Irish Examiner view: Beware of the law of unintended consequences
CSO data shows 29,851 residential units were completed in 2022. This includes 9,148 built in the fourth quarter of the year. Picture: Andrew Matthews/PA Wire
The law of unintended consequences has been with us for at least three centuries, ever since economics began to present itself as a satisfactory career choice for people who couldn’t make or grow things. But nowhere is it more prevalent at the moment than in the vexed sector of housing and, