What role for housing in a Republic? What strategy for housing policy?

Q: Is/should housing be provided as Human right, need, public good or financial/speculative asset?

Repossession a trickle compared to the flood of Repossession a trickle compared to the flood of people about to lose their homespeople about to lose their homes

• Approx. 350 PDH repossessed in first half 2015• But 50,000 PDH legal repossession notices

issued• Full court proceedings to repossess homes

initiated in 23,751 cases

• 18,000 BTL issued with repossession letters and 8,618 with court proceedings

This IS a National Emergency!• 100,000 on housing waiting list (& homeless)• 79,788 households in receipt of rent supplement (40,000)

have to top up• 30,000 RAS (35% total private tenancies)• 100,000 in mortgage arrears• 10,000s in poor quality local authority accommodation &

private (dampness etc)• Hidden homeless/rental distress/mortgage distress• Well in excess of 300,000 households (over half a million

people) in serious housing distress

• “Direct investment in real estate is “almost back at the pre-crisis level” and increasingly the impetus is attributable to sovereign wealth fund and institutional capital, much of it from Asia.

• The market is awash with capital surging into Europe from around the world.• The wave of capital rich investors entering European real estate markets is savvy and sophisticated.

Their need to preserve and create new wealth will, for some, see a move away from core markets where many feel there is little value to be gained and into assets, developments and cities that give them the opportunity to achieve better returns.”

Speaking about real estate investment in Dublin, Enda Faughnan, Real Estate Leader, PwC Ireland, said:

“There has been heightened interest in Dublin as a property investment centre, particularly from foreign investors. There is still a lot of supply to come onto the market which will appeal to a wide range of buyers.”

“Though office rents and values are recovering strongly, they still have some way to go before they regain their pre-crisis peak”

(Don’t expect rent rises to stop – Is this why gov reluctant to introduce rent regulation)

If only people in housing distress were banks…….

Why this crisis? •Housing & property important area for economic growth/Irish business ‘entrepreneurs’ - capital/wealth/ accumulation/investment 1980s •‘housing as an investment or asset ‘housing policy •Close (corrupt?) relationship between politics/power and developers/builders/financiers (banks)•Social/public housing supposed to be a ‘failure’ •Neoliberal approach •Part of global deregulation of finance – financialisation & neoliberalisation•Global asset bubbles –investment and wealth inequality

Household debt Percentage of Gross Disposable Income

Neoliberalism in response to crisis: socialism for property finance and wealth – debt for the majority•Crash – losses of developers and banks put on to taxpayers/society –Accumulation through & displacement of crisis (Harvey) – •bank bailouts & NAMA –saving Eurozone & ECB - vs austerity for the people - – crisis displaced from banks to homeowners and renters -•Injustice of debt: the Irish people get national debt and mortgage arrears : socialisation of financial crisis: of costs of speculative investment – no moral hazard for investors/speculators•NAMA: 12 debtors - debts of €1 billion each - 133 between €110m & €999m•"Mr Noonan replied there was nothing unusual about significant write-offs: “If you look at the billions that were involved in Nama and the billions that were involved in all the banks, the way of restructuring was write offs so there is nothing unusual about huge write offs, massive write offs..”"....•Noonan has consistently ruled out write offs for ordinary people or looking for right offs on national debt

National Debt Interest

€m As a % of GNP As % of Exchequer Tax Revenue

2014 7,470 4.6% 18.1%

2013 7,324 4.8% 19.4%

2012 5,679 4.0% 15.5%

2011 4,548 3.2% 13.4%

2010 3,492 2.5% 11.0%

2009 2,535 1.8% 7.7%

2008 1,544 1.0% 3.8%

2007 1,619 1.0% 3.4%

Mortgage arrears: what crisis?Still

98,137 (13 per cent) of mortgage accounts for Principal Dwelling Houses are in arrears (down from 117,000 last year)

38,041 PDH accounts in arrears over 720 days: no decrease

15,276 BTL accounts in arrears over 720 days (€4.6 billion, 17% of BTLs)

Financialisation/profiteering speculative ‘investment’: Up to 20,000 residential mortgages sold to "mortgage vultures“

Austerity (to pay for bailing out banks and European financial system - results in lack of social housing)•Austerity budgets reduced funding for local authority housing from €1.3bn in 2007 to just €83 million in 2013 •As a result, only 8,200 units were delivered in these years•Had spending being maintained at the 2008 level an additional 25,000 social housing units would have been provided

NAMA

•Playing a significant role in worsening the housing crisis through its sale of assets to real estate investment trusts (REITs). •Government encouraged Irish-based REITs in 2012 through generous tax breaks. •Nama advertises portfolios with residential rental income - Selling to investors with this expected rate of return places huge upward pressure on rents•600 units out of a promised 4,000 social housing units•3bn with developers - 22,000 units in Dublin (half of expected demand) and surrounding counties by 2019 -existing units and 1,500 hectares of development land. •maximum commercial return - Nama will sell these units at the highest price, thus inflating prices further.•need for rental growth – rent control

NAMA: Bringing the global property bubble back to Ireland?

