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TO DESCRIBE THE public response to the article I wrote last Thursday as phenomenal is an understatement.
At 127,000 views, and growing, it is one of the most-read opinion pieces ever published by The Journal. Who would have thought that a 2000 word article on the ins and outs of the housing crisis and policy would go viral?
I thought the only chance I ever had of getting my housing stuff to go viral would be if I managed to get my kids and our cat to somehow make a dance routine to me beatboxing the closing lines of my Housing Shock book: “We have to stop the investor funds, yeah, build affordable homes, yeah”.
But go viral it did (the article, not my beatboxing), because it touched a nerve. It captured the mood of a generation thrown to the investor wolves by Government. And I wrote the truth as I saw it based on my years of research into housing and economic policies.
It connected to what Generation Rent knew inside, could feel, were experiencing, but had not seen described and the policy explained before.
Political reaction
The government is scrambling around trying to cobble together some sort of a response that will make it look like it is doing something on the investor funds. It is looking for a response that will quieten down the tidal wave of public outrage that has engulfed it since last week.
But this time it’s different. Generation Rent and Generation Stuck at Home will not let government away with the spin that tries to portray inaction as action.
We have had public outcries over the housing crisis, the Raise the Roof protests, Apollo House, anger and shame over the scandal of homelessness – but each subsided, with no immediately visible impact on politics or policies.
The frustration with Government inaction on the housing crisis did get expressed in the 2020 election, with Fine Gael losing out and Sinn Féin gaining. But then Covid-19 hit, and the housing issue slipped from the headlines. The Government policy that enticed the investor funds continued to work away as investors bought up our homes.
A generation locked out
And now, as we begin to open up cautiously and carefully, housing is back. And this time it’s different. Generation Rent and Generation Stuck at Home are standing up and not taking it any more. They have been pushed to their limit.
I have been contacted by so many people who are being devastated by this crisis. The couple outbid by ‘cash buyers’ and investors for their dream home, couples putting off having kids until they can get a home where they aren’t worried about being evicted and having to uproot and move somewhere else, the couple who put all their savings into IVF and were then unable to afford a deposit, the parents worried about how their kids are being impacted by the stress of overcrowding living in their grandparents’ house, the shame of couch surfing or sleeping in a car, the low self-esteem of a single person in their 50s left living in a room with other house sharers, elderly renters facing homelessness, single mothers with kids facing homelessness because the rents have gone beyond the social housing HAP payment, carers with children with a disability stuck waiting for appropriate social housing for ten years. This is a social catastrophe.
The housing crisis is causing massive distress, impacting negatively on mental health, causing anxiety, despair, and shame across the generations. And that is why there has been such a reaction.
Just as the water charges were the straw that broke the camel’s back of people’s tolerance of austerity, the investor fund buy-up of homes is the straw that is breaking the Irish people’s tolerance of the housing crisis.
The extent of anger and desire for action that is being expressed up and down the country reminds me of the response to the water charges. If it wasn’t for Covid there would be hundreds of thousands marching on the streets.
But they are finding ways to express themselves on social media and signing the Uplift petition created on the back of last week’s piece.
What has been galling in the last few days has been the feigned surprise and concern from Government about how did this happen? It cannot be not surprised. Its policy created it. I believe it knew the consequences, knew it was throwing Generation Rent under the austerity bus and its policies would be locking people into pouring their hard earned income into perpetuity into the profits of investment funds.
And the longer Government pretends otherwise the more damage it will suffer politically. It faces a choice. It’s going to be an electoral wipeout by Generation Rent or make a radical change in housing policy now.
The Tánaiste’s claims that rents and homelessness would be higher if it wasn’t for these investor funds is actually a disturbing level of dishonesty. The Tánaiste knows very well that rents are higher and homelessness worsened because his Government allowed rents to rise and did not implement measures to stop homelessness, such as restricting evictions, so that property would remain attractive for investors.
New promises on investors
The Government has said that it is looking to restrict investors from buying up housing estates, and has defended investment funds as being needed for the ‘supply’ of apartments and housing and that they provide a key source of finance for building that supply.
