The Housing Bill 2016: More than supply or the same old story?

There has been much discussion, and not a little disagreement, about the Housing Bill 2016 (Housing Miscellaneous Provisions Bill 2016) currently going through the Seanad.  In essence, it is the Government’s attempt to ‘fast track’ the delivery of new housing units.  And while there has been some debate about a small number of legislative changes that will, potentially, give tenants more rights, the bill offers an example of more of the same, rather than fundamental departure, in terms of the housing policy pursued by successive governments.

In this post, I want to do two things. Firstly, I want to look briefly at some core points of the bill with a view to identifying where they depart or continue existing policy.  Secondly, I want to place the state’s approach to focusing on stimulating supply through incentivizing the development sector in a historical context.

 

The Housing Bill 2016

The Housing Bill 2016 is generally a continuation of the kinds of housing policies successive governments have been pursuing for years now. Its basic premise is to remove (more) barriers to development in order to increase supply quickly. Most fundamentally, it assumes that supply is the single most important element of the housing problem and that remedying the issue of supply will have a ‘trickle down’ effect to subsequently alleviate the other crises of housing affordability, homelessness, and tenure insecurity.

As I want to argue below, this assumption is highly problematic, as borne out from historical evidence in the Irish context.  But before I get to this, I want to briefly focus on three key points from the bill that have gained media and activist attention.

Firstly, the bill includes a clause to curb wholesale evictions when a property is sold to a large investor. It builds on the so-called ‘Tyrllestown amendment’ by including a provision that landlords with 20 properties or more cannot evict tenants when selling to an investor.  This protects against a particularly high-profile form of eviction, but one which is perhaps very limited in the overall scheme of things.  Some estimates suggest that this will affect only 0.56% of landlords*.  Moreover, a new get-out clause was also included in the bill, which allows a landlord to pursue a vacant sale (i.e. evict existing tenants) if they can prove that the value of the sale is decreased by 20% as a result of occupancy.  Given the current market conditions it may not be difficult for landlords to ‘prove’ this.

Secondly, the bill makes provisions to amend Part 4 Tenancy by removing the six-month window at the beginning and end of a four-year lease agreement in which a landlord can terminate a tenancy.  This improves the rights of tenants but offers limited protections in a context where a number of other gaping loopholes exist that allow landlords to terminate tenancies. Moreover, in a context where rents have increased by 40 per cent since 2011 this will do little to combat the tsunami of economic evictions taking place.

Thirdly, the bill proposes to give increased powers to An Bord Pleanála by introducing new ‘fast-track planning permissions’ for ‘strategic housing development’.  This removes planning powers, in particular instances, from the local authorities.  The bill proposes that:

“Applications for permission for strategic housing developments shall be made direct to the Board (An Bórd Pleanála) and not to the local planning authorities.”

The rationale here is to reduce the time it takes developers to secure planning permission, and thus reduce the overall time it takes for new housing supply to come on stream.

In the Irish planning system, An Bord Pleanála operates as an adjudicator of last resort on planning decisions made by local authorities: “Anyone applying for planning permission and anyone who made written submissions or observations to the planning authority on a planning application, can appeal a subsequent planning decision to An Bord Pleanála”.

As such, the ‘fast track’ approach, while ensuring a quicker process for developers, potentially removes one more avenue for community opposition to new development. Given the less than exemplary recent history of sustainable development in Ireland, the removal of recourse to objection is potentially worrying.

It has been documented in academic work by Linda Fox-Rogers and Enda Murphy and Gavin Daly that during the boom local authority planning departments were put under pressure to deliver favourable planning outcomes.  One mechanism used was the incorporation of ‘pre-planning’ talks, whereby a developer submitting an application could avail of extensive meetings (even negotiations) with the planning authority to ensure that a planning application could fit the criteria to be granted permission.  Will An Bord Pleanála, which is an independent body, now also be expected to engage in pre-planning discussions with developers given the political pressure to quickly increase supply?  If the answer is yes, it could seriously undermine the independence of the authority.  If the answer is no, the new measures might well fail to deliver the fast-track supply of housing the bill promises.

