The housing crisis needs more than just supply
Jill Kerby
Just as there is only one way to end this crippling coronavirus pandemic – vaccinate. Faster.
It would be wonderful if ending the toxic housing shortage was just a matter of - more homes. Sooner.
If I were unlucky enough to be a government minister, I’d much prefer to be dealing with the pandemic than the housing crisis; at least with the pandemic, you’d know that it would end when the vast majority of the population was finally vaccinated.
By contrast, the housing shortage is a chronic, systemic, politically toxic mess fuelled by greed and self-interest, complex and incompetent planning regulations and decades of tax mismanagement that has favoured everyone at some stage, but ultimately produced a dysfunctional market that now favours two powerful lobbies: institutional investors-cum-landlords and existing, unencumbered homeowners.
Throw in the debt-related consequences of the property-driven bank collapse a decade ago and the delays caused by the global pandemic and we now have a crisis of such grave proportions that perhaps only a ‘wartime’ Cabinet with over-riding powers could solve.
My old friend, the mortgage expert and commentator Karl Deeter made a similar suggestion last week on Newstalk’s Hard Shoulder broadcast: that we accept we are hopeless at managing great crises (of our own making) and just get somebody else to take over the state’s role in building social and affordable housing.
Deeter was being facetious – but only just.
He isn’t the only one to point out that if coronavirus vaccines can be created in record time to deal with an urgent, global medical emergency, then surely we can find a way – he suggested asking help from the Germans whose scientists created the Pfizer vaccine in record time – to come up with a blueprint to build enough social and affordable private houses to avoid the social funding disaster that is looming for Generation Rent, now and at retirement.
It’s a tempting idea, I don’t think there’s going to be any bold, quick fix, or Irish wartime cabinet solution …with German allies. Instead, we’re going to see yet more tinkering with the system that will continue to favour and protect property owners and vested interests. (Just look at the latest loosening of the Fair Deal nursing home conditions for elderly owners of family homes, in which they are unable to live, but unwilling to sell.) Sadly, Generation Rent – see www.citizensinformation.ie - will only get onto the property ladder in the foreseeable future if they can avail of existing and no doubt, future government housing purchase schemes like The Help to Buy Scheme, The Affordable Housing Scheme, The Rebuilding Ireland Home Scheme, Mortgage Allowance Scheme, Shared Ownership Scheme, and can fulfill as many of these criteria:
- They start saving for that downpayment from the moment they start earning. (Ditto for a decent retirement income.) Parents need to encourage their children to consider apprenticeships at age 18-19 rather than automatically enrolling in university if they want them to get an invaluable four or five year earning advantage.
- Live at home rent-free or share in rented accommodation with as many others as feasible to maximise the amount they can save.
- Marry, rather than co-habitate to not just share income and living expenses, but to maximise your borrowing capacity and savings with the added advantage of married person’s tax relief. With typical rents nationally now higher than mortgage payments, according to the latest Daft.ie survey, two people really can live cheaper than one.
- They receive tax-free financial gifts of up to €3,000 per annum from any source – but usually a close family member – to boost the home purchase fund.
- They receive an early inheritance or gift from the Banks of Mum & Dad, Granny & Grandad or a loan from a family financial Ark. (See MoneyTimes 24/08/12).
- They find a way to earn a great deal more money and pay less tax. An experienced, fee-based financial adviser/planner can help with that plan. (See www.sfpi.ie )