Now firstly, apartments are homes too. This idea that the problem will be sorted by trying to halt the gallop of investors into commuter belt housing estates and ring-fencing a small proportion of planned new estates for first-time buyers is misleading and more spin. Is it trying to pretend that investors are only buying in the Google docklands, and somehow apartments aren’t homes for families or individuals?
The profile of properties rented out by Canadian-owned Ires Reit, which is now the State’s largest private landlord with just under 4,000 rental properties (see map below), shows it owns homes in the city suburbs of Tallaght, Ballymun, Sandyford, and in Cork.
It is a derogation of responsibility to anyone who wants to live in a city or even a city suburb. Most new developments inside the M50 are likely to be apartments or higher density housing.
So is Government basically saying anyone who wants to buy a home or rent an affordable one inside the M50 can forget it? Inside the M50 is designated ‘investor feeding ground’. If you want to live there, good luck to you finding an affordable home.
Apartments are homes, especially for smaller households, singles, city workers and families. Investor funds must be restricted from buying up those too. Apartments should be affordable to rent and buy. Investor funds do not provide an affordable supply. Restricting investors from buying housing estates is not enough.
The financing and supply arguments are attempts to deflect away from the reality that in fact, finance is available for building affordable housing on a major scale. And it is not that people cannot access mortgages, it is that they can’t get mortgages or deposits for unaffordable house prices at €350,000 or €450,000.
There is another way
The State can borrow at practically zero cost to build on scale. The European Investment Bank has billions to lend for affordable house building. The Credit Unions have billions to lend if they were enabled by Government. The Irish sovereign development fund, the Irish Strategic Investment Fund, which is managed and controlled by the state’s National Treasury Management Agency, has about €7bn available to lend.
But it is another example of State policy backing the investor funds. It is currently investing in the development of build to rent with real estate funds. It is lending to Activate Capital, which is funding various investor fund development of build-to-rent homes.
Why is our State fund investing in the development of unaffordable housing? Why is not lending for actual affordable housing.
And when we talk about finance – there is €1bn a year, a third of our housing budget going into private landlords (including investment funds) for social housing via the Housing Assistance Payment (HAP). The funds profit massively from the State’s social housing policy through renting rather than building. Yet this could be used to build permanent social homes.
But there is a way to provide affordable housing. This is a model of housing that really cuts through these finance arguments and is provided by Hugh Brennan, of the Ó Cualann Co Housing not for profit provider which is the only body in the country to actually build affordable homes in the last few years.
He has provided me with a model whereby the State could support and ensure the building of 10,000 affordable purchase homes per year.
These homes would then be for sale at c. €250,000 per unit. It is done whereby local authorities and ‘not-for-profit’ housing providers like AHBs and Ó Cualann build the units themselves on state land, using SME and some larger contractors.
If the land is subsidised or if a site services fund is made available, the State pays a maximum of €50,000 per unit toward the cost of these houses. The total maximum cost to the state is €0.5 billion per year, again easily managed from the exchequer. And the State recoups €50,000 per unit in taxes from these homes the actual net cost to the State is ZERO.
A not-for-profit builder like Ó Cualann can raise the finance from commercial banks and Home Build Financing Ireland at competitive rates and institutional investors and buyers are not needed in this model. Similarly, he explains, 5000 genuinely affordable cost rental units could also be provided using a similar model to provide affordable rents into perpetuity, and institutional investors and buyers are not needed.
Architect Mel Reynolds similarly explains that in affordable housing provision, you don’t need big investors involved, you borrow and recycle the capital through the development in phases. You build out the first phase and sell it, and you have funding for the next phase.
Very quiet on NAMA question
In regard to a supply of affordable homes, I have seen no Government response to my point on NAMA. NAMA has the finance and land to build 70,000 affordable homes. But instead, it is selling to investor funds, at unaffordable prices, and is under no direction to build at scale at pace.
