Louise Holden on the dire state of the student accommodation market
'This is the worst year for student accommodation in Dublin, according to the Union of Students in Ireland." This bleak conclusion was reported in The Irish Times in September 1996. The pressure on housing in Ireland has only mounted since then. Last year's crisis is this year's "catastrophe" according to USI. Plainly we can't keep lurching from one gloomy expression to the next before we hit "meltdown". What is to be done to address this problem?
According to Colm Jordan, president of USI, there is only one solution to the student accommodation crisis - take students out of the private rented sector. "There are 80,000 students in Ireland and half of those are living away from home. These students are competing for private rented accommodation with families, professionals, immigrants, the unemployed - in short, the rest of us. What we're saying is, lets get them out of the picture and free up accommodation for everyone."
Recently, the USI staged a protest outside the Department of the Environment to highlight this point. Jordan emphasises that the objective of USI's campaign has implications for the entire Irish housing issue, and not just student accommodation. "We're asking the public to tell the Government to kick students out of the private rented sector altogether," Jordan contends.
This would involve a new approach to student housing, but a sustainable one, in Jordan's view. "The exchequer needs to fund on-campus accommodation at a far higher level than at present. Only 6 per cent of Irish students live on campus in Ireland, as opposed to 28 per cent in the UK. Government-funded student accommodation would be cheaper to develop than local authority housing, it would decrease demand in the sector generally and it would ultimately provide a lucrative revenue stream for the exchequer." This would involve a huge and urgent investment now, but it would not be long paying dividends, Jordan contends.
Student representatives have little faith in current government schemes to free up accommodation. Tax relief introduced under section 50 of the Finance Act 1999 was designed to ease the accommodation crisis for students by encouraging the provision of housing for third-level students at or within an 8km radius of campus facilities. The scheme comes nowhere near to tackling the problem, Jordan maintains.
Under the relief, investors in rented residential student accommodation are allowed to write off all of construction, conversion or refurbishment costs against the rental income from the student apartment. The investor must own the apartment for 10 years to avoid a clawback on the tax relief and the properties must be certified by a third-level institution in accordance with government guidelines.
Jordan and his colleagues believe that Section 50 is full of holes and their contention was partly vindicated in July when the Minister for Finance, Mr McCreevy, was forced to address the tax avoidance potential in the scheme which could have cost the exchequer millions.
The trouble now, according to Jordan, is that the closing off the tax loophole has made section 50 even less attractive to investors, and may even herald the cancellation of some planned student accommodation developments. "I believe that the tightening of this tax loophole has prompted a severe rethink amongst some developers where Section 50 is concerned," he says.
The other weakness in the system is its 10-year lifespan which Jordan says will undermine the sustainability of Section 50 developments. "Even if Section 50 development potential was fully realised tomorrow, it still wouldn't touch the student accommodation crisis. We need to get students out of the private sector for good."
