Freeze A Jolly Good Fellow

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Leo Varadkar at a recital of Christmas carols by Department of the Taoiseach’s staff choir this afternoon

Eamonn Kelly, responding to comments from his post on homelessness on Friday (What Shall We Freeze?), writes:

I can see the role of supply and demand in the whole homeless crisis, as some of the comments have pointed out, but I find it a bit tragic that we appear to be so helpless against market forces. I don’t think we are. I think the government chooses to believe we are helpless and uses this impression as an excuse to do nothing.

They don’t do anything about imposing some kind of rent freeze. They don’t do anything about building social housing. They throw us all on the mercy of the market, standing over a system that is seeing Irish people dying on the streets of Dublin. And they are doing nothing to prevent this.

If there was a will to prevent or deal with homelessness there would be no homelessness, but there is no will. And that was most apparent at the dismal turnout for the Dail debate on the issue. No ideas are put forward.

For instance, off the top of my head, as some kind of recompense for providing tax avoidance loop holes for multi-national companies, you could factor in a deal that they build social housing or worker housing, like industrialists did in the 19th century.

Something like this could be done if solving homelessness was a priority at political level.

But it’s not just the government to blame for this neglect. It is, apparently, the majority of Irish people supporting these policies with their silence.

It seems that a consensus has  been quietly arrived at that we can afford to “lose a few” in pursuit of economic recovery. And besides, the new Taoiseach is kind of trendy looking. That’s progress too, in a way.

And the media too, in a wrong-headed approach to increasing economic confidence they are exaggerating the recovery. That 10.5% I mentioned in the original article, as trumpeted by the Irish Times, had become, by the RTE News at 9, “just under 12%”.

The effect of these exaggerations, as one commentator pointed out, is to attract emigrants back into a system that literally can’t accommodate them, returning due to a falsely raised hope of a recovery more advanced than it actually is, piling even more pressure onto the creaking system.

Lots of people are doing really well from the upsurge in private rents. It’s not just anonymous international vulture capitalists driving this. It’s “ordinary” Irish people too.

It’s so cruel and heartless, and justified in the main on prejudicial thinking, that sometimes it crosses your mind that the entrenched Irish establishment is made up mainly of those who survived the famine.

When I framed the question in the title of the original piece, What Shall We Freeze? I didn’t have a ready answer. I was being a bit cute. But an answer came to me hours later. What shall we freeze? Our hearts. We must freeze our hearts for the sake of the economy’s health. It’s the only way forward.

Happy Christmas and a prosperous New Year to all. May you never have to make your bed out in the cold.

Eamonn Kelly is a freelance writer

Previously: What Shall We Freeze?

Earlier: Not Just For Christmas

60 thoughts on “Freeze A Jolly Good Fellow

  1. Owen C

    “And the media too, in a wrong-headed approach to increasing economic confidence they are exaggerating the recovery. That 10.5% I mentioned in the original article, as trumpeted by the Irish Times, had become, by the RTE News at 9, “just under 12%”.

    “Just under 12%” refers to GNP growth, which in fairness to RTE is what everyone, who didn’t believe the scale of GDP growth in previous years, was insisting be used as a better measure of actual economic growth.

  2. Hansel

    Eamonn,

    Also please note that a lot of pensions (and by extension pensioners) are inextricably linked to property values. Many people have property as their pension and a big part of our overall house-price-bubble problem is that we can’t leave the house prices drop for fear of the pensions time-bomb, which we all know is coming. These two are massively linked. And note also that pensioners vote in large numbers.

    For me, the housing issue might be helped by what you suggest (companies providing housing incentives), but we also possibly need to:
    – Decouple pensions from property
    – Protect the elderly vis-a-vis state/mandatory/etc pensions

    I think that saying “the government can/should/could fix this” is not enough, as you say. We need to address the pensions issue in order to address the housing issue in this country.

    1. Owen C

      Property prices are not just important to pensioners. They are the no.1 source of household wealth for all ages, particularly with defined benefit pensions now very much a thing of the past for anyone under 40, and despite the decline seen in recent years, around two thirds of people own their own home rather than rent. Of the remaining one third, a lot would be younger people and immigrants to the country (who may not see themselves staying longer term) renting, or people renting/living in social welfare related homes. As such, there is probably less than 15% of people who rent either through choice or through a long term non-social welfare situation (ie can’t afford to buy but don’t receive social welfare). This 15% is the primary demographic who suffer from rising house prices and rents.

      If you want to break the importance of rising property values, you have to break the cultural focus on owning vs renting. With mortgage rates below rent yields, that is unlikely to change for a few years yet at a minimum.

      1. Hansel

        Owen, I’m not going to disagree too strongly here other than to say…
        1: In the least densely populated country in Europe perhaps it shouldn’t be as big as big a problem as it has become.
        2: Why has this reared its head more recently when we always had this “owner” culture?

        I suggest that the property prices were artificially inflated (deliberately, as government policy) by NAMA, This was primarily in order to protect banks and pensions. Some banks, we can potentially leave fall (nationwide, anglo) without major social problems. Pensions, we cannot.

        1. Owen C

          We essentially stopped building between 2010-2014. That took 100-150k houses out of the equation vs what would be the case if we hadn’t gone full doom-and-gloom and assumed property prices would never recover. This was definitely not due to NAMA hoarding land ( per SBP reporting, only 7% of the land sold by NAMA has actually even begun to be developed), and more around a lack of finance, a lack of infrastructure and a lack of builders with enough scale to actually build 25-30k houses per year.

          1. Hansel

            OK.
            Either way I think we all agree with Eamonn’s base point of companies who hire more than X number of employees (perhaps it should be a combination of payroll cost and employee?) being given a tax incentive to build.

            I just don’t think the house prices are going to come DOWN without an end of the current bubble (without a NAMA rescue) and that won’t be allowed to happen without the pensions time-bomb being addressed. Too many of our elderly rely on house prices for survival.

          2. Owen C

            I don’t think property PRICES need to come down (they are high but not crazy), the issue is more around RENTS being too high (rents are at all time highs and terms around renting are very restrictive for renters). It is rent increases that are driving price increases (rents have gone up by far more and supply of rented property is far tighter than buying property). If we deal with the severe rent issues, the price problems, which are far less of an issue, will take care of themselves.

      2. anne

        Culture of owning versus renting?

        Eh sorry now but someone has to own the house you live in…change that culture.

        1. Hansel

          I don’t follow you at all anne. Of course someone has to own the house I live in…change what culture? Do you think nobody/the state should own my house? Or is it that you disagree with the existence of landlords? I don’t understand what you’re getting at here.

          I was agreeing with Eoin in saying we have a high level of owner:renters ratio here in Ireland and that it’s a fairly culturally ingrained thing. I didn’t think that was a controversial observation.

          1. Anne

            Ok I’ll explain.
            Owen C said – “If you want to break the importance of rising property values, you have to break the cultural focus on owning vs renting. ”

            That is complete and utter rubbish.

            First of all, the ‘importance of’ doesn’t mean anything there.. but he seems to be implying that if more of us were renting, rather than owning, it would reduce the price of property. This has shown not to be the case, as the number of people renting has increased,(30% of dwellings now being rented) but property prices continue to rise. How can that be so if his claim is true? It’s not. He’s wrong.

            Someone has to ‘own’.. so who’s he referring to? We should have more concentration of property ownership is what he means.. and less of us should want to own. Leave it up to someone else to have that ‘culture’. Feeeeck off.

            Also it’s complete rubbish that Nama hasn’t been a factor in rising property prices. Huge swathes of property portfolios have been sold at huge discounts to vulture funds.. I’ve already discussed that with him and I’m awaiting an apology on that one, as well as his nonsense that few banks were moving people off their tracker mortgages.