The investor’s funds have said publicly that the risks to their profits include:
Possible changes to the government’s housing policy to a more interventionist approach aimed at improving housing affordability.
I believe that is why Government is reluctant to make any major increase in affordable supply – to suit the property finance investor funds.
The seriousness of the situation should not be underestimated. I’ve made this point, that every unit bought up by an investor or developed as build-to-rent is a home lost. It is a house or apartment taken away from being a secure, affordable home and instead converted into an investment asset, locking some household into unaffordable housing for their lifetime.
The investor funds have a war chest of billions, and globally, trillions, targeted at cities and housing across Ireland. They are going to continue to buy up tens of thousands of homes, and build unaffordable rental units in the coming months and years. They are not going to pull back or ease off unless Government reverses its policies and stops them. Time is of the essence. The scale of what is at stake should not be underestimated. This about today, tomorrow and the homes for our children, and their children.
I have set up a petition with Uplift calling on the Government to take real action. It calls on the government to stop the investor funds buying our homes, to scrap the Real Estate investor tax breaks, restrict investor sale of new developments, build public and affordable homes on state lands on scale, and hold the referendum to put a right to housing in the constitution.
Sinn Féin has a Private Members Motion going to the Dail tomorrow, which is being backed by the Social Democrats and Labour. It calls on the Government to introduce legislation to end the tax advantages and exemptions for institutional investors, including REITs, and to implement measures to restrict the activity of institutional investors in the residential property market. The Government can show it is serious by supporting the motion and implementing it.
It would suit the Government for this issue to disappear from the headlines. Don’t let it. This is the battle for your and, all of ours, future. It is about the fundamental need for us all to have a secure, stable, affordable home. A basic human right.
This has the potential to be the turning point in the housing crisis. This is the battle of your generation. Don’t be silenced or fooled by Government inaction. Now is the time to stand up and take action.
Dr Rory Hearne is Assistant Professor at Maynooth University and author of Housing Shock: The Irish Housing Crisis and How to Solve it (Policy Press, 2020).
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Another great article from rory.keep up exposing this government for what it really is
@reginald: The wool has been pulled from around the eyes of the electorate thanks to honest opinions like Rory’s being given a platform to educate us on how we have been taken for fools for years by FFG. Thanks for posting this article, Journal.
@reginald: Rory Hearne … well done – representing every grandparent, parent of kids LockedOut, on Rack Rents , and at risk of eviction.
@reginald: Is Hearne not ex PBP?
@reginald: “The psychology of military incompetence was the subject of an excellent study by Norman Dixon; less has been written about the psychology of political incompetence as a general phenomenon. We can all readily think of individual incompetent politicians. But can we identify general forms of political malpractice in the field of disaster preparedness and mitigation?
Five categories come to mind:
- Failure to learn from history
- Failure of imagination
- Tendency to fight the last war or crisis
- Threat underestimation
- Procrastination, or waiting for a certainty that never comes
This is partly a problem of incentives. Leaders are rarely rewarded for what they did to avoid disasters — for the non-occurrence of a disaster is rarely a cause for celebration and gratitude — and more often are blamed for the pain of the prophylactic remedies they recommended.”
Ireland has been pimped out since the financial crash.
@Patrick Corr: Given we’ve now seen the revelations that Housing Minister Darragh O’Brien had personally invested in vulture/cuckoo funds it shows you where these people’s true hearts lie.
Great article Dr Rory, keep the pressure on the government.
Depressing reading. We have the FFG mafia whose members are some of the biggest landlords in the state in charge of this issue. I suppose when you’re in charge of the cookie jar, you’re going to raid it.
There is a total and utter disconnect between our overpaid politicians and the ordinary person. Varadkar is a poster boy for that particular fact.
Next election the FFG cartel needs to be wiped out. End of…..
@In fairness now…: I just wish there was an election tomorrow
@In fairness now…: Don’t forget, FFG did some sneaky gerrymandering of the vote to keep SF out and keep power for themselves. The electorate has not forgotten.
