Cian O’Callaghan | Ireland after NAMA
There has been much discussion, and not a little disagreement, about the Housing Bill 2016 (Housing Miscellaneous Provisions Bill 2016) currently going through the Seanad. In essence, it is the Government’s attempt to ‘fast track’ the delivery of new housing units. And while there has been some debate about a small number of legislative changes that will, potentially, give tenants more rights, the bill offers an example of more of the same, rather than fundamental departure, in terms of the housing policy pursued by successive governments.
In this post, I want to do two things. Firstly, I want to look briefly at some core points of the bill with a view to identifying where they depart or continue existing policy. Secondly, I want to place the state’s approach to focusing on stimulating supply through incentivizing the development sector in a historical context.
The Housing Bill 2016
The Housing Bill 2016 is generally a continuation of the kinds of housing policies successive governments have been pursuing for years now. Its basic premise is to remove (more) barriers to development in order to increase supply quickly. Most fundamentally, it assumes that supply is the single most important element of the housing problem and that remedying the issue of supply will have a ‘trickle down’ effect to subsequently alleviate the other crises of housing affordability, homelessness, and tenure insecurity.
As I want to argue below, this assumption is highly problematic, as borne out from historical evidence in the Irish context. But before I get to this, I want to briefly focus on three key points from the bill that have gained media and activist attention.
Firstly, the bill includes a clause to curb wholesale evictions when a property is sold to a large investor. It builds on the so-called ‘Tyrllestown amendment’ by including a provision that landlords with 20 properties or more cannot evict tenants when selling to an investor. This protects against a particularly high-profile form of eviction, but one which is perhaps very limited in the overall scheme of things. Some estimates suggest that this will affect only 0.56% of landlords*. Moreover, a new get-out clause was also included in the bill, which allows a landlord to pursue a vacant sale (i.e. evict existing tenants) if they can prove that the value of the sale is decreased by 20% as a result of occupancy. Given the current market conditions it may not be difficult for landlords to ‘prove’ this.
Secondly, the bill makes provisions to amend Part 4 Tenancy by removing the six-month window at the beginning and end of a four-year lease agreement in which a landlord can terminate a tenancy. This improves the rights of tenants but offers limited protections in a context where a number of other gaping loopholes exist that allow landlords to terminate tenancies. Moreover, in a context where rents have increased by 40 per cent since 2011 this will do little to combat the tsunami of economic evictions taking place.
Thirdly, the bill proposes to give increased powers to An Bord Pleanála by introducing new ‘fast-track planning permissions’ for ‘strategic housing development’. This removes planning powers, in particular instances, from the local authorities. The bill proposes that:
“Applications for permission for strategic housing developments shall be made direct to the Board (An Bórd Pleanála) and not to the local planning authorities.”
The rationale here is to reduce the time it takes developers to secure planning permission, and thus reduce the overall time it takes for new housing supply to come on stream.
In the Irish planning system, An Bord Pleanála operates as an adjudicator of last resort on planning decisions made by local authorities: “Anyone applying for planning permission and anyone who made written submissions or observations to the planning authority on a planning application, can appeal a subsequent planning decision to An Bord Pleanála”.
As such, the ‘fast track’ approach, while ensuring a quicker process for developers, potentially removes one more avenue for community opposition to new development. Given the less than exemplary recent history of sustainable development in Ireland, the removal of recourse to objection is potentially worrying.
It has been documented in academic work by Linda Fox-Rogers and Enda Murphy and Gavin Daly that during the boom local authority planning departments were put under pressure to deliver favourable planning outcomes. One mechanism used was the incorporation of ‘pre-planning’ talks, whereby a developer submitting an application could avail of extensive meetings (even negotiations) with the planning authority to ensure that a planning application could fit the criteria to be granted permission. Will An Bord Pleanála, which is an independent body, now also be expected to engage in pre-planning discussions with developers given the political pressure to quickly increase supply? If the answer is yes, it could seriously undermine the independence of the authority. If the answer is no, the new measures might well fail to deliver the fast-track supply of housing the bill promises.
Underpinning the bill as a whole is the assumption that the supply of housing is the biggest challenge to overcome. This dogma, although increasingly challenged by various housing experts, is stubbornly trotted out in the media by politicians and vested interests. This simple formula for solving periodic housing crises, namely increase supply through removing barriers to development and incentivizing the construction and investment sector, has had a long history in Ireland, with highly variable outcomes.
Build it and they will come
This approach has deep roots in the history of Irish Housing Policy. Indeed, the first Fine Gael government sought to deal with a crisis of tenement housing by offering grants to incentivise higher income families to take out mortgages to buy their own home, thus freeing up units in tenements for low income families. When Fianna Fail came to power in 1932, they instead embarked on a programme of building social housing, in the process offering incentives for the construction sector during a period of relative economic stagnation. These two moves set in place the conditions that have remained stable in Irish housing policy since – a focus on homeownership as the optimum model of housing tenure and a close relationship between the successive Governments and the construction sector. These close relationships have provided fluctuating outcomes for Irish housing.
To take two broad, and broadly different, examples.
