Rory Hearne: No bright future for Generation Rent in Budget 2022

Investor funds will continue to laugh at us for another while yet, as this budget does nothing to stop house prices and rents rising further, writes Rory Hearne
Rory Hearne: No bright future for Generation Rent in Budget 2022

An apartment and retail building construction site in Bettystown.

The Minister for Finance says that Budget 2022 will deliver a brighter future for this country.

Unfortunately not for Generation Rent, potential home buyers, or those facing homelessness. The budget does nothing to stop house prices and rents rising further and will result in a worsening housing crisis.

The lack of a rent freeze means rising inflation and rents. The tax relief for landlords, while tenants received no such relief, was a harsh move by the Government. The global investor funds will continue to profit at the expense of Generation Rent. 

There was no controlling of caps on new rental properties from setting ever-higher market rents, the Real Estate Investor tax break remains in place, and apartments remain exempt from stamp duty measures.

At the height of an unprecedented housing emergency, the budget bizarrely reduces the number of new social housing units planned for 2022 compared to last year, from 12,750 new social homes (9,500 new-build) this year to a lower number of 11,820 new social homes (9,000 new build) next year.

The zoned land tax, despite the Minister for Finance’s claims, will benefit land speculators, as it reduces the current vacant sites tax from 7% of market value to 3%. The tax will also not be implemented for two years. Yet the housing emergency is now.

There was also no sign of a much-needed vacant homes tax to tackle the thousands of vacant homes and rental units investor funds are leaving empty.

On my podcast Reboot Republic this week, Mike Allen of Focus Ireland described the recent increase in homelessness and evictions in the private rental sector as something they “have never seen before”. 

 Focus Ireland director Of advocacy Mike Allen pictured outside Leinster House. Picture: Leon Farrell/Photocall Ireland
Focus Ireland director Of advocacy Mike Allen pictured outside Leinster House. Picture: Leon Farrell/Photocall Ireland

The budget did little to stop the flow into homelessness. It is spending close to €194m on homelessness, but that is mostly going to private, for-profit emergency accommodation provision. There is no increase in funding for the prevention of homelessness.

Why are we putting in place tax cuts when we need investment in homes?

How can we stand over cutting taxes when 2,189 children are homeless in this country?

The budget has also seen a reduction in the target of delivery for cost-rental housing. Housing For All promised there would be 2,000 cost-rental units produced each year, but now this target has been moved out to 2025.

Just 750 units are planned for 2022. The Land Development Agency is tasked with delivering 1,000, but it has stated that its first units will not come on stream until 2023.

There was no new capital funding for third-level institutes to rapidly build much-needed affordable student accommodation. Expect to see an even worse student housing crisis next September.

Housing minister Darragh O'Brien. Picture: Naoise Culhane
Housing minister Darragh O'Brien. Picture: Naoise Culhane

The plan is to retrofit just 2,400 social homes in 2022. At that rate, it will take 70 years to retrofit our entire 170,000 social housing stock. Surely we’re capable of a bigger response to the urgency of the climate crisis and reducing energy poverty?

Worryingly, there is also a return to austerity cuts for the most disadvantaged social housing communities. Funding for the regeneration of older social housing estates which have major problems of dampness, sewerage, and need complete rebuilding, was cut from €75m in 2021 to €50m for 2022.

The budget shows there is no substantive policy change away from the previous failed Rebuilding Ireland plan. 

In 2022, twice the amount of social housing will come from the private market through landlords, investors, and developers via the Housing Assistance Payment Scheme and social housing leasing than building of social homes by the State. Over a quarter of the entire housing budget is now going to landlords (including investor-fund landlords) in these schemes.

The budget is, once again, focused on incentivising the market, developers, and investor funds. Unaffordable house prices and rents remain Government policy. 

They want to keep rents and house prices high in order to attract institutional funds to build the ‘supply’. The assumption is this supply at some point in the far-distant future will reduce rents. But it is trickle-down free-market economics baloney. 

The investor supply is €1,900-a-month one-bed apartments. Institutional investors will not reduce their rents unless they are stopped and there is a sufficient alternative supply of affordable homes to rent or buy. 

This is where the real failing of the budget is. The Government should have borrowed an additional €2bn on top of the current capital allocation to directly build 10,000 affordable homes to rent and buy on State land. It has never been as cheap for the State to borrow, as economists in the ESRI recommended. 

Yet the Government refused, opting instead for a trickle of affordable homes directly delivered by the State so as not to upset the market and investors. It should have set up a State housing company to rapidly build up a capacity that would actually build affordable homes.

I was surprised to see no mention of Nama in the budget, which has paid off all its debt and is a fully State-owned agency. It has 577 hectares of residential development land, enough to build at least 80,000 homes. 

Why is Nama not directed to accelerate its building and sell its homes at affordable rates to home buyers, rather than investors at inflated prices? Because the Government does not want to disrupt the market.

Of total Government expenditure next year, less than 5%, will be spent on housing, showing the lack of priority for State-provided housing, and the over-reliance on the private market.

The Government appears wedded to a path that it will not diverge from, even though that path is utterly failing to provide affordable homes.

Their lack of willingness to even ruffle the feathers of the real estate investor funds is unacceptable. The investor funds will continue to laugh at us for another while yet.

The future Budget 2022 offers to young people and renters is emigration. It is certainly not a commitment to a bright future where you will be able to get an affordable secure home of your own. 

But Government has the tools available to end the housing crisis, if it wants to.

 Generation Rent and the wider public will not tolerate this crisis continuing.

Dr Rory Hearne is Assistant Professor in Social Policy Department of Applied Social Studies at Maynooth University

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