Housing

Before talking about anything more specific, my fundamental approach to housing is that it should be generally affordable. A decent house/apartment should be generally affordable for people on normal incomes. Even in Dublin.

If we can make cars and PCs and food better and cheaper all the time, we can do the same for housing.

Imagine for a second how a government would react if food became too expensive for people to afford and if there were people starving in the street. That's how a government should react to housing being too expensive for people to afford and having people living in the street. Do you see that sense of urgency? I don't. Even now.

There should be an "emergency council on housing" so that all the best ideas on how to solve the problem could be discussed. There isn't. There's lobbying and there are ministers with shares in REITS.

And housing should be affordable not just for people entitled to social housing.

Generally affordable.

That has lots of implications.

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I've been banging on about housing costs since at least 2004. I was persona-non-grata in some households in Ireland in the run-up to the 2007/8 peak, warning people against buying into the bubble. And since 2012 or so I've been warning about the crisis we're in now. What's happening isn't the fault of "the market" or of "developers". It's the fault of this and previous governments who have all worked to make housing as expensive as possible.

Housing need not be that expensive. It should not be that expensive. The problem is that lots of people like their house to be expensive and there is more money to be made by lots of people (landowners, developers, estate agents, bankers, politicians) if housing is expensive.

However, the primary purpose of a housing market should not be to extract the maximum amount of money from people for the least possible house. It should be to get houses to people as efficiently and well as possible. The important point is that housing should be generally affordable and readily available. Houses should be competing for people to live in them. We should not have people queueing and fighting over houses any more than we should have people queueing and fighting over food.

The situation in Ireland has arisen because govt policy has long aimed to make housing expensive. That results then in a desire to organize the market so that land is expensive, permissions hard to get and to use, standards often inappropriately high, etc.

A market doesn't exist without government policy shaping it. A market is defined by govt policy. So blaming the "market" is meaningless. This is all on govt. If we change the rules of the market, we can change the situation and make all types of housing cheaper.

While we may initially have accidentally fallen into that first kind of market sometime in the 1990s, that type of extractive "market" has been maintained very deliberately ever since then. See the "Parable of the Frozen Oranges" if you don't believe me. We can and must change that.


The parable itself starts on page 8. However, the whole document is worth the read. It demolishes the vast majority of myths and excuses on why housing is expensive. And it reminds us of why there’s a market in things….which is to supply those things to people as efficiently as possible. So when you hear people blaming house prices on “the market” you can be reasonably confident that it’s not actually “the market”‘s fault…more likely there’s collusion and price fixing (even if that’s implicit and not explicit) between govt and the existing landowners and developers

Social Housing? Public Housing? Private Sector Housing?

Each of the different types of housing has its place and they should all exist together.

Now, we absolutely SHOULD have public/social housing as well as private sector housing. The two shouldn't exist separately from each other. If you want a fancy house - go private sector. If you're looking for a "normal" house or apartment, you might be fine in either public housing or private sector housing. And public sector housing should probably be open to everyone. Why not allow anyone to cost rent a public sector house to live in? (as long as it's their primary and maybe only residence)

After all, we don't have "social supermarkets" in different places to "private sector supermarkets". Or social vs private sector car dealerships. If you're rich you might shop in Fallon and Byrne. You might also shop in Aldi.

We do have a private/public split in health (discussion on that elsewhere) but there's no need to have two mutually exclusive systems in housing or to have to choose between having one and the other.

We can and should have both. As long as housing is generally affordable there's no problem. If you want a fancy house with marble floors and an indoor cinema and a 2000m2 garden, well that won't be affordable to most people and that's ok. If you make a lot of money and want to live in a nice apartment somewhere in Santry along side lots of people on normal incomes, that's probably ok too.

But if - as now - normal people can't reasonably afford anywhere decent to live, that's not ok.

Constitutional Issues & Amendments

Rory Hearne is currently very active and very visible on the whole housing discussion. He's written a book on the topic and is an academic studying housing in Maynooth. He's on the money, as it were. I agree with almost everything he's saying. And he's saying almost the same things I'm saying.

One thing where I'm not sure that it's really relevant is the idea of putting a right-to-housing in the constitution. I'm not against it, just not sure how necessary it really is or whether other measures should be pushed harder first and I'm a bit nervous of vaguely worded constitutional amendments.

Don't get me wrong, if I was in government I'd be using fiscal policy and taxes to - ehm - rather emphatically "encourage" lots of new housing to be built and lots of building land onto the market. And this would not be by pumping more money into the market. The problem is not that there's a shortage of money. There's a shortage of housing. If a property-owning Attorney General were to give me advice that I felt favoured one type of property over others, I'd get a new Attorney General.

