Home ownership getting harder

For a society that values home ownership so much – I refer to the long list of tax and investment incentives this state has awarded first time buyers, second time buyers, investors, long term owners over generations – we still seem to be making it harder, not easier for our young people to get on the property ladder.

We may not have one of the highest home ownership rates in the EU any more – we can thank the large influx of migrants, the 2008 financial crash and now the pandemic for that – but there are plenty of other reasons, minor and serious, that our housing crisis is only getting worse.

(Just last week one popular lender announced a ‘use it or lose it’ rule for prospective buyers with mortgage approval that they would have to take it up within six months rather than within a year. This, at the height of the pandemic when fewer people, not more, are worrying about job security.)

It isn’t just the high street banks that are at fault.

Central Bank lending rules could be more flexible: developers should never have been given such a free reign by politicians and planning authorities to build so many unsuitable properties (both regarding geographic location and design) or more recently to designate so many new apartment blocks as exclusively buy-to-rent developments.

Planning, tax and constitutional guarantees regarding make up many of the other roadblocks to wider ownership of affordable, private homes today.

For example, in my own city neighbourhood there are numerous boarded up, empty family houses of various sizes urgently in need of repair and occupation. Why are they not being seized and put on the market?

Other legislation that facilitates commercial building owners to fix up, rent or sell the empty spaces above their shops also needs to actively pursued and proper incentives put in place to sort out what I keep being told are insurmountable fire safety and ‘planning’ rules.

The supply shortage and planning laws make it very difficult to swap a large family home for a suitable smaller one in the same area or for larger homes to be split into two or more units, to either rent or sell. This happens all over the western world but the Irish banks would need to be behind this with mortgage finance, something they will not consider extending to older borrowers.

Nor is it made easy to utilise empty sites in mature, low-rise neighbourhoods in order to allow high density housing. NIMBYism is rife in Ireland and vote-seeking politicians and incompetent planners seem easily intimidated by vested interests.

And let us not forget how modest is the local property tax (just 0.18% of market value), which has remained exactly at the same rate for the last eight years. The state permits this absurdly low wealth tax by taxing the labour and income of productive young workers who subsidise older homeowners but who cannot afford to buy their own homes and face annual rent increases (even in designated rent pressure zones).

Meanwhile, there is no urgency to addressing how the pandemic has made the housing supply crisis so much worse. The most worrying comment I heard recently was from a frustrated developer who noted that it could be a decade before the shortage problem is rectified.

Finally, a recently published Eurostat survey using 2019 data identified another ‘roadblock’ to wider home ownership here: 69.6% of Irish people, it says, are living in properties that are deemed to be “too large for their needs… in terms of excess rooms and more specifically bedrooms”. Every Irish person, it seems, occupies 2.1 rooms compared to the EU average of 1.6 rooms. The EU average for ‘over-occupiers’ is just 32.7%.

The pandemic means a lot of adult children have moved back to their formerly empty bedrooms, but empty-nesters are sited as the main cause of under-occupation. However, there are thousands of properties owned by recipients of the state subsidised Fair Deal nursing home scheme that are lying empty around the country because renting them out or selling would trigger a higher care contribution payment. There are also thousands of social housing properties with spare bedrooms under occupied by older, empty nester tenants… as c 3,750 children and their parents, who would otherwise qualify for a council property, still crowd into emergency B&Bs and hotel rooms.

Some commentators have suggested imposing a higher property tax on owners of under-occupied private homes.

Good luck with that. UK local authorities charge a deeply unpopular ‘bedroom tax’ to social housing clients with spare bedrooms. Many tenants have to be subsidised.

Under-occupancy is a consequence of the chronic shortage of suitable housing, not the cause of it. Only the government can change the long list of bad tax, planning, building and social welfare legislation that is on track to make a bad housing crisis much worse.