Anne Marie McNally: Stopping Renters Putting Down Roots

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From top: Minister for Housing, Planning & Local Government, Eoghan Murphy with Minister of State at the Department of Health Catherine Byrne arriving at Richmond Barracks, St Michael’s Estate, Inchicore before Mr Murphy announced redevelopment proposals of Council lands at Emmet Road opposed by Ms Byrne, who is also a local TD; Anne Marie McNally

If you were to take a poll right now of the number one issue that, in some way or another, touches almost everyone’s lives, it would likely be housing.

Be it the young student or worker who is anxious to leave home but cant. Be it the parent of those adult children who watch helplessly as their children are denied the opportunity to fly the nest.

Be it the families trapped in unsustainable mortgages or be it the many people – singles and families who are renting at exorbitant cost and never finding themselves with the luxury of being able to save for a deposit to secure a mortgage which their rental amounts would easily cover, and then some.

When I canvass, housing is the number one issue that always rears its head. Even financially comfortable families are concerned about what percentage of their young adult children’s salaries will be spent on housing when they, or indeed if they can, leave home.

The traditional Irish attitude to housing has always dripped with the heavy narrative of ‘getting a foot onto the property ladder’. For many property boom purchasers, that tentative step onto that ladder pulled them into a vicious cycle of debt and despair that they are still reeling from.

But for many others, that bottom rung is now so far out of reach that it may as well be up there on ‘Zeppelin’s Stairway to Heaven.

If you’re renting right now, unless you’re sharing with 15 others tenement style, or unless you were lucky enough to get a decent landlord who set a fair and stable rent recognising the value of good reliable tenants, then the odds are you’re paying a fair chunk of your income on rent – and it’s likely leaving you with very little if any scope to save for a deposit.

You’re also likely living in fear of your landlord serving notice. In short, you feel vulnerable and insecure. Not the ideal way to try and plot a life and/or family life.

Yet in other countries and cities worldwide renting is a very valid housing option for people in all types of situations from young students to settled families.

Other countries manage to deliver rental options that provide affordable rents and, crucially, security of tenure.

This allows people access to a housing option which they can afford and which they can have a certainty about how long they’ll be there for thus allowing them to plan a life. If that involves children, it’s no problem.

No fear of having to change schools because the landlord has decided s/he can get more rent from someone else or needs it for a family member. On the flip side, the landlord is professional, has a certainty or income and a fixed tenant. An ideal situation for all parties involved.

Whereas here in Ireland we tend to have a proliferation of ‘accidental landlords’ (primarily people who fell victim to putting a foot onto that aforementioned property ladder), on the continent and in many US cities, strong regulations in the private sector have ensured a professionalisation of the sector which works to the benefit of all.

Whilst there have been some moves to beef up the powers of the Residential Tenancies Board, by and large the rental sector in Ireland is largely unregulated.

In Denmark for example, where the sector works particularly well, regulations have made long-term, often indefinite leases, a financially attractive option for both tenants and landlords.

On Tuesday, at the launch of the latest (of many yet to be delivered) project for the St Michael’s Estate complex in Inchicore Dublin 8, an idealogical battle was played out between two Government ministers from the same party. Strange, but true.

When Housing Minister Eoghan Murphy launched the cost-rental model for the site – a model which is to be welcomed and hopefully replicated – his own party’s Junior Minister Catherine Byrne (who represents the Inchicore area) angrily took to the stage (uninvited) to condemn the plans and declare it an unmitigated disaster for the local area.

Her reasons?

She pointed out that renters make for a transient community that they don’t put down roots. Apparently she completely missed the hypocrisy her argument.

She, straight-faced, argued against creating a sustainable, affordable and professional rental sector which would mitigate against all the problems she pointed to within the current rental sector.

Ireland will have to come to terms with the fact that long-term renting is now the most, sometimes only, realistic housing option for an entire generation of people who will never be in a position to secure a mortgage.

Instead of decrying that fact and wringing hands whilst the situation escalates, we should look to embrace best-practice models that have proven successful in other places worldwide.