@In fairness now…: you will get what you deserve when your knights in shining armour (SF) get into power next time. Houses for everyone in the audience! United Ireland and Dana winning the euro vision again!
@In fairness now…: you will get what you deserve when your knights in shining armour (SF) get into power next time. Houses for everyone in the audience! United Ireland and Dana winning the euro vision again!
@In fairness now…: you will get what you deserve when your knights in shining armour (SF) get into power next time. Houses for everyone in the audience! United Ireland and Dana winning the euro vision again!
@Tim Thethird O’Hanrahan: You are obviously one of those ‘I have my house so I’m alright Jack’ types.
@Fr. Fintan Stack: No, he’s worse than that. Even with the taste in his mouth after having his tongue firmly stuck up the rear end of his local FFG TD, he still doesn’t give a fook about anyone else but himself.
Says a lot about our print media and rte that they never highlight the facts about exactly why our governments pander to investment funds as Rory has done in last weeks article and this one today.
@Moss Cotter: He was on Prime Time last week.
Another incredible article Rory. Seriously this is what happens when you give absolute power to Teachers and Doctors. Countries should be run by Economists and People like yourself who know what they’re talking about. Not people who go to training school for spin and how to avoid answering a question. A bunch of educated professional debaters. You have the sense to see what’s going on and know how to change it, so why haven’t we more people like you in the position these politicians are in. They have no foresight. With someone of your knowledge and common sense in the housing department in government this sham would never have happened.
If the FFG lot with their asleep under a tree green friends told me the sky was blue, id have to go outside and double check. The stench of panic is setting in especially around the FF ranks, they know a wiping out Will come in the next election over this mess, not so much FG as their base support already live in mansions and ivory towers and wouldn’t know what a struggle to get a mortgage even looked like.
I fully support this initiative and don’t see how anyone wouldn’t (unless they are part of one of these funds). I see too many friends and colleagues my age and older stuck in a hellish loop of renting and trying to save.. I was lucky I moved early as would never get a mortgage now. Still in negative equity from 2008 but the mortgage is reasonable and we’ve a house over our heads. Like most people with a house- there but for the grace of God go I. If I were to apply on average wage now, like I did then I wouldn’t have a hope. So sorry to everyone who is stuck. This country has failed you. I hope it changes as a result of this.
Head ready to pop with rage and frustration
Can I just say also that a traditional private landlord will pay out well over 100K to the State over the lifetime of a typical 300K mortgage in tax on rental tax income and in addition stamp duty on purchase and CGT on sale of the asset? Any profit the landlord makes will be spent in the Irish economy as most are domiciled at home.
The new breed of institutional investors pay negligible income and CGT tax. They are instead taxed on dividends to which many of the pension fund investors are exempt anyway. As many of the funds are Canadian or otherwise foreign in origin this results in a significant net outflow of money from the State.
@Sean: paying tax does not build houses… ffs its not all about the tax take ….
@Mike O’Flaherty: I don’t Sean’s complaint isn’t necessarily about the tax take (but it is LOL), it’s about how FFG, labour and the greens have bent over backwards to facilitate vulture funds who are just taking money out of the Irish economy while at the same time screwing Irish businesses.
@Harry Power: I wouldn’t say taxing landlords at similar rates to PAYE workers is screwing Irish businesses. However not taxing these cuckoo funds is definitely screwing the Irish public.
The government see rent as money well spent and the lack of home owners gives them massive _____ (fill in the blank) *great article
Another great sorely needed contribution by Dr Hearne to the public discourse on the most important issue – nothing compares – brought to you by the Journal. We might actually get some real action if we all get in behind this campaign and support each other against the absentee landlords – The land league 2.0 – where the people come together and support each other against the landlords in and out of government
Didn’t read the article though.
I’m hoping the penny has finally dropped. I’ve a home paid for and am well over the hill (76) but it still makes my blood boil .
I can’t understand how people tolerate being made fools , paying some of highest rents in the world . And continuing to vote in the same weak politicians .
