Housing remains one of the top issues in this general election. Here Stewart Smyth exposes the government’s spin and myths about the housing crisis and argues that another housing system is possible.
In a stale and social media driven election campaign, where the mainstream candidates are mollycoddled by the media, there was one occasion in the first week of the campaign, where the Taoiseach was actually challenged on his government’s record.
While glad-handing on Capel St in Dublin, Simon Harris was met by long time socialist and People Before Profit activist, Kieran Allen. With an entourage of media and cameras to capture the exchange, Allen challenged Harris over the growth of homelessness while his party Fine Gael has been in government.
Specifically, Allen charged that Harris and his government were told in the Dáil that lifting the eviction ban would lead to greater homelessness. This is exactly what has happened. There are now over 4,000 homeless children in the state.
Hollow Words
Harris responded in his typical, tetchy style, giving a potted history of events – the financial crisis, broken construction sector, broken financial sector, then Covid closed down construction twice. You know, the kind of explanation that a six-year-old might provide when asked why not enough homes are being built:
“I went to the park and got an ice cream, but then a big boy ran by and knocked it out of my hand. Then I had a ball but a big dog took it and burst it. And that’s why we don’t have enough housing for young people.”
While it is easy to ridicule Harris and his responses, it would be a mistake to only do that. Harris and his government are trusted by the Irish elites to look after their best interests. So, when Harris lists off these seemingly random, external events he is trying to distract attention from the priorities and policy failures of his government.
“Look, it wasn’t us – it was all those horrible external events that caused the housing crisis.”
Now no one is denying that there was a financial crisis in 2008/9, followed by the Great Recession that was international in scale and dynamics.
What Harris doesn’t say is anything about the policies successive FG/FG governments have pursued over the past 15 years. Instead he advanced the bland, and frankly insincere words, that “there is nobody in this country that wants to see a child homeless, absolutely no one”.
Not a Priority
And yet the day before the Capel St engagement, the Sunday Business Post was reporting an interview with former FG Housing Minister, Eoghan Murphy, where he was quite categorical:
“But one of the really important takeaways I think from my time in government is that we did not escalate Housing to priority number one. And that wasn’t because we didn’t want to. Everyone agreed it was a priority. But it was never as important as Brexit.”
So, housing was (and I think most people would agree continues) not to be the number one priority for the government. In fact, Murphy highlights that Housing was a lower priority than internal Fine Gael harmony.
FG have a pedigree of being willing to accept the costs of the impacts of the housing crisis, such as homelessness. Back in 2017 the then Taoiseach, Leo Varadkar tried to normalise the increasing levels of homelessness in the state – saying the Irish level was low in comparison to international standards.
Simon Harris’ words look increasingly hollow.
Eviction Ban
It is not just attitudes though but actual government policy decisions that have caused this housing crisis. Take for example the eviction ban. The Housing Minister, Darragh O’Brien, as he was lifting the eviction ban in March 2023, conceded that the decision might lead to more people becoming homeless in the short term.
Well over 18 months later we can confirm the Minister was correct. In March 2023 there were 11,988 people presenting for emergency accommodation, by the end of September 2024 (the latest numbers we have) there are 14,760 people in this position.
Rather than working, or even trying, to solve the housing crisis as Harris claims, his government’s policies are actually making it worse.
This is not just about individual policy decisions, there was a key decision point when the FG/Labour government could have moved towards providing housing on the basis of need, not profit.
After the construction bubble crash the state stepped in and bailed out most of the developers in the country, mainly through NAMA. This meant the state had part-built “ghost estates” and land that it now controlled. Alongside a huge existing land bank owned by public bodies.
Making the Choice
The question was what to do with all this development land and part built estates?
One route would be for the state, through local councils or a state construction company, to build out the housing on a social and affordable basis. This would provide the homes for those on waiting lists and reduce the numbers in homelessness.
Social and affordable housing is beneficial for all, as more people housed in the not-for-profit sector means less pressure on the private rented sector, resulting in more availability and lower rents.
Such a socially beneficial policy was not taken by the FG/Labour government. Instead they turned to international private equity and vulture funds to reflate the property market and start the whole boom and bust cycle again.
All About Profits
We know this because in 2013/14 the then FG Minister for Finance, Michael Noonan, met with private equity fund Lone Star Capital three times, and Apollo Global Management twice. Further officials in his department met representatives from private equity funds on at least 65 occasions in these years.
