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The housing crisis

A discussion document

Universal Declaration of Human Rights (Resolution 21.1)
Everyone has a right to a standard of living adequate for health and well-being for himself and his family, including food, clothing, housing, medical care, and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Declaration on Social Progress and Development (UN General Assembly, 1969)
The provision for all, particularly persons in low-income groups and large families, of adequate housing and community services.

Vancouver Declaration on Human Settlements (United Nations, 1976)
Adequate shelter and services are a basic human right which places an obligation on governments to ensure their attainment by all people, beginning with direct assistance to the least advantaged through guided programmes of self-help and community action. Governments should endeavour to remove all impediments to the attainment of these goals. Of special importance is the elimination of social and racial segregation, among other things through the creation of better balanced communities which blend different social groups, occupations, housing, and amenities.



European Union
While there are declarations on the right to adequate housing, no binding law has been included in any of the treaties or any of the parliamentary protocols enforcing this right or doing anything to promote an improvement in housing conditions. On the contrary, the social legislation built up after the Second World War and the measures brought into force under socialist and progressive forces in the nineteen-sixties are being dismantled.
     Member-governments have been under intense pressure to introduce market conditions in the buying and letting of houses and to sell off existing publicly owned stock. At the same time they are reducing the security of tenants in rented accommodation by abolishing rent control and shortening the length of leases, which in some countries were favourable to the tenant. Subsidies on rents are being reduced, and local authorities and housing associations are now being pressured to operate under market conditions. Nevertheless there are long-standing traditions in many European countries of a large public and rented sector with mixed social housing.

The Constitution of Ireland
The Constitution has no reference to housing as a right for all. The Universal Declaration of Human Rights is not legally enforceable and remains an aspiration, and the right to housing is not guaranteed unless legislated for in each country. The right to housing as a legal principle is a demand that should be campaigned for, and there should be pressure to have the Law Reform Commission include it in the proposals for revision of the Constitution. It is one of the most fundamental human rights, as it is the prerequisite for access to employment, social welfare, education, health, and participation in the political process. Many European countries have adopted this principle of housing rights. Belgium, France, the Netherlands, Portugal, Spain and Sweden have all incorporated this principle as binding on the state to provide for an adequate dwelling and the resources to be supplied to do so. Unless the policy of the European Union is opposed, these rights will be eroded.
     The rights of private property in the Constitution have often been cited as making any right to housing or the power to control the price of land or houses impossible. This has been disputed, as one right cannot completely deny another right; and the right to social justice and equality must be asserted against the right to private property.


