The Week in Housing 14/05/21
Inequality and the politics of generation rent
When I started this newsletter a few weeks ago, I worried if there would be enough new developments in housing each week to give me one page worth of content. That worry certainly was not well founded, with this week seeing a host of new developments in both policy and research. Once again the private rental sector, which is increasingly becoming the fault line of housing inequality in Ireland (and internationally), was at the centre of the debate.
The ESRI published a chapter from a forthcoming report (being launched today) essentially showing that millennial and Gen Z households are getting screwed in both the labour and housing markets, and that Covid-19 is likely to make this problem worse. Some of the most interesting data include:
· Average weekly earnings for workers born in the 1990s were no higher than for those born in the 1960s at ages 20 to 22, and had by the age of 26 yet to surpass that of either the 1970s or 1980s cohort.
· More than a fifth of those born in the 1980s were paying more than 30% of their disposable income on housing at age 30, compared to 13% of those born in the 1970s.
· For those born in the 1960s, more than 60% were homeowners by age 30. For those born in the 1970s, the figure was just 39%, and for those born in the 1980s it was 32%.
This means that "those born in the 1980s and 1990s stand out as being the first of the generations covered by our data not to experience consistently higher earnings than that born a decade earlier", and that they're spending more of those earnings to put a roof over their head while being shut out of homeownership. So, if you're a young renter who feels like you're getting a raw deal, your feelings are now empirically verified.
The interesting thing about this is that it shows that the 'generation rent' term really is appropriate. Some academics (see this short piece by Kim McKee or this longer, more academic article by Brett Christophers) have been arguing that there is no such thing as generation rent because it is all about class. No doubt class plays a big role, but we can also see, certainly with regard to the housing system, a historical shift which has disadvantaged millennials and Gen Z. The generation who were in a position to benefit from the very favourable housing conditions between the 1950s and 1970s by becoming homeowners really are in a much better position. As our housing system has become systematically more unfair, a generational divide has indeed been created.
Meanwhile the latest Daft.ie report confirmed that renting is only getting more unaffordable. Worryingly, rents are rising rapidly outside Dublin, driven by Covid-19 related household relocation and very low levels of available rental properties across much of the country. Rents outside of Dublin increased by 7.1%. This begs the question of how average rent increases can be over 7% when most of the country is in a Rent Pressure Zone capping rent increases at 4%? Having said that, the ESRI found in 2019 that more than 40% of tenants in RPZs had received rent hikes above the 4% limit, but this being the private rental sector nobody seemed at all surprised about mass non-compliance on the part of those very naughty landlords.
In Dublin, in contrast, rents fell by 3.2%. On closer inspection, however, as Ronan Lyons notes in the introduction, there is also what may be an early warning sign that the pattern of the last year is changing. Looking just at the first quarter of 2021, Dublin rents actually rose very slightly. Does this reflect Dubliners, in anticipation of post-lockdown life, returning to the fair city after a year of renting down the country? Will we see a return to rent inflation in Dublin in Autumn 2021, especially considering students may well be on campus once again?
On another note, in a reference to the likely impending attempts to clip the wings of the 'cuckoo funds', Lyons, writing in the introduction to the Daft report, has the following warning for us:
Ireland badly needs the tens of thousands of new rental homes European pensioners and others have planned to build over the coming years. For this reason, any moves to prevent Ireland from getting the rental homes it needs will only make things worse, not better.
I wasn't aware that European pensioners built any housing here, but anyway it looks like the old supply Vs regulation debate is back, but unlike in 2016 (when RPZs were introduced) this time the focus isn't on the impact of regulation on 'accidental' and 'mom and pop' landlords, but on international financial institutions.
It all sounds like doom and gloom (a familiar feeling when it comes to Irish housing), but happily Threshold published their submission in relation to the Government's forthcoming new flagship housing policy (slated to be published this summer), and it was full of policy solutions for renters. Threshold's submission is well worth reading in detail for anyone interested in the sector because it sets out remedies to the problems across the system and points towards what a functioning rental system would look like.
There are of course quite a few familiar demands here (e.g. an NCT for rental housing and, the oldest of chestnuts when it comes to these issues, a deposit retention scheme), so I focus here on what are in my view the bits that are most relevant right now:
· A referendum on the Right to Housing - very interesting to see Threshold coming out strongly in support of the Homes for Good campaign.
· A long term, twenty-year housing strategy: this is a great idea in my view. I often get asked 'how can we fix the housing crisis'. In reality, housing systems can't be fixed. They are not like cars that work well by default, and then have issues which, once fixed, restore the machine to good working order. If you want to intervene in a housing system you need to know what you are trying to achieve specifically - what is the outcome you want. Right now, there is no vision accept that we should build houses, which you might think would be the starting point for any vision for the housing system rather than the end point.
· The submission rightly draws attention to the scandalously quick turnaround time for evicting a tenant due to rent arrears. This is really important as we move out of the pandemic. Threshold are calling for an increase in the warning notice period from 28 days to 90 days and the establishment of a “Rent Arrears Fund” to provide cheap loans to renters in arrears.
It was also interesting to see some of the fighting talk in this submission, e.g.:
In comparison to the homes of owner-occupiers and social housing tenants, the homes of private renters are treated as commodities…. Allowing a tenant to be removed from their home underlines the lack of understanding that the property is the tenant’s home and it only secures the tenant’s status as a second-class citizen.
I think this reflects a mood in the politics of Irish housing. Last Sunday the Business Post had a big article on how Generation Rent was running out of patience. Are we on the cusp of seeing generation rent emerge as a major force in Irish politics? Interestingly, when we think of what we might call Ireland's 'generational politics' in recent years, we would probably think of the two big referendum campaigns (marriage equality and the 8th). In both cases, it was specifically a referendum campaign which catalysed a generation to come together. With a potential referendum on the right to housing looming on the horizon, will this be the issue around which Generation Rent finds its voice and, finally, takes on the political establishment's failure to address the housing crisis?
Events
No good row about Irish housing is complete without a reference to the Kenny report (1973), which looked at land value capture and made a series of very progressive proposals. It was duly ignored, but as a Henry George super fan I have always been intrigued by these ideas. Due to the chronic issues in housing systems in many countries, it's an issue very much back on the agenda; a new report on the issue in the UK is being launched on June 14th.
A few weeks ago, I mentioned the launch of a report on High Rise Housing in the UK. The video of that launch is now available. On May 19th, The Housing Agency are launching a new report on management companies.
What I'm reading
Valesca Lima has a great new paper providing an in depth look at HAP. Irish Institutional Property, which represents institutional investors in housing, including the big landlords published this report, while Sinn Fein proposed new legislation to regulate those same investors. Self-organised Architecture published research they launched yesterday on the potential of community-led housing in Ireland.