I welcome the cost-rental model announced on Tuesday and look forward to more of the same but simultaneously we also need to a conversation about regulations, professionlisation of the sector and pilot-projects of schemes that work elsewhere.

If we’re going to keep clapping ourselves on the back for being this supposedly progressive Republic then let’s get progressive with all our ideas and move away, where necessary, from the Field mentality of owning land.

Instead of pushing people off a financial cliff and hoping a foot lands on the bottom rung of a ladder that’s forever being pulled up, let’s start supporting people who may want or need to take an alternative option.

Anne Marie McNally is Social Democrats Political Director and General Election candidate for Dublin Mid-West. Her column appears here every Monday.

Rollingnews

45 thoughts on “Anne Marie McNally: Stopping Renters Putting Down Roots

  1. Dr.Fart MD

    for as long as i’ve been around, the government always believes that rapidly rising house prices are a good sign.

      1. Col

        People can’t help but feel wealthier when their house is worth more than they paid for it.
        It breaks my heart.

    1. Cian

      for as long as i’ve been around, the voting public always believes that rapidly rising house prices are a good sign.

          1. Andyourpointiswhatexactly?

            Forgive me, dear Mildred, but you seem to be squiffy. Have you turned to sweet liquor in the face of relentless bad news and sweaty thighs due to humidity?

          2. Cian

            /me looks around the (virtual) room at all the potential voters.
            [squints]
            /me looks at the current TDs/Councillors.
            [squints]

            Um. Yes, definitely, the voters are fools.

          3. Andyourpointiswhatexactly?

            I was watching Grace and Frankie last night. Martin Sheen was making a big jug of Screwdriver(s). I noted he was using Ketel One and lovely fresh OJ. I’d happily knock one back now.

      1. Cian

        One of the reasons for this is inflation.

        Up to 1983 there was double-digit inflations;
        between 1984 and 2008 inflation averaged 3.5% (for comparison mortgage interest rates averaged 9%)
        But since 2009 inflation has averaged 0%;

        Between 1984 and 2004 inflation was just over 100% – effectively prices doubled (or the value of money halved). If I’m repaying a mortgage over those year, in year 1 the repayments are 55% of my take-home pay – that is tough. But 10 years later, my monthly repayments are still the same number, but through inflation my wages have gone up; now my mortgage repayments are only 37%… and by the 20th year my repayments are down to 27% of my take-home pay.

        If I got a mortgage in 2008 the repayments are the same 55% ten years later. Ouch.

        1. johnny

          This is junk math-its garbage and makes no sense,whats your point Cian ?
          Theres no logic to it-repayments on a fixed rate mortgage are the SAME-that’s the whole f**king point of a fixed rate margate,duh !
          What exactly are you trying say that the central bank has failed in its mandate to keep inflation at 2%-lets discus that Cian ?

          1. Cian

            I’m responding to with Dr.Fart MD[1]’s post that “for as long as i’ve been around, the government always believes that rapidly rising house prices are a good sign.” giving a possible reason for why this might be so.

            I’m saying that for most of the history of the Irish state (up to 2008) we lived with inflation. House prices were always rising. This was seen as normal. People like normal. People like house prices rising. Governments like house prices rising. People like Government that like house prices rising.

            [1] I don’t believe that she is a real doctor though.

          2. Col

            “People like house prices rising”
            Should that be home owners like house prices rising?

          3. Cian

            @Col: “Should that be home owners like house prices rising?”
            Yes – but we (traditionally) are a nation of home owners[1].

            [1]It was 80% in 2000 (although it’s dropped to 68% now).

  2. newsjustin

    Good piece. Agree with pretty much all of it. Housing is definitely the number one issue in the country.

    “…in many US cities, strong regulations in the private sector have ensured a professionalisation of the sector which works to the benefit of all.”

    I just wonder, how we can ensure a professionalisation of the rental sector, while at the same time developing a narrative whereby all big investors in rental properties are pretty much considered vulture funds and considered the bad guys.

