The state should be neutral regarding buying and renting

Brendan Burgess

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Ronan Lyons made an excellent presentation to the Oireachtas Finance Committee in support of the minimum deposit of 20% proposed by the Central Bank. I have transcribed it here.

It starts at 10 on this CR3_20141127-14.30.wmv

I have separated a key point he made from the main thread.

Families in Ireland should have access to abundant and affordable good quality homes Everything else is detail.

The state should be neutral between private, social and cooperative ownership.
The state should be neutral between renting and ownership – that is not for the state to decide
 
I have to say I am not convinced for two reasons.

...

(2) "The state should be neutral between renting and ownership – that is not for the state to decide".
I disagree but if that is the state's position, then they need to set aside increased liability for rental allowance for retired people. I have mentioned this on another thread, pension planning has been done on the assumption that when you retire you are living mortgage and rent free.

(3) I think the state should do more to put renting on a better legal footing, with better Continental-style protection for long term tenants. I think this would help to remove one of the 'push' factors driving people from renting to buying.
 
Not atall convinced that the State should be Neutral on Housing.

1. If State builds/supplies well located housing it creates a virtuous circle.
A. Puts a cap on the excesses of bubbles in housing market.
B. Saves on the ongoing issue of Rent Supplement type costs.
C. Once built , like all good infrastructure ,the upkeep/ongoing costs are known and small.Eg a house built 20 years ago is now a benefit to us.
D. The (Market )has to compete with a then adequate housing supply, thereby they have to up their game to make profit.Also only those who can really afford will go for higher mortgages, it will be perspiration not silly aspiration.
E. If (market) house prices/rents remain volatile or keep increasing we end up pricing out employers ,since wages must compensate for high rents.ie high rents kill jobs.

Housing is much too important to be left to the (market).
Like roads /electricity /water/health/education Government must plan and interfere in housing.
 
The state should be neutral between private, social and cooperative ownership.
The state should be neutral between renting and ownership – that is not for the state to decide
I also have my doubts on whether these are appropriate objectives.
How can the State remain neutral on any aspect of housing. Availability, affordability and sustainability of housing are the fundamental requirements for all citizens of any country. Based on the current market none of these are being properly met.
It is clear that as a result of poor availability of affordable accomodation in high density population centres (particularly Dublin) both rents and prices are being driven up to an extent where those seeking accomodation are being forced into long commutes or a reliance on SW housing. Howver, given the restrictions caused by low availability of Social Housing and low rent allowances demands in this area are not being met, which in turn is creating a new level of homelessness that the State is unable to address.
By consistently staying out of this market the situation is moving towards a crisis point and if left unaddressed will result in rushed legislation which invariably will not address the core problems.
In my view there is a need for a public/private approach to this problem. NAMA has significant levels of shovel ready land-banks available and also has the financial capacity to fund the development of same. However, NAMA does not have developer expertise nor seemingly an incentive to progress these sites to development. State intervention is therefore required in order to force NAMA to utilise these sites for the greater good. The charge of direct intervention in the market can be avoided by NAMA acting as a developer bank in lending funds to developers to build out and sell the properties. As is normal in banking activities site fines can be applied where a portion of each sale is returned to NAMA to pay for the site. This in turn will lead to a higher level of return to NAMA and provide good developers with the funds to build out sites in needed areas. Its' not a new nor novel idea and yet there appears to be no Government appetite to progress it. As usual Government focus (any Government not just FG/labour) is led by inaction on issues such as this as there is a constant fear of any action being criticised. Surely any reasonable opposition TD's can see the sense in taking this approach and support it or am I just being naive?
 
