Housing the New Ireland Comment on the NESC Report

In spring 2004, Focus Ireland, the voluntary organisation dealing with homelessness, placed a series of poster advertisements around Dublin city. These were designed to look rather like the plaques which are put on buildings to indicate that a noted artist, political figure or other famous person once lived there. A typical Focus Ireland \’plaque\’ read: \’Paul Ryan, Homeless Person, Lived Here, August 2003\’. Posted alongside doorways, bridges and other places that might provide minimal shelter, they were a graphic reminder of the continuing problem of homelessness in the midst of a vibrant and clearly prosperous city. On the evening I first saw one of these posters, I turned on the radio and encountered a very different advertisement: this one announced a Holiday Home Fair for the latest location to become \’the\’ destination for Irish people wanting to buy that second home abroad. The two advertisements pointedly illustrated the widening gap in the experience of different groups of people in Ireland with regard to housing (and income and wealth) which has been such a feature of this society over the past decade.

NESC Report
Housing in Ireland: Performance and Policy, Report No. 112 of the National Economic and Social Council (NESC) was published in December 2004.1

NESC begins its Report by outlining the wide range of \’issues and anxieties\’ most frequently expressed about the Irish housing system – including the increase in house prices, the inadequate supply of social housing, low-density suburban development, and rural housing. It states that the concerns can be clustered into three general areas. The first is the of the Irish housing system – in effect, whether the private housing market is a realistic reflection of underlying economic; social factors, or whether it is may amount to a \’bubble\’ that might burst. The second is in the distribution of resources and opportunities. The third is of the system – whether the pattern of settlement is storing up social, budgetary and environmental problems for the future.

The Report draws attention to the factors that underlie the strong demand for housing over the past decade – economic growth, an increase in population (which rose by 8 per cent between 1996 and 2002); the increase in income and wealth, and the availability and cost of finance for housing.

It highlights the overall increase in construction, with three times asmany dwellings completed in 2003 as in 1994, and describes this rate of construction as \’unprecedented\’ and “exceptional when compared to other European countries” (p. 34). It shows the significant increase in the number of apartments built, with a concentration of these in; Dublin and the Greater Dublin area, and the high proportion of new housing that is in the form of single dwelling; – nearly one-third in 2002 and one-quarter in 2003 (p. 37). The increase in housing output in the Dublin area is shown to be lower than the national average, while the increase in counties surrounding Dublin and in the \’outer\’ counties of Leinster has been significant. The result is a \’pronounced doughnut pattern\’ to development in Leinster (p.38).

The Report deals at some length with the issue of affordability, showing that while a majority of the population has been insulated from any affordability problems (either because they own their home outright, had acquired a mortgage before the take-off in prices or because they live in rent-protected social housing), a significant minority experiences serious affordability problems.
Using as a measure of affordability the percentage of average industrial earnings, post tax, required to service a twenty-year mortgage on an average house (while recognising the reality that many young people are taking out significantly longer mortgages), NESC shows that, from the late 1990s, the mortgage on an average house would cost a single earner around 60 per cent of income but around 80 per cent in the Dublin area (p. 47). This is compared to the official \’affordability threshold\’, under which a person is regarded as being eligible for housing assistance from the State if the cost of a mortgage would exceed 35 per cent of their net income (p. 46). NESC calculates that \’dual earning households\’ on average earnings; (where the incomes are equal and full individualisation applies), be able to meet the official affordability criterion – though only just in the case of Dublin houses. However, it shows that whereas a dual earning household, with each person having two-thirds of average earnings,; could have met the affordability criterion in the mid-1990s, it; would no longer be able to do so.