Background


Ireland at the moment is facing a radical change in the demand for housing. We have had a society that promoted and regarded home ownership as the norm and something that everyone aspired to. 80 per cent of houses are privately owned; local authorities own just under 10 per cent; private rented houses account for 8 per cent, and co-operative and voluntary associations 2 per cent. This contrasts with about 50 per cent private ownership in the rest of Europe.
     The state saw itself as the provider of housing for those who could not afford to buy their own. Home ownership was encouraged by tax relief on mortgage interest. This system was biased in favour of the well off, and the concept of a house as not only a place to live in but an investment property is deeply rooted in the home-ownership class.
     The state never provided the number of houses required for the housing lists, particularly in the cities. The local authorities are moving out of publicly owned housing and are selling existing stock, moving from the provision of social housing to the provision of rent rebates through the supplementary welfare allowance administered by the Department of Social, Community and Family Affairs.
     As the country was relatively lightly populated, this philosophy of home ownership was not a great problem; but as cities, particularly Dublin (which now has over a quarter of the country’s population) became crowded, this put pressure on the supply of building land.
     At the same time, land speculation and the buying and holding of land for sale later at exorbitant profits became a huge problem. Fianna Fáil’s links with the building industry meant that they did nothing to regulate this, and the price of land soared in urban areas.
     From the nineteen-sixties, urban working-class areas have been cleared; and while some new housing, usually in the form of flats, was built instead, there was a massive move of large public housing estates to areas far outside the city. Families were separated and communities broken up.
     In those communities still living in the city there is the new phenomenon of “gentrification,” where well-off people are buying flats and houses and renovating them. This puts impossible pressure on remaining tenants and their families. On the one hand there is the pressure to sell and on the other hand the impossibility of local people being able to buy at the new inflated yuppie prices.
     The enormous increase in house prices of 71 per cent (92 per cent in Dublin alone) since 1994 means that home ownership is becoming impossible for many. (During the same period the consumer price index rose by 9 per cent.) However, no other means of obtaining a secure home has been created, nor has there been any real development of public housing programmes.
     The increase in the price of houses over the last few years means that it now requires two incomes to buy a house, and even this is now not enough. This in turn exacerbates the problem of the price of housing. In the United States and most European countries the price of a house is usually three or at most four times the average income; in Ireland at the moment it can be from five to ten times the average wage. Banks are lending far in excess of the usual two-and-a-half times the basic wage plus, if there is a second earner, the second wage. This is causing enormous stress and is changing the nature of society.
     Rather than tackle the right of private property and the land speculators, the Government offered huge tax incentives to landlords to provide rented flats and houses, and we now have a new landlord class making massive profits on the young people now needing accommodation. Apartments are going up all over Dublin, with few rights for tenants and no provision of amenities when many of this group of people start to have families. 30 per cent of loan applications were from investors, and the Government has had to take away the provision for interest on borrowings being allowed against rental income, as it realised that it was exacerbating inflation. In fact over 50 per cent of house-buyers in 1998 already owned a house, 23 per cent had rented, and 0.1 per cent were local authority tenants (Annual Housing Statistics, 1998).
     At the same time, local authorities have almost stopped building houses. In 1998 all local authorities combined built 2,771 houses, and 2,006 were sold. This is amazing, considering that there is a waiting list of 43,000 households.
     The present position is that the price of houses has reached impossible heights and is threatening the economy, as it is dangerously inflationary. The Government and financial institutions are aware that this cannot go on, and so the Government is setting up all sorts of commissions and consultancy groups to curtail this trend, without actually tackling the core of the problem, which is that the building industry will have to be directly curtailed, both by the regulation of building land and prices, and an alternative method of finance found to the banks and building societies. The Kenny Report in 1962 proposed radical measures to prevent speculation, but it was never implemented.
     The proposal in the Planning and Development Bill that 20 per cent of building land be given over to local authorities for “social housing” is an attempt to compensate for the European Union’s requirement that local authorities not directly involve themselves in providing housing, while at the same time realising that any country that calls itself civilised must provide a certain amount of public housing. It also realises that the totally divided class system in housing means class polarisation and alienation.
     However, some of these proposals are worth while, and all efforts should be made to resist the opposition of the builders to these plans. The idea of mixed housing is certainly one that is long overdue and will somewhat redress the division into privately and publicly owned housing, with the attendant snobbery and class division and consequent alienation.
     The most recent effort to address this problem of soaring house prices and the inability of many people to meet the financial criteria for a loan has been the report of the Bacon Commission. There were two reports: (1) An Economic Assessment of Recent House Price Developments: Report to the Minister for Housing and Urban Renewal, and (2) The Housing Market: An Economic Review and Assessment. This report identifies three main problems within the framework of the capitalist economy and supply and demand as the accepted method of operation in the housing market.

The three areas identified were:
     1. An increase in the number of people looking for housing because of the age structure of the population, change of type of household, immigration, and the increase in size of the work force because of changes in the number of women working and the consequent increase in income available.
     2. Shortage of supply of housing because of the release of land and serviced sites, infrastructure problems in servicing these sites, and general infrastructure shortages in transport, roads, and amenities.
     3. The availability of loans to finance house purchase.

The main proposals for a solution were:
• Making more land available, including areas in the Dublin region formerly classified as “green-belt” areas. This proposal suggested a reduction in capital gains tax to persuade land speculators to sell their land. This was put into operation, and a rate of 20 per cent is now imposed until 2002. So far this has not produced the figures expected.

• Speeding up the process of servicing sites. Local authorities have to produce plans to achieve this; one of these is the Serviced Land Initiative (SLI). This puts enormous financial burden on public funds.

