Property rights win out
Housing commission fudges on rent control
BY ROBBIE MacGABHANN
If there is one tangible government response to the housing crisis it can be found in the number of reports commissioned to study the problem. There are now four comprehensive studies lying around government offices. All are in-depth studies of the varying aspects of the housing problem. However, all are constrained by both the conservative nature of the government that commissioned them and at times a lack of vision on the parts of both the experts and lobby groups involved in formulating these tomes.
£12 will buy you the Report of the Commission on the Private Rented Residential Sector. It is, in fact, three reports mingled in one 224-page text. One report is a range of interesting statistics about the housing market in Ireland. Then there are a range of submissions and opt outs by some members of the commission, in particular Threshold, the tenants' rights group, the Union of Students in Ireland and the St Vincent de Paul.
The failure to recommend some control on the rate of annual increases in rents and the lack of measures to deal with affordability condemns tenants in the sector to continual frequent and substantial rent increases
Then there are the conclusions of the commission, which clearly weren't unanimous.
These conclusions amount to a landlord's charter. They do not even begin to tackle the problems faced by renters. Instead the ethos of the report is a fear of upsetting landlords and having them withdraw from the housing market. We need to protect their property rights, their substantial profit margins. We should not burden them with regulations. Tenants' rights come a very poor second in nearly every aspect of this report.
The only sop to renters is the right to long leases and only one rent review a year.
The statistical aspects of the report make good reading. The centrepiece is the annual property survey of the Irish Auctioneers and Valuers Institute (IAVI). It shows that rents rose by 13% across the 26 Counties in 1999 and by 15% in Dublin. In some parts of Dublin, rent increases were up to 20%, that is four times above the wage increases offered to workers under the Partnership for Prosperity and Fairness (PPF) this year.
The IAVI survey found that the minimum monthly rent in Dublin for a one-bedroom unit at the end of 1999 was £500, with rents more likely to range from £550 to £650 and over £750 a month in more upmarket locations.
A two-bedroom unit in Dublin starts from £685 a month and rises to £900 a month. The rents for three bedroom semi-detached houses vary from £700 a month in the suburbs to £1,400 per month in some of the more upmarket areas.
The IAVI believe that the average monthly cost of private accommodation in Dublin is now averaging £300 per person.
The report shows that there were 43,000 tenants in receipt of rent supplement from the Department of Social Community and Family Affairs. In 1999, the department paid £100 million into the private rented sector subsidising rents.
The core of the IAVI survey and the report itself is found in the discussion in different sections of rent yields. This is the amount of money landlords make in profit from their investments.
The problem, according to the IAVI, is that landlords would see their rent yields fall if any form of rent control is introduced into the market. This takes no account of the fact that though a landlord might make small profits on a property bought and rented this year, the level of profit increases in subsequent years.
For example, house prices in Dublin have increased by over 90% over the last four years. Rents have increased by similar amounts. This means that a house rented for four years has seen the landlord benefit in two ways. One is that the value of the asset bought has nearly doubled and the profit from renting that asset has increased substantially very year. One of the glaring inadequacies of the report is that it takes no account of this simple fact in its conclusions.
Instead, we are blandly told that the commission's vision is for a ``vibrant, thriving, well managed and diverse sector which satisfactorily meets a range of housing needs, provides an adequate supply of secure, affordable, good quality accommodation''.
Kieran Murphy, the Director of Threshold, described the report as ``an inadequate response to the need for a fundamental reform of the private rented sector. The failure to recommend some control on the rate of annual increases in rents and the lack of measures to deal with affordability condemns tenants in the sector to continual frequent and substantial rent increases''.
The commission sides with landlord property lobby, saying that rents in the private sector should be ``the open market rent''. They recognise the hardship this creates but offer few real options as to tackling it.
The undealt with aspect of the report is what role should government play. Already, over £100 million is being paid annually into the bank accounts of landlords. This is money lost. Why aren't similar sums made available as part of a longer term strategy to fund housing associations, shared ownership schemes and most importantly the increase of quality housing developments built and run by local government.
The Commission never asks itself the simple question of would the housing market really be that worse off without private landlords. Many of the renters who have seen their rents spiral upwards in recent years would give an interesting answer to that question.
(Wexford Sinn Féin councillor's imaginate initiative to tackle the housing crisis. See Page 17)