NESC does not discuss the wider implications of assuming dual earnings as the basis for housing affordability. The majority of those faced with affordability problems in relation to house purchase are young, and presumably most will at some stage wish to have children. What choice does \’affordability\’ based on two incomes leave parents who would prefer for one of them to stay at home full-time or part-time to care for their children and what are the implications if they do continue to work full-time but must meet the considerable costs of child care?2

Affordability must also take account of the need to pay \’point-of-entry costs\’ – deposit, taxes and fees. NESC shows that in 1989 an individual on average industrial earnings would have needed to save 62 per cent of one year\’s net earnings to accumulate a deposit of 10 per cent for an average new house; today, they would need to save 100 per cent (130 per cent for an average house in Dublin). It notes the increase in the pressure to obtain assistance for point-of-entry costs, \’most notably through parental gifts\’ (p. 49), and cites research showing that 71 per cent of first-time buyers earning less than 40,000 euro had obtained parental or third party assistance in some form (p. 31).

NESC suggests that the Government should explore ways of assisting those who would have difficulty in accumulating a deposit, which it suggests could be done either through a tax-assisted savings scheme or the provision of a loan by the State.

Attention is also drawn to affordability issues for those in private rented accommodation: in 1999-2000, 20 per cent of households in this sector spent more than 35 per cent of their income on rent (p. 50). A possible policy response raised by NESC is the development of a \’cost rental\’ sector through the subsidisation of not-for-profit or limited profit housing providers (p.168).

In its interpretation of the Irish housing system, NESC takes the position that a large increase in house prices was inevitable from the mid-1990s, given the prevailing economic and social circumstances (p. 77). While this may be true in essence, is it really the case that no public policy measure was available to curb prices in the interests of meeting people\’s primary need for housing and of ensuring more just distribution of resources?

The Reality of Housing Need

What is striking about the Report\’s opening chapters is that although they present an array of facts and analyses about the evolution of Irish housing in the past decade, they do not provide a quantitative or qualitative account of the reality of housing deprivation in today\’s Ireland for those who are experiencing it. There is a table outlining the numbers in the \’categories of need\’ in local authority assessments (p. 56). However, there is nothing that coveys the experience of homelessness, the situation of the Traveller Community, the life of those forced to live in B&B accommodation, or in the lower end of the private rented sector, or in poor quality local authority estates. The Report does not consider the particular housing issues facing the increasing number of older people, especially those living alone, or present the perspectives of those who are now shut out from the home ownership that they once could have assumed to be a reasonable aspiration.

The impact of the current housing system on children is not discussed – even though the 2002 housing assessment showed that there were 50,000 children in families with housing needs. Children are also affected by decisions concerning planning and design, which fundamentally impact on their ability to move around independently, to be safe where there is traffic, and to play outdoors. The omission regarding children occurs despite the commitments in relation to housing and the environment, and its further commitment that all government departments will be required to identify the impact of proposed policies on children.3

The Report does, however, give some attention to the specific needs of people with disabilities. It says there is \’urgent need\’ to develop a strategy to support the provision of tailored housing and housing supports across all sectors of the housing system.

{mospagebreak}Land for Housing
In its discussion on the availablity and cost of land for housing, the Report makes several references to the 2004 Report on Private Property of the All-Party Oireacthas Committee on the Constitution. Yet it makes no comment on the extremely important central conclusion of that Report. In the view of the All-Party Committee, the recommendation of the 1973 Kenny Report that local authorities should be empowered to acquire land needed for development at existing use value plus 25 per cent, would be unconstitutional. The All-Party Committee Report, in effect, gave a \’green light\’ to the Oireactas to proceed with the enactment of legislation to implement the Kenny recommation.4 More than a year after the publication of Report, there is no indication that the Government has plans for such legislation.

Social and Affordable Housing

Opening its deliberations regarding future policy on social and affordable housing, NESC declares that: “There is greater dynamism in the supply of private housing than in that of social and affordable housing in the Irish housing system.” (p.145) A description more accurately reflecting reality might be that successive governments over recent decades have simply accorded insufficient priority to ensuring an adequate response to social and subsidised housing requirements.

