Extended precis (PDF of full paper)

The publication of the Department of the Environment, Community and Local Government’s ‘non-statutory’ Planning Policy Statement (PPS) in January 2015, heralds the prospect of the replacement of the National Spatial Strategy (2002-2020) with a National Planning Framework (NPF). The PPS emphasises that future Planning Strategy should be both evidence-based and plan-led.

As a contribution to these developments, this paper presents a demographic approach applied to the spatial planning context for current housing needs and points to compelling reasons for developing Ireland’s cities whilst curtailing the ongoing proliferation of villages, small towns and one-off housing, and for services provision, infrastructural priorities and related policy issues.

The paper’s first consideration is that of Ireland’s imperative for its emerging housing strategy: to improve its economic competitiveness which is compromised by its small-scale urban content. The State’s modest-sized settlements, with their inevitable diseconomies of scale, present economic handicaps to the provision of both public and private sector services. Unsurprisingly, they are the subject of current services-rationalisation, often of a controversial nature.

The outgoing spatial NSS planning policy is based on the definition of Balanced Regional Development (BRD) which is self-contradictory. In a modern economy, the optimal performance of the State is critically dependent on that of its primary contributors and of their large settlements’ ability to generate urban agglomerative spill-over: not on the BRD definitional illusion of achieving the full potential of each area. BRD is the opposite to achieving settlements of ‘Concentrated Lumpiness’, which would be characterised as centripetal agglomeration: of dense, efficient centres of population and their associated clusters of employment.

The outcome from the 2002-2020 National Spatial Strategy is that its BRD policy has encouraged excessive village and small-town proliferation. Over a fifteen year period to the last census, there has been a 30.6% growth in the proliferation of settlements of less than 5,000 since 1996, but especially so in for smaller town and village categories. Thus future spatial planning should place emphasis on the selective locations for new housing so as to complement and promote urban agglomeration. New house types are likely to introduce double-duplex and other innovative features of urban design, reducing the need for car ownership whilst encouraging more sustainable forms of transportation, suitable for short commutes.

The paper also differentiates between the requirements of the two principal areas of State: the Greater Dublin Area (GDA) and the Rest of State (RoS) areas. It finds that in 2011 there are many striking contrasts between the two areas. Dublin has nearly eleven times the average population size of the four RoS cities. The overall average settlement size for each of the seven categories of towns and villages is also greater in the GDA.

GDA house vacancy rates in 2011 were between just one-third and one half of those of the RoS areas, a contrast that has increased since then. This places an increasing need for focused housing supply-demand research. The wastefulness and inefficiencies of higher levels of current housing vacancy, directly corresponds to the remoteness of a county from its nearest city and particularly so in its further distance from Dublin.

Given the fragile sizes of Irish urban settlements, the emerging spatial planning and development imperative should especially facilitate the growth of larger, selected, populated towns and some cities, so as to counteract the extent of small-settlement proliferation in the RoS villages and Non-Nucleated populations. The housing crisis and affordability issue is also linked to the unsustainability of long and medium-distance commuting, given the census evidence and the geography of daytime working population and to Ireland’s economic competitiveness.

The research notes that from the most recent indications of prospective developments in Ireland’s spatial planning strategy, there is still little evidence that the authorities recognise or appreciate the need for an urban agglomeration ‘top-down’ approach, where the alternative focus continues to be dominated by rural generated ‘bottom-up’ strategies, making the task of achieving urban agglomeration difficult. Thus there have been few opportunities in the RoS area to exploit and take advantage of urban agglomeration forces.

Unfortunately, Ireland has always had a spatial record of eschewing its cities. In 1969 the first ‘modern’ spatial strategy, the Buchanan Plan’s objective of achieving an accelerated growth of fifteen or so of the provincial cities and larger towns was politically rejected. Subsequent ‘politically dominated’ planning strategies have sought to ‘give a little to everyone in the audience’ instead of implementing a policy of concentrating the State’s limited capital resources to a few chosen locations which have the potential to grow at a much faster rate than the norm and thereby ‘capture’ the benefits of scale, of critical mass and of urban agglomeration.

