The government does actually have a housing policy. I don’t know how many people have read this document, but it is pretty interesting.
environ.ie/en/Publications/D … 867,en.pdf
Two particular extracts
Our economic crisis has a variety of causes. However, over-stimulation of the housing market is accepted as a key causal factor in the scale of the economic downturn.
In a climate of low interest rates and rising incomes, a series of disastrous pro-cyclical policies led to a model that provided unprecedented growth, but it was a growth based not on foreign demand for our goods and services – as should be the case in a small open economy – or the productive use of investment capital to create sustainable employment. It was based on a mirage and a false assumption that the normal rules of supply and demand somehow did not apply in Ireland.
We now know that those rules do apply. We now know the consequences of encouraging people to choose their housing options on the basis of investment and yield rather than hearth and home.
The costs of these lessons are being felt by households across Ireland. Given the centrality of the housing sector to both the good and the bad times we have seen over the last two decades, a new vision for the sector is a fundamental part of our national recovery.
Housing in Ireland has been characterised by a persistently hierarchical structure for several decades. This paradigm of housing has private home ownership at the top, with supported home-ownership (tenant purchase of local authority housing, affordable housing) next, self-financed private rented accommodation further down, and State supported rental accommodation at the bottom (rent supplement/social housing tenancies).
This structure and the value judgement that underlies it – which implicitly holds that the tenure which must ultimately be aspired to is homeownership – has had a considerable role in leading the Irish housing sector, Irish economy, and the wider Irish society to where they are today.
Our vision for the future of the housing sector in Ireland is based on choice, fairness, equity across tenures and on delivering quality outcomes for the resources invested. The overall strategic objective will be to enable all households access good quality housing appropriate to household circumstances and in their particular community of choice.
It will neither force nor entice people through fiscal or other stimuli to treat housing as a commodity and a means of wealth creation. Clearly, home ownership will continue to be a significant feature of housing in Ireland and is likely to continue to be the tenure of choice for the majority of households. Policy makers must take account of our current economic circumstances which effectively dictate that State provided housing supports must be prioritised towards meeting the most acute housing needs. In so doing we will allow for a future in which housing services are accessible by a wider cohort of people based on a less stratified model of service provision.
Without taking corrective action to moderate the housing market in the recent past, the previous policy response was to chase a fast moving target, adopting unrealistic output targets and facilitating unsustainable levels of residential construction.
Now though, as a result of the wider economic downturn, affordability – the measure of net income required to service a particular mortgage – has returned to levels last seen in the early to mid 1990s before house prices were allowed to spiral out of control and the real failure of the Irish housing market began. The right conditions now exist to ensure that such a market failure of affordability in terms of an imbalance between average prices and incomes does not occur again. The housing market is currently depressed and its recovery will be part of wider recovery across the economy.
The Government will act across a range of regulatory and policy areas: banking (specifically lending); taxation; housing; planning and land use, and social welfare) to ensure that once recovery is under way, the housing market makes an appropriate contribution to wider economic performance and is not – as it has been in the past – regarded as a key driver of that performance.
Private rented sector
A balanced housing sector requires a strong, vibrant and well regulated private rented sector. Important steps have been taken in this regard in recent years with the establishment, via the Residential Tenancies Act, of the Private Residential Tenancies Board (PRTB) and the creation of real security of tenure, as well as the introduction and enforcement of higher minimum accommodation standards.
We are committed to building on this, and to making the rented sector a stable and attractive housing option for all, delivering true choice across tenures. In the short term, we intend to introduce legislative changes to optimise the efficiency with which the PRTB does its work and to bring tenancies in the voluntary and cooperative sectors within the PRTB’s remit. We will specifically address the illegal retention of deposits by landlords and the overholding of property by non-rent-paying tenants in that context. In the longer term, the provision of equitable regulatory treatment for all forms of non-ownership housing, and how best to enhance the stability of the sector, must be considered.
Affordable housing
If a household is capable – through the resources it has available to it – of renting a high quality home in a vibrant community but lacks the resources necessary to purchase an equivalent home, that household does not need – particularly where pressures on resources are extreme and the resources available must be focused on responses to the most acute housing needs – assistance from the State
As a means of bridging an affordability gap between the cost of home ownership and household income, the concept of ‘affordable’ housing reinforces the high and often disproportionate value placed on owner-occupation that has been so detrimental to Ireland’s society and economy. Subvented affordable housing is a symptom of and not a solution to housing market failure.
If the Government’s approach to housing is successful in not repeating the mistakes of the past through over-stimulation of the market, there should be no need for national programmes of affordable housing provision by the State. The Government is
therefore standing down all existing affordable housing programmes to reflect current affordability conditions.
These will be wound up as part of a review of Part V of the Planning and Development Act 2000. The decision is not being taken to end Part V fully. There is a continued rationale for capturing planning gain for residential development through resourcing of socialhousing supports.
What’s interesting to me is that the policy is actually very good. Reading this you’d be hearted to think that an intelligent and forward looking government was in charge.
To document
- recognises that the bubble was a bubble, and that we have to find a better way
- states that the paradigm with home ownership as the ultimate goal for every citizen needs to change
- recognises that people should be able to rent in a stable environment as an affordable long term option
- pledges to deal with lending policy, planning and other areas to ensure that the bubble doesn’t happen again
In the real world, we have rents in central Dublin back up to bubble levels; tax relief has been introduced to stimulate home purchase; no rules have been put in place to control lending; home owners are protected in their ‘family homes’ but renters are not. Everywhere you look the ‘high prices good, low prices bad’ mindset goes unchallenged.
It’s as if the government knows the right thing to do, but doesn’t have the courage to do it.