Underpinning the bill as a whole is the assumption that the supply of housing is the biggest challenge to overcome.  This dogma, although increasingly challenged by various housing experts, is stubbornly trotted out in the media by politicians and vested interests.  This simple formula for solving periodic housing crises, namely increase supply through removing barriers to development and incentivizing the construction and investment sector, has had a long history in Ireland, with highly variable outcomes.

 

Build it and they will come

This approach has deep roots in the history of Irish Housing Policy. Indeed, the first Fine Gael government sought to deal with a crisis of tenement housing by offering grants to incentivise higher income families to take out mortgages to buy their own home, thus freeing up units in tenements for low income families.  When Fianna Fail came to power in 1932, they instead embarked on a programme of building social housing, in the process offering incentives for the construction sector during a period of relative economic stagnation.  These two moves set in place the conditions that have remained stable in Irish housing policy since – a focus on homeownership as the optimum model of housing tenure and a close relationship between the successive Governments and the construction sector.  These close relationships have provided fluctuating outcomes for Irish housing.

To take two broad, and broadly different, examples.

Firstly, attempts by the state to solve period social housing crisis have in the past focused on strategies to increase supply and/or renovate existing stock.  Moreover, this has often been achieved through incentivizing the private sector.  For example, the plans to create Ballymun emerged in the context of a crisis of tenant housing in Dublin city centre.  Built using new rapid-build materials, Ballymun was intended to as modernist utopia delivering a large supply of working class housing.  However, while the development proved a relative success in the early years, the state’s failure to deliver local jobs coupled with the withdrawal of Dublin Corporation investment and general upkeep of the flats led to spiralling social problems in the area.  The supply of housing alone was not enough to make the community sustainable.

However, when the regeneration of Ballymun was slated in the 1990s, the focus was once again overwhelmingly on the ‘bricks and mortar’ approach to supply.  Although the plans included provisions for community and economic regeneration, these promises remained largely undelivered by the state.  Moreover, the regeneration was to be financed by the construction of new private housing units on site, which was expected to also lift the economic profile of the area.   Thus, what the community got was new public and private housing units, but less in terms of long-term investment in the community or the local economy.  The regeneration during the 1990s failed to deliver on long-term community development because of a focus on a supply of housing units rather than taking a more holistic view of housing.

Despite these problems, the Ballymun model of regeneration became the template for regeneration schemes in places like Cork, Limerick, and Dublin.  Using a Public Private Partnership (PPP) approach, regeneration of social housing was expected to deliver new social housing, enhance community development, and deliver private sector housing supply.  Moreover, it was expected to do this by incentivizing the private development sector.  Many of these PPP schemes collapsed with the property crash, leaving communities high and dry.

Secondly, from the 1986 Urban Renewal Act on, the state introduced a series of tax incentive schemes to increase the supply of property development in urban and rural areas.  This was a major factor in kick-starting the Celtic Tiger property bubble, which saw an astronomical increase in the supply of housing.  Between 1991 and 2006, 762,541 housing units were built in Ireland.  However, this supply did not lead to more affordable housing. In fact, house prices increased by between 300 and 400 per cent in different parts of the country.

The tax incentive schemes were extended far beyond the point at which they were necessary.  These policies to increase supply were a key factor in the creation of the 2,846 unfinished housing estates identified in 2010, including 78,195 complete and occupied units, 19,830 under construction, 23,250 complete and vacant, and planning permission in place for a further 58,025.

Moreover, the unregulated development that resulted from reducing the barriers for developers actually undermined the creation of sustainable communities built around strong transport links and services.  One of the reasons planned developments like Adamstown and Clongriffin failed to deliver on their promises, for example, was that unregulated development in neighbouring local authorities undermined plans for the timely delivery of schools, transport links, and other amenities in tandem with the phased delivery of housing.

Following the crash, there was little legislative change introduced to the planning system. And while the development sector has been significantly affected by the financial and housing crash, this has been the impact of external factors rather than designed through government policy.

The current housing and homelessness crisis is a direct outcome of the series of systemic problems created throughout the boom and the policy responses to the crash that ignored issues like mortgage debt, the decline in social housing provision, and the changing character of the rental sector, and continued to support existing and new development interests.

