This site uses cookies to improve your experience and to provide services and advertising. By continuing to browse, you agree to the use of cookies described in our Cookies Policy. You may change your settings at any time but this may impact on the functionality of the site. To learn more see our Cookies Policy.
OK
Dublin: 10 °C Friday 19 April, 2019
Advertisement

“Everything should be free” brigade rowing in on housing isn’t helping

We need to make it easier for developers to make a fair margin on affordable homes, writes Aaron McKenna.

Aaron McKenna

SINN FÉIN AND the Anti Austerity Alliance have been trying to outbid one another on every social economic issue they come across.

From water charges to, now, the rental crisis they seem to butt heads; with Sinn Féin typically trying to suggest less drastic solutions than “Storm the Winter Palace and shoot the family in a basement” approach of the AAA.

In the case of 103 properties in Cruise Park, Tyrrelstown that are coming up for sale as vacant possessions, the local Sinn Féin councillor Paul Donnelly suggested that residents buy themselves time to find new accommodation by availing of the Private Residential Tenancies Board appeals process to slow down matters.

The AAA’s TD for the area, Ruth Coppinger, told RTE that the families should just refuse to leave point blank. She spoke of arranging “actions”, which we can only assume will include some of the occupations of houses – including some new to the market on viewing for those trying to buy them – we’ve seen them engage in previously.

In the past, as on water charges, Sinn Féin has had to try and fight the outflanking on the left by offering more drastic solutions themselves in a bidding war to be eventually paid for by the taxpayer.

The Everything Should Be Free Brigade have a tendency to exacerbate underlying issues with their simple minded approach to solving problems. Ruth Coppinger was once asked how she would keep companies like Dell in the country after the AAAs proposed mega taxes were introduced should they get to government. “Well,” she answered, “we’d just nationalise them.”

And then, presumably, we’d need to invade whatever countries their raw materials come from to nationalise the companies that provide them; and deal with whatever trade war comes down on our heads after we go riding roughshod over international company, patent and common sense laws.

Housing Market

The residents of Cruise Park, and every other rented accommodation in the country, will find themselves in much deeper hot water in the long run if the rule of contract law is torn law up and burned by socialist dreamers.

90412298 The Cruise Park housing estate in Tyrellstown in West Dublin Source: Eamonn Farrell via RollingNews.ie

With Irish Water we have already seen the state’s ability to collect taxes forever eroded; so that any new tax will need to be garnished from your salary or lumped atop the price of items.

These happen to be two of the most economically destructive forms of taxation, but if mass protest and actions could sink a tax you have to sign up for and pay for the sole reason that it’s the law … Well, good luck introducing any more of those.

Similarly, if “mass actions” were to cripple the ability of individuals and companies to enforce contracts and the laws around them, you will see a further seizing up in the housing market.

People talk a lot about vulture funds this, blood sucking investment bankers that, Goldman Sachs the other when discussing housing. The fact is, the monies that are made available for property development at a high level often come from the funds that seek to build pension pots for ordinary people among other investments.

Why would finance flow into a market where the returns are likely to be put at risk because some militant socialists have managed to forever ensure that you can pay what you like for your rent and leave the property whenever you please?

Socialists might tell us that we just need the state to step in, nationalise building firms and build all the houses. Given that every socialist economy in the world has been an abject failure in the medium to long run I’d prefer not to bother trying to refute the idiocy of people suggesting such a solution.

Socialists in this country and elsewhere were lately extolling the virtues of Venezuela, where a leftist revolution swept the old order away in the early 2000s. On Wednesday, the President announced the entire country would shut down for a week due to an electricity crisis.

Socialists aren’t so loud about Venezuela any more.

Regulation 

The solution in the long run to our housing crisis is more supply. We need to overcome some regulatory barriers that create lead times as long as a year or two between submitting a planning application and getting a site opened. That doesn’t mean shoddy planning; it means less bureaucracy and paper pushing by the ever efficient arms of government.

We need to make it easier for developers to make a fair margin on affordable homes. We have some of the highest per square meter building costs in the developed world, and the state could ameliorate some of this by exempting or reducing VAT and other development costs for affordable homes so long as the saving is passed on to buyers as well as to margin.

This would help open up more sites and get more buildings available at prices that people can afford.

We do have relatively lackadaisical laws around renting and both tenants and landlords can get burned. A landlord can, as in the case of Cruise Park, give relatively short notice to even long term tenants if they so desire under certain circumstances.

90412324 Tenants who live The Cruise Park housing estate in Tyrellstown in West Dublin, at a meeting in the Town Plaza Source: Eamonn Farrell via RollingNews.ie

On the other side, it is a long and drawn out process to get rid of tenants who do not pay their bills or who mess up a property. The system of allowing landlords to hold on to deposits is broadly open to abuse when it comes to ending a lease on any terms.

We could introduce more protections for both tenants and landlords by more tightly regulating the system, though it should be acknowledged too that with more regulation comes more costs at a time of high rents.

Providing more tenure for tenants, for example, to give them more advance notice at the end of a lease would provide certainty without seeing a chaotic breakdown in the system that socialists might salivate over.

There is nothing wrong with providing tenants a fairer deal so long as there is certainty for investors on the other side. And more regulation might dissuade the amateur buy-to-let class we saw develop during the boom, who are likely to actually be less forgiving than the “vulture fund” big investors who treat their tenants as clients.

We cannot allow the Everything Should Be Free Brigade to screw up the property market even further by catching issues like Cruise Park to prompt their dreamed of “mass actions”.

But certainly we should take a good look at the protections afforded both tenants and landlords alike while we wait for the supply side of the property market to kick into higher gear.

Aaron McKenna is a businessman and columnist for TheJournal.ie. You can follow him on Twitter here.    

Read: Holding Luas strikes on such important days will cost other workers dearly>

  • Share on Facebook
  • Email this article
  •  

About the author:

Read next:

COMMENTS (209)