CO M M E N T REALITY CHECK PETER McVERRY SJ
A LEFT-WING GOVERNMENT?
IF THE GOVERNMENT FAILS TO ADDRESS THE HOUSING CRISIS, THERE WILL BE A POLITICAL REVOLUTION IN IRELAND
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the first time in Irish history, we could see a left-wing government after the next election. The reason: housing. For the past 15 years or more, buying and renting a home has become unaffordable, and successive governments have been unable and unwilling to remedy the problem. Housing experts agree that we need to build at least 35,000 homes every year just to keep up with the expanding population. But, even before the pandemic, we were only building about 21,000 homes per year. So the gap between demand and supply is getting bigger every year – which is pushing up house prices beyond the reach of most people. As a result, many are forced, unwillingly, into the rental market. Again, the failure of successive governments to build social housing (in 1975, this country built 8,500 council houses, in 1985, we built 6,900, and in 2015 we built 75!) has forced many low-income households into having to rent, with the aid of the Housing Assistance Payment. This further increases the demand for renting and pushes up rents. In desperation, the government introduced policies, such as the First Time Buyers subsidy and the Shared Equity Scheme, which help a small number of people to secure a mortgage, but which push up house prices even more, since they increase demand without increasing supply.
REALITY OCTOBER 2021
WHO ARE THE WINNERS AND LOSERS IN THIS SYSTEM? THE WINNERS – OWNERS OF CAPITAL First, the large international investment funds. They love to see house prices going up; if they buy a house and sell it some years later, they increase their profits. And if they buy to rent, then, again, rising rents increase their profits. They have billions of euros available to invest, so they can easily outbid Irish people who have had to save for years to build up a deposit. The government sought to attract them to Ireland with a range of extremely generous tax exemptions. In May, we saw the consequences of that decision when they bought up the majority of houses in several housing estates for rental, thus reducing further the supply of houses for first-time buyers. These investment funds now own over 15,500 residential properties in Ireland and consider Ireland one of the most attractive countries in which to invest. Second, the banks. They benefit from rising house prices because if they sell 'distressed' mortgages to large international investment funds or repossess a house in mortgage arrears, they make more money. If there is conflict between the needs of banks and the needs of ordinary people struggling to pay a mortgage, government policy has always sided with the banks.
Th i rd , m o st l an d l o rds . The huge demand for rental accommodation, far outstripping supply, has pushed rents to outrageous levels, leaving many people, even those on good salaries, in effective poverty, as they may pay 50-60 per cent, or even more, of their wages to the landlord. As in other European countries, the government's reluctance to regulate the private rental market results in people having the worst of all worlds, high rents with little security of tenure. THE LOSERS – LOW AND MIDDLE-INCOME PEOPLE First, young Irish people who are forced to live with their parents because they cannot afford to buy, or who struggle to pay the rent, or who experience homelessness because they can neither afford to buy or rent. Most of these young people will never own their own home, will be renting all their lives, living in constant fear of eviction. They have done everything asked of them. They studied hard, went to college, got a job but now find they may have to emigrate to have a decent life. Second, parents of children who cannot leave the family home. At a time when they hoped to live a quiet life, they find their children (and sometimes their grandchildren!) still living with them. Third, older people. Many of them are watching their life
savings slip away as they have to help their children with a deposit. As house prices rise, they have to put aside more and more money, sometimes at great sacrifice to themselves. Unless the government changes sides, from supporting the owners of capital to supporting struggling homeowners and renters, the anger and frustration of a large section of Irish society could usher in a political revolution in Ireland.
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