 

More than supply

The Housing Bill aims to solve a series of complex problems in the housing system through a short-term intervention to increase supply.  While this might be what vested interests in the sector need to get building in the short term, it will only exacerbate conditions for most of us with regard to our access to secure and affordable housing.

It foolish to assume that focusing on the needs of the same vested interests will remedy these problems.  Firstly, because they have never solved these problems in the past and indeed created many of them. Secondly, because the housing market has changed since the crash.

For financial actors, the rental market has become more profitable in recent years as a form of investment.  For international funds, in particular consistent rising rents is essential for them to return growing profits on their investments.  As such, a greater supply of rental stock will not mean more affordability – there will still be pressure to push up rents.  In combination with the incentives for first time buyers, measures supporting developers, landlords, and investors will only serve to further inflate the housing market.

In the meantime, the clear and modest demands to increase the supply of social housing, or improve tenants’ rights are being side-lined.  For example, the Secure Rents campaign asks for three things:  to regulate increases in rent by linking rents to the Consumer Price Index; to revoke the right of landlords to evict tenants for the purpose of sale; and to move from current 4 year leases to indefinite lease terms. These provisions are not radical by any means, but rather start to address some of the imbalances between the rights of tenants and those of landlords.  Indeed, tenant rights are particularly poor in Ireland in comparison to the rest of Europe. These provisions would not unnecessarily penalise developers, landlords, or investors. But they would slow down some of the crisis conditions.

More starkly, within the context of a housing crisis of unprecedented proportions, the Irish Housing Network have made a call for a complete ban on evictions.  It is worth remembering here that the number of homeless people in Dublin has risen by 35 per cent in a year.

In sum, the Housing Bill is unlikely to change the current system to any great extent – in terms of tenants, the new amendments will not make much of a dent, while in terms of development interests, the changes are just the latest iteration in a long-standing state support for this sector.  But in the context of the current housing crisis, this response is inadequate at best and has the potential to worsen the problem.

The assumption of supply being the most significant factor is highly problematic, as we can see from historical evidence.  The evidence suggests that relying on the logic of supply (without considering issues of affordability and security of tenure) will create increasingly dysfunctional housing systems.  It is time that we finally took stock and addressed the bigger housing problems that repeat themselves.

This is an emergency. And an emergency requires new thinking.

Cian O’Callaghan

*My thanks to Lorcan Sirr for providing this figure

 

What we need now is more zoning and construction: Really?

There seems to a lot of revisionist history going on over the last few days. First the CIF yesterday published a report on future housing supply in the country, arguing amongst other things that “County Galway is facing a chronic shortage of new homes over the next six years”. Now this just seems like the definition of irony in the current climate, akin to suggesting that someone with health problems due to chronic obesity needs more cheeseburgers or that the insomniac needs more coffee. As Rob Kitchin suggests, the CIF report is focussing on new homes exclusively and ignoring second hand homes in coming to their conclusions. Well, it may just be me but I was under the impression that houses had a longer lifespan than say cabbages; they don’t suddenly go off after a couple of months or years – if they do then we have some serious questions to ask the banks handing out 40 year mortgages – but that they were more or less ‘built to last’. We don’t necessarily need our houses fresh from the grocers.

And then today, the Independent published an article by former chief economist of the Central Bank Tom O’Connell suggesting that one of the main factors contributing to the property bubble was “restrictive land zoning”. He argues that the ability of large developers to bank large parcels of land in the cities and drip feed it on to the market was enabled by restrictive zoning policies. It’s hard to believe that I am even living on the same planet, let along country, as the originators of these statements.

While O’Connell’s arguments re zoning make some sense in a roundabout manner, they fail to acknowledge a range of factors. Land-banking has certainly been a pertinent issue which has undoubtedly contributed to driving up the price of property. However, his argument hinges on the assumption that supply and demand were somehow logically correlated during the boom. If this was the case then we wouldn’t have an oversupply of some 120,000 properties at present. Supply and demand are coupled in the sense that there was a demand in the early 1990s and there has been a supply ever since. In the rural renewal counties “restrictive zoning” was certainly not an issue, yet these areas are characterised by massive oversupply. At a certain point the price of land became dissociated from any reasonable demand for it as speculation pushed property into the stratospheres of what Tom McCarthy glibly describes in his novel Remainder as “imaginary futures” that are not valued “by what they actually represent in terms of goods and services”. The suggestion that more liberal zoning policies could have prevented the property bubble is indicative of a blind neoliberal assumption in the ‘logic’ of the market, which, in light of the global crisis, is all too obviously unfounded.