When you get to my age you’d better have plenty of assets
The entire philosophy informing housing policy in this country is deeply flawed because it treats housing as an economic asset and commodity instead of a social and societal necessity.
This policy has emerged and been developed by successive governments since the late seventies and reflects the philosophy of Fianna Fáil in particular, which under the leadership of Jack Lynch and his successor Charles Haughey seemed to believe that everything was for sale and social justice was a religious theory and had no place in real world policy making.
The only areas of policy and life which require intervention of state are; Health, Education, Housing and security and should never, in any circumstances be handed over to commercial interests, but in Ireland we have followed the opposite policy .
Zero balance in this article, sorry I’m not jumping on this bandwagon, too many like Rory who think the decisions are easy. Get out there Rory put yourself forward as a candidate in the next election and bring the magic wand. Seriously folks – very disappointed to see such an unbalanced article. Please set out pros and cons – don’t just gloss over the hard bits and keep going for goodness sake!
@MB: Rory is highlighting the issue and making it visible. While I agree it is easier said than done, and easy to point the finger, at least it is pointing in the right direction. Who else should fix this issue but Government? To say that Rory should run for office and wave the magic wand is childish. One person cannot fix these issues, it will only change with a change in Government policy, and articles like this to shine a light and embarrass them into it it seems. Well done Rory, keep up the good work (From a lucky homeowner, worried about my childrens future)
@MB: please enlighten us with the “cons” of his suggestions. And by the way, opinions usually are 1 sided….that’s why they’re opinions. His opinion piece, states the facts of government policy and what believes would be better policy. Experts should inform decision, they don’t need to be the decision makers. Your criticism of him for not getting elected is a straw man argument, and quite ridiculous when you scratch the surface.
@mark d: with respect Mark, I believe a lot of issues such as this are much more complex than can be set out in a couple of paragraphs. I don’t disagree with the ideology of what Rory is targeting but in practice most of these issues are exrtremely difficult to get right. I don’t appreciate the oversimplified solutions put forward and feel they fuel a mob mentality. I think all parties in government have a duty to make sensible proposals that take a balanced perspective – right now keeping capital invested in supplying housing in the country is an important factor that I don’t think should be over simplified. If the left wish to make sensible suggestions I think put the solutions forward, but think through the steps and unintended consequences carefully.
@HectorPickaxe: thanks Hector, I don’t disagree with you but I do believe it’s important to provide balance, having read Rory s article it would appear to me that there is a very easy solution that is being overlooked, which is not the case. I always read articles and try to learn something but didn’t learn anything form this unfortunately. I’m sure Rory s intentions are well meant but I see somebody who is an academic – if a mistake is made here and the capital heads for the hills we need to consider the consequences of that, I think that’s an important point not to be overlooked.
@MB: So if I pay for an airline ticket and the operator drops me to the wrong destination 5 hours late, is the only way to have it sorted to become a pilot myself? We pay governments to manage this country.
So if there is zero balance, we have heard one side, now give us the other side?
@Fr. Fintan Stack: the other side of the argument is relatively simple, push too hard and the only capital that is financing the supply of housing could shift. I believe the funds should be paying tax and that they shouldn’t be buying product that otherwise would not be supplied however we need to carefully craft the rules to ensure we don’t completely banish this form of capital out of the market. As I said I’m not against what Rorys ideology is pointing toward it’s just that we need to be very careful about how we navigate to get there as the unintended consequences could have a serious impact on housing supply.
@MB: there is nothing simplified about his proposals. The crux of his argument is that government policy is not working. We have objective evidence that this is the case. This isn’t a left or right or centre issue. This is an issue for all people living in Ireland, especially for future generations. Did you ask the question of the unintended consequences when governments moved from building social housing to HAP and RAS schemes?
@MB: Absolutely has to be carefully thought through. I’m sure nobody on a comments section has all the answers. I was commenting on your opening contribution. And yes, we don’t want to drive out finance but the government seem to be depending on only one stream of finance up to now. There are a number of financial and practical solutions put forward by Rory that I don’t believe this government have seriously looked at never mind tried to implement. For that I condemn them.
