Sunday 17 December 2017

Home Truths: An emergency? So get urgent about it

Housing Minister Simon Coveney. Photo: Damien Eagers / INM
Housing Minister Simon Coveney. Photo: Damien Eagers / INM
Mark Keenan

Mark Keenan

After years of sticking their heads in the sand regarding a housing crisis which has been developing steadily over five years, Ireland's Fine Gael-led Government finally clicked into gear last summer with the launch of Simon Coveney's massive and well-thought-out house-building plan: 'Rebuilding Ireland'.

In it, the State has pledged to fast-track tens of thousands of new homes between now and 2020. This plan is already having an impact, with evidence that supply of new homes is now up 17pc on last year. But is it working fast enough? Or is this the plan we should have got three years ago - or five years ago?

Figures published yesterday by Sherry FitzGerald and by the Central Statistics Office would seem to suggest that this might be the case.

The former shows supply running at an all-time historic low, with 1.2pc of total housing stock on the market. In a 'normal' market, that should be around 5pc. The figure is even worse for the capital - showing Dublin running at between 0.4pc and 0.7pc depending on location - averaging 0.5pc. This is actually 10 times less than a normal level of housing supply. The same report showed rents surging above boom-era levels and that twice as many landlords are selling up than are getting into the market.

The CSO data saw house prices rising nationally by 11pc in the year to February - definitely an overheating market. The reason for the price rises, like surging rents, is lack of supply. And so on it goes.

So, the housing crisis is getting worse. There is no doubt at this point that we should be addressing it as a national emergency. Therefore, there is an argument to be made that more urgent and 'true' emergency measures are now required.

The supply of new housing at a reasonable pace is being bogged down in a quagmire that is part red tape - local-authority objections and conditions, and myriad regulations. That quagmire is also part financial - 40pc of a new home's price can be accounted for by various State taxes and charges, while builders still cannot get reasonably priced finance. And it is part infrastructural - there is none in place for a good many of the available sites out there.

A fast-tracking of affordable housing supply, while at the same time removing all obstacles, is the only plausible solution. And if we are truly serious about addressing this emergency, then Simon Coveney's housing plan needs a fast-track update to get with the programme. The State (no one else can do it) should now get stuck in with 'real' emergency measures. By necessity we will have to cut corners, albeit for a temporary emergency period.

We need to hold an international design competition inviting architects and factories from around the globe to come up with solutions - to provide a basic, no- frills menu of three house types which can be built fastest and cheapest and to the best quality possible.

This time, we want truly affordable homes that can be constructed at real speed - not 'temporary' housing, which costs almost as much as permanent housing and seems to take just as long to erect.

We need to provide a universal planning permission for these types and then start sticking them up. We did it well in the 1940s and 1950s when we cleared the Dublin slums. It can be done again. If we want private construction to help, then we need to set up a proper workable fund through which they can borrow money to develop at a fair rate. Currently, they are paying 14pc interest to private funders in the absence of bank lending. If it's a 'true' emergency, then it's time for the State to temporarily suspend all VAT on house building and any other State- imposed financial barrier that exists. With so little housing being built, the Revenue Commissioners are not benefiting in either case.

The worsening housing crisis is having severe impacts on a number of fronts. We have families who buy their first homes spending more of their incomes on mortgages because of price inflation, and those who can't are spending more on rents - both of which dramatically reduce consumer spending impact on the economy overall: in shops, restaurants and with businesses. We have foreign multi- national companies becoming increasingly frustrated at having to shell out big bucks for some of the fastest-increasing rents in Europe and workers who are less willing to come to Ireland as the cost of renting continues to surge. We have social issues caused by families having children late because of an inability to get on the housing ladder and we have families stuck in unsuitable accommodation that is too small for them. We have greedy landlords racking up two and three sets of bunk beds per room and charging by the bed. And we have burgeoning homelessness.

If it's a true 'emergency', then let's go for broke and introduce 'true' emergency measures. Otherwise we might as well just go home (if you have one, that is).

Indo Property

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