The irony is that if today’s Ireland had such ‘concentrated lumpiness’, this policy direction would have considerably mitigated the depth of the recession that has visited so many of its small towns, villages and open countryside. Agglomerative ‘spillovers’ from larger Regional cities and large towns remains the only certain way to counteract rural decline. Ireland has yet to learn that painful urban economic lesson.

Because of the bias favouring town growth, exacerbated by the population deflection from unaffordable housing in the cities, especially for Dublin, their aggregate growth has been much lower than might otherwise have been expected. During 1996-2011 the State population increased by 26.53% whereas the cities grew by just 16.42%, – i.e. even less than the 17.72% for the non-nucleated rural areas and towns/ villages of 5,000 and under.

This paper concludes that the capacity to generate ‘spill-overs’ are currently constrained, limited perhaps to Dublin and to the CASP area surrounding Cork City. Thus, it should come as no surprise that due to the defects of past strategic spatial planning policies, rural emigration is rife and economic downturn is magnified for regions which do not have large towns but especially cities.

Full paper

Dr Brian Hughes, DIT

 

Previously published in the Irish Examiner

THE Central Bank’s proposed mortgage lending regulations — through the introduction of a 20% deposit requirement for borrowers — have drawn criticism from the Government, property market interests, and the ESRI, for its likelihood to restrict the ability of people to get mortgages to buy housing.

The ESRI state that “Irish house prices still appear to be undervalued” and that “most commentators have identified a lack of housing supply as the main policy concern in the Irish housing market at present”.

Instead, they want to give a different “signal to the market”, ie tell property developers that financial institutions will be allowed give lots of people lots of credit to buy homes, and thus they should start building again.

Prices will stabilise, their theory says, and we will have another generation of happy homeowners living the property dream.
Of course the reality will be developers and sellers pushing up prices in the knowledge that borrowers will be able to get mortgages at multiples of their incomes and deposits.

Doesn’t this seem eerily familiar?

Wasn’t the expansion of unsustainable borrowing for home ownership one of the fundamental causes of the crash?
Have we learned nothing from the fact that 130,000 households are still in mortgage arrears?

If the concern of policymakers and economists is to provide young families and low to middle income earners with high quality, affordable, secure housing in sustainable communities, then clearly this is not the way to do it.

There is a need to explore alternative ways of addressing this need rather than creating another housing bubble and unsustainable levels of indebtedness, poverty, and stress.

One obvious area that offers great potential is the private rented sector.  Many people looking to buy a home are doing so, not because of some insatiable desire to own property, but simply because of the failure of the private rented sector to meet their needs.

The private rented sector now accounts for a fifth of all households.  In urban centres it is even more significant with almost 40% of people renting in Galway, 35% in Dublin, and 29% in Cork.

However, the recent annual report of the national housing charity, Threshold, detailed chronic failings “that need to be addressed before anyone living in a rented dwelling can really consider it their long-term home”.

Threshold has found that “loopholes in the law are enabling landlords to remove tenants from their homes and then re-advertise the same properties at substantially higher rents” and they are “increasingly witnessing such economic evictions, where families are forced to leave their homes because of exorbitant rent hikes”.

In the absence of any regulation, rents have increased dramatically, in some cases up to 40% in the last four years.
The introduction of rent control is imperative to change this and provide a functioning housing system that can meet people’s needs.

The youth campaign We’re Not Leaving recently produced a report that pointed out Germany only allows increases in rents for sitting tenants of up to a maximum of 20% over three years, with some cities permitting no more than 15%.

The Netherlands has rent control between and within tenancies where the initial rent for a unit is regulated and there is a maximum rent for each dwelling based on a points system awarded according to size, quality, area etc.