• Designating certain areas for development, with tax concessions for landowners and builders in these areas.

• Increasing the density of housing allowed, thereby reducing the cost of houses and the services that go with them, namely water supply, sewerage systems, and the amount of land itself.

• Changing the criteria for the evaluation of entitlement to a loan by lending institutions.

• Considering a decentralisation of the economy.

• Encouraging the private rented sector, with an encouragement of private investors into this area.

• Establishing a legal structure to encourage investors, with the statement that the rights of the tenant must be taken into account as well. In fact, of course, these things are mutually exclusive.

• Extending the Shared Ownership Scheme between local authorities and individuals and raising the income limits, with new alliances with this scheme to include the private sector. It was also suggested that voluntary bodies might become involved. One statistic given was that the system is not working for lower-income applicants as they now cannot afford even the reduced rent or mortgage payment.
     One thing that was clearly stated was that they would not advocate any measures to reduce current house prices, as that would affect those already owning houses. It was also stated that they would not curtail landowners or builders in the prices they charged for the sale of either land or houses.
     They also warned against increasing the Shared Ownership Scheme before new houses came on the market. So the only way forward is to increase supply through the methods above and not through any regulation of the market.


Solutions

• Compulsory purchase of any land that has not been developed in the last three years. The Housing Act (1998) says land that has not been developed in the last five years, but this is not enforced.

• A levy on the development of land where the return exceeds a given percentage per acre over its undeveloped (usually agricultural) price. The Irish Home Builders’ Association has estimated that average site prices in Dublin have risen by 200 per cent since 1995 and in 1998 accounted for 31 per cent of the average price of a house, compared with 21 per cent in 1995.

• No further sale of local authority housing.

• Resume the public housing building programme at levels far greater than the 3,500 units now the norm by local authorities. The Government has now promised that 32,000 new houses will be built in the next four years. A third of these are to be financed by voluntary or non-profit organisations. This is still only 8,000 houses per year for the whole country, while the local authorities are still selling housing stock at the rate of 2,000 a year. How and when are the 43,000 people on the housing list to be housed?

• A firm commitment from local authorities and the Department of Social Welfare Community and Family Affairs to withdraw from the use of private housing and the landlord system to house any housing applicants. This system means a transfer of public funds directly into the hands of private landlords. It is wasted public money, and the tenant is no better off than before. A third of people living in private rented accommodation receive rent assistance. Through the supplementary welfare allowances £88 million was given in rent in 1998, and this is now heading for £100 million. This compares with £14.1 million in 1991.

• The removal of tax incentives for the purchase of houses and flats for rental purposes, even in the designated development areas. There is enough profit in rental income without in effect giving a tax subsidy to landlords as well.

• No rezoning of amenity and green-belt areas, no matter what the shortage. This shortage could be met by local authorities acquiring privately owned land at a price laid down by legislation. (This was already recommended by the Kenny Report.) Also, the Government must be responsible, in the interests of future generations, for ensuring that economic development is spread evenly over the country and that urban areas are not destroyed environmentally.

• A national plan to decentralise the economy and stop further growth of the larger urban areas.

• A restriction on the purchase and use of holiday homes in rural areas.

• A Government regulation on house price levels to ensure that the price of new houses relates more closely to the cost of buying the land and the actual cost of construction of the houses. House prices have increased three-and-a-half times faster than house building costs over a four-year period.

• An insistence by the Government on the implementation of the proposals in the Planning and Development Bill that 20 per cent of individual housing sites be transferred to county councils for social and affordable housing and to ensure a “social mix” content of new house-building schemes.

• A much broadened mode of operation of the joint local authority and private-owner house purchase scheme. This scheme should apply only to new housing outside the local authority stock, and preferably only to co-operative housing schemes. This exclusion should continue until more housing becomes available in the public stock and is more than the prospective sales permitted. Local authority tenants are not in dire need of housing, and equity in their ability to buy must wait until more people have houses and until the new mixed social housing schemes get under way. A raising of the upper income limit should take into account the exorbitant house prices that now exist. Indeed, with more mixed housing people would no longer have the need to buy a house, and the stigma attached to public housing would disappear.