The Irish experience begs for more and not less regulation. Rather than zoning more land, the Government would have been better served to implement the recommendations of the Kenny report on the sale of land or to put in place more restrictions on the time period a parcel of land will remained zoned without development taking place. The CIF’s report induces further bafflement. They just seem to be roaming around the detritus of a party the morning after, shaking the bodies of the shell-shocked hungover revellers desperately trying to get them to do another shot of tequila to get the queasy party up and running again. The last thing we need at the moment is to be hitting the property bottle.

Cian O’ Callaghan

 

Willie O’ Dea on Limerick Regeneration – Progress or posturing?

Amid the carnage of yesterday’s budget Brian Lenihan suggested that among the key priorities for government investment in 2010 would be housing and urban regeneration.  Given Fianna Fáil’s recovery measures so far exemplified by NAMA, it is probably that the rationale for this statement is more in keeping with attempts to save the property industry than it is geared towards dealing with issues of poverty and disadvantage.

Currently the largest such project on the cards is that of Limerick Regeneration (www.limerickregeneration.com).  The flagship initiative to regenerate a number of estates in Limerick characterised by acute social problems which was launched in 2008, has (apart from some demolition work) been relatively low-profile in media and political circles for the last year.  The project, in keeping with the state’s policies for regeneration over the last decade, was to be rolled out through a public-private partnership model.  As such, it has always been dependent on the construction and sale of a significant proportion of additional private housing units to fund the replacement of social housing along with a series of environmentally and socially oriented projects. In one of the estates, Moyross, for example an even 50/50 split between 970 replacement social housing units and 970 additional private units was envisioned.  Even during the boom PPP regeneration strategies have frequently led to the sidelining of the interests of existing communities in favour of catering to the interests of private profits for developers.  John Bissett’s work on regeneration in St. Michael’s estate, for example, suggests that residents’ priorities were consistently marginalised as the PPP sought to build private apartments on the site.  With this in mind, it raises serious questions about the future of Limerick Regeneration in the context of the property crash: firstly, whether this private sector funding would be forthcoming at all, and secondly whether it would be desirably if it did, given what must now be an even more conservative property investment climate?  Are all socially oriented goals now going to be dropped in order to retain the bottom line priority of NAMA to re-inflate the property bubble?

Last Sunday Limerick TD and Minister for Defence Willie O’ Dea published a commentary piece in the Sunday Independent on the future of the project.  In a spiel typical of FF, O’ Dea made an optimistic and confident pose while offering very little in terms of actual policy commitments.  Apart from listing some of the history of the estates and reiterating the major focus of the original plans, O’ Dea spends much of the piece talking the positive impacts it has already had on in terms of community building and the external image of the areas.  He suggests:

“The regeneration project is far from over, but already one can sense the growth of community spirit and pride in Moyross. Where once my weekly clinic was filled with people seeking out of Moyross, I am now getting queries from couples and families looking to move into the area. They see that the situation in Moyross has not just stabilised, but the community spirit that usually takes decades to develop is already coming to the fore”

While these improvements to community wellbeing are obviously positive they  should be seen only as early indications of success in what must be a long-term and complex set of processes, investments and policy actions necessary to deal with existing social problems in these areas cultivated by years of neglect.  They should not be seen as an end in themselves.  Like Brian Lenihan’s glib comments yesterday that the country had “turned the corner” while no evidence suggests that it has, this rhetoric promises change without providing anything in the line of reform.

Cian O’ Callaghan

 

Ghost Estates: ‘ ‘It happened in the US, it Could Happen Here’?’