This shows that the argument that rent control reduces supply is not true. These countries have a much larger provision of rental properties than Ireland.

The issue of supply could also be addressed by the use of the 43,707 vacant properties in Dublin (including 16,321 apartments), 6,168 vacant units in Cork City, and 3,755 in Galway City.

Refurbishing and rebuilding derelict units or converting the thousands of empty retail and office buildings into suitable accommodation could also help supply.

Nama’s €3bn development fund should focus on funding local construction workers to undertake that work and provide low-cost rental accommodation rather than funding the large developers and real-estate investors.

Another issue raised by landlords and property economists is that rent control would contravene their private property rights enshrined in the Constitution. It is true that Article 43.2 protects “the right of private ownership”.

However, Article 43.2.1 states that this right “ought to be regulated by the principles of social justice” and the State may, “delimit by law” these rights for “the common good”.

Essentially, the Constitution protects the right to private property but states that these rights can be superseded by laws and measures (such as rent control) that are in the interests of social justice and the “common good”.

An expert on housing and property law, Padraic Kenna of NUI Galway, has detailed how there is no property rights impediment to rent regulation at an Irish and European level.

He has pointed out that the European Court of Human Rights has established that rent controls are accepted as a means of state control on the use of property in the general interest.

For example, in 2013, the ECHR held in a Dutch case that laws on rent control which imposed caps on rent increases of 2.5%, 1.2%, as well as rent reductions, did not impair landlord’s property rights.

So there is nothing stopping the Government from passing regulation to restrict the rate of rent inflation in any one tax year to, for example, 5%, and then recouping a higher rate of tax on rental incomes where a landlord has breached this cap.
We need a national debate about who really benefits from the current housing and property market based around homeownership, and spiralling house prices and rents.

The big beneficiaries remain the banks, developers, estate agents, solicitors, landlords, and increasingly, international capital and vulture fund investors who are buying up huge swathes of Irish residential property (often from and with Nama).
They all have a vested interest in a rising property market.

It is unsurprising, therefore, that property commentators, who are generally in some way connected with one of the above interests, argue against rent control.

The truth is, rent regulation along with significantly increased security of tenure for tenants, and improved standards, would help to make the private rented sector a realistic long-term housing option.

It would also immediately help address the homelessness crisis.

Rory Hearne

With NAMA recently entering into its fifth year, Maynooth Geography’s Rory Hearne considers what it has achived. Published in today’s Irish Times

The government’s new Social Housing Strategy correctly identifies the underfunding of the provision of social housing and rising rents in the private sector as the principal causes underlying the current housing crisis. Unfortunately it continues this underfunding as the 2015 social housing budget will be just half of what it was in 2008. Furthermore, the Strategy failed to radically reform NAMA, which is the largest housing agency and property developer in the state. This leaves a fundamental contradiction in housing policy.

While the government expresses a strong concern to address the 90,000 households on the waiting lists it is, at the same time, actively encouraging NAMA to sell off its residential and land assets in the form of ‘packaged portfolios of property’, at the highest possible price, to international and Irish capital investors. The Strategy did not alter NAMA’s primary objective to achieve a maximum commercial return to the state. The uncomfortable truth is that those who will benefit most from current government housing policy, and NAMA in particular, are international wealthy investors and banks, developers and landlords and not the ordinary Irish people who have paid dearly for the write downs on development loans transferred to NAMA.

The reality is that NAMA is playing a significant role in worsening the housing crisis through its sale of assets to Real Estate Investment Trusts (REITs). The government encouraged the setting up of Irish based REITs in 2012 through generous tax breaks. Irish REITs are being set up to take advantage of high yield returns from investment in the ‘recovering’ Irish property market. One newly formed REIT is the Irish Residential Properties which includes large property investors from Canada and finance from the UK based Barclays bank. Another REIT, Hibernia, has billionaire investor George Soros’ funds amongst their shareholders. Irish Residential Properties bought the ‘Orange’ portfolio from NAMA for €211m which included 716 residential apartments in Dublin. NAMA advertised that the portfolio would provide a residential rental income of €10.6m and ‘significant rental growth potential over the near and longer term’. Selling to such investors with this expected rate of return will clearly provide a huge upward pressure on residential rents in the coming years.