• A co-operative housing organisation should be set up, with Government funds, with the object of providing a non-profit service in house building and the management of purchasing and deposits. This would mean a Government-guaranteed loan, a local authority loan, and a deposit from the applicant, which would vary depending on ability to pay. Much more support should be given to the existing non-profit sector: the Irish Council for Social Housing, the National Association of Building Co-operatives, and the City Housing Initiative.

• A recognition that the credit unions are ideally suited to replace profit-making building societies and banks in the provision of housing loans. In allowing this change in the function of the credit unions it would have to be ensured that the original non-profit nature of the movement would continue and could not be altered. It is vital to stop the moves by Charlie McCreevy, under pressure from the banks and building societies, to tax the credit unions.

• It has been proposed that trade unions could become lenders; but trade union money should be put to use within the area of union members’ services, and must be available in case of strikes.

• Where a house has been bought from the local authority up to now, and in the case of rental purchase schemes under the new proposals above, if an owner wishes to sell they should sell the house back to the body that originally financed it, or gain a credit for a different type of housing (for example where they needed larger accommodation), or sell at an agreed price to another person on a waiting list for rental-purchase.

• There should be no dismantling of the tax relief on mortgage interest payments on an owner-occupied house, with relief restricted to an upper mortgage limit of the average price of a typical family home. This would apply to one house or, if sold before fully owned, the transfer of the relief to take into account the amount already received and the profit received on the original house.

• A Government regulation on house price levels to ensure that the price of new houses relates more closely to the cost of buying the land and the actual cost of construction of the houses.

• The provision by universities of housing units within their control with Government assistance would mean less pressure on the private rented sector. Since students always need accommodation, this is a guaranteed market and would pay for itself over time.

• There must be a recognition of the changed nature of housing requirements in modern society, including a greater need for single-unit housing for a young, mobile population, one-parent family housing, and smaller housing needs for an ageing population.


Homeless people


Local authorities should recognise the increasing need for secure housing by a growing number of homeless people, and to this end they should ensure that the proportion of the local housing stock that is supposed to be set aside for this group is actually used by them.
     They must acknowledge that the use of temporary shelters and bed-and-breakfast accommodation is short-sighted and expensive. As well as providing the accommodation, there should be support services to ensure that the conditions for remaining in the tenancy are established as well.
     The number of people in this group has increased over the last few years, for several reasons. The health boards have released a large number of people from institutions, without establishing a proper system to secure these people in proper accommodation and with support facilities to enable them to function reasonably independently.
     There is an increasing number of people who cannot afford to rent or buy their own home because of impossible house prices.
     The increasing alienation of young people, with its attendant anti-social behaviour and drug abuse, means that these people have special housing and social needs. People working in the Combat Poverty Agency and other experts estimate that the number is 5,000 and expected to rise dramatically in 2000.

The Gaeltacht


• There must be a recognition that the Gaeltacht is an area that needs special protection in order to preserve its language and heritage rights.

• Special subsidies should be made available to the children of Gaeltacht families to stay in the Gaeltacht areas.

• No further holiday homes should be allowed in these areas.


Travellers


• There must be a recognition that Travellers have special housing needs and rights.

• To those who wish to continue travelling, an increase in the number of halting sites is necessary.

• An allocation of local authority housing within mixed communities should be specifically set aside for Travellers who wish to settle, with the services to help with settlement and integration. The number of households needing accommodation is over 3,000.


Rental accommodation


The rights of people depending on private rented accommodation are almost non-existent. The emphasis has always been on the rights of private property, and protection of the landlord.
     The Government should immediately implement steps to redress the enormous injustice perpetrated on this ever-increasing group of citizens.

• There should be a realistic tax allowance, comparable to the amount of mortgage interest relief granted to private house owners.

• Leases should be for much longer periods. The norm should be a minimum of a ten-year lease for those wishing to have longer tenure.

• Rents should be legally regulated, monitored by specially appointed inspectors, with recourse to rent tribunals and mediators.