• Transactions involving income-producing real estate totalled $770.2bn globally in 2014, up 9 percent from 2013

• .“What’s really driving all this activity is the availability of capital rather than the underlying fundamentals”

• “The wall of money is even bigger than before the crisis.”• “The corollary of so much capital focusing on limited stock

is higher prices. Core property is overpriced in almost all markets, say 61 percent of those surveyed.

• finding the required rate of return will involve taking on more risk

Social Housing 2020 strategy & Capital Investment Plan = Worsening crisis

•110,000 units by 2020 - only 35,000 new social housing units•only 22,500 (1/5) would be built or bought by local authorities or housing associations (only 3750 per annum)•11,000 would be leased• 2,300 “voids”

At that rate current housing list will not be dealt with until 2038 ie will take 23 years!

75,000 – HAP & RAS – Private rental sector: supply from where???

Truth: funding/resources is an issue – LAs being told to use Has & ‘off balance sheet’

Public Land is AvailableBut…PPP The council is seeking expressions of interest from venture capitalists, financiers, investors, housing providers, developers, builders or consortiums of the above to enter into discussions on providing private and public housing on council owned land.

In who’s interest is current housing policy?• Property Industry Ireland, representing developers, real estate agents, the largest

banks, financial institutions, and legal firms is making the case for reducing the ‘cost burden’ and speeding up the ‘development process’ through incentivizing private development (such as reducing Vat on construction, development contributions along with reducing Part V– which they achieved)

• The increased supply of private housing will ensure, they claim, market principles will operate and prices will drop. However, this policy did not work in the Celtic Tiger housing boom. Additional supply did not reduce prices.

• They all have a vested interest in a rising property market.• Media - property economists, who themselves work for these institutions that have a

direct interest in rising property prices such as banks, mortgage brokers and stockbrokers.

• Rising house prices celebrated in the media to sell advertising and supplements• Political return - government ministers welcoming property price growth and

international capital investors buying up distressed Irish homes as signals of a return to growth.

• At least 41 of the 166 TDs in the Dáil are landlords

• Need radically different approach to housing policy• Neoliberal – the private market will solve it – ‘enterpreneurial investment’ still

dominates Irish state and political thinking • Move away from speculative housing as investment – to a rights and home – to a rights and home

based approach – underpinned by human rights & strong role of the statebased approach – underpinned by human rights & strong role of the state• Enshrining right to housing in the constitution (As reccommended by

constitutional convention)• Additional 1bn in budget for social housing (Wealth tax, relax EU fiscal rules)• Rent regulation & tenants rights• CPO vacant housing & land : private housing vacancy: 100,000 in Leinster,

43,000 in Dublin• Cooperative and co-housing models• Proper planning and regional development• Redirect NAMAs 3bn from developers to build low cost rent and social housing• Debt write down like Iceland• Retain AIB as state investment bank

The constitution?• Rent control or taking over vacant land - would contravene

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”.

A Human Rights Approach Case StudyCollective Complaint against Ireland, which outlines appalling and substandard housing issues across 20 Local Authority housing estates, has been deemed admissible for further investigation by the European Committee of Social Rights.

Council of Europe European Social Charter:Article 30 states:With a view to ensuring the effective exercise of the right to protection against poverty and social exclusion, the Parties undertake: to take measures within the framework of an overall and co-ordinated approach to promote the effective access of persons who live or risk living in a situation of social exclusion or poverty, as well as their families, to, in particular, employment, housing, training, education, culture and social and medical assistance

Article 31 of the RESC on the right to housing states: “With a view to ensuring the effective exercise of the right to housing, the Parties undertake to take measures designed: 1. to promote access to housing of an adequate standard; 2. to prevent and reduce homelessness with a view to its gradual elimination; 3. to make the price of housing accessible to those without adequate resources

But Ireland hasn’t ratified Article 31!

If only people in housing distress were banks…….