NAMA is also likely to have a major influence on the residential property market through its intention to provide over 22,000 units in Dublin (half of expected demand in Dublin) and surrounding counties by 2019 through the use of existing units and 1,500 hectares of development land. It is doing this through partnerships with developers including the provision of at least €1bn in finance. However, the objective to ensure a maximum commercial return means that NAMA will make certain these units are sold at the highest possible price thus inflating prices further.

Although we don’t hear much about it, NAMA has a mandate to ‘contribute to the social and economic development of the State’. It achieves this through its provision of social housing yet only 736 units have been delivered. The new Housing Strategy includes an expansion of NAMA’s Special Purpose Vehicle (SPV) set up to sell or lease NAMA residential properties for social housing but only plans to deliver 2,250 units by 2020.

NAMA’s current trajectory is wrong if we want to develop a sustainable economy and society. Its need for rental growth is likely to be one of the reasons the government is refusing to give private tenants (who are the majority of those on social housing waiting lists) relief through the introduction of rent controls. By pushing for maximum commercial returns NAMA is working against the interests of those looking for an affordable and secure home. It is continuing the speculative asset approach to housing that fuelled the crisis. This promotes residential property as a commodity rather than a social good that is developed primarily to meet people’s housing needs.

NAMA is facilitating a massive transfer of wealth (income) created by the Irish people to foreign and domestic capitalist investors. It exemplifies all that is wrong with the current model of financial neoliberal capitalism. Rather than investing in the ‘real’ economy and social requirements it is promoting speculative finance. The result is rising inequality and a more unstable system. The legacy of socializing the costs of the banking crisis in Ireland has been widespread social devastation. NAMA is embedding this for decades to come.

But the government can still reorientate NAMA to play a key role in addressing the housing crisis. It could genuinely expand NAMA’s SPV by transferring the majority of NAMA’s residential development units and land into it. NAMA could then provide 15,000 social housing and 7000 low-cost rented units managed by housing associations by 2020. These could be excellently planned, environmentally sustainable and model community developments in areas such as the 25 acre Glass Bottle Site in Ringsend. Such a social stimulus could help repair some of the societal damage caused during the crisis. If this means NAMA doesn’t make a profit it is important to highlight that those most affected by that will be the private (mainly international) investors who own fifty one percent of NAMA’s shares. Furthermore, NAMA was also set up so that if it makes a loss a surcharge can be introduced on the profits of the financial institutions.

When our financial system was in peril there was no obstacle too large for our political establishment and the state to overcome. Now we face an equivalent crisis in terms of the fundamental housing needs and rights of hundreds of thousands of our citizens. It is legitimate to ask why the same radical approach that determinedly did ‘whatever was needed to be done’ is not applied to the housing crisis. It appears it is because the government is unwilling to stand up to the financial and property investors and transform the residential property market into a system to meet housing needs.
Rory Hearne

In the midst of a mounting frenzy over the Central Bank’s plans to introduce new rules relating to mortgage lending, Rory Hearne offers a detailed and sobering analysis of the bigger picture housing crisis. Published in today’s Irish Examiner.

Providing solutions to the housing crisis have to be central to the forthcoming Budget. But the government needs to be willing to radically transform how the housing market operates in Ireland and reorientate housing policy to meet the needs of the majority of the population rather than the interests of the property development industry. It is surprising how much rising house prices are being celebrated as a new property boom in the media including interviews with buyers (often engaged in cash purchases) about how they are being ‘outbid’ for properties in wealthy Dublin suburbs.

