The future of cost rental (Part V)

The Week in Housing 11/10/24

This is the final in this series on our research examining The Impact of Cost Rental and some of its implications. On another note, some readers may recall I put out a call for guest posts for the Week in Housing at the start of this year, leading to some excellent contributions. If you have an idea for a piece which would be of interest to those involved in the housing policy, research and activism community, please get in touch. Information on how to approach a guest post is available here.

The three prisms of tenancy, financial/fiscal and political sustainability, discussed last week, can, I hope, be useful in terms of thinking through the opportunities and challenges associated with scaling up the cost rental sector. By way of a conclusion, I want to touch on our collective expectations for the sector. At the moment we are asking the sector to do a lot. We want rents to be low, quality to be high, it has to be self-financing, and (perhaps most importantly), it has to grow rapidly. Pulling all this off, at the same time and when the sector is in its infancy, is an immense challenge.

In discussions about the role of cost rental in shifting our housing system on to a better footing, I am sometimes reminded of debates about housing tenure in the years after the 2008 financial crash. As some readers will recall, at the time there was quite a prominent debate about the need to move away from our ‘addiction to homeownership’ and develop a viable private rental sector, which was usually accompanied by references to how in other European countries renting was not stigmatized in the same way, landlords were more professional etc. etc. It was thought that if we could re-balance our housing system away from homeownership towards private rental, we could have better outcomes. Incidentally, this was all predicated on the view that the desire of Irish households to buy houses was responsible for the property bubble, which was of course an entirely ideological move designed to shield those who were actually to blame (banks, developers, the politicians responsible for the most insane tax incentives of all time, and financial regulators).

Anyway, we certainly did shift away from homeownership and towards private rental. And in that process we asked too much of the private rental sector. We wanted it to provide high-end apartment living to mobile, high income workers. We wanted it to provide an alternative for the millennials who were locked out of homeownership. And we wanted it to provide quasi-social housing to those on low incomes. All of this as well as catering for the traditional renter cohorts of students, those experiencing family break down, recently arrived migrants etc. This massively overstrained the PRS.

Now, a decade and a half later, we are talking about re-balancing our housing system away from private rental and towards cost rental. There is a clear, and solid rationale for this, set out in Threshold’s research paper. But we need to be wary of asking too much of the sector. Is it realistic to ask the sector to be both self-financing and to be affordable to all who are eligible? Is it realistic to say we are going to reduce costs while at the same time scaling up supply? This last question is a good example. Many people argue that the cost rental sector should move away from a delivery model which is dependent on private developers as this means developers’ margins are factored into costs, which therefore raises rents. Instead we should have a more ‘contractor-based’ delivery model. This is entirely rational and should be a key priority going forward. However, is it realistic to reduce reliance on the existing developer-led model while at the same time rapidly expanding supply? In my view it is not.

From this analysis it follows that we (i.e. those who advocate for cost rental) need to prioritize in terms of what we think the focus of the sector should be in the short, medium and long term, rather than trying to achieve everything all at once. So, for example, we might want to focus in the short term on delivering quality, secure homes and expanding supply, in the medium term on sorting out the affordability issue, and in the long term on creating a contractor-led model, bringing in private finance etc. (see figure below).

This concludes my series on cost rental housing. If you have read all the pieces in the series, thank you very much for your interest. I got a lot out of working on this project, especially with my co-authors Cian O’Callaghan, Robert Sweeney, and Sarah Sheridan, and the teams we worked with at the AHBs: Fiona Dunkin, Niamh Randal, Reyhana Cushnan, Andrew Daly, Fiona Egan, Fiona O’Connor, Helen McCormack, Niamh McGovern, Clare Austick, Rosemary Hennigan and Haley Curran. Particular thanks to all the residents who participated in the study.

Events & news

A couple of weeks back Michelle Norris presented research on the role of land policy in social housing systems, and you can now watch a recording here. CATU are organising an event looking at housing and land justice with scholars and activists from Cape Town and Vienna.

What I’m reading

An interesting article in Novara about a UK tech start up focused on housing cooperatives. An interesting new journal article reviewing the concept of ‘housing classes’ and its potential relevance today.