Houses are for living in

19th December 2001

There are two ways of looking at a house. One – it is somewhere to live. Two – it is something to be traded.

The Government has decided on the latter while the vast majority of fair-minded people in this country believe it to be the former.

And so it has come to pass, upon the season of ‘no room at the inn’, that the coalition has completely sold out to the property lobby.

They have decided that investors are the only people to provide housing and that a considerable number of people in Ireland can never look forward to owning their own homes.

Instead people who already have money are being asked to buy houses to provide rented accommodation to those who can’t afford housing because the same investors have outbid them. Mad, isn’t it?

The number of housing starts have dropped and it has been blamed on the lack of investors. Very little evidence has been produced to support this.

The more likely reasons are that builders are finding land outrageously expensive, that building labour has become expensive and scarce, that it is increasingly difficult to get planning permission and that the Government’s own 20 per cent social housing policy has put builders off.

Investors will now pay the same stamp duty as first-time buyers and will be able to claim tax relief on the mortgages. So now the state is subsidising investors.
What is particularly pathetic is Charlie McCreevy’s assertion that this is being done for the benefit of tenants – given that under this Government tenants have almost no rights.

The enormous hike in rents over the past few years is due to Government inaction in providing social housing and in a total absence of policies to control the price of housing.

One sector that has felt the pressure is the student population and it is this sector that could benefit most from direct intervention by the Government. A tax break has been introduced for student accommodation and about 7,500 units are being built. It sounds impressive but it will still leave Ireland far behind direct provision of accommodation for students and it is uncertain how many of these units will actually be available for students.

The Government needs to invest directly in accommodation on campuses. This could have three major benefits. Firstly, it would provide direct, affordable and appropriate accommodation for students. Secondly, it would reduce pressure on rents. Thirdly, it would reduce pressure on public transport at peak times.

The major failure of the Government is its unwillingness to intervene directly in the housing market. It refuses to set a target price of home for first-time buyers. It fears that any attempt to reduce prices could have a major backlash from the middle classes and those that have bought recently. The words ‘negative equity’ looms large over the Government policies.

This is ridiculous. The increase in wealth of home-owners is largely illusory. Even though your house has trebled in value you can’t cash it in unless you want to move to Leitrim. The bigger house you had your eye on has also trebled in value.

Meanwhile, the price for first-time buyers is not illusory. A large number of first time buyers now depend on their parents to put down deposits. Another large number have moved onto the social housing lists even though the number of new local authority houses has declined year on year.

The answer to this is for the Government to buy land and build houses.

The cost of building a house in Dublin is about £90,000. How do I know this? Because this is the sort of figure that Dublin Corporation is quoted from builders tendering to build the few council schemes that they have going. This includes profit for the builders.

The critical factor is the land. There is a huge amount of good building land around Dublin lying idle. Speculators are sitting on it waiting for the right price. The Government should CPO it, paying reasonable compensation.

This would be entirely legal – all you have to do is zone it for affordable housing. If you can zone land as amenity worth nothing, then surely you can zone land for housing for, say, £20,000 an acre.

The houses could then be sold on to first-time buyers under the shared ownership scheme.

The other failure in Irish housing it the still-birth of the voluntary housing sector here. The Government could kick-start the sector with capital allocations in the order of £20 million. These organisations, usually housing associations, can then become self-financing.

I honestly don’t expect this Government to do anything of this nature. I half-believe that its 20 per cent social housing policy was designed to look good but to fail. Then the coalition could claim that direct intervention didn’t work.

Whatever about the ideology, housing is turning into a bitter experience for many young people. In Lucan, for example, while there are hundreds of families on waiting lists, less than thirty houses have been built this year.

It is really time for people to get angry about this.