Some interesting comparisons between the blighted neighbourhoods of US cities and the future of the so called ‘Ghost Estate’ have taken root in public debate over the last year, most recently in the Sunday Business Post where David McWilliams raised the issue again in his article ‘Ghettoisation of the nation’ (23/11/2009 Link). Here he bleakly promoted a common idea now in circulation that the Ghost Estates are ghettos- in -waiting, magnets for anti-social behaviour, and ripe for abandonment from homeowners who may no longer pay their mortgage due to rising unemployment.

There’s no doubt that empty and partly occupied residential estates have become a potent symbol of the collapse of the Celtic Tiger. No doubt either that vacant homes touch some part of the psyche and can act as a loci for anxiety or ‘trauma’. But are the pronouncements about their demise to quickly made? And is their imagined future as a Ghetto overstated? In his recent piece, McWilliams’s subtly evades what urbanists understood about ghetto formation.

First of all, drawing attention to the consequences of mortgage foreclosure in the US as a lesson for what to come in Ireland is misleading. Certainly the rise of foreclosures in the USA is linked to rises in unemployment, particularly amongst poor non-white communities, but their sudden increase occurred in the near absence of a social safety net for their occupants, and because of highly inflexible banking system which is unable to negotiate to those in arrears to live in situ and restructure their payment – two forces which are not at work in Ireland. The statistics bear this out. Whilst the falls in the values of property and the rise in unemployment in Ireland have mirrored the situation in some states in the USA, house repossessions here – despite recent increases – remain fortunately a tiny percentage of the Irish housing scene. Moreover, even in the event that foreclosures rose here very significantly, because of the way in which Irish public services are funded (mainly on central rather than local taxation), financially speaking, mortgage foreclosure are delinked from the budgets of Local Authorities, social services, education or the police. This means that the prospect of these estates being abandoned by the state and left to go to ruin is unlikely. It follows surely that new ghetto formation or urban blight will not occur in Ireland on the basis of foreclosure in the way it has happened in the American rustbelt.

Secondly, a quick glance at the experience of urban blight in other countries presents a scenario which offers a poor match to the conditions of the presented by unoccupied estates in Ireland. Urban blight is strongly associated with areas with high levels of long term unemployment, high percentage of people dependent on welfare, high turnovers of population, concentrations of crime, drug abuse, vandalism, environmental contamination, insufficient social infrastructure, structural deficiencies of buildings and functional deficiencies of neighbourhood.  Many have been temped to jump to conclusions that the Ghost Estate is somehow at the beginning of the process.  But what needs to be appreciated is that urban blight will only kick in once these characteristics reach an intensity and scale which is endemic and long- term, and only when both the market and the state have withdrawn for a considerable length of time.  The extensive urban blight in cities like Baltimore, St Louis or Detroit were not created overnight but by long term economic restructuring and by an even more long term planning regime in post-war US that boosted the development of suburbia with low tax, flexible credit arrangements, a pull factor that drew largely white populations out of the urban core to live in edge-city neighbourhoods. The same process, underwritten by institutional racism trapped largely poor and black Americans into social housing in the old city cores, areas that could not generate tax-income and as a consequence fell into a spiral of decline.

To suggest the Ghost Estate problem in Ireland will amount to a problem of Ghettoization on par with the desperate situation in the US misjudged speculation. It’s some leap to compare Irish Ghost estates on the outskirts of villages like Roscarberry, Co. Cork or Edgeworthstown, Co Longford with Baltimore. Rather here we have a different housing ecology, with a different political and economic context.  To put it another way, the solutions to address the Ghost Estates in Ireland are less than a thousandth of what it will take to address the social problems of our own deprived urban areas.  The ‘overhang’ in unoccupied units is large, but a mixture of demand from new household formations, and market price correction will soak it up eventually.  The actual percentage of the vacant units that will eventually fall into dereliction will not constitute a national crisis.

These empty housing estates then are better understood as part of the peculiar geography of the NAMAscape, whose topography still needs careful mapping and interpretation. So? No Ghosts. Just Estates. A problem? Sure, but one not best addressed by McWilliams’s bleak dystopian vision of the city (I’m thinking about what consequences such ways of thinking had for the destruction of Georgian Dublin in 1970s), but by creative, imaginative and innovative housing policy which is still, despite the crisis in government finances, not outside our grasp.

Denis Linehan