          2. Owen C

            Anne

            massive increases in property prices both pre and post date our recent economic crisis. History didn’t start in 2013. The large increases in property prices more recently is not down to NAMA or short term reversals of trend in renting vs owning. It is down to our innate belief that owning is far superior to renting (as your own reply informs us). In a cold emotionless world we would judge the pros and cons of renting vs owning on their own merits, rather than ascribing a large premium to owning (this can be seen in data terms from the lower implied rent yield/higher imputed rent which owners of large family houses in better areas pay vs renting of smaller houses in average areas). It can also be seen in the Celtic Tiger era data which had mortgage rates at 4%+ vs rent yields at 1-2% (ie owning was 2-4x more expensive than renting, but no one seemed to realise this didn’t make sense. People now do realise this, and goes some way to explaining why so many people want to buy now, given where rent costs are and are likely to go).

            We are a country that has a high propensity to want to own property. This is a fact. Its best seen in the incredibly basic rental legislation that existed in this country up until 12 months ago (and which remains limited even after recent improvements) – put simply, we have never been too bothered about renters rights because the vast majority of us always expected to own. The point is that if we all own our homes, we’re all incentivized to want higher property values. Its basic human nature (and has been an important part in creating household wealth in recent decade – but with all our household wealth tied up in property, generally in a leveraged format, we can see what the price volatility can do when bad times come). And until the “rental constituency” is large enough to actually matter, we will always end up with government policies which encourage higher property values rather than lower ones. We see it across the world. To deny this is ridiculous.

            “We should have more concentration of property ownership is what he means” – we should have more balance to the concentration of property ownership, in order to create more stability around price and demand/supply dynamics, and offer better options to rent rather than just own. At the moment, owner occupier ownership (vs private sector renting) is massively concentrated. In the event of the next downturn (and there will eventually be one), its the household balance sheet that takes all the risk and downside. And to try and prevent that, we end up with government policies which encourage higher prices. Its not rocket science.

          3. Anne

            “The point is that if we all own our homes, we’re all incentivized to want higher property values”

            I don’t think so. It doesn’t make a blind bit of difference unless property is rising everywhere – then of course you will want your property price to be as high as possible, so that you’re not stuck somewhere and cannot move.. and can ride the wave like everyone else.

            Yes history didn’t begin in 2013. We have a long history of being tenants to the ascendancy class. To your point – an increase in people renting did not bring down prices. If /when there’s another economic downturn, rents still have to be paid..

            A roof over peoples’ heads needn’t and shouldn’t be a commodity for the wealthy to get even more wealthy from –

            https://www.theguardian.com/housing-network/2017/feb/28/un-report-lays-bare-the-waste-of-treating-homes-as-commodities

          4. Anne

            And another thing.. regarding that comment – “The point is that if we all own our homes, we’re all incentivized to want higher property values”

            As if landlords want lower prices.

            Go way out of it.

          5. Owen C

            Of course landlords want higher prices, where did i say they didn’t? The point is they have less ability to influence government policy because there are less of them to vote! For all the talk about corruption, lobbying, uncaring governments etc, the vast majority of government policy (all governments) is informed and influenced (in a very imperfect manner) by what the voters want. Why do you think that FG has all of a sudden announced a huge long term housing investment policy, and all the other parties are falling over themselves to offer their own versions of? Because its what voters want. Its simple.

            When there’s a downturn rents will have to be paid – and who were the “beneficiaries” of the Irish downturn in 2010-2012? Renters! Rents fell by around 25% between 2008 and 2010, and as people have the flexibility to renegotiate a lease every year or rent a different property, they get to benefit from a downturn. This is the whole point of what i wrote below – if we have a higher proportion of renters (lets say 60/40 vs the current 85/15 when you exclude social or council housing recipients or shorter term migrants to the country), then the “average joe” would be less exposed to a property market downturn next time, as people who actively want exposure to the property market (hopefully more institutional investors or wealthy individiuals) would be the ones who would lose out, not the “average” household.

            Re “people don’t care if property prices increase” – this is a nonsense given the decades of ‘wealth effect’ data which is available. The first two paragraphs in the article below neatly wrap up all of my thoughts above (the wealth effect of falling house prices would be diminished if more people were renting)

            https://www.economist.com/blogs/freeexchange/2009/08/the_housing_wealth_effect

          6. anne

            Voters don’t want to be renters Owen.

