We need to share the pain if we are ever going to fix our spiralling housing crisis
Housing Minister Eoghan Murphy was at it again this week - announcing more measures here and there to salvage something out of the housing mess.
He cannot be accused of doing nothing to tackle the housing and homeless crisis. He keeps announcing initiatives which may help some of the people some of the time, but won't really cure the problem.
The housing crisis is itself akin to a badly-built house. Bad design, bad planning and bad building. Mr Murphy is like the builder who, instead of knocking it down and starting again, keeps trying to fix bits and pieces in a rotten structure.
He hopes, by introducing a suite of measures aimed at helping some people, the situation will eventually improve.
It isn't his fault. Responsibility for this piece of 'cowboy' building goes way back to 2010 and 2011, when valuable lessons about property were not learned.
The latest plan from the Housing Minister sounds helpful for some people. However, there is a lack of real details and substance behind these new announcements.
This week he announced three new ingredients into the housing mix - a new State-backed affordable mortgage scheme, an affordable housing scheme and an affordable rent scheme.
Most attention was given to the mortgage scheme which will enable people earning €50,000 a year (or €75,000 for a couple) to receive a low-interest rate mortgage of 2pc to 2.5pc for the duration of the loan.
You have to have been turned down twice by the banks to qualify and the scheme allows you to borrow 90pc of the mortgage on properties up to €320,000 in value in Dublin, Cork and Galway or €250,000 for the rest of the country.
This is a great deal if you meet the criteria, and can find what you are looking for within that price range. You will still have to come up with a €30,000 deposit.
It may be more attractive for people in rural areas who could now buy a bigger house than before because their monthly repayments will be lower.
The fact that the low interest rate applies for the full duration of the mortgage insulates these people from rising interest rates.
The question is whether there are enough people out there who meet the criteria and who can find, especially in Dublin, a suitable property. You can buy a family home in places like Swords or Clonsilla for that kind of money, according to asking prices.
The minister has set aside €200m for the first phase of this plan and he hopes that around 1,000 people/families will benefit from it. There is always a problem with helping people to buy expensive houses in a rising market, instead of finding ways of making housing less expensive.
This scheme will be administered by the local authorities. Do they have the skillset to make judgement calls and risk assessments on lending €200m in subsidised loans to individuals and families? I doubt it.
However, the minister can argue that he is also trying to make more affordable houses available. He also announced an affordable-housing scheme on State land through which the State will take a small equity stake in the house, equivalent to the portion of the purchase price that covers the provision of the land.
This was announced nine months ago when Simon Coveney was in the job. During the week Mr Murphy said his department would do work to identify these land banks. But last April Mr Coveney announced how 2,000 hectares controlled by city and county councils, and the likes of CIE, IDA, etc, were being offered to private developers and housing associations.
It isn't clear how many houses can and will actually be built through this model. It depends on the amount of land that is eventually made available, who will the developer be and what price will attach to the houses be by the time they are completed.
The department might argue that the measure is significant because it signals the State's willingness to intervene in the market for development land. But it was announced last spring without any noticeable impact on the market.
I believe there is a more fundamental problem in the housing crisis which these initiatives do not address. It is a multifaceted mess but one in which there are different vested interests.
So far, the proposals from government, while imaginative in places and overly complicated in others, do not recognise that somebody has got to take some pain in order for the housing crisis to be solved.
You cannot make an omelette without breaking a few eggs. The housing problem will never be sorted with a win/win scenario for everybody. That just ends in tears for buyers and taxpayers.
So who should take the hits? Well, everybody has to give up something.
Planners need to lose out by having some planning restrictions on new-builds lifted, such as height restrictions and minimum amenities such as car park spaces.
Developers need to take a hit by being financially punished for not developing the sites they own but are not building on. There have been moves to introduce a levy on vacant sites but it has not been pursued with real vigour.
Local authorities have to play their part in ensuring that suitable sites are shovel-ready by putting in the relevant infrastructure. They also have to be forced into embracing the construction of social housing. There appears to be foot-dragging or even resistance to the 'hassle' of building, maintaining and operating social housing.
Landlords have to take a hit by absorbing rent controls. The rental caps that have been introduced in certain parts of the country are too little too late. They also favour the landlords too much by providing them with multiple ways of getting around them.
Accepting that nobody, could build tens of thousands of houses overnight, the pace of supply growth is very slow. The supply crisis has been allowed to fester for far too long and even rapid responses now will bring about their own difficulties such as overheating the economy, and that is if we could find enough skilled workers to fill the thousands of jobs such a building programme would create.
The rickety structure that is the housing market is not fit for purpose yet we are kind of stuck with it now. Three basic errors have been made in the housing situation in the last five years. They reflect a failure of our politicians but also social, cultural and economic shortcomings in our society.
1 We failed after the crash to realise the long-term social and economic value of not having to pay the earth for a roof over your head, whether you buy it or rent it. Much government inaction in the early years of the recovery seemed to focus on getting the property market moving, which would take tens of thousands of voters out of negative equity and increase the value of our State-owned banks. It has done both, but it has come at a price.
2 We failed to look at the demographics. It isn't rocket science to take census figures, population projections and age profile to see that a lot more houses need to be built and social housing is also badly needed. At the end of the boom, public/private partnerships tasked with building social housing collapsed because the developers went broke. That did not the wipe out the need to have those houses built. We still need them a decade later.
3 We have failed abysmally to protect people who rent property. They have insufficient security and stability, while they have been thrown to the wolves when it comes to rent controls.
Because of these failures, the Government's housing policy is by necessity a salvage operation rather than a strategic plan. But very little will be salvaged unless some groups take some of the pain.