The Report shows that in the three-year local authority assessments of housing need, the number of households requiring housing assistance rose from 27,427 in 1996 to 39,176 in 1999 and to 48,413 in 2002 (p. 56). There was, therefore, an increase of 76 per cent over six years. The percentage assessed as being in need because they were \’unable to afford\’ housing increased significantly, representing 43 per cent in 2002. Given the comparatively low level of output of social housing since 2002, along with the increase in the country\’s population, it would be surprising if the assessment carried out in March 2005, but not yet published, were not to show a further increase in the numbers needing housing assistance.

NESC describes Part V of the Planning and Development Act, 2000 (which gave local authorities the power to ensure that up to 20 per cent of all residential developments could be retained for social and affordable housing) as \’perhaps the single most important policy development of recent decades\’ (p. 57). It makes no comment on the implications of the amendment to this legislation in 2002 which seriously weakened the potential of Part V to increase the supply of social and affordable housing and to promote social integration. Instead, it euphemistically describes the change to Part V thus: “The legislation was amended in 2002 to provide additional methods of compliance for developers.” (p. 58)

NESC says it is \’is firmly of the view\’ that \’ a roboust policy response\’ is required to ensure there is an increase in the output of social and affordable housing, and that this sector is given priority in public spending (p. 146).

Social Rented
The Report speaks of the need for \’a high level of ambition\’ in relation to the provision of social housing by local authorities and voluntary housing associations and of the \’urgency of actions\’ required to achieve this (p. 153).

Throughout the past decade, even though output of social housing has gone up in absolute figures it has remained at only around 5 to 6 per cent of new housing. As NESC notes, the level of provision has fallen behind even the relatively low target set in the (2000-2006).

The Report recommends that there should be 83,000 new social housing units built up to 2012 – the target date being the ending of the next National Development Plan. Allowing for continued sales of local authority housing, this level of output would result in a net increase of 73,000 and would bring the stock of social housing up to 200,000, representing 12 per cent of all housing. The recommended increase would require an output of 10,000 units annually over the eight years 2005 to 2012, which is a level of new provision more than 50 per cent higher than the yearly output during the last decade. A target of 200,000 for the national stock of social housing provides a nice round figure, easy to remember for those wishing to lobby on the issue. But the question remains, would this level of provision, even if it were to happen, be sufficient? It is frequently argued that the present system for determining housing need is too narrow – for example, many in the private rented sector are not included in the assessment of housing need, despite the high percentage of their income that goes on rent.

An important aspect of social housing is the provision of social supports for tenants who are vulnerable. NESC recognises the inadequacy of financing for such supports and recommends that there should be a \’defined revenue funding scheme\’ to ensure adequate funding for housing bodies providing social housing for vulnerable groups who require on-site or care supports. (p. 171)

Supplementary Welfare Allowance
NESC supports the view that the social rental sector should be defined as including the subsidisation of rent in the private rented sector, through the supplementary rent allowance scheme (p. 153). It notes that the number of households receiving rent allowance rose from 34,7000 in 1996 to 58,000 in 2004, and that such households now represent about 40 per cent of the entire private rented sector. Moreover, rent supplemented housing equals about half the size of the rented local authority and voluntary housing sectors (p. 65).

NESC expresses support for the introduction of the Rental Accommodation Scheme announced in 2004, which aims to address the situation of those who are receiving rent allowance for more than eighteen months. The scheme provides for long-term contracts with landlords already providing accommodation to people in receipt of rent allowance, as well as \’specifically built premises\’ and \’new developments under public-private partnerships\’ (p. 65). While some of the possible drawbacks of the proposed scheme are acknowledged, NESC concludes: “These are valid concerns, but innovative measures should not be held back because they are typically attended by new uncertainties” (p. 160). Yet the concerns listed are of a substantial nature: the fact that this arrangement will not provide the same long-term benefits to tenants as would social housing, such as life-long security of tenure and the opportunity of tenant purchase; the possibility that stigma may attach to tenants if buildings become identified with the scheme; the difficulty of ensuring that repairs to property are carried out; the fact that the public subsidisation involved will not result in the acquisition of equity for the State. It is hard to avoid the suspicion that, whatever about the need to do something about the prolonged use of rent supplement, the proposed scheme reflects the current tendency in policy to prefer a solution that is \’private\’ – though almost inevitably subsidised by the State – to one that is public.

