Calls For 'Cost Rental Housing' Undermine The Right To Housing
Sinn Féin, The Green Party, The Social Democrats and Labour have included ‘cost rental housing’ as a significant element of their proposals to solve the housing scandal. This deeply flawed approach is playing into the hands of the establishment and undermining the fundamental Right to housing. Read on to find out why.
Every political party in Ireland claim that they want housing to be ‘affordable’ for everyone. But what does ‘affordable’ actually mean?
The simple answer is that ‘affordability’ is different for every individual and family, depending on their overall household income. The internationally accepted definition of ‘affordable housing’ is, therefore, directly linked to the income of a given household.
Most definitions state that housing costs - mortgage or rent - are determined to be ‘affordable’ if they account for no more than 30% of the post-tax, disposable income of a household. Some argue the percentage figure should be lower and others that it should be higher, but all agree that ‘affordability’ is intrinsically linked to income.
For this reason the current system of ‘social housing’ calculates rents on the basis of household income. Called ‘differential rent’ it also takes account of some outgoings, such as the number of children in a family. ‘Social housing’ tenants currently pay just 15% of their disposable income in rent to their local authority.
By comparison a report published by Social Justice Ireland in April 2019 found that one in ten households that are renting in the private sector were paying more than 60% of their disposable income on rent. The pressing need to develop a new system of housing for people who are currently trapped in the cut-throat private rental sector is clear, but ‘cost rental housing’ isn’t it.
Eoghan Murphy officially ‘turned the sod’ on the first cost-rental development in the state in September 2019. The fact that Fine Gael are backing ‘cost rental housing’ should start alarm bells ringing for anyone who wants to see radical change in the housing sector.
‘Cost rental housing’ is fundamentally different to ‘social housing’ or other progressive models of housing because the rent is calculated not on the basis of income, but on the basis of land and construction costs.
By name and definition ‘cost rental housing’ breaks the connection between rent and income - a connection that is necessary for rent to be always ‘affordable’.
In September 2019, the then housing minister, Eoghan Murphy, organised a sod-turning publicity stunt at the first cost rental development in the state on a site in Sandyford in south Dublin.
A two-bedroom home in this cost rental development will cost €1,200 per month to rent. An individual or family would need to have a post-tax, disposable income of €4,000 per month for a rent of €1,200 to fall below the 30% threshold of affordability.
That’s the equivalent of an annual gross income of roughly €58,000 for a married couple or €70,000 for an individual or two unmarried individuals. For anyone earning less than these amounts, this cost rental development fails the test of affordability.
Two-bed homes in a second proposed cost rental development in nearby Shankill are expected to cost €1,300 per month to rent. Rents in a third cost rental development on the St Michael’s site in Inchicore, Dublin 8 are expected to be 25% below private rental rates or roughly €1,300 per month.
In all three of the examples above the developments are being built on public land that is being supplied for free or a nominal charge. If the developments were to include the market cost of the land the rents would be significantly higher. So even cost rental isn’t actually cost rental. Irish gombeen-created problem ‘solved’ by an Irish gombeen solution.
Those who support cost rental housing, particularly Fine Gael, highlight that a rent of €1,200 or €1,300 is lower than the rent in the surrounding private market. But will this always be the case? What happens when the next private property crash happens?
Will those who rent a home in a cost rental development then find themselves locked into leases and rents that are higher than the private sector? As there are currently no proposals to tie the rents of cost rental housing to the surrounding private market, this scenario cannot be ruled out.
It isn’t that long ago that thousands of people bought homes under ‘affordable housing’ schemes, only to find identical homes were being sold in the private market at a lower price a short time later.
Nobody that is serious about housing justice should be advocating for cost rental because the rent in that system is marginally lower than an utterly dysfunctional and highly extortionate private market.
Getting a bad financial beating might be better than getting a crippling financial beating, but that doesn’t mean that we should present a bad financial beating as a victory.
Cost rental housing plays within the rules a game that was created by the developers, bankers, landlords and their gombeen politicians who serve them. It can be easily integrated into the existing housing model alongside other new-comers such as the vultures who are charging €2,350 for a two-bed apartment in Fernbank, a Build-To-Rent development in Dundrum, South Dublin.