Firstly, attempts by the state to solve period social housing crisis have in the past focused on strategies to increase supply and/or renovate existing stock. Moreover, this has often been achieved through incentivizing the private sector. For example, the plans to create Ballymun emerged in the context of a crisis of tenant housing in Dublin city centre. Built using new rapid-build materials, Ballymun was intended to as modernist utopia delivering a large supply of working class housing. However, while the development proved a relative success in the early years, the state’s failure to deliver local jobs coupled with the withdrawal of Dublin Corporation investment and general upkeep of the flats led to spiralling social problems in the area. The supply of housing alone was not enough to make the community sustainable.
However, when the regeneration of Ballymun was slated in the 1990s, the focus was once again overwhelmingly on the ‘bricks and mortar’ approach to supply. Although the plans included provisions for community and economic regeneration, these promises remained largely undelivered by the state. Moreover, the regeneration was to be financed by the construction of new private housing units on site, which was expected to also lift the economic profile of the area. Thus, what the community got was new public and private housing units, but less in terms of long-term investment in the community or the local economy. The regeneration during the 1990s failed to deliver on long-term community development because of a focus on a supply of housing units rather than taking a more holistic view of housing.
Despite these problems, the Ballymun model of regeneration became the template for regeneration schemes in places like Cork, Limerick, and Dublin. Using a Public Private Partnership (PPP) approach, regeneration of social housing was expected to deliver new social housing, enhance community development, and deliver private sector housing supply. Moreover, it was expected to do this by incentivizing the private development sector. Many of these PPP schemes collapsed with the property crash, leaving communities high and dry.
Secondly, from the 1986 Urban Renewal Act on, the state introduced a series of tax incentive schemes to increase the supply of property development in urban and rural areas. This was a major factor in kick-starting the Celtic Tiger property bubble, which saw an astronomical increase in the supply of housing. Between 1991 and 2006, 762,541 housing units were built in Ireland. However, this supply did not lead to more affordable housing. In fact, house prices increased by between 300 and 400 per cent in different parts of the country.
The tax incentive schemes were extended far beyond the point at which they were necessary. These policies to increase supply were a key factor in the creation of the 2,846 unfinished housing estates identified in 2010, including 78,195 complete and occupied units, 19,830 under construction, 23,250 complete and vacant, and planning permission in place for a further 58,025.
Moreover, the unregulated development that resulted from reducing the barriers for developers actually undermined the creation of sustainable communities built around strong transport links and services. One of the reasons planned developments like Adamstown and Clongriffin failed to deliver on their promises, for example, was that unregulated development in neighbouring local authorities undermined plans for the timely delivery of schools, transport links, and other amenities in tandem with the phased delivery of housing.
Following the crash, there was little legislative change introduced to the planning system. And while the development sector has been significantly affected by the financial and housing crash, this has been the impact of external factors rather than designed through government policy.
The current housing and homelessness crisis is a direct outcome of the series of systemic problems created throughout the boom and the policy responses to the crash that ignored issues like mortgage debt, the decline in social housing provision, and the changing character of the rental sector, and continued to support existing and new development interests.
More than supply
The Housing Bill aims to solve a series of complex problems in the housing system through a short-term intervention to increase supply. While this might be what vested interests in the sector need to get building in the short term, it will only exacerbate conditions for most of us with regard to our access to secure and affordable housing.
It foolish to assume that focusing on the needs of the same vested interests will remedy these problems. Firstly, because they have never solved these problems in the past and indeed created many of them. Secondly, because the housing market has changed since the crash.
For financial actors, the rental market has become more profitable in recent years as a form of investment. For international funds, in particular consistent rising rents is essential for them to return growing profits on their investments. As such, a greater supply of rental stock will not mean more affordability – there will still be pressure to push up rents. In combination with the incentives for first time buyers, measures supporting developers, landlords, and investors will only serve to further inflate the housing market.
In the meantime, the clear and modest demands to increase the supply of social housing, or improve tenants’ rights are being side-lined. For example, the Secure Rents campaign asks for three things: to regulate increases in rent by linking rents to the Consumer Price Index; to revoke the right of landlords to evict tenants for the purpose of sale; and to move from current 4 year leases to indefinite lease terms. These provisions are not radical by any means, but rather start to address some of the imbalances between the rights of tenants and those of landlords. Indeed, tenant rights are particularly poor in Ireland in comparison to the rest of Europe. These provisions would not unnecessarily penalise developers, landlords, or investors. But they would slow down some of the crisis conditions.
More starkly, within the context of a housing crisis of unprecedented proportions, the Irish Housing Network have made a call for a complete ban on evictions. It is worth remembering here that the number of homeless people in Dublin has risen by 35 per cent in a year.
In sum, the Housing Bill is unlikely to change the current system to any great extent – in terms of tenants, the new amendments will not make much of a dent, while in terms of development interests, the changes are just the latest iteration in a long-standing state support for this sector. But in the context of the current housing crisis, this response is inadequate at best and has the potential to worsen the problem.
The assumption of supply being the most significant factor is highly problematic, as we can see from historical evidence. The evidence suggests that relying on the logic of supply (without considering issues of affordability and security of tenure) will create increasingly dysfunctional housing systems. It is time that we finally took stock and addressed the bigger housing problems that repeat themselves.
This is an emergency. And an emergency requires new thinking.