the form of a loan from Government or via a Government subsidy that would bring the cost of Housing Finance Agency loans down (they are currently around 3.75% I believe). Either way this could be a good idea, although my preference would be for the latter option. More interestingly, they propose ‘a Housing Solidarity Bond via State Savings with an attractive interest rate’, which is a great idea and something that works really well in Austria and France.

In terms of AHB borrowing, Labour also promise to reform CALF (which is the loan AHBs get from Government to deliver Social Housing) and convert a portion of it into a grant ‘to address issues of debt and gearing levels’. This will be music to the ears of the AHBs who have been sounding the alarm bells about the level of debt Government expects them to take on, as both Social Housing and Cost Rental are debt financed. Something has to be done about this issue and it essentially boils down to either grants from Government (as Labour and the AHBs propose) or requiring AHBs to provide equity, or both.

The PRS

There’s lots of big promises in here for private renters, which is not surprising as Labour have been very strong on renters’ rights for a number of years. The language introducing this section is interesting with its talk of ‘fundamentally chang[ing] the balance of power so that people are protected in their homes’. It’s good to see recognition of the landlord-tenant power imbalance, which is a hugely important if underappreciated issue. The main long term ideas are to remove no fault evictions, which would effectively give life time security of tenure (as regular readers will know, I favour 6-year tenancies), and to move to a system of reference rents. No rationale is provided for the latter, but it is very interesting to see reference rents make an appearance here as they are a recommendation of the Housing Commission report, are promised in Sinn Féin’s housing plan, and, reading between the lines, seem to mooted by the Department of Housing’s recent review of the PRS. I have no problem with a reference rent system but I’m getting a bit concerned that there seems to be a bit of a consensus building up around them despite none of the above providing a rationale for this model of rent regulation (as an aside, the Housing Agency are in the process of commissioning a review of the RPZs at the moment, which will likely underpin their reform under the next Government).

So far so good. The one eyebrow raising idea in this section is an immediate rent freeze and ban on evictions. But to really put the frighteners on landlords, these measures are to last ‘until housing supply dramatically increases’! It’s hard not to interpret this as anything other than ‘whenever we feel like it’. I think it was Milton Freedman who said ‘there is nothing as permanent as a temporary Government intervention’. SF are of course also proposing a rent freeze, in their case for three years.

I cannot for the life of me understand why anyone would propose a rent freeze in the current context. RPZ increases are already capped at 2% per annum, making them some of the strictest rent controls in the world. This means tenants paying the average current rent for existing tenancies can get a max increase of €32, a paltry sum. Introducing a rent freeze, in my view, would send a very strong negative message to landlords, but with almost no gain in terms of affordability. The issue with affordability in the PRS is non-compliant landlords, who presumably would not comply with a rent freeze either, so it makes way more sense to focus on compliance.

Events & news

The Housing Alliance have a call for tenders out for research on the classification of the AHB sector. The RTB’s 20th anniversary conference will take place on December 5th, register here. The Simon Community have one of their excellent webinars coming up at the end of the month, this one with Housing Europe’s Dara Turnbull looking at the issue of vacancy. The Simon Community are also hiring a policy analyst.

What I’m reading

A really interesting new paper from Michelle Norris on the role of land policy in underpinning social housing. The Housing Agency have published a new report featuring international case studies of compact design. The Simon Community have released their pre-election manifesto. Cooperative Housing Ireland have also released a pre-election manifesto. A new RTE Brainstorm piece on sustainable housing.