Cost rental housing is not a radical departure from the current system of housing. As a model of housing it conforms to the rules that have been developed over many decades by the developers, bankers, landlords and the gombeen politicians who serve them.
It undermines the concept of housing as a fundamental human right that the state has an obligation to uphold. In name and structure it places the responsibility on the tenant to individually pay for all of their housing costs, regardless of whether they can afford to do so or not.
Cost rental housing individualises housing, turning a collective, societal challenge into an individual responsibility and relieves the state of its responsibility to provide all citizens with equal access to affordable, secure housing.
It conforms to the politics of the right-wing bean-counter, where the value of a home is measured in euros and cents alone. The staggering social and financial cost of market-driven housing are conveniently excluded from the bean-counters equation. This is all safe ideological ground for Fine Gael and the wider political establishment.
Cost rental housing will also reinforce and deepen the segregated nature of housing. The poor will continue to be concentrated in stigmatised but actually affordable ‘social housing’, while the bulk of the population will be left to fend for themselves in the private rental and private purchase market. And the ‘lucky few’ will be able to access cost rental housing.
Cost rental housing is going to create a deep injustice where low-income families that earn €100 below the ‘social housing’ threshold of €25,000 to €42,000 will be able to rent a home at 16% of their disposable income, while low-income families that earn €100 more than this threshold will be required to pay a fixed rate of €1,200 for a cost rental home.
To deepen the injustice those in social housing are able to buy their home at a heavy discount through the tenant-purchase scheme while those paying far higher rent in cost rental homes will not be able to do so.
Every citizen either has a universal right to affordable, secure housing or they don’t. Why should some citizens pay a fair rent calculated on their income and others pay a rent calculated on the volatile land, construction and maintenance costs?
How can parties like Sinn Fein, The Green Party, The Social Democrats and Labour be arguing for the creation of such a patently unfair model of housing? Why do they want to create another tier of state-supported housing in addition to ‘social housing’?
The alternative to divisive ‘social housing’ and ‘cost rental’ housing is a single, transparent and fair system of Universal Public Housing.
The alternative to adding expensive cost rental to the existing mix of housing is Universal Public Housing. UP Housing is the only system that can logically deliver the abstract Right to Housing that so many political parties now claim they support.
Under UP Housing there wouldn’t be one system of state-backed ‘social housing’ for low income families and a parallel system of state-backed cost rental housing for slightly wealthier families.
Under UP Housing everyone that is need of a home would have the same legally enforceable right to rent a secure, high-quality, properly-managed, publicly-owned home from their local authority. And everyone would pay a rent that is primarily based on their individual income. Those earning more would pay a bit more, but nobody would pay more than 30% of their income on rent.
The right-wing bean-counters will tell you that UP Housing is an unrealistic fantasy and that it would bankrupt the economy. But the fact shows that it is the establishment that is peddling the fantasy that the free market can deliver housing stability and affordability. And it is the political establishment that has already bankrupted the economy with its fanatical belief in ‘market forces’.
In the long-term UP Housing would pay for itself through the rental income paid by tenants and through the wider social and economic benefits that would flow from a society based on housing justice.
In the short-term very significant sums of public money would need to be spent to catch up with decades of neglect by the political establishment. Éirígí makes no apology for arguing that tens of billions of euros of pubic money should be invested in providing our citizens with subsidised public housing.
We want strong, efficient, democratically controlled local authorities, with the backing of central government, to build and buy hundreds of thousands of homes to create a world-leading system of UP Housing.
We refuse to play by the rule of the right-wing bean-counters in the Departments of Finance and Environment. Again we make no apology for this and other parties who claim to be of the Left should do likewise.
The market-led approach to housing has been a financial and social disaster, a fact that unprecedented numbers of people are now coming to realise. Political support for profit-driven housing is at an all time low. The people are now more ready than they have ever been to listen and support a radically different approach to housing.
Those on the Left who support cost rental housing are providing the establishment parties with political cover and providing them with another route to avoid their responsibility to build universal public housing - something which they are fundamentally ideologically opposed to doing.
Now is the time to be brave, to strike for that which the bean-counters tell us is impossible, to bring an end to segregated housing and break the political grip of the landowners, developers, bankers and landlords. Now is the time to build support of maximum change, to build support for UP Housing!
You can find out more about UP Housing here. And if you’re ready to join the fight for UP Housing fill in the contact form here.