The Housing shortage saga - the root cause(s) ?

[-alan-]

Picked this up on a UK site I read from time to time. Have removed the party political references to make it more general.


The housing problem has three roots:

1) 'Public' housing and building of homes has essentially been privatised and starved of support. Public building had been throttled.

2) 'Private housing ' has largely become dominated by a few big companies who land bank and - by their own admissions - will only build when there is more than 20% certain clear profit. (i.e. controlled to maximise profit return, not to meet the number of homes needed.)

3) Many [Political party X] voters don't want new houses build in their pretty areas - particularly if those new houses might be affordable by what they fear may 'lower the tone' or 'ruin the view'.

The current shortage in overall term stems primarily from the influence and wealth the companies operating in the Private Build / Land bank sector feed to [Party X] polticians and their 'think tanks', etc. By no co-incidence [Party X] politicians - many of whom do nicely out of the above - therefore have systematically hampered public provision at cost. The alternative often often being shoddy housing built at high private profit in places out of their view by big companies that donate or pay as 'consultants' nicely, thank you.


I was wondering if there's a view here that our current woes in the area could be laid firmly at the door of similar political and financial vested interest groups in Ireland ?

[Conorw89]

The privatisation of social housing construction is mad, the price some councils are paying for homes could build you x2 what you're getting in some cases.

[Peterboxster]

That's largely correct;
1) Councils in Ireland haven't built houses in years and don't have any house-building expertise, have no plans to employ any and Gov can't force them to do so
2) Ireland has the opposite issue - too many small developers that struggle to access finance
3) Planning is the big issue in Ireland; currently any one individual (sometimes a politician) can delay a development for years - until the Gov changes the rules so that they favour the less outspoken majority over the outspoken minority, housing shortages will never be solved

The recent action by the Central Bank to allow people to borrow 4times their income, while 3 years too late, was done to reverse the reductions in planning applications coming from developers. Ultimately too many developers believed that they should hold off building as they didn't believe that they could sell houses for the higher cost of building them plus profit.

Also, private equity has lost interest in build-to-rent schemes as they can now get 2-3% on deposit with no risk, so we'll see far less apartment blocks being built

[shaggy]

Whilst there's a lot of truth in this article the housing market in the UK is still more varied than here. We are only recently beginning to step away from the binary system of housing supply of either social / developer housing. The big mistake has been letting all the housing built with public money return to the open market. What is required is affordability in perpetuity so state investment is protected and housing remains affordable for future generations.

I am a member of Common Ground Community-Led Housing and we have spent the last 4 years researching how other countries have tackled the housing crisis Ireland is now in and creating a model for affordable housing provision.

Our website....

https://commongroundclh.ie/

We are collaborating on one of the 8 featured projects (Home4Community) in the Housing Unlocked exhibition in Trinity college organised by the Irish Architecture Foundation and the Housing Agency.
Worth going to if you get the chance, if this is an area that interests you there are some great idea showcased.

https://housingunlocked.ie/

[Aontroim]

I have long maintained that the housing problem on this island (applies elsewhere too) is due to demand.

The problem is not that 'everyone wants to own their own house'. The problem is that everyone wants to own someone else's house so that they can rent it and make money off it.

​​​​​In other words, one house per family would not meet demand as people/businesses want to own more than one house.

I don't necessarily blame landlords or multiple homeowners for this. Given our current economic/political landscape, if you have the money, it'd almost be silly not to invest in housing.

One solution could be to dampen demand by increasing the tax rate on rent earned from each subsequent house. I.E. The incentive to own more houses decreases with every additional house as each additional house leaves you with diminishing returns post-tax. This would mean that people owning their own home don't incur extra taxes and those who own one more house would have marginal increases. Disincentive is proportional to 'market share'.

The advantage of this would be that the proportion of people's incomes taken up by housing decreases which means they have more available income to invest in other areas of the economy (cafes, bars, restaurants... things that provide jobs. A new racetrack or motoring hub maybe?).

I feel that the reason why this kind of solution isn't explored is due to the links between those with political power and those with houses to rent...

Now, that being said, this thread has opened my eyes to the fact that my theory only applies to the cost of housing, not the availability of it. Obviously a lack of availability will increase demand too but I don't think this negates my point about the cost of housing proportional to incomes.

One of the reasons I joined this forum was to have my perceptions/opinions challenged (which I think is a healthy part of life). So thanks lads!

[foyler]

Good post Aontroim, it started out sounding a bit like a Sinn Fein Party political broadcast about social housing for everyone, tax the rich greedy landlords even more ....... as they sell up and run for the hills in their thousands given the ballache renting a House out can become or simply cash in.
Even the most ardent fans of this approach have realised one of the main problems is that the exact the folks you were proposing to lump more tax on have decided its not for them.
So not particularly well thought out & massively linked to availability - go have a look how many vacate the house orders are pending but its a frightening number which means like the health service, things will likely get worse before they get better, unfortunately .
As we've seen when you tinker with one side of the market, the law of unintended consequences kicks in and presents you with 3 other problems.

Finally this is a similarly huge problem in almost every first world country & beyond, so blaming our genius' is pointless, no easy solutions otherwise some smart folks with a hint of backbone would have started fixing it.

I'd hazard a guess the big brains on here would have a far better stab at it then any of the landed gentry in leinster house & in that vein its great to see and hear about that work shaggy.

Anyway its refreshing to see someone on the internet open to having their positions challenged & changed .

[Alfaguy]

I used to be a multiple house landlord but got out of it as its just not worth it anymore with all the new regulations and tenants rights etc. Nobody seems to think of the landlords who are providing a valuable service but these days its more trouble than its worth.

[Tin Worm]

There is a fourth leg to the problem as well in that the private rental market is dominated by institutional investors who pay no tax on the rental income, you don’t have to be a REIT to do this, hold your apartment blocks in a fund regulated by the Central Bank and you’ll get zero tax charged on your rental income. Compare this to the ordinary folk who might have one or two houses…not exactly a level playing field.

Your institutional landlord just views rental income as string of cash they can use to pay their investors (who are all overseas). I often wondered if the state ratcheted up the tax on the institutional landlords their business models wouldn’t stack up as much as before and the state could pick up ready made housing stock at a keener price! . Anyways it all goes back to the fact thats there’s not enough rental stock.

[-alan-]

^ What's the rationale for exempting institutional investors from tax on rental revenues - simply getting the private sector to fund development / procurement of housing stock ?

[shaggy]

How many of those renting would rather be home owners? 50% ? 70%.. maybe more. Most people after they've left their student and travelling years behind them would rather own then rent. Yet we are told that the problem is lack of rental accommodation. I think it's lack of affordable homes to buy.

The western world have treated housing like the worst of donedeal car flippers of recent times. Imagine if the expectation of selling a car for more than you bought it for went back generations! A housing crisis has always been inevitable as that first 'rung of the ladder' of the housing market was continually raised at a faster rate than wage increases. The first rung has moved up to where the tenth rung used to be with no stream of first rung replacement. That first rung is now well out of reach.
Now even the most petrol headed amongst us wouldn't argue that everyone has a right to a car but the right to a home is enshrined in many countries constitutions and may soon be a part of ours. We see individuals and dealers being slagged off on here for price gouging and flipping cars, but basically that's what everyone has been doing for generations with housing which is a far greater need. The challenge is to find ways to stop the cycle of treating housing as a commodity or an investment opportunity.
The models that step away from the binary Irish paradigm of Social / Developer-Led housing are working for decades in most other countries of the western world.
Most often these models are variations of Community-Led Housing which involves individuals coming together with state and professional support to create their own housing projects. In much the same way as we had a strong tradition of dairy co-ops and mutual societies they are about giving agency and power to create their own communities and neighbourhoods.

[Cold]

I wouldn’t have any problems renting but not in Ireland as a general rule. That said, I know someone who is renting a very swish place so it can be done and she’s very happy with it. Unsurprisingly perhaps countries that have a good rental market also have a good car rental market as both serve the same kind of customer that values flexibility and ease.

What I mostly can’t reconcile is the obsession around housing and the abysmal quality of it. I would have thought that’s at least as big of a problem as all the other things.

[Aontroim]

It's a great point and this is part of it that's not spoken about enough. People are happy to pay big bucks just to get a structure and an address.

Proven on here too in a recent insulation thread what people are happy to accept as standard. More focused on their return value than standards and comfort.

The quality of a house is a million miles from the initial sourcing of it, until of course the first swing of all seasons is experienced.



Sent from my IN2023 using Tapatalk

Devil's advocate and speaking from the perspective of someone who has recently bought a house (1.5 years ago):

I don't think people are happy to pay big bucks for low-quality housing. I think people are in a situation where the majority of the housing stock is sub-standard but massively over-valued so have to compromise heavily.