Meanwhile the real housing crisis is affecting hundreds of thousands of households (who are mainly lower income). Fr Peter McVerry has described the growing ‘tsunami’ of homelessness on the streets of our cities and towns. Between January and July of this year 267 families became homeless in Dublin, including 549 children and some of those have been housed in hotels.

But the crisis is much, much, larger than these figures suggest. Almost 90,000 households are defined in housing ‘need’. The majority of these are living in private rented accommodation. Rapid rent increases in recent years (most significantly in Dublin) and the introduction of rent ‘caps’ by the Department of Social Welfare, has meant that more than half of those receiving rent supplement (40,000) have to top up their rent in order to get access to housing.

Then we must include the 132,000 households in mortgage arrears on their principal residence. The government appears to be just hoping they will sort themselves out somehow. But a staggering 70% of these households are over 720 days in arrears and the banks are silently, but steathly, increasing repossessions and evictions. In the first four months of this year the banks have issued legal proceedings in 3,093 of these arrears cases and 281 properties were repossessed further adding to housing pressure.

Overall then, approximately 262,000 (16%) of the total 1.6 million households in the state are in serious housing need. This doesn’t include those who are forgoing basic necessities to cover their mortgage or rent nor does it include those affected by substandard conditions in social housing estates throughout the country. This is not a crisis. It is an emergency.

(more…)

Yesterday the Independent published an OpEd that discussed ways to try and start creating housing supply in areas that needed it – principally some urban centres, particularly Dublin.  It gave ideas grouped around land and sites, planning, costs, regulations, finance, and alternative solutions.  The piece was written by Karl Deeter, Ronan Lyons, Frank Quinn, Lorcan Sirr, Peter Stafford and myself, six regular media commentators on Irish housing.  The idea was try and see if six people who hold different views on housing and planning could reach a consensus position that provided practical solutions to creating supply.  The ‘rules’ were all the instruments suggested could be introduced quickly and with minimal or no legislative changes and it all had to be said in 900 words or less.

Inevitably, the list of solutions produced was a compromise and writing such a piece is an exercise in politics and principles.  No signatory on the piece is fully subscribed to each potential solution and all had to concede ground.  From my perspective, I have problems with removal or reform of Part V, I’m cautious about bringing aspects of Dublin planning regs in line with the rest of the country and the reduction of development contributions.  But I’m happy to see the use of the term housing sector not market, the advocacy of social housing and associated HFA financing and a reversal of the cuts to capital spending, and the ‘use it or lose it provisions’ on planning and land zoning.  I’m a little cheesed off that the Indo editors altered a couple of bits of the submitted piece, especially removing the phrase the “inventions should be time delimited”.

Some of the critique of the proposals on twitter and email has been that they overly favour market and developer interests.  There is, however, I think some degree of balance.  Ideas such as derelict/vacant site tax and a more aggressive use of the Derelict Sites Act are not in land owner/developer interests.  Moreover a range of interventions favoured by such interests were kept off the table: tax incentives, reduction of construction labour wages, radical laissez faire change to the planning system, alterations to build quality, radical changes to density targets, and state provision of housing.

What the piece hopefully does is move the discussion on from diagnosing the problem to practical solutions and towards action.  It provides a selection of options that can be debated and I would welcome counter-pieces.  If the piece does that, then it has done useful work.  At the same time, we also need to move towards action.  We have a real problem that has real consequences and is quickly getting worse, yet very little is being done to address the issue.  We therefore need that action soon, not in two or three years time.  If that requires compromise solutions, then I’m prepared to consider them.  And as this exercise proves, other interests are too.  What we can’t afford to do is nothing.

Rob Kitchin

Amongst everything else that went array during the boom years in Ireland was the lack of any significant critical media analysis of the property sector and related fields. As has been documented by Julien Mercille, the majority of commentary during this time gave further fuel to the unsustainable model then being pursued. This was supplemented by newspaper property sections festooned with glossy adverts for the latest in lifestyle possibilities. It should therefore be seen as a positive step that one of the key differences between now and then is that the level of discussion and debate has moved on somewhat. For example, with particular reference to Dublin, we have had a significant amount of discussion within various media outlets as to whether or not we are witnessing another bubble. Such discussion is something that should be welcomed.