And if someone tried to use constitutional claims to slow or stop that effort to bring housing onto the market then I'd perfectly happily argue the point in court. And if they win THEN I'd have a constitutional amendment at the polls in the morning to address whatever specific legal basis they'd won on. And the constitutional amendment would pass.

We might want a right to housing in the constitution. Again, I confess I'm a little leery of putting vague language into the constitution even when I agree with the aspiration. Meantime there's a lot to be done in legislation and policy now, so let's get on with it. And we might well get back to putting things in the constitution later too.

[And yes, I'm aware of the constitutional and human rights discussions on this topic in Ireland and Europe going back to the 1970s.]

Planning Processes

The planning processes in Ireland are broken. While you'll often hear that there's "no problem with supply" because there are lots of planning permissions out there, lots of those are notional permissions. Besides, "permission" to do something doesn't mean it actually happens. I have "permission" to go to the gym today.

Plus, the permissions that are being used are often challenged, and challenged, and challenged again. At the core of the problem is that NIMBYs are represented in the process but the people who might live in new housing are NOT represented in the process. That's not democratic, it's not "the voice of the community". It's the voice of the NIMBY. It's the voice of "I'm all right, Jack".

A recent example, where 600+ apartments have been refused permission again because well connected and funded locals repeatedly object, is enough to make anyone except the specific NIMBYs extremely angry. This last refusal is also supposedly on grounds that apartments would impact birds' flight lines. I shit you not.

"He also found the board was required to consider evidence concerning the impact of the height of the development on birds’ flight lines before deciding whether to allow a material contravention of building height guidelines".

Now I'm sorry, but "that's mad Ted".

We've also seen every single political party and every political leader use every possible excuse to object to housing - both in their own areas and just out of "principle". Permission for new housing has even been denied on the basis that it would impact the values of existing properties. That's REALLY not ok.

We need to re-work the planning processes in Ireland. We need to give a voice to the new inhabitants and not just the existing ones. Communities change and must change. Living in an area does not give you the right to stop anyone else living in the same area. Just no.

15 Minute Cities

Suddenly everyone in Ireland is talking about the "15 minute city". That's great to see. And there are examples out there of what can be achieved. Amsterdam, The Hague, Barcelona. We just have to look around.

The 15 minute city doesn't mean it has to be impossible to own or use a car for trips that require a car. If I want to pick up a desk in Clondalkin, the bike might not be enough. If I want to go for a kitesurfing trip to Achill, public transport might not get me there with all my gear. We'll still need cars for some trips.

But the 15 minute city DOES mean that it has to be possible to walk and cycle around without it being dangerous and loud and toxic. And that even car owners use their feet or their bike for short trips. And that they can speak to people along the way.

I live near the now-infamous Strand Road. You can't even have a conversation with someone as you walk along that road. It's too loud. That's mad. You REALLY can't cycle along that road and have a chat with anyone. Someone in an SUV will try to kill you and shout at you as they pass - all to rush ahead to stop at the cars that they can already see are stopped 50m up the road. That's mad.

I, or my kids, could cycle into the city center in 15-20 minutes at a tootling pace. We don't do it because we'd get killed along the way by someone in a 211-reg black Range Rover making the same journey. This is mad.

[And if you try to make an argument along the lines of "but what will old people or handicapped people do" then I suggest you go to the Netherlands and find out.]

grote maarktstraat den haag.

Grote Maarktstraat - Den Haag. This used to be the UGLIEST loudest most car-packed street in The Hague.
Look at it now. It's lovely.

Property taxation and land taxation

There's a lot of history in Ireland around land and taxation. Land is special in the Irish mind. It's seen as different from any other kind of property, somehow.

But it isn't really.

My income is my "property" and the government can take more than 50% of it. My car is my "property" but the govt can impose taxes on it and impose safety requirements and annual inspections on it. Even if the property is land, the rights don't extend down into the subsoil or up into space.

Our "property" is subject to taxation and regulation and limitation. Preferably in "the common good", though I'm cynical enough to think that's not always exactly true.

In any case, there are lots of things we could and should be doing - or at least considering - in Ireland about property taxation. That's in both a general sense and in the specific context of how to fix the housing crisis.

Here are a few things we should be considering;

  • Empty Property Taxation

      • if there is a house or apartment empty (unless it's being actively refurbished or within the first few months of being empty), the owner has to pay the market rent of that house/apartment to the council. Basically, if there's empty housing, that means that the city/county has to enable more housing in which to put the people that could be in the housing that's being kept empty. Or dispose or people somehow...which seems extreme.