            And your hair brained notion that we should not be concerned with owning our own property, that that will some how make for a stable property market is rubbish. Concentration of wealth in a few hands never brings down prices.

            And having a high percentage of the population renting for all their lives will put huge pressure on the state when they become OAPs and their rent has to be paid – by the state. There’ll be no asset to pay for nursing home fees either.

            Home ownership doesn’t incentivise people to want high property prices.. people for the most part want affordable housing that they can call their own. Investors and vulture funds want high property prices. Not families with one home. If the market was static it makes no difference to the price of your house makes, even If you’re selling up, as other homes won’t have gone up either. That is not the case obviously with boom and bust property markets.

    2. Cian

      Hansel,
      Another issue (in Dublin) is that there are a lot of pensioners (either couples or singles) still living in their 3-4 bed family homes. If they could be encourages to move to smaller homes, then the larger homes would be available to families. We need to
      a) incentivise trading down – financially.
      b) ensure that there are suitable homes being built that would be attractive to OAPs.
      c) ???

      1. Hansel

        I’m on-board with all of that Cian. My parents want to downsize but I can imagine plenty don’t have any motivation to do so. Standards of smaller houses for OAP’s are an issue as you say.

      2. Anne

        And what will the family do who want to visit their OAP parents, sleep in the living room like they’re in a harum?

        A 3 bed 1000 to 1200 sq ft home is not excessive. It’s nice to stretch out your feet in the living room and not have them touching the kitchen.

        “b) ensure that there are suitable homes being built that would be attractive to OAPs.”
        Like these is it –
        https://www.irishtimes.com/news/politics/new-rules-will-allow-higher-apartment-blocks-with-fewer-windows-1.3330707

        Minister to announce measures intended to make apartments cheaper to build

        Minister for Housing Eoghan Murphy is to announce a number of changes to planning guidelines largely in relation to apartment buildings including the removal of a requirement to have car-parking spaces.

        He also intends to increase the cap on the number of units that can be on a floor for every lift or staircase from eight to 12. The necessity for apartments to be dual-aspect, meaning they must have windows on two different walls, will also be changed.

        Mr Murphy said the measures would address a number of challenges including making it more cost-effective to build apartments.

        The most significant change is the removal of the height restrictions. Currently residential developments in low-rise areas of inner-city Dublin can be only six storeys (about 24m high), with lower limits in the suburbs.

        A race to the bottom for standards, but maximum profits..

        1. Cian

          I dunno anne. The government cannot win.
          There has been a chorus of voices for the government to “do something” about housing. One of the things they were repeatedly slated on was these higher standards – and how they were forcing builders to build fewer (albeit bigger) homes and this was bad.

          They roll-back these standards, and they are slated because it allows builders create rubbish apartments.

          What do we want? small numbers of quality apartments? or larger number of lower quality apartments?

  3. dav

    let us be perfectly clear leo HATES the homeless. The reason they are homeless is they don’t get up early enough and that is one of they reasons that they are homeless. Helping the homeless will only encourage more people to become homeless so they can avail of the help.
    He has encouraged the view with his alt-right supporter base that those homeless charities also contribute to the problem. If they did NOT help, allied to Leo’s lack of help = more dead homeless people and the problem sorts itself.

  4. b

    I think the point about nobody putting solutions forward is excellent.

    Solutions should be debated, costed, critiqued etc so people can see the real costs and trade offs of dealing with these issues.

  5. ollie

    the main winner with high rents is government.
    every euro of taxable income produces 48 cent profit for the landlord.
    tax reliefs are cut to the bone for landlords except for reits

    1. Aaaa

      Very well said. Also the rent freezes that were brought in place suited the landlords who always increased rent and screwed their tenants over at every opportunity. A decent landlord who didn’t increase the rent of their properties in line with the market in order not to screw tenants has inadvertently been shafted themselves due to the nuances of the current rent freeze guidelines.

  6. Anomanomanom

    Its not hard to solve, its really not. Its as simple as building houses, nothing hard about it. Social housing shouldn’t be for people who can afford a mortgage. So maybe if a social housing tenant is earning enough they should have to start paying a certain % above their normal rent and use that % towards say a fund just to build more social houses. Might be a crazy idea but why could something like that not work.

