Victoria White: Home ownership weakens the building blocks of our society

Victoria White: Home ownership weakens the building blocks of our society
Locked-in: Houses are an economic asset and ownership creates ‘haves’ and ‘have-nots.’

We have a warped relationship with home ownership in this country.

We see it as a socialist stance to demand our own cabin rather than pay rent to the hated landlord.

But home ownership has always been pushed by right-wing politicians in English-speaking countries, from Margaret Thatcher to Boris Johnson to Donald Trump. (The latter, with the tweet, “We will bring back the American dream,” promised to restore home ownership levels.) The rush towards home ownership from the mid-20th century was partly an effort by Western governments to beat down communism.

Fianna Fáil and Fine Gael are typical of the “right-leaning parties” which incentivise home ownership because their survival depends on a new generation of home-owners, according to The Economist magazine.

Fine Gael describes itself as the party of “home ownership” while Fianna Fáil calls itself the party of “owning your own home”. Reading their manifestos, I keep imagining little Tories peering over privet hedges.

That’s not fair.

I’ve lived in communities of homeowners all my life, from deepest south Dublin to the heart of Dublin’s inner city, and I know how diverse homeowners are in this country.

I have been a homeowner for more than a quarter of a century and I have loved every minute of it. I know how much home ownership means to Irish people, because, like Éamon de Valera, I need only look into my own heart.

My head tells me a different story. It tells me that the benefits I had of being in the right place at the right time, with a mother who could front up some cash, deprived other people of a decent future.

Incentivising home ownership creates a society of have-homes and have-not-homes, an inequality that can never be bridged.

Home ownership is a currency. It’s not just that I can’t be put out of my home. Living at home in the city may fund some of my children through higher degrees, which may earn them higher wages. If they want to travel to study, I can rent out their rooms.

Of course, I fear they will never be able to afford to live close to me, but their chances will be enhanced if I sell my house and move into a small apartment, sharing out the extra cash between them for deposits.

The apartment may be the permanent home of my autistic son or it may fund my nursing care.

I look at the few friends I have who were never in a position to buy a home and my blood freezes. The only hope for them, in their old age, is charity. That’s not good enough for anyone.

To solve the housing crisis, we must aggressively tackle the inequality between renting and buying a home.

The Economist details how government support for home ownership has weakened the foundations of democracies by fostering inequality and homelessness.

It says the “mad dash” to create property-owning democracies, in the 1990s and 2000s, ended with “the global financial system on its knees”. Far from being part of the natural order, home ownership only took off in the rich world in the mid-20th century, as governments tried to stabilise their societies after the Second World War.

Home-ownership in itself does not lead to prosperity: Romania has home ownership of 96%, while Switzerland has 37.4%.

Home ownership is a massive drag on enterprise, because homeowners have no cash with which to take a punt and workers can’t afford to move to cities like London, New York, Sydney, or Dublin, where there is more work.

Sadly, creating a large class of homeowners also creates a large class of people who benefit if their asset — housing — is scarce. It also creates a large class of people who object if more housing is planned close to where they live.

As home ownership grew, peaking in the rich world around the year 2000 — America’s home ownership rate rose from 45% to 70%, the UK’s from 30% to 70% — rates of home-building tanked.

The Economist calculates that the rate of home-building across the rich world is half what it was in the 1960s.

Sorting the housing crisis, here or in the US or in the UK, must start with equalising renters and owners in the tax system.

Our most popular parties are proposing the opposite. Fianna Fáil’s homeowning manifesto promises young couples “a good quality home to start their families”, with the implicit message that you don’t start a family in a rental.

It backs this up with its astonishing SSIA-type scheme, which will gift up €1 for every €3 that home-seekers save for a deposit, up to a cap of €10,000. Only 25,000 households can apply annually, leaving anyone else out in the cold, facing higher house prices.

FF will also expand Fine Gael’s Help to Buy Scheme, which currently offers refunds on income tax and DIRT paid by homebuyers in the previous four years, up to a €20,000 limit, meaning “aspiring homeowners” might be gifted up to €30,000 in total.

In an attempt to compensate, FF will build 50,000 new social housing units and “affordable rental housing” for “average income households”, so reinforcing the existing three tiers of Irish society, with homeowners kings of their own castles.

Sinn Féin’s three-year rent freeze attracted wide support from opposition parties, but The Economist describes such interventions as “misplaced,” as rent control tends to lower investment in new construction.

Sinn Fein is suggesting a €1,500 refundable tax credit on rent expenses, but of the 100,000 new homes they promise to build, only 10,000 are rentals and 30,000 are homes-to-buy, while 60,000 are traditional social homes.

These are the three tiers again. And abolishing the property tax, as Sinn Féin proposes, will reinforce them.

Instead, I think the next government should build rental housing on State land, so that the rent covers the cost of construction within 20 years — so-called cost-rental. Tenants need security of tenure (for which we need legislation), but also low house-price inflation (which would mean that keeping a tenant in a home is a landlord’s most rewarding strategy).

To unlock the large amounts of under-used State land in our cities, our planning laws should be reformed to counter the Nimbys like me who don’t want to lose an inch of green space.

In Germany, where local objection can’t overturn what is deemed good planning, twice more homes have been built since 1950 than have been built in the UK.

I am not suggesting that people like me should be put out of our homes, but our asset should be taxed, so that the renter in the A-rated home that is built, despite my objections, on the green space nearby, envies me nothing.

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