The high cost of rent is one of the most serious problems facing working class people. Private tenants are forced to spend 30% of their income on rent on average and nearly a quarter fear losing their home in the next year. Dublin rents have risen 35% since 2011 and are now only 6% off their peak in 2007, when wages were much higher. Alan Kelly’s proposal to link rents to inflation for three years would fix them at unaffordable levels and prompt increases from greedy landlords before they come into effect. Rent Supplement has also been cut 28% since 2009. Joan Burton claimed when introducing the last cuts that “There will be no incidence of homelessness due to these changes” but in reality, they have become the biggest direct cause. 450 families were made homeless in Dublin alone last year and the problem is spreading outside the capital to the commuter counties of Kildare, Wicklow and Meath, and to Galway,Limerick and Cork.
This crisis of rental accommodation has its roots in the property bubble, when profiteering by builders, developers, landowners, buy-to-let landlords, and banks put buying a home out of reach for hundreds of thousands of workers. Despite all the propaganda about a ‘national property obsession’, the percentage of people renting increased from 21% in 1991 to 30% in 2011. This put huge upward pressure on rents. Even those that got on the ‘property ladder’ by taking out huge mortgages have paid a heavy price. Over 100,000 are in long term arrears and face eviction and many more are struggling with repayments now they have lost their jobs, or are crippled by austerity taxes. Meanwhile, local authorities built nowhere near enough council housing. In the 1970s, 27% of all new houses, or over 6,000 a year, were built by local authorities, whereas from 1996-2006 only 37,500 were built, less than 6%. Had the government maintained 1970s’ levels of construction, we would now have an additional 135,500 local authority houses/apartments. Instead, after decades of privatisation and cuts, traditional local authority housing has declined from 18% of all residences in 1961 to under 5%.
After the crash, public expenditure on local authority housing was cut 71% to facilitate bailing out banks and property developers. Local authorities stopped building almost entirely and the housing list doubled to 90-100,000 households. Taking into account additional households on Rent Supplement or the Rental Accommodation Scheme (RAS) but not on any housing list, up to 175,000 households, or more than 400,000 people, are in need of permanent, secure, affordable housing – substantially more than the 86,000 households currently living in traditional local authority housing.
The combination of all these factors has led to huge demand for privately-owned rented accommodation and created one of the largest, most expensive, but least secure and lowest quality ‘private’ rental sectors in Europe. The state directly subsidises around half of it, through Rent Supplement, RAS, the new Housing Assistance Payment (HAP) and long term leasing from failed developers in NAMA. These schemes dish out well over €600m a year to landlords – and the banks that gave them buy-to-let mortgages and crashed the economy.
The government is planning yet more of this privatised ‘social housing’, intending to put another 86,000 households onto RAS, HAP and long term private leases by 2020. Despite Alan Kelly’s claim to have “put more money into housing than anyone on this island in the history of this State”, when you cut through the spin, the government only plans to build or acquire 12,000 new local authority units between now and 2020 – a pathetic 2,000 a year. This is less than half the level of the 1970s and less than Fianna Fáil and the Greens built in 2009!
So, what should be done? Tackling the rent crisis requires making decent, secure and affordable housing available to everyone because all sectors of housing are interconnected. This could be based on two simple principles: no one should ever be without decent, secure housing for economic reasons and no one should have to spend more than 10-15% of their income on housing.
Achieving this could involve: An immediate ban on economic evictions. Change the law so landlords cannot sell or refurbish a property without the tenant’s consent. An immediate rent freeze and progressive rent reductions to affordable levels. A massive programme of direct construction of housing by local authorities to satisfy existing housing need and ensure adequate future supply. This would provide tens of thousands of jobs and help reduce private rents and house prices. Compulsory purchase of building land at agricultural prices to eliminate profiteering would further reduce costs; during the boom 40-50% of the price of a new house was swallowed up by exorbitant prices paid to land-hoarding farmers and developers. Acquiring suitable buy-to-let and other private rental properties to immediately increase supply of affordable rented accommodation. Landlords could be incentivised to participate through taxation of rental profits at 80-90%, with compensation on the basis of proven need.
Writing down mortgages to affordable levels and writing off unsustainable arrears. This would bring down house prices and rents and could best be achieved by halting the privatisation of AIB and taking the wider banking system into democratic public ownership.
The above measures could be funded through: Savings from cutting government subsidies to landlords and increased income from local authority rents. A publicly owned banking system would free up vast resources. Currently around €3bn is paid to the banks each year in mortgage interest payments. Billions more could be invested in affordable housing for all, based on deposits currently lent out for private profit. Dramatically reduced housing costs would massively boost consumer spending and redirect resources to productive investment, rather than rewarding landlords and banks for doing nothing other than renting out their capital.
Higher taxation on corporations and the wealthy e.g. abolish inequitable tax reliefs, increase corporation tax, introduce a wealth tax and a third rate of income tax for high earners.
Nearly €8.5bn has been budgeted for debt service in 2015. Join in solidarity with the people of Greece instead to repudiate odious debt and demand retrospective recapitalisation of the public banking system.