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Housing Crisis

Government denies UN claim that housing in Ireland is 'unaffordable'

A letter from the UN said private housing investment has impacted security of tenure for renters.

THE IRISH GOVERNMENT has denied an assertion by the United Nations that “housing in Ireland is moderately unaffordable”. 

A UN Rapporteur on housing sent a letter to the Irish government in March noting how heavy private housing investment has been making housing in Ireland significantly unaffordable.

The UN report and letter by Leilani Farha said the situation was being made worse by land hoarding – investors sitting on vacant land to restrict supply and thus increase demand and value.

It also noted that private equity landlords, such as Ireland’s largest landlord, I-RES REIT, “have openly discussed policies of introducing the highest rents possible in order to increase returns for shareholders”.

The Irish government has facilitated housing financing through “preferential tax laws and weak tenant protections among other measures”, added the letter. 

‘Wake-up call’

In March, Sinn Féin leader Mary Lou McDonald said the letter was a “wake-up call” for the government. 

The report was also highly critical of Ireland, and other countries such as the US and Spain, for allowing vulture funds buy up properties, resulting in skyrocketing rents, with the report stating that “landlords have become faceless corporations wreaking havoc with tenants”.

In a 16-page reply, the Irish government defended Ireland’s housing policy, Rebuilding Ireland, claiming that progress has been made. 

Highlighting a number if initiatives such as the help-to-buy scheme, the vacant levy tax and rent pressure zones, the letter of reply said Ireland would like to reaffirm that it takes “very seriously the issues and concerns raised”, stating that housing issues remains a “critical priority for the Irish Government”. 

However, in praising its own policies, the government failed to mention in the correspondence that recent figures showed a record number of people were homeless in Ireland during April.

Figures published by the Department of Housing show that there were 6,584 adults and 3,794 children – 10,378 people – recorded in state-funded emergency accommodation last month.

Government defends housing policy

While not mentioning the homeless figures, the government’s response took issue with the UN stating that “sweeping cuts were introduced notably to the public housing capital construction budget” and also to references to “cuts in public housing budget”.

“These statements are entirely at odds with the factual position in recent years, with housing budgets increasing year on year. As reflected below, the housing budget for 2019 is just under €2.4 billion. This is the highest level of funding ever provided for housing purposes in any given year in Ireland,” reads Ireland’s letter of response. 

In the section discussing social housing, the letter also informs the rapporteur of the country’s official title (the UN’s letter, at times, refers to Ireland as the Republic of Ireland).

The Irish government states, that “in accordance with the Irish Constitution, the correct name of the State in the English language is Ireland. It would be appreciated if this could be borne in mind in all future communications with the State.

Right to housing 

The government goes on to disagree with the UN’s suggestion that Ireland’s housing policies are “contrary to international human rights obligations” and that Ireland is failing “to protect against human rights abuses by business enterprises”.

The letter of response to the UN states: 

The Irish Government does not accept this assertion and wishes to set out the legal position in Ireland regarding rights to social housing and protections in relation to private and rented accommodation.

It adds that Ireland is very conscious of its obligations under the International Covenant on Economic, Social and Cultural Rights in relation to the right of people to an adequate standard of living for themselves and their families, including adequate food, clothing and housing.

“While the Irish Constitution does not contain an express right to housing, there are however a range of rights and protections in relation to social housing provided for in Irish legislation,” the letter states, adding that the Eighth Report of the Convention on the Constitution recommended that the State should progressively realise economic, social and cultural rights, including the right to housing, by inserting such a right into the Constitution.

The Irish government said the recommendation “raises substantial questions, including for example, the suitability or otherwise of the Constitution as a vehicle for providing for detailed rights in this area, the possible cost, and the fact that there is already power by legislation to confer rights and determine expenditure via primary and secondary legislation and an elected and accountable Government and Oireachtas”.

“For these reasons the issue of the right to housing was referred, for further consideration, to the appropriate Oireachtas Committee – the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in October 2017.”

However, the letter fails to inform the UN that this proposal has been stalled since then, despite numerous attempts by the opposition to introduce their own legislation calling for the right to housing to be included in the Constitution.

House prices

The Irish government was also not happy with the UN stating that “house prices are now approaching levels last seen at the height of the property bubble”, stating that the Central Statistics Office figures show it is lower than its highest level in 2007.

A report published yesterday by the CSO showed that the average cost of a residential property in Ireland was 3.1% higher than it had been at the same time 12 months ago.

The most expensive place to buy a home in Ireland was Dublin 4, with a mean price of €760,747. The least expensive Eircode area within the capital was in Dublin 10, with a mean price of €233,704. 

The Irish government’s letter went on to state that housing costs are affordable.

In fact, for many households, housing costs are not high relative to household disposable income. The paper finds that on average households were paying one-fifth of their income on housing costs in 2016, albeit that there was substantial variation across households.
Very considerable components of the total population of households were, on average, faced with housing costs that were eminently affordable and sustainable; the average mortgage payment to disposable income ratio was 21%, the average payment by households paying rent to a local authority was circa 12%.

It acknowledged however that it remains the case “that high housing cost burdens were concentrated amongst particular cohorts”.

“Private renters, those living in Dublin and the surrounding mid-east region and low income households were paying a significantly higher proportion of their incomes on housing payments. This is acknowledged and policy measures are directed towards improving affordability for these households,” states the response.

Renting in Dublin

The government also took issue with the UN’s assertions in relation to the rental market, including that “in Dublin……… a person with an average salary renting the average property now has to allocate 86.3% of their income on rent” and that there is a “constant escalation of housing costs for tenants”.

They also disagreed with the statement that Ireland was “turning housing into an investment” which leads to “decision-making that is investor-centric, rather than tenant-centered”.

The government acknowledged that upward pressure persists in the private residential rental market, stating that this is “due to Ireland’s strong economic and demographic growth and the restricted rental accommodation supply available”.

It added:

However, the assertion that decision-making is investor-centric rather than tenant-centred is not supported by the significantly increased tenant protection measures which have been introduced in Ireland, as well as the actions taken to limit rent increases.

The government went on to highlight the introduction of Rent Pressure Zones (RPZs), where rents can only increase by a maximum of 4% annually. However, there is no mention that the RPZs are not working in some areas, with rents rising above 10%, well above the 4%, as set down in legislation.

Other areas discussed in the correspondence relate to investment in the housing sector. 

The letter from the UN stated that “investment in housing in the Republic of Ireland has disconnected housing from its core social purpose of providing people with a place to live in with security and dignity”. 

“Private housing investment, and the related increased unaffordability and availability it has generated, has also impacted security of tenure. Property investors (and investor landlords) are known to push tenants and owners out of their homes by taking possession, evicting, or creating conditions to compel tenants to leave – such as vastly increased rents or using loopholes in rent legislation,” the special rapporteur wrote. 

‘Positive effects’ of private investment

The government responded that “it is also important to recognise the positive effects that institutional investment can have in terms of the supply of housing”.

“Recent market developments show that institutional investment is increasingly being directed at the forward purchase or funding of new developments, which over time helps address the supply challenges that Ireland faces. Institutional investment in apartments is likely to be the driving force behind a significant recent increase (130%) in the number of apartment units granted planning permission in Dublin.” 

It adds that the UN’s letter fails to make any reference to the “positive endorsement of the role of institutional investment in increasing the supply of new apartments in Dublin”.

The Irish government concluded by stating that it is “very focused” to deliver its objectives through the Rebuilding Ireland Action Plan.

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