Special post: the eviction ban fiasco
Last week I said I’d be taking a break from writing this newsletter for mid-term grading, but given the uproar over the eviction ban I couldn’t help myself. Rather than a full newsletter, below is just a few quick reflections I’d like to share (some of which I already Tweeted about, apologies to those who also follow me on Twitter)
If the debate and decision on renewing the eviction ban reveals anything, it’s that the rental sector is a complete fiasco at this stage. Hindsight is 20/20 vision, but back in 2015 Simon Coveney, then Minister for Housing, held a national consultation and published a Strategy for the Rental Sector, later incorporated into Rebuilding Ireland. At this stage I think it is safe to say it has been a complete failure. The strategy led to widespread reform of Irish PRS, including enhanced security & rent regulation, so it is interesting to think about why it failed despite this. In my view, there are three main reasons:
The reforms never went far enough and subsequently required continual updating as their inadequacy became clear. Rent regulation is the obvious example. Since the first iteration many exemptions have been removed, the geographic area of RPZs has been expanded and the cap rate has been reduced from 4% to 2%. There was a failure to grasp the nettle, especially in dealing with the security issue which has been the one issue that won't go away over the last decade, with the exception of housing supply. The existence of within-tenancy no fault evictions, the fact that 25% of Dubliners are renters, and the supply/demand imbalance was always going to be unsustainable. The only one of these three issues policy makers have direct control over is within-tenancy terminations, and these should have been eliminated back in 2015 in my view (a view also argued by practically everyone who participated in the national consultation that led to the Strategy for the Rental Sector, with the exception of the property sector).
The severity of the supply crisis was woefully underestimated. Somehow no one seemed to realize that the banking/development sector collapsing would likely lead to long term chronic undersupply or consider the consequences. The ability of the housing market to bounce back was overestimated.
The capacity of the PRS was overestimated in its ability to meet demand, to provide secure homes, & to become de facto social housing. At the time there was a narrative about rebalancing our housing system away from homeownership to avoid the problems of the bubble period. There was some logic to this but the shift to the PRS was too hasty and the downsides weren’t considered. The structural problems & inherent weaknesses of PRS as a tenure, and the Irish PRS market in particular, were never fully understood (e.g. weak security, problematic landlord/tenant relationships, lack of professionalism, informality, non-compliance).
The upshot of all this that there is now no hope for the PRS. The political question becomes - as we have seen with eviction ban debate - about who takes the most pain and when.
This is where the question of trade offs comes in.
To be fair to the Government, this is a difficult issue and, at the risk of descending into cliché, there are no easy answers. But let’s consider the trade offs here.
One trade off, sometimes presented by Government politicians and in the media, is between tenants and landlords. But this framing is extremely unhelpful. If a policy choice involves a trade off between tenants and landlords, it is self-evident (in my view) that tenants should be prioritized. The Government has a duty to protect access to housing and prevent homelessness, and tenants are economically among the most vulnerable groups in society, with crucial sectors such as migrants and lone parents concentrated in the PRS, for example. The Government has absolutely no obligation to ensure that investment in property, or any other investment, is profitable.
To be clear, I do believe, as I have argued before, that landlords have been treated unfairly. The Government has been claiming for some time that eviction bans are unconstitutional, but then last winter U-turned. More generally, the volume and pace of legislative change has understandably left landlords angry. Nevertheless, if the renewal of the eviction ban represented a zero-sum trade off between landlords and tenants, the priority should be housing as home first, and as an asset second.
If the landlord-tenant trade off is unhelpful, how should we think about the trade offs?
First, there is a trade off between security and supply. Renewing the eviction ban would certainly have negatively impacted supply. It would have sent a message that virtually anything is possible in the PRS and investors can take nothing for granted. It would send a message that the Government is happy to constantly rewrite the rules of the PRS.
Looking at this a little deeper, there is a tension between what should be the two key objectives of housing policy. First, over the medium to long term the Government has to do all it can to address the supply/demand imbalance. Second, because this will take a long time (it could even be a question of decades), in the short to medium term Government has to protect households from the consequences of the supply shortage. Renewing the eviction ban would help the latter, but hinder the former.
Second, there is a trade off between today’s tenant and tomorrow’s tenant. Renewing the eviction ban would help existing PRS households. But it would disadvantage, mainly via the supply impact, hypothetical future PRS households, i.e. households who have yet to form, and whose ability to form is hampered by difficulties accessing housing. This is in a sense just another way to frame the first trade off mentioned above, but with slightly different implications.
So, how should policy makers navigate this trade off. I’m certainly not claiming it is an easy question, but I do feel strongly that existing, tangible, immediate harm - i.e. the evictions which will result from the withdrawal of the ban - should be prioritized over future harms, such as those that would arise from the negative supply impact. Of course, supply is absolutely crucial, but in a toss up I believe that the ethical duty is to prevent the immediate and concrete harm that a given policy action would generate.
The context is also important. This is all coming after a decade of record rent increases and in which PRS evictions have played a leading role in homelessness. At this stage, tenants will rightfully be asking if they have not already sacrificed enough at the alter of supply.
Having said all this, a renewal of the eviction ban would not have been my policy preference. Instead, as I’ve argued before, I would have withdrawn the eviction ban (possibly on some kind of phased basis) and replaced it with the removal of within-tenancy no fault terminations (i.e. terminations for sale of property, family use etc.). There is lots of talk about the alleged unconstitutionality of eviction bans, but to my mind this is more or less irrelevant as the same effect could be achieved simply by removing the provisions for within tenancy terminations, which would certainly be constitutional (assuming, it is important to add, tenancies are for a defined period of time rather than indefinite).