    1. Hansel

      Well, if you don’t mind me playing devil’s advocate for a minute here, who exactly will build these houses? The state? I don’t disagree with the concept but they traditionally suffered a lot of negative publicity every time they tried this in the past, and their entering of the market may well drive up prices of land/materials/labour/equipment.

      Agree with your second statement and also think social housing tenants shouldn’t be allowed to purchase at reduced cost, only full value. I think social housing tenants probably shouldn’t be allowed pass houses on to family either (inheritance). Difficult to means test EVERYONE though I’d say.

    2. Cian

      Yes. we need to build more social housing. We can do this piece-meal and start building small quantities of houses on small plots immediately. But in parallel we need to think big.

      One (small) problem is where to build in Dublin. Traditionally, social housing was either replacing the slums (modern flat-blocks that are inside the canals) or on green-field sites in the suburbs.
      There are relatively few slums left inside the canals – so we need to go green-field – where do we get large sites? How much land do we need? Where can we put them?

      Lets do some back-of-envelope maths:
      The RTE site (8.6 acres) was sold last year for 500 apartments.
      Double that 1,000 apartments = 17 acres.
      So 100,000 apartments = 1700 acres;
      For 100,000 apartments (or 2 years supply) we need land about the size of the Phoenix Park. That excludes any extra land that would be required for shops, pubs, restaurants, churches, halls, schools, roads, trains, and all the other infrastructure you might expect.

      (Another large development is Cherrywood – this also includes office blocks – but the housing density it about 5 times lower than RTE; they are putting 4000 homes on 400 acres) At this density we need 5 Phoenix Parks.

      So where is all this land? look at a map of Dublin – hmmm.. we’ll need to start outside the M50, and in certain cases well outside the M50.

      1. some old queen

        @ Cian. The RTE site (8.6 acres) was sold last year for 500 apartments.

        Apartments in Donnybrook, Dublin 4, are not average size or build. Think more the ground space of Smithfield and even that isn’t held up as a great design.

        1. Cian

          Can you provide any links to a better apartment/home ratio? As I say it’s back of envelope stuff. If I do a quick google I get:
          Tallaght is 4,500 acres and population of 76,000 – so that’s about 35,000 homes [2.2 people per home] or 8-homes-per-acre
          Ballymun is 700 acres, population of 22,000 – about 14-homes-per-acre.
          Clontarf is 1700 acres, population of 32,800 – about 9-homes-per-acre.
          By my calculations RTE will be 58-homes-per-acre. If anything I would think my numbers are way to high (because, as I said, they don’t need to include amenities in existing built-up areas).

  7. Frilly Keane

    Cheezus those kids aren’t a bit impressed are they

    Maybe the SCU could dig out a Santy hat for ‘im

  8. Milton Freidman

    EK, a few points.

    You call for a Rent Freeze but evidence shows that this makes housing affordability worse and capital is then not invested in new housing stock. If you have evidence to the contrary then please show it.

    You say they (I presume ‘they’ are the government) are doing nothing. Well they are actually. Perhaps it is not enough or they are pursuing policies you disagree with but they are doing something. Such finite statements should be avoided if you want to make a valid point.

    If there was a will to deal with homelessness, there would be no homelessness. Again another binary and finite argument. There has always been homelessness in Ireland. Indeed every country in the world has homelessness, well maybe bar North Korea or Cuba but lets not follow those idiots.

    Again, you seem to offer only one solution, a solution last tried in the 19th century. It is the 21st century now EK so is that the best you can offer? Ireland has the fastest growing population in the EU, this should be a good thing, emigrants returning home should be and is a good thing. 10.5% increase in GDP is a good thing. This country is on the right track on a macro level and most people agree with this sentiment, because as you say people are self interested. That is life, it seems to me you are bemoaning human nature and wondering why we do not live in Utopia and why there is no world peace.

    I think the state should stop trying to micro manage housing and let the market decide. If one wants to rent a bed sit, let them. Too many well intention-ed policies have caused this mess.