• Notice to quit should be much longer than the four weeks required at the moment.

• There should be regulation of deposits, with legal guidelines for their return and the matter of who gets the interest being examined.

• There is a need in the short term for more unfurnished accommodation, which allows for greater security and satisfaction, especially to families who need more than temporary furnished accommodation. How this can be achieved is open to discussion.

• The tenant should have a right to the full use and enjoyment of the property, with greater freedom to decorate and use it without restriction or permission within the norms of not changing the structure or use of the accommodation.

• A right of privacy from landlords or their agents should be recognised.

• Where furnished accommodation is in question, good-quality furniture and fittings should be provided. These items should be replaced without fear of the rent being raised or of the tenants being evicted.

• All evictions should be banned, except where the local authority provides a normal housing alternative.


Immigration


There is an increase in the number of Irish people returning to live in Ireland as they see more employment opportunities, and these numbers should be taken into account in any housing plans. However, employers and the Government have now proposed a plan to increase the work force by means of incentives for people from outside the country, thereby putting increased pressure on housing.
     The solution is for the nature of the development of the economy to be looked at carefully before any such plan is implemented.
     What industries need imported labour? The tourist industry is one of these, developed by the present Government. This is of questionable value to any country, as the development of a tourist economy usually means the destruction of the country.
     Another area is in the computing field. This is a very dangerous area, as the companies involved in this have no commitment to the country, and as soon as they see another country producing cheaper labour they will be off. This is already happening, as companies are moving operations to Asia. What will happen when the new people become unemployed?
     The building industry has also been bringing in cheap labour. It is ironic that the employers are complaining of a shortage in this area while not recognising the rights of the workers already employed, by arresting picketers for demanding proper regulation of the industry.
     If people are brought in from outside the country it raises complex questions of the right of a country with a so-called worker shortage inviting people of skill to come away from their own country and families. This takes away the skills from their own countries and puts stress on their family life. In the first instance the plan is to encourage Irish people to return, but it specifies people with skills, particularly in the technology area. What about the unskilled Irish abroad? Are we to encourage only a “better type” of Irish person to come home?
     From Ireland’s point of view, immigration puts increasing demands on housing and other social facilities, while the proportion of gross national product being spent in this area is the third-lowest in the European Union and decreasing all the time.

Appendix

Relevant legislation
Housing Acts
Housing Act (1988)
Housing (Private Rented Dwellings) Act (1982)
Housing (Private Rented Dwellings) (Amendment) Act (1983)
Housing (Private Rented Dwellings) Standards (1984)
Housing (Miscellaneous Provisions) Act (1992) and Regulations
Landlord and Tenant (Amendment) Act (1980)
Finance (No. 2) Act (1998)
Planning Acts
Local Authority Acts (1963–1993)

Housing Bills
Planning and Development Bill

Government housing commissions and planning groups
Report of the Committee on the Price of Building Land [Kenny Report] (1973)
Social Housing: The Way Ahead (1995), Department of the Environment
The Housing Market: An Economic Review and Assessment [Bacon Report] (1998)
Commission on Rented Private Accommodation [still to report]
Action on House Prices
An Economic Assessment on Recent House Price Developments
Administration of Rent and Mortgage Assistance: An Interdepartmental Commission on Issues Relating to Transfer of Administration of Rent and Mortgage Supplementation
Commission on House Price Statistics [being set up]
Planning Group on Local Authority Rent Assistance [being set up]
Consultants to prepare a Model Housing Strategy [being set up]



Statistics

Census of Population, 1966
Housing Statistics Bulletin, 1998



House-buyers by occupation (percentage share)

Employers and managers Non-manual workers Skilled and semi-skilled Unskilled manual Farmers and fishermen
1994 37.7 26.5 26.5 7.3 2.0
1995 41.9 24.1 24.2 6.6 3.2
1996 44.3 23.3 23.2 6.4 2.8
1997 52.2 19.5 20.3 4.4 3.7
1998 52.9 22.0 19.9 3.4 1.8
(Annual Housing Statistics Bulletin, 1998.)


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