    Maybe the answer is in the “strong regulations” bit, to be fair.

  3. Joe Small

    Housing is a massive issue but there are no easy answers. if we ramp up house building we overheat the economy with an economically unproductive construction sector and end up where we were. Unfortunately, this problem can only be solved gradually over 5-10 years, which is unbearable for those at the rough end of this crisis.
    Will Bodger delete my comment on this too?!

      1. Joe Small

        How will a mortgage rate cut increase the supply of housing? I have a family member on a fixed rate of 1.8% for 20 years in another EU country which is lovely for them but doesn’t address supply issues one bit. In fact, lower interest rates will improve affordability by lowering repayments and mean more people now chasing limited supply and so increase residential property prices.

      2. Cian

        this.
        But also let the banks kick out mortgage defaulters more easily. Like in the rest of the EU.

        1. johnny

          WTF-‘let the banks kick out’- these are peoples homes,not the pub,what’s with ‘the rest of the EU’ link please showing Irl as outlier V rest of EU-the banks contributed significantly to this mess your solution is allow the same people who created it fix it via evictions.

          You appear somewhat sophisticated, thats just an incredibly ill-informed,nasty and naive comment, regarding where people live and raise their families.

          1. Cian

            johnny, you are missing the point.

            In other EU countries if someone doesn’t pay their mortgage they can be evicted quickly (and from the bank’s perspective cheaply) . In Ireland this is very costly, and you have years of non-payment.
            The result of this is that banks change higher interest rates because the higher risk of someone defaulting.

            We either have cheaper mortgage rates + quicker evictions; or high mortgage rate + slow/no evictions.

            https://www.independent.ie/business/personal-finance/property-mortgages/higher-mortgage-rates-due-to-low-repossessions-34818643.html

          2. johhny

            Total and absolute govt propoganda-if you think I’m opening that press statement from the govt forget it-that isn’t a newspaper its a govt supported rag,that I’d be embarrassed to click on never mind link to.
            The banks were bailed out, given sufficient reserves for all the bad loans they made, legacy lending does NOT affect current interest rates.
            Which ‘other’ EU countries ?
            Cian – its called underwriting, you don’t model based on what just happened it was and is a black swan event-your not making any sense here.
            What makes you think there’s any correlation between time of eviction and interest rates,thats just wrong.

          3. Andrew

            Cian is correct. There has to be some recourse if people stop paying their mortgages. Instead you have the likes of David Hall/Gerry Beades and every other rag tag posse dragging it out through the courts. You have buy to let landlords not paying mortgages and stilll collecting rents. Blaming banks for lending them the money.

          4. Cian

            johnny. You’re right – it’s called underwriting – you look at the risks associated with a loan. You look at two things: the likelihood of a default; and what recourse will there be after a default. You look at the existing loan book; you look at the existing property market; you look at the current judgements for evictions.

            And then you run the sums to see how much this risk costs. And then that cost is added to your base interest rate.

            So what increases the cost?
            1. likelihood of default – the more people that are likely to default: the higher the cost.
            2. recourse after default – the longer you are left with a non-performing loan: the higher the cost.

          5. Joe Small

            “Relative to many other European jurisdictions, including those with lower levels of non-performing loans, the legal process through which lenders effect security is now substantially longer in Ireland.”

            Source: https://www.finance.gov.ie/wp-content/uploads/2017/08/CBI-Mortgage-Arrears-Report-FINAL.pdf

            “Mortgage delinquencies and foreclosures have serious implications, not just for the households affected, but for the financial stability of the economy. The solvency of the mortgage lenders is affected, and their ability to extend credit.”

            Source: https://voxeu.org/article/mortgage-delinquency-and-foreclosure-uk

          6. johnny

            Cain-your conflating default/evictions and rates deliberately,its part of the govt’s plan to abdicate any responsibility for this mess, by blaming the borrowers.
            In demonizing defaulters your attempting to justify the widespread evictions that the vulture funds are embarking on, this is a ham fisted attempt to provide FG with some fig leaf.