  • Site Value Tax

      • A lot of taxation policy is based on the idea of elasticity. You tax things that will remain stable whether or not you tax them. You tax alcohol because people really like to drink. You tax tobacco because people are addicted to it. You tax working because people will do whatever they can to improve their family's wealth. You tax land because it can't move. You don't tax multinational corporations because they might leave (not saying it's right...just that that's a logic)

      • So land should be taxed. It shouldn't be taxed based on what's on top of it....because that disincentivizes improvments to the land. The council tax in the UK is a good example of a bad tax. Land should be taxed based on the value of the land. A site value tax. Read about site value taxes on Ronan Lyons' site. He knows a thing or two about them.

  • Zoned Land Tax

      • If your land is zoned for housing (or commercial) then you have x months to get planning permission and then x months to get something built, or then you have two choices. Either the city/county gets to buy the land at agricultural value plus 25%, or a levy of 25% per year of the zoned value kicks in...payable in advance.

      • So yeah, you get the upside of being zoned as residential. But you don't get to stockpile land any more than you'd get to stockpile food.

  • Stamp Duty

        • A transaction tax on housing is stupid. It means people avoid moving. It means people avoid downsizing. It's stupid.

  • Development Levies, VAT, etc

        • At the moment, we have people taking out mortgages to pay taxes. This was first commented on during the housing "boom" of the noughties and it is not ok.

        • Development levies are a tax measure that specifically penalizes new housing. It's mad. Yes, the council needs to put in facilities, but it also has to maintain facilities for existing housing and the current development levies are a penalty on the young and homeless (in general) while the old and housed get to sit in assets with facilities that they didn't pay for. They have to go. And it could and should be replaced by the land value tax income. (see above). Rates went out in the 1970s as a populist and vote-winning gesture. It was the wrong thing to do. We shouldn't bring rates back, we should put in a sensible land tax.

        • VAT on housing is currently at 13.5%. We have people saving for years and borrowing money to pay taxes.Livestock sales get a better rate (4.8%). It's appalling and could be easily fixed.

Construction Methods & Other Thoughts

One of the common things you hear in Ireland is that "that construction industry doesn't have the capacity". That's just an excuse, though there is an issue with our construction standards keeping novel construction methods (and foreign competition) off the market.

But, as I wrote in 2006:

"Similarly, whatever the capacity of the Irish construction industry, the German industry could supply much of Ireland's needs with thousands of warm, well-built houses delivered, already part assembled, on trucks to your door."

And it's not just Germany. It's also Poland and Estonia and France and the rest of the world. Either of the techniques in the videos, which are used in France, Belgium, the Netherlands, etc, could work fine here.

And they're fast. And they don't require months or years to build a house. And there are MANY MANY more out there.

If you think French people or Germans live in shitty sub-standard housing, then I think I have news for you.

Even Irish companies have innovated in housing development in the past. Where are they? Not being used.

Old letters to the papers, articles online, etc..

I'm not a prominent public figure, but I can read. So I was warning about the housing crisis in Ireland from well before 2006. By 2006 I was getting pretty loud - and have been getting loud again since about 2012. But - again - noone was interested in listening. See some of the more recent article on the "Opinion Pieces" page, and older ones here below.

Most of these were letters to the papers. As I often say, “letters to the paper are like puns – the lowest form of political expression other than supporting Sinn Fein” but for many people there has been no other medium where reality might intrude into the news.

Here are some examples from over the years, mostly serious, many tinged with sarcasm.

For more recent thinking (often me warning about the property crisis since 2012 or so) see "Opinion Pieces".

Borrowing our way to a bright future” – Irish Independent March 25 2006

A Poor Excuse for expensive Housing” – Irish Independent June 12, 2006

Massive mortgages go to tax exempt” – Irish Examiner June 29 2006

Defining ‘key-workers’ is divisive” -Irish Examiner September 27 2006

Overturning the rezonings” – Irish Independent November 1, 2006

The mythical housing ladder” – Irish Independent March 28 2007 (bottom of page)

Be wary of ‘help’ for first-time buyers” – Irish Independent Sept 5 2008

Scale of our crisis must be realised” – Irish Independent August 7 2009

NAMA deal is a pig in a poke” – Irish Independent August 28, 2009

Don’t chase good bankers away” – Irish Independent Sept 7 2009

Apart from our historically bad housing policy, I was also disturbed by the spectacle of the public sector strikes in 2009 when the main unions held the country to ransom – a country that was obviously on the edge of catastrophe.

“Debt the only solution for SIPTU members” – Irish Examiner October 7 2009

€4 billion hole is just the tip of the iceberg” – Irish Independent October 26 2009

Strikers should try another viewpoint” – Irish Examiner Nov 26 2009

Also, for several years, I was a commenter on the www.irisheconomy.ie discussion group. My attitudes to economics, markets and finance are there for all to see, albeit in a more informal context.

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