    1. some old queen

      Oh dear where to start.

      What caused the housing crisis? Supply or demand? It is primarily supply. Blaming immigrants who can’t afford to pay such prices in Dublin or people returning home is nonsense. This will be a social science thesis for someone in the future. I am certain that the fact people now have to register their interest in renting out a property has meant some pulled out of the market.

      And then there is the gougers. Those ‘respectables’ who will quite happily squeeze their tenants because of greed. And when it comes to TD’s that is right across the board… including SF.

      1. Milton Friedman

        It is actually both, too much supply and not enough demand. If our economy was in the toilet there would be no demand. If renting is so lucrative, why are there more people leaving the rental business as per CSO data? No one was complaining 5 years ago when rents were on an all time low. Ireland has a weird problem with the idea of a landlord, they attract all the ire of the moaners.

        1. some old queen

          There are two sets of ‘moaners’ here.

          The renters who are being gouged to the point where even with good jobs they are running hard to stand still. IMO that is a reasonable complaint.

          Then there is the landlords who even with the highest rents in history apparently still can’t make a profit. Well sorry but if you couldn’t make it work when rents were much lower then there little hope for you now.

    2. some old queen

      Oh and another thing. The media narrative that ‘decent’ landlords are being penalised because of the 4% cap. If they could afford to rent at a certain price for ten odd years, exactly how are they being penalised now?

      1. Milton Friedman

        What narrative is this? The narrative I see is that being a landlord is like belonging to the church of satan.

  9. wearnicehats

    I know a couple who took advantage of everything the banks were chucking at them back in the day. They bought a cracking gaff in a nice area – living the dream, baby. Then the arse fell out if it – cue large amounts of guffawing from the SJW community. So rather than lose their house they moved the family to live in rented accommodation in a cheaper part of town and they rent their own house out for the going market rate in the area. Their hope is that they will be able to move back into their own house in 2-3 years. By today’s logic they are evil landlord scum. Living the dream, baby. It wouldn’t surprise me if their own house is rented by some “freelance writer”….I’d give you their current address but some SJW would probably go and burn them out for taking up space that someone on minimum wage would otherwise not have a chance of getting. I’m tired of this insatiable bandwagon which desires to depict everyone in Ireland who owns property as some kind of grasping little fagan who should suddenly see the light and open their doors to the poor and needy.

    1. some old queen

      I know one guy who has four flats and two houses in Dublin, plus his own and a holiday home in Spain. He is forever singing the poor mouth and complaining about bad tenants. He doesn’t work but but then again he doesn’t need to. All rents have gone up by near 50% despite the fact that his mortgages have been exactly the same from the early nineties.

      Don’t tell me he is not exploiting people. It is one word…. greed.

      1. Cian

        if he has mortgages from the early 90s, and they were 20-25 year mortgages – then he should be (almost) finishing paying them. ker–ching!

        1. some old queen

          He kicked out a fella who lost his job with six month pregnant girlfriend AND mother in law.. All of whom were living in a glorified bedsit.

          Not a nice person. Not someone I wish to be like in any shape or form.

  10. the bottler

    Start by compulsory purchase of Milltown Golf Club. Good local amenities, schools, transport links etc. Ideal for social and affordable homes. All the legal eagles, medics and funeral professionals can play golf elsewhere.

  11. italia'90

    That’s an interesting suggestion and in my opinion, there is no reason to have any private golf courses inside of the M50 for starters. Plenty of room off all motorways serving the capital.
    After that, I believe we should look at all lands owned by the religious orders.
    The Dail could be moved out to a more convenient location for Minister Zappone and free up a prime development zone within the heart of the city. Would definitely be more productive.
    All other suggestions gratefully accepted.

    1. Cian

      Both Dun Laoghaire Golf course and Bray golf courses were bought by developers that swapped new courses in Wicklow + club houses + cash for the land in the towns. Perhaps we’ll see more of that.

  12. Rob_G

    I thought that the government had already introduced a rent freeze (at least in Dublin), and that it had little or no effect(?)

    The govt needs to increase supply; a rent freeze would do the opposite.

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