The majority of people who are becoming homeless today are becoming homeless because they’re being thrown out of private rented accommodation because the rents have gone through the roof. Focus Ireland tells us there 45 families last month, they usually deal with 8 families a month, this year they’ve dealt with an average of 40 families per month, and last month it was 45. And out of those 45 families, I understand 41 of them have been evicted from their rented accommodation. Not for anti-social behaviour, not because they were drinking, not because they didn’t pay the rent but because they couldn’t pay the rent. So the people who are becoming homeless today have never been homeless before, they never for one moment in their lives ever thought that they would be homeless and they just find the situation absolutely intolerable. It’s a whole…they’ve never been in this situation before and they’re absolutely horrified to find themselves in this situation, particularly if they have children.”
This is a quote from Fr Peter McVerry from a interview with Nwstalk today. It illustrates the urgent need for the State to become more involved in the accomodation crisis issue. The market will not naturally find its own level in the time required to resolve this crisis and matters will deteriorate further before they start to improve. Urgent action is now needed and State neutrality is not an option!
 
Housing is much too important to be left to the (market).
Like roads /electricity /water/health/education Government must plan and interfere in housing.

The State cannot get any of these right. In each and every one, the State's actions have caused costs to balloon, and individuals and families pay the price.
 
Guys

I think you may have misunderstood what was meant by "neutrality". He means that the state should not favour renting over buying or vice versa. He does not mean that the state should not be involved in the housing sector. This is actually government policy.

I think that the Housing Policy 2011 Statement explains it quite well: (I have put some bits in bold)



Housing in Ireland has been characterised by a persistently hierarchical structure for several decades. This paradigm of housing has private home ownership at the top, with supported home-ownership (tenant purchase of local authority housing, affordable housing) next, self-financed private rented accommodation further down, and State supported rental accommodation at the bottom (rent supplement/social housing tenancies).

This structure and the value judgement that underlies it – which implicitly holds that the tenure which must ultimately be aspired to is home ownership – has had a considerable role in leading the Irish housing sector, Irish economy, and the wider Irish society to where they are today.

Our vision for the future of the housing sector in Ireland is based on choice, fairness, equity across tenures and on delivering quality outcomes for the resources invested. The overall strategic objective will be to enable all households access good quality housing appropriate to household circumstances and in their particular community of choice.

It will neither force nor entice people through fiscal or other stimuli to treat housing as a commodity and a means of wealth creation. Clearly, home ownership will continue to be a significant feature of housing in Ireland and is likely to continue to be the tenure of choice for the majority of households. Policy makers must take account of our current economic circumstances which effectively dictate that State provided housing supports must be prioritised towards meeting the most acute housing needs. In so doing we will allow for a future in which housing services are accessible by a wider cohort of people based on a less stratified model of service provision.
 
Very difficult to apply neutral legislation/taxation changes which will by their effect on the purchase/rental market be somewhat biased towards one or the other. While Ronan might point to the FTB grant as being biased towards the purchasers he could equally raise Section 22 as being in favour of providing more rental accomodation. Also enforcement of CB LTV % is likely to drive more people into the rental market. This in turn is likely to reduce available accomodation and raise rents. I'm sure we can all think of a number of differing pieces of legislation/taxation changes that tend towards the buyer/renter. Neutrality is just not an option here as it would mean avoiding specific legislation that may favour one or the other of these options. I.e. should the State steer clear of improving the rights of long term leassors because that would be seen as market interference?
 
hi 44b

I fully agree with you, but that is the official government policy at the moment.

However, buying a home has huge tax advantages, so the practice is not consistent with the policy.

I probably think that it's the wrong policy. The government should encourage people to save up and buy a house and pay down their mortgage.

I suspect that, on balance, home ownership is good for society.

Brendan
 
The State cannot get any of these right. In each and every one, the State's actions have caused costs to balloon, and individuals and families pay the price.
............

The State may well be ponderous and may well not {get any of these right}
But ask .
Would our vaunted private enterprise have put in funds on

* Road Infrastructure.
* Health Infrastructure.
* Educational Infrastructure.
*Electricity Infrastructure.

These are MUST haves.

In the absence of Benign Capitalists , I think I put my (albeit tested) trust in the State.

You say individuals and families pay the price of State interference?
Recent History does in no way support that view.


Was it not the Privately Owned Banks who when they found themselves in trouble foisted their Professional ? Mistakes ? onto the families and individuals?
I am very strongly of the opinion that at least with the State we can change them every so often.
However the Lords of Private Enterprise can foist their
mistakes onto us when the going gets hot for them.