@MB: how would you explain the fact that in the poverty striken 1940′s and ’50′s the governments of the day were able to build between 30 and 50 thousand social houses a year. The answer is that they weren’t afflicted by a ideology which facilitates greed and corruption.
@Brendan Greene: that is true but the Government sold off most of the council housing for pennies in the pound during the 70s and 80s. This was a vote getter unfortunately it created problems down the line as the State then had to approach private landlords. It is somewhat ironic people saying the State could build all these houses as much of the Government owned and maintained social housing is in disrepair.
@Sean: God forbid the state selling off council houses to its citizens at a bargain price. Better to pour billions in to paying private landlord mortgages through HAP.
@Sean: firstly, the sell off was a bad idea following Margaret Thatcher’s example. The neglect of maintenance is driven by the same ideology rather than incompetence.
It’s a choice our governing parties have made.
@Sean: NAMA sold off billions of euro worth of property to the vultures for cents in the euro which made no economic sense whatsoever as those homes would have gone a long way to creating a balanced property market whereby young people could afford to buy or rent at reasonable prices compared to the monster that has now been created in the Irish housing market.
@MB: really ..the left should think through unintended consequences???? Shouldn’t every politician think through unintended consequences…. any half decent mid level manager can tell you that …we haven’t one experienced manager in power
@MB: Why don’t YOU set out the pros and cons? Why wait for somebody else to do the work for you. All smoke and no fire.
Rory Hearne – well done. You have the support of every grandparent, parent and their kids, Locked Out, Rent Raped, and at risk of Eviction.
“Housing is the battle of OUR generation. Don’t be silenced or fooled by Government inaction. Now is the time to stand up and take ‘street’ action. Angry No – Furious, bloody sure of it …
https://my.uplift.ie/petitions/stop-investors-buying-our-homes
https://www.change.org/p/irish-referendum-on-family-home-special-status
Who cares who owns the property, the fact that people believe property has that much fundamental value is the problem.
@Tom Fearon: Well anything thats “rare” in the world is valuable, like gold… we need a supply of suitable sustainable housing and not just big mansions down the country
I don’t know what exactly is meant by a social and affordable home,the author states its somewhere around 250 grand,builders will tell you that figure is not an economic figure to build a house in Ireland even a modest one,labour and materials costs are soaring due to shortages with the government state taxes a whopping 33% of build,if he means housing should be built at a loss subsidised by the taxpayers that is not a viable long term option either,as far back as I can remember housing has always been a major problem not just in this country and like the HSE nobody has ever got to grips with either..
FIANNA FÁIL’s Darragh O’Brien and Micheál Martin failed to back the ‘Affordable Housing and Fair Mortgage Bill’ as drafted by the Master of the High Court, Ed Honohan, back in 2018, and taken to second stage in the Dáil by John McGuinness – which would have prevented today’s Housing and Distressed Debt crisis… #vultureculture
Wish it could be so simple, obvious, and painless, Rory, and if it was so, then previous governments with Labour coalition partners would have done so long ago. It’s not simply supply and demand. It’s also where I want to live. I can easily get public housing or private housing in Leitrim but I want to live near my parents in Ballymun but there’s not much supply there and the rents are too high or I am competing with students at DCU. Home ownership is a Thatcherite dream. Look at how other countries e. g. Germany, prioritize renting over ownership. Ireland cannot live forever beyond its means.
Rory Herne is becoming our very own Thomas Pipette. A sound grasp of a complex situation and a will to try change. The question of land value and the Justice Kenny report (1974) must be kept in mind. Last be not least if you want to build tens of thousands of affordable homes….. first build a factory. WIth our computer literate Architects. High quality beautiful homes can be produced quickly. Imagine trying to build motor cars the way we build houses…. keep up the good work Dr.
Fergus Quinlan FRIAI.ret.
Burrin
Co. Clare
And we should not be fooled by your simplistic approach either
a brilliant piece, Cant wait for the straw to come.
Well done Rory keep up the good work
have your say