However, for all the positives within this discourse, the debate continues to be dominated by discussion that is fundamentally oriented towards market forces above all else. While there is a certain level of discussion about the need for social housing, the rhetoric of ‘supply and demand’ represents the dominant discourse around housing. This, on one level, is hardly surprising given Ireland’s recent trajectory. Yet it is deeply problematic in terms of thinking through the wider dynamics of the built environment. We are seeing the continued dominance of something that is fundamental to our everyday human needs by a set of economic assumptions that often run against those very same fundamental needs. This is a set of assumptions which perceives the very tools which we should be promoting and fostering as being the key problem and blockage. For example, in a recent piece, Ronan Lyons commented: “What the decade to 2007 tells us is that planners should be very wary of directing where buildings and people should go“. In laying the blame at one particular cohort, this is an approach which deems planning as something which is simply about regulation and stands outside wider societal norms, politics or economic forces. To place blame on planning or planners without taking into a account weaknesses in governance and wider structural forces misses a significant amount about how intertwined the economic boom was with Ireland’s built environment. Following from this, in recent days, Karl Deeter, writing in the Irish Times, in an otherwise critical piece, put forward the following: “The solution is to swamp the market with supply. To do this we need to make the right to build on land you own implicit.” Again, we see a worrying desire to revert to a Laissez-faire approach to housing development and planning more generally. This is justified through a selective reading of German and Swiss land-use policies. While for the most part Deeter is opposed to going back to a boom-time scenario, he seems to miss the possibility that the deregulation of planning may actually lead us back to such a scenario again.

If anything, now is a time where we need a greater focus on the potential for regional and urban planning, not a cry for less regulation. For this to even become a possibility, there is a need to shift the discourse around the built environment to one that puts the use-value of housing first and foremost. In so doing, it becomes important to recognize that housing is also just one element amongst many within the built environment. It is a central building block of our communities, towns, cities and, thus our entire society. There is a need to actively promote the discussion of housing in a much broader sense and recognize that for a functioning, balanced and more equitable society we need approaches which are about the tenets of society first and fore-most, not the abstract modes by which these are delivered. As a starting point, such a discussion would entail looking more holistically at different sectors, and bring together discussion about housing (including social housing) and societal development.

Philip Lawton

Got us home

Back in March, Taoiseach Enda Kenny made the claim that “If you had 30,000 three- bedroom detached houses in Dublin you’d sell them all in a week. That’s the pent-up demand that’s there”. This has been part of a discourse that seeks to once again talk up the property market; to encourage the construction and sale of houses as a means to both stimulate the economy and to provide housing through the mechanisms of the private market.
The casual slippage back into the development logic of the Celtic Tiger era seeks to ignore both the remaining material evidence of the property crash – in the form of the persistent problems of mortgage arrears, negative equity, and unfinished developments – and the burgeoning housing crisis in the Dublin region.
In short, this strategy seeks to resurrect the property market to the detriment of addressing the housing crisis.
To tackle these issues, the group Housing Action Now have produced a Manifesto For the Right to Housing calling for an end to “market-based policies of debt-fuelled home ownership”. To deal with the housing crisis, which will only worsen if left to the private market, the provide a series of solutions including regulating the private rental sector, homelessimplementing a policy of zero evictions, providing social housing, and providing traveler specific accommodation.

“The manifesto provides a snapshot of the housing crisis and proposes clear, meaningful solutions in an accessible format. We hope it will also serve to bring together all those who believe in the right to housing and facilitate discussion on how we can bring this about”.

The manifesto will be launched today at 6pm in the Teacher’s Club on Parnell Square. A discussion on this crucial issue will follow.
A short version of the manifesto for online sharing is here. The full version is available here.

Cian O’Callaghan

 

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