Tell me please that I am wrong?
 
We can change governments Gerry but we can rarely, if ever, change the State. The ruinous State-engineered bubble and bailout attest to that.

Anyway this is totally off topic.
 
We can change governments Gerry but we can rarely, if ever, change the State. The ruinous State-engineered bubble and bailout attest to that.

Anyway this is totally off topic.
..............
Nope;
The bubble was engineered by the Gods of the Market,particularly our Bankers who turned greed into poison.
Our custodians of the State were duped , but in fairness all we can accuse them of is ineptitude.
The Bailout was the Gods of the Market duping Government for the 2nd time.

As you say off topic , maybe time will give us all clarity?
 
The bubble was engineered by the Gods of the Market,particularly our Bankers who turned greed into poison.
Our custodians of the State were duped , but in fairness all we can accuse them of is ineptitude.
The Bailout was the Gods of the Market duping Government for the 2nd time.

I just can't help this but I'm picturing Gerry putting a tune to this and getting John Delaney to perform it live on the Late Late. :D.
With apologies to all!!!!
 
Not atall convinced that the State should be Neutral on Housing.

1. If State builds/supplies well located housing it creates a virtuous circle.
A. Puts a cap on the excesses of bubbles in housing market.
B. Saves on the ongoing issue of Rent Supplement type costs.
C. Once built , like all good infrastructure ,the upkeep/ongoing costs are known and small.Eg a house built 20 years ago is now a benefit to us.
D. The (Market )has to compete with a then adequate housing supply, thereby they have to up their game to make profit.Also only those who can really afford will go for higher mortgages, it will be perspiration not silly aspiration.
E. If (market) house prices/rents remain volatile or keep increasing we end up pricing out employers ,since wages must compensate for high rents.ie high rents kill jobs.

Housing is much too important to be left to the (market).
Like roads /electricity /water/health/education Government must plan and interfere in housing.

The theory is great Gerry but in practice it does not work out as smooth.
In a county that I know particularly well the Co.Co./State has spent over €70k on average on upgrading/repairing 300 houses in the last three years with a similar programme for the next 3 years. These houses were approximately 20 year old on average.
The money to build them had to be borrowed by the state.
I know the Engineer in charge and he told me that between administrative costs repair costs and bad debts in relation to rents that over that 20 year period the rents that were collected would not have covered the running costs never mind having a fund to do this upgrade.
All this is in an area where rents for a 3 bed semi are about €475pm. I am only stating facts that I know of.
My problem with social housing as it is currently run is there does not seem to be a penalty enforced for those who do not pay.
There does not seem to be a penalty for those who wreck their houses.
There does not seem to be a working deterrent for anti social behaviour and who make life miserable for the good people living in Council estates.
When vandalism and unsocial behaviour is allowed without real consequences for the perpetrators the estates rapidly deteriorate.
Too many Council estates have become ghettos and have other hidden costs such as extra Garda /social workers/doctors resources being deployed.
On many threads and in the media and politicians I often see a reference that Tenants have No security of Tenure. I am a Landlord (in a small way)for a long number of years and I cannot say I ever met a Tenant who was willing or wanting to do a lease for 5 years never mind longer. Tenants have effectively a 4 year term as it is.
I have had Tenants who stayed in excess of 5 years but they would not have agreed to it at the outset.
 
Dermot.

I clearly hear you.
From the threads it appears the Big issue is miss-management and those who supply Social type housing not having the Spine to operate properly.
Maybe just have a legislative change that (messers) be turfed out and apply it from day one.

Yes I am naiive but things can,t continue as is.

Ps . Brendan , You had a nice snigger @ me , but that would change if you heard me sing !! Indeed my voice would empty houses !!
 
Yes I see that old chestnut being raised again "the lack of longer-term leases were a major problem for those in the private rental sector".
This is always being trotted out by the media, politicians and"experts". I am a long time in the business admittedly in a small way but I would love to know about this big demand that is out there in the Irish market. I have not come across it.
I must have been asleep all these years.
 
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