It’s not just the housing system that is broken in Ireland, the politics around it is broken too. In a radio interview last week, Taoiseach Leo Varadkar was trying to defend Eoghan Murphy’s poor tenure as Minister for Housing, Planning and Local Government. “He didn’t cause the housing crisis, we know who’s responsible for that.” He wasn’t challenged on what he meant, and oddly he’s never been asked how he believes the housing crisis began, so let’s bring him up to speed.
When Fine Gael came to power in 2011, there was no housing crisis, despite the crash being three years old. Rents were low, houses were affordable and in supply, and the total in emergency accommodation was 3,800. After eight years of Fine Gael, the figure is more than 10,000 and Dublin rents have more than doubled. So who is responsible? Fianna Fáil? Hardly, considering that practically the only blessing from their mismanagement of the economy was house prices and rents crashing through the floor.
The crisis was born, inadvertently perhaps, out of policy decisions made by the Department of Finance after 2011. Fine Gael inherited a vast State land bank in the form of Nama. To take the sting out of austerity and reboot the property market, Michael Noonan ordered a fire sale of assets. To entice the few investors available worldwide, he threw in generous tax incentives. This came in the form of barely taxing capital gains when investors flipped properties, and not taxing the profits landlord firms made on rents.
Planning rules
It wasn’t a terrible idea, it was just very, very badly executed. Firstly, the properties were packaged in such enormous lots only non-developer investment funds could afford them. This meant a lot of vacant land changing hands from taxpayer to private funds without anything being built on them. At the same time, the Labour-run Department of the Environment kept changing planning rules, making it harder for the few developers who survived the crash to build apartments profitably. When the recovery began, housing problems grew.
Fine Gael failed to foresee how creating a situation whereby large funds would buy thousands of apartments meant they could set the price of rent for whole cities. What’s baffling is how the Government never called a halt when the problems arose, and still won’t while those problems intensify. Rents rose, pushing families, including working taxpayers, into housing services.
There’s no end in sight for the incentives. Corporate landlords have had their fun, made huge profits, nudged out potential homebuyers, so surely now they can contribute?
Fianna Fáil made loud noises about ending the incentives for investment funds . Well now’s your chance, lads – there’s a budget in a few months, what better time to close loopholes than in the finance Bill? They are notably silent. Murphy was also on the radio last week, preposterously bragging again about so-called “co-living”. These overpriced rentals are upgraded student-like digs, aimed at transient multinational professionals who can afford €1,500 a month per tiny room. Some have pull-down beds. “Co-living” is estate agent jargon but politicians and journalists now use the word without qualifying it.
Murphy likened these overpriced digs to “boutique hotels”. He’s not entirely wrong, in that, like hotel guests, tenants in these expensive rooms don’t get normal tenancy rights. They can’t register their lease with the tenancies board and the accommodation is exempt from rent caps. “Co-living” projects are also exempt from including social housing, keeping the riff-raff away from top-dollar clients.
Muted Opposition
Across the floor, the Opposition has turned down its volume on the housing crisis. Sinn Féin’s decision to focus on the plight of homelessness rather than high rents impacting workers’ ability to save for deposits clearly cost them votes in the local elections. Other assorted left-wing groups also lost ground as voters turned away from impractical revolutionary talk around homelessness.
The left also doesn’t want to talk about the mass evasion of rent on social housing. Dublin City Council says more than half of its 25,000 social housing tenants are in arrears on their rent. It cannot be deducted from social welfare and privately council staff admit it’s taboo, given the sensitivity around the homeless, to suggest a tougher rent-collecting regime. Millions are lost every year in this broken system.
Most people simply want affordable rents in good locations while saving up to buy their own home. Helping them out would seem to be a big vote winner, so why isn’t Fine Gael listening? Why does the multibillion-euro industry that the housing crisis has become have greater sway with Government than renting voters? That Varadkar and Murphy are of the generation most affected, yet still do nothing, shows just how far from reality these two transition-year Cabinet chaps have drifted from real life. Perhaps the biggest failing of this “young” leadership is that after all the hype, Varadkar’s regime doesn’t differ at all from Enda Kenny’s.
Oliver Callan is a writer and satirist