            -existing/legacy loan books are irrelevant-the bad loans have adequate reserves provided by the citizens of Irl.
            -evictions are irrelevant-don’t make the loan if that’s a concern.

            The ‘spread’ is not affected by any of the situations you describe,your analysis is more suitable to sub-prime than reflective of the current mortgage market in Irl.

            Its not worth further comment.

            If DEFAULT is front and center DON’T make the loan,duh !

          7. johnny

            Hi Joe-try to join us in July 2018-these links are form 2016 and I’m at a loss to what you ‘think’ they show-the central bank has current stats if thats what your looking for?

            Some “vox” piece on the Brits ?

            Cool you can use google.

    1. Col

      “if we ramp up house building we overheat the economy”

      If we don’t, prices (purchase or rent) will continue to rise and people will need higher salaries, which will also overheat the economy.

  4. Anomanomanom

    Housing is a problem for everyone, even home owners, sorry mortgage holders. Mine is still not worth what I paid but I’m not in negative equity and my mortgage is less than peoples rent. But even if i sell,so no debt, I can’t afford to buy anything bigger because prices are still rising at ridiculous rates. So in my case we have to sell up and move back “home” and save for a few more years because we cant get a mortgage big enough to be able to stay in the we where born in, grew up in and currently have our life in.

    1. Cian

      It has always been a bit like this. My grandparents bought a house *2 miles* from the city centre – practically in the country back in the 40s. it was what they could afford. And the city grew. My parents couldn’t afford to buy nearby and were forced to buy 2/3 miles further from that – again in the greenfield sites past the suburbs – again the city grew; I can’t afford to buy near my parents – but am forced to buy in the commuter towns.

      Plus ça change

  5. SOQ

    I think perhaps you are somewhat misrepresenting what Catherine Byrne said there Ann Marie. She objected to the density of the proposal and as someone who knows the scale of that site, I believe she was right.

    As I said in the other thread, mid or highrise social housing is doomed to repeat the mistakes of the past and in the north where roughly 18% of housing stock is social, this is now being avoided at all costs.

    It is not just a question of social housing otherwise just build another Ballymun. An estate must integrate into the local communities and that includes relative scale or it is a failure before it gets off the plans.

  6. bisted

    …is this piece from the address Anne Marie gave at the Soc Dem Ardfeis in Rialto last saturday?

  7. Termagant

    The only actual solution to the problem is to make living somewhere other than Dublin or Cork more appealing. Building more houses is a short-term salve, as long as the idea of living in, say, Leitrim is considered a fate worse than death by many young people the major cities are just going to keep getting more and more crowded. Roll out services to rural areas, improve transport links, make moving away from the comforts of the big smoke a more reasonable proposition.

    1. Col

      I don’t think they are crowded, they are too sprawled. The solution is to increase building to meet demand. Demand is where the jobs are. Spreading the problem out will just lead to traffic congestion.

      1. Termagant

        When a 3 bed house in Wexford costs less than a room in a 2-bed apartment in Kilmainham – that’s overcrowding.

  8. fez

    Anne Marie, you want us to get away from the mentality of owning land. You’re somewhat right, but do we want to let the REITs and other foreign investors own huge tranches of our land so we can return to the times where we were victims of absentee landlords? How do we make home ownership an attractive financial proposition for the individual and not the corporation? You can’t dump all the recent homebuyers into negative equity.

  9. rotide

    This piece is basically a more sophisticated version of what you hear over a jar in every pub in the land. What Anne Marie is saying is not news. We all know what’s happening. What we need are people voicing reasonable and practical solutions. This piece, like the conversations in the pub, lacks that (apart from agreeing with a rival political parties idea)

  10. samwise_gangee

    as mentioned above; the mortgage holder is disproportionately protected relative to the renter – almost as though the policy-makers are trying to tells us something…renoviction will be the loophole of choice until rent controls are done away with.

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