It's worth bearing in mind that renting is also very expensive (I understand there are reasons for this but as a renter, I can't say I felt I was getting value for money) and is often made up of similarly low-quality housing stock. With the added proviso that you don't own the place so have little control over improvements/maintenance.

I totally agree that most housing stock is sub-standard but it's kind of like the second hand car market: you need this thing but what's available to buy (even for considerable amounts of money) is just a sea of badly-maintained dung. So you have to pay big money for the best you can get your hands on leaving you with less money to improve.

On a similar note, I went to view many new houses. All of them were flawed beyond belief (as in their design) but were up for mega-money.

I'm not against timber frames but in all the semi-detached ones we went to see, I could hear a neighbour if they picked their nose.

Or many had en-suite bathrooms which meant you could barely get a double bed into the 'main' bedroom. Or a 'walk-in' wardrobe which meant every bedroom had a weird notch cut out of it as the house was nowhere near big enough for such a feature.

All this low quality stuff was serious money so I can't say I'm seeing the trend between 'cheaper' building alternatives and lower prices. Again, kinda like the second-hand car market.

I think the obsession around housing stems from its huge impact on someone's quality of life. It's such a large concern that people are in fear of 'getting it wrong'.

​​​​

[crank_case]

[


https://commongroundclh.ie/

Shaggy - is this a variation on housing co-ops? because that's a great idea and something not explored enough here.

[crank_case]

It's a great point and this is part of it that's not spoken about enough. People are happy to pay big bucks just to get a structure and an address.

The flipside of this is the old truism that "you can change your house, but you can't change where your house is" - location might sound boring, and some of it is postcode snobbery, but there can be practical things too.

Now really, location should be less and less important in the 21st century with the variety of remote working options proven to work, but far too many people with decision making power in large companies are trying to push people back to offices either full or part time.

There are reasons for this and it's got nothing to do with the debunked ideas about collaborating round whiteboards and team building and stuff (the blind control test research is out there if anyone cares.). I mean in the scientific community remote/asynchronous collaboration has been a thing for decades out of necessity due to scale and complexity of things like atomic particle research/climate science/astrophysics, but somehow we gotta sit in a room so someone can blather about last weeks KPI... ohhhh kaaaay boooomer. 😆

Anyway, point is, we're still insistent on making location a thing for economic reasons for a lot of people when it doesn't need to be, though younger folks and anyone still wanting some sort of social/cultural life will always like to be in cities, which Dylan Moran sums up perfectly..

Remote work is not the solution to our crisis given there's no rentals anywhere at all, doesn't matter if your in Dublin or Donegal now, there's nothing, but long term it might take some of the pressure off given Dublin seems to be coming apart at the seams in trying to get its infrastructure up to scratch.

At the same time, there's a big irony that Dublin isn't a particlularly dense urban area. You have farmland inside the M50 for goodness sake, lots of low residential density in the city centre and acres and acres of eco-disaster "business parks" which are often just retail outlets rather than say actual industry while city centre retail goes to hell.

[Cold]

Devil's advocate and speaking from the perspective of someone who has recently bought a house (1.5 years ago):

I don't think people are happy to pay big bucks for low-quality housing. I think people are in a situation where the majority of the housing stock is sub-standard but massively over-valued so have to compromise heavily.

It's worth bearing in mind that renting is also very expensive (I understand there are reasons for this but as a renter, I can't say I felt I was getting value for money) and is often made up of similarly low-quality housing stock. With the added proviso that you don't own the place so have little control over improvements/maintenance.

I totally agree that most housing stock is sub-standard but it's kind of like the second hand car market: you need this thing but what's available to buy (even for considerable amounts of money) is just a sea of badly-maintained dung. So you have to pay big money for the best you can get your hands on leaving you with less money to improve.

On a similar note, I went to view many new houses. All of them were flawed beyond belief (as in their design) but were up for mega-money.

I'm not against timber frames but in all the semi-detached ones we went to see, I could hear a neighbour if they picked their nose.

Or many had en-suite bathrooms which meant you could barely get a double bed into the 'main' bedroom. Or a 'walk-in' wardrobe which meant every bedroom had a weird notch cut out of it as the house was nowhere near big enough for such a feature.

All this low quality stuff was serious money so I can't say I'm seeing the trend between 'cheaper' building alternatives and lower prices. Again, kinda like the second-hand car market.

I think the obsession around housing stems from its huge impact on someone's quality of life. It's such a large concern that people are in fear of 'getting it wrong'.

​​​​

It seems job #1 is to do a sh1t job and see if you get away with it