Out of these interactions came NAMA deals with massive profits for US vulture funds, including in Northern Ireland (around Project Eagle). Further, in the 2013 Finance Act, Minister Noonan created a specific investment vehicle aimed at extracting maximum profits from the distressed housing market, with the creation of real estate investment trusts (REITs).
REITs allow investors looking to make maximum return on their capital, to avoid paying tax. This legislation created the space for corporate landlords to buy up whole developments and profiteer from the ever rising rents.
A decade later, we can see the impact of this policy. IRES REIT is the largest corporate landlord in the country. At the end of 2023 it owned over 3,700 homes, worth nearly €1.3 billion.
In its first full year of trading (2015) IRES REIT had revenue (from rents) of €27.4 million – last year the revenue was €87.8 million. Its Net Rental Income (i.e. rents minus property operating costs and taxes) has exploded over three-fold from €20 million to €68 million.
Richard Boyd Barrett is quite correct when he says the cost of living crisis has been a bonanza for some – including the corporate landlords.
Rather than the government policy being aimed at trying to solve the crisis it is actually contributing to making the crisis worse. This is not by accident or incompetence, but is by design. As two housing academics – Madden and Marcuse – wrote in 2016:
“Housing crisis is not a result of the system breaking down but of the system working as intended.”
Harris, Darragh O’Brien and the rest of the government have designed a housing system that is working as intended to fill the pockets of landlords, private equity funds and developers.
Migrants are not to blame
One last point and very important point – the above should make it clear where the blame for the housing crisis lies. Yet, our tetchy, Tik-Tok Teesh refuses to take responsibility. Instead seeking to scapegoat some of the most vulnerable in our society those seeking protection for war and persecution elsewhere in the world.
In September, Harris attempted to link homelessness to those coming to Ireland for protection. A blatant attempt to deflect anger away from his government’s appalling housing record and try to garner some support for dog whistle racist comments.
Rightly he was challenged on this, including by the Mercy Law Centre, who stated
“Ireland has experienced an unprecedented housing and homelessness crisis that predates any notable increases in immigration to Ireland or numbers of people seeking International Protection … These have been problems in the making for over a decade and suggesting that they are somehow a new phenomenon related to immigration is disingenuous and should be avoided.”
Another Housing System is Possible
However, none of this is inevitable. We can still change course and deliver housing on the basis of need, not profit. That is the basic principle that informs the housing policy in the People Before Profit manifesto.
This is why we support the establishment of a state construction company, that will be able to build housing and retrofit homes without having to produce profits for developers and others. Last year the Society of Chartered Surveyors Ireland (SCSI) produced a breakdown of the cost to building new houses.
What it shows is the direct costs of building a house in the greater Dublin area is less than €230,000; yet the actual cost charged to the public is over €470,000. The staggering difference between the two is made up predominantly from profit making in one source or another:
- Developer profit €54,000
- Finance costs (bank profits) €23,000
- Sales and Marketing €9,000
- Land €70,000
A state construction company that built on public land, would not have to pay these costs. A further reduction could be secured by the government waiving the VAT (€48,000) on new social housing in recognition of the dire emergency and the fact that the rent paid would be returned to the public purse.
The government and other parties argue there is a labour shortage and it will take too long to organise a state construction company. These sound like problems but in reality they aren’t and are excuses to keep the status quo.
On labour shortages, the Irish Fiscal Advisory Council reported last month that we need an extra 50,000 construction workers in the housing sector. These will come from re-allocating workers from other construction sectors and increasing the number of apprenticeships. The re-allocation of workers is a growing need as the commercial construction sector is in decline.
Further a state construction company would offer better pay and working conditions, including ending bogus self-employment and casualised working practices, and increasing apprenticeship pay to the living wage (currently apprenticeship get pay a little €7 an hour in the first year of their training). All this will attract workers to join the state construction company.
As for the time it will take to establish a state construction company – the answer is very simple. If the political will is there it can be done very quickly. Remember, when the profits of banks were threatened, the bank guarantee, nationalising the banks, was brought in overnight.
A new left government committed to solving the housing crisis as its number one priority could establish a state construction company in a matter of months.
For any of this to happen we need to get FF/FG out of power. Then, the more PBP and other socialist TDs that get elected to the new Dáil, the stronger opportunity we will have to build campaigns for social and affordable housing over the next five years.