Home truths: At last a proper plan for rental
IN ye olde tymes, court advisors were always wise. The king listened carefully to counsel. But when the advice was wrong and its pursuit generated fallout, the advisor lost favour... and his head.
The king removed blame from his own shoulders in the axeman's process and called the next wise guy up throneside...and also to the block. Long lived advisers took their time getting to the point and usually steered wishy washy through the middle ground.
If recent Irish Governments were permitted to behead dud advisors they'd have had a guillotine on the Leinster House lawn instead of despatching unwise heads to better paid gigs in quangos, consultancies or Europe.
But long lived wiseguys too often make non committal wishy washy noises, which tweak and tinker, but essentially render no real change for policy.
So somewhat surprisingly, after four years of practically ignoring the housing crisis, this Government appears to have finally tabled a plan (or at least the bones of one) which could have a real chance of transforming Ireland's rental market for the better.
The policy proposals are outlined in a document tabled to the Cabinet this week by that council of counsels, the National Economic and Social Council (NESC), a panel of economists and experts appointed for three years to advise the Taoiseach. They may have taken three years to appear, but these proposals also appear to contain some of the bravest and also the most radical changes proposed for the Irish rental market in a generation.
But first let's recap the problem: a shortage of homes in city areas causes higher prices and forces more people to rent. In the absence of supply the rents are going up and also pricing out renters at the bottom end.
Increasing numbers of social welfare tenants are not getting enough money to pay current rents and in either case, landlords are doing whatever they can to avoid taking them. More affluent families - who once bought their homes and can no longer afford to do so - are flooding in and pushing the poorer tenants down the rental ladder.
Two thirds of these more affluent families don't want to rent at all, not least because they can be shoved out after 12 months in favour of even more preferable tenants.
Shoved off the bottom rung of the rental ladder, the people who can't afford the lowest rents are becoming homeless in huge numbers.
But despite years of rent increases, being a landlord hasn't been a barrel of laughs either. Aside from the values of their properties crashing through the floor from 2007 onwards, in 2009 full tax relief on mortgage interest was cut to 75pc. In recent years, landlords had property tax added to each home, a second home tax and various increases in costs to shell out. And if they get a problem tenant, it can take years to get them out.
The NESC report starts out by acknowledging the size of the problem now facing the Irish State and how vital the rental market has become. It states that as much as one third of Irish households will not be able to afford to buy their own homes going forward - in a country where home ownership has long been 80pc. Households now renting in our cities have increased - in Dublin to 34pc, in Cork to 29pc, in Galway to 40pc. So rental is here to stay for Irish families.
Thus far Government has been faced with two lobbies - one shouting for rent controls and the shooting of baddie landlords (controls can't hope to work without an increase in supply), the other cries for tax reliefs for landlords (these won't do the job without concessions to secure tenancies).
The NESC proposal is essentially an outline for a 'new deal' for Irish landlords and Irish tenants which could truly benefit both if applied and carried through properly.
On one hand the landlord gets tax breaks, most likely a resumption of 100pc mortgage interest relief. There will be real help ejecting rogue tenants (almost impossible to remove at the moment without costly and lengthy legal process). There might even be some extra tax relief for those taking social housing tenants.
On the other hand, tenants will get a longer lease (the suggestion is at least 10 years) permitting families to settle, find schools, and feel secure and at home. Landlords will be prevented from removing tenants to sell the property and the PRTB will be beefed up to assist in the rapid resolution of disputes. But most interesting of all, rent controls will apply on the basis of a figure founded on the local area rental average through the previous four years - a so called 'dragging anchor' system. So not fixed but with rises impeded.
The document is a 'menu' for future Government policy and much will depend on the flesh to be put on the bones going forward. Nothing to go losing our heads over yet. But a brave and honest start.