Beyond its reflections on the proposed Rent Accommodation Scheme, the Report makes no comment on the operation of the rent allowance scheme, including issues such as the cap on the amount of rent for which the allowance will be paid, the restrictions that have been introduced to curtail access to the system, and the quality of the accommodation supplied to those availing of rent allowance.

{mospagebreak} Affordable Housing
The Report refers to what it terms \’intermediate households\’, which it defines as those households whose incomes are too high to qualify for social housing but too low to allow them to purchase a home or who struggle to rent privately. Another way of putting it would be to say that these were households who would in the past have been able to buy a modest home but who, because of the astronomical rise in house prices, have been priced out of the market.

NESC estimates that current schemes to subsidise the acquisition of homes will provide around 4,000 units per annum up to 2006, which would mean that 5-6 per cent of buyers of new homes may expect to purchase a house at a discount. It suggests that “the number of people eager to purchase a home but unable to do so under market conditions is unlikely to get smaller”, since even if there were a further reduction in the rate of increase in house prices, and a catch-up in earnings relative to them, this would be offset by interest rate rises. It proposes, therefore, continuing with policies to provide subsidised housing at around the present level, but before doing so does not provide any analysis showing to what extent the current level of provision matches demand for this type of housing. It does, however, speak of the need to “stand ready to improve the effectiveness of these policies in the light of experience.” In view of the Council\’s projections concerning the growth in the population and the composition of the labour market, it would seem very likely that there would be need for a revision upwards of this target.

NESC argues that the existence of four separate schemes to subsidise private ownership – the Shared Ownership Scheme and the three Affordable Housing Schemes – have given rise to variations in eligibility and allocation criteria, and to different levels of subsidy to the purchaser. It recommends that they be amalgamated into a single First Home Scheme, under which households could apply either for housing supplied by local authorities or supports to purchase, or build, their own home.

It also refers to emerging initiatives for shared equity schemes in the voluntary and co-operative sectors, and recommends that funding and other supports should be made available to enable the extension of such partial equity housing (p. 165).

Second Homes

There is no precise, up-to-date figure for the incidence of second-home ownership in Ireland but the evidence suggests that it is significant and growing.

NESC says that the issues facing Ireland in regard to housing bear comparison with the other major challenges that faced the country over the past half century

NESC does not refer specifically to the impact of second home construction in its analysis of the increase in the price of housing – unlike the , which stated unequivocally: “An important driver of the price of building houses is the demand for second dwellings.”6 The speaks very clearly about the detrimental effects of second home building, including the fact that it narrows substantially the differential between house prices in Dublin and regional locations. “This runs totally counter to the needs of balanced regional development, making it unnecessarily expensive for individuals to live and for businesses to operate in regional locations.”7

NESC says that there is a strong case for measures that would recover from owners of second homes \’the full costs\’ of, for example, connection to services, environmental damage and lost amenities, as well as an additional contribution to ameliorate the knock-on effects of second home ownership on prices locally, which impact on people wanting to buy a primary home (p. 185).

And what of the question of imposing a tax on second homes, an issue which has been raised by various commentators in the past few years? The Report says merely that NESC “believes that consideration should be given to a separate tax on second homes” (p. 185). It adds, however, that a decision on whether to introduce such a tax, and what form it might take, would “depend on how the wider issue of land value intervention and betternment is treated”. Why the decision should be so dependent is not elaborated on.

The Right to Housing

The NESC Report is silent on the question of the right to housing. This is disappointing for a number of reasons. First, Ireland has ratified a number of UN human rights treaties which include the right to housing, in particular, the International Covenant on Economic, Social and Cultural Rights. Under this, and other UN conventions, a State Party is required to implement the rights outlined \’to the maximum of its available resources\’ with a view to progressively achieving their full realisation. Ireland\’s obligations to respect the right to housing must therefore take account of the significantly increased resources now available.

In a , issued in 1991, the UN Committee on Economic, Social and Cultural Rights elaborated its views as to how the right to housing is to be interpreted. It noted that: “The right to adequate housing … is of central importance for the enjoyment of all economic, social and cultural rights”. The right “applies to everyone” and the interpretation of the right should not be one that “views shelter exclusively as a commodity”, but rather it should be seen as “the right to live somewhere in security, peace and dignity”.8 These reflections of the UN Committee could have provided a valuable source for NESC in setting out a vision and a set of priorities for Irish housing.

Second, in 2004, the All-Party Oireachtas Committee on the Constitution in its committed itself to examining the question of socio-economic rights, including the right to housing, at a future date.9 This was in response to the large number of submissions it had received urging the inclusion in the Constitution of a right to housing. A reminder to both the Government and the All-Party Committee of this commitment would have been timely.

Third, NESC itself, in a previous report, looked at the issue of socio-economic rights and in its conclusion said: “the Council proposes that Irish policy, and any new national programme, should contain a process to explore how standards of public service can be better identified, monitored, achieved and improved in order to vindicate socio-economic rights.”10
The quality of housing available to the majority of people in Ireland has improved immensely over recent decades. Since the economic boom, standards have improved still further. In addition, a majority of households have seen an unprecedented leap in their wealth-holding as a result of the increase in the value of their homes. In this context, it is all the more unacceptable that a minority should have to live in poor quality, insecure accommodation, or be homeless, with little immediate prospect of their situation improving. In relative terms, the position of those experiencing \’housing poverty\’ in Ireland has deteriorated in recent years. Against this background, the Irish housing system appears to have been providing four to five times as many houses for use as second homes as it has for social housing.

NESC in its conclusion says that the issues facing Ireland in regard to housing bear comparison with the other major challenges that faced the country over the past half century and that resolving them is essential to the social and economic future of Irish society. The implementation of the NESC recommendations, especially on social and affordable housing, would undoubtedly bring improvements. The question remains: do the NESC recommendations as a whole go far enough? They are, it must be remembered, the result of the deliberations, and inevitable compromises, of the diverse interests represented on NESC – Government, business, trade unions, farmers, and the community and voluntary sector.

In any case, the challenge to Irish society, as NESC makes clear, is considerable. Can it generate the political will, and level of public concern, to ensure that developing an adequate and equitable housing system can become a priority in public policy, and public expenditure, over the coming decade?

1. NESC, (2004)
2. This issue was referred to in Mary Daly (2004) , Dublin: Department of Social and Family Affairs, p. 37.
3. , National Children\’s Strategy, Dublin: Stationery Office, 2000, p. 79; p. 41.
4. Jerome Connolly, “A Green Light for a New Agenda on Housing and Planning”. , No. 48, June 2004.
5. Central Statistics Office (2002) , Dublin: Stationery Office, Table 3.5, p.156.
6. John FitzGerald, Colm McCarthy, Edgar Morgenroth and Philip O\’Connell (2003) , Dublin: Economic and Social Research Institute, p. 252.
7. John FitzGerald ., p. 253.
8. United Nations, Office of the High Commissioner for Human Rights, Committee on Economic, Social and Cultural Rights, General Comment No.4 on the Covenant on Economic Social and Cultural Rights: , par. 29 and par. 30.
9. The All-Party Oireachtas Committee on the Constitution (2004)
10. NESC (2003) , Dublin: National Economic and Social Council (Report No.), p. 371.

Thanks to Focus Ireland for permission to reproduce its poster advertisement.