TO DESCRIBE THE public response to the article I wrote last Thursday as phenomenal is an understatement.
At 127,000 views, and growing, it is one of the most-read opinion pieces ever published by The Journal. Who would have thought that a 2000 word article on the ins and outs of the housing crisis and policy would go viral?
I thought the only chance I ever had of getting my housing stuff to go viral would be if I managed to get my kids and our cat to somehow make a dance routine to me beatboxing the closing lines of my Housing Shock book: “We have to stop the investor funds, yeah, build affordable homes, yeah”.
But go viral it did (the article, not my beatboxing), because it touched a nerve. It captured the mood of a generation thrown to the investor wolves by Government. And I wrote the truth as I saw it based on my years of research into housing and economic policies.
It connected to what Generation Rent knew inside, could feel, were experiencing, but had not seen described and the policy explained before.
Political reaction
The government is scrambling around trying to cobble together some sort of a response that will make it look like it is doing something on the investor funds. It is looking for a response that will quieten down the tidal wave of public outrage that has engulfed it since last week.
But this time it’s different. Generation Rent and Generation Stuck at Home will not let government away with the spin that tries to portray inaction as action.
We have had public outcries over the housing crisis, the Raise the Roof protests, Apollo House, anger and shame over the scandal of homelessness – but each subsided, with no immediately visible impact on politics or policies.
The frustration with Government inaction on the housing crisis did get expressed in the 2020 election, with Fine Gael losing out and Sinn Féin gaining. But then Covid-19 hit, and the housing issue slipped from the headlines. The Government policy that enticed the investor funds continued to work away as investors bought up our homes.
A generation locked out
And now, as we begin to open up cautiously and carefully, housing is back. And this time it’s different. Generation Rent and Generation Stuck at Home are standing up and not taking it any more. They have been pushed to their limit.
I have been contacted by so many people who are being devastated by this crisis. The couple outbid by ‘cash buyers’ and investors for their dream home, couples putting off having kids until they can get a home where they aren’t worried about being evicted and having to uproot and move somewhere else, the couple who put all their savings into IVF and were then unable to afford a deposit, the parents worried about how their kids are being impacted by the stress of overcrowding living in their grandparents’ house, the shame of couch surfing or sleeping in a car, the low self-esteem of a single person in their 50s left living in a room with other house sharers, elderly renters facing homelessness, single mothers with kids facing homelessness because the rents have gone beyond the social housing HAP payment, carers with children with a disability stuck waiting for appropriate social housing for ten years. This is a social catastrophe.
The housing crisis is causing massive distress, impacting negatively on mental health, causing anxiety, despair, and shame across the generations. And that is why there has been such a reaction.
Just as the water charges were the straw that broke the camel’s back of people’s tolerance of austerity, the investor fund buy-up of homes is the straw that is breaking the Irish people’s tolerance of the housing crisis.
The extent of anger and desire for action that is being expressed up and down the country reminds me of the response to the water charges. If it wasn’t for Covid there would be hundreds of thousands marching on the streets.
But they are finding ways to express themselves on social media and signing the Uplift petition created on the back of last week’s piece.
What has been galling in the last few days has been the feigned surprise and concern from Government about how did this happen? It cannot be not surprised. Its policy created it. I believe it knew the consequences, knew it was throwing Generation Rent under the austerity bus and its policies would be locking people into pouring their hard earned income into perpetuity into the profits of investment funds.
And the longer Government pretends otherwise the more damage it will suffer politically. It faces a choice. It’s going to be an electoral wipeout by Generation Rent or make a radical change in housing policy now.
The Tánaiste’s claims that rents and homelessness would be higher if it wasn’t for these investor funds is actually a disturbing level of dishonesty. The Tánaiste knows very well that rents are higher and homelessness worsened because his Government allowed rents to rise and did not implement measures to stop homelessness, such as restricting evictions, so that property would remain attractive for investors.
New promises on investors
The Government has said that it is looking to restrict investors from buying up housing estates, and has defended investment funds as being needed for the ‘supply’ of apartments and housing and that they provide a key source of finance for building that supply.
Now firstly, apartments are homes too. This idea that the problem will be sorted by trying to halt the gallop of investors into commuter belt housing estates and ring-fencing a small proportion of planned new estates for first-time buyers is misleading and more spin. Is it trying to pretend that investors are only buying in the Google docklands, and somehow apartments aren’t homes for families or individuals?
The profile of properties rented out by Canadian-owned Ires Reit, which is now the State’s largest private landlord with just under 4,000 rental properties (see map below), shows it owns homes in the city suburbs of Tallaght, Ballymun, Sandyford, and in Cork.
It is a derogation of responsibility to anyone who wants to live in a city or even a city suburb. Most new developments inside the M50 are likely to be apartments or higher density housing.
So is Government basically saying anyone who wants to buy a home or rent an affordable one inside the M50 can forget it? Inside the M50 is designated ‘investor feeding ground’. If you want to live there, good luck to you finding an affordable home.
Apartments are homes, especially for smaller households, singles, city workers and families. Investor funds must be restricted from buying up those too. Apartments should be affordable to rent and buy. Investor funds do not provide an affordable supply. Restricting investors from buying housing estates is not enough.
The financing and supply arguments are attempts to deflect away from the reality that in fact, finance is available for building affordable housing on a major scale. And it is not that people cannot access mortgages, it is that they can’t get mortgages or deposits for unaffordable house prices at €350,000 or €450,000.
There is another way
The State can borrow at practically zero cost to build on scale. The European Investment Bank has billions to lend for affordable house building. The Credit Unions have billions to lend if they were enabled by Government. The Irish sovereign development fund, the Irish Strategic Investment Fund, which is managed and controlled by the state’s National Treasury Management Agency, has about €7bn available to lend.
But it is another example of State policy backing the investor funds. It is currently investing in the development of build to rent with real estate funds. It is lending to Activate Capital, which is funding various investor fund development of build-to-rent homes.
Why is our State fund investing in the development of unaffordable housing? Why is not lending for actual affordable housing.
And when we talk about finance – there is €1bn a year, a third of our housing budget going into private landlords (including investment funds) for social housing via the Housing Assistance Payment (HAP). The funds profit massively from the State’s social housing policy through renting rather than building. Yet this could be used to build permanent social homes.
But there is a way to provide affordable housing. This is a model of housing that really cuts through these finance arguments and is provided by Hugh Brennan, of the Ó Cualann Co Housing not for profit provider which is the only body in the country to actually build affordable homes in the last few years.
He has provided me with a model whereby the State could support and ensure the building of 10,000 affordable purchase homes per year.
These homes would then be for sale at c. €250,000 per unit. It is done whereby local authorities and ‘not-for-profit’ housing providers like AHBs and Ó Cualann build the units themselves on state land, using SME and some larger contractors.
If the land is subsidised or if a site services fund is made available, the State pays a maximum of €50,000 per unit toward the cost of these houses. The total maximum cost to the state is €0.5 billion per year, again easily managed from the exchequer. And the State recoups €50,000 per unit in taxes from these homes the actual net cost to the State is ZERO.
A not-for-profit builder like Ó Cualann can raise the finance from commercial banks and Home Build Financing Ireland at competitive rates and institutional investors and buyers are not needed in this model. Similarly, he explains, 5000 genuinely affordable cost rental units could also be provided using a similar model to provide affordable rents into perpetuity, and institutional investors and buyers are not needed.
Architect Mel Reynolds similarly explains that in affordable housing provision, you don’t need big investors involved, you borrow and recycle the capital through the development in phases. You build out the first phase and sell it, and you have funding for the next phase.
Very quiet on NAMA question
In regard to a supply of affordable homes, I have seen no Government response to my point on NAMA. NAMA has the finance and land to build 70,000 affordable homes. But instead, it is selling to investor funds, at unaffordable prices, and is under no direction to build at scale at pace.
The investor’s funds have said publicly that the risks to their profits include:
Possible changes to the government’s housing policy to a more interventionist approach aimed at improving housing affordability.
I believe that is why Government is reluctant to make any major increase in affordable supply – to suit the property finance investor funds.
The seriousness of the situation should not be underestimated. I’ve made this point, that every unit bought up by an investor or developed as build-to-rent is a home lost. It is a house or apartment taken away from being a secure, affordable home and instead converted into an investment asset, locking some household into unaffordable housing for their lifetime.
The investor funds have a war chest of billions, and globally, trillions, targeted at cities and housing across Ireland. They are going to continue to buy up tens of thousands of homes, and build unaffordable rental units in the coming months and years. They are not going to pull back or ease off unless Government reverses its policies and stops them. Time is of the essence. The scale of what is at stake should not be underestimated. This about today, tomorrow and the homes for our children, and their children.
I have set up a petition with Uplift calling on the Government to take real action. It calls on the government to stop the investor funds buying our homes, to scrap the Real Estate investor tax breaks, restrict investor sale of new developments, build public and affordable homes on state lands on scale, and hold the referendum to put a right to housing in the constitution.
Sinn Féin has a Private Members Motion going to the Dail tomorrow, which is being backed by the Social Democrats and Labour. It calls on the Government to introduce legislation to end the tax advantages and exemptions for institutional investors, including REITs, and to implement measures to restrict the activity of institutional investors in the residential property market. The Government can show it is serious by supporting the motion and implementing it.
It would suit the Government for this issue to disappear from the headlines. Don’t let it. This is the battle for your and, all of ours, future. It is about the fundamental need for us all to have a secure, stable, affordable home. A basic human right.
This has the potential to be the turning point in the housing crisis. This is the battle of your generation. Don’t be silenced or fooled by Government inaction. Now is the time to stand up and take action.
Dr Rory Hearne is Assistant Professor at Maynooth University and author of Housing Shock: The Irish Housing Crisis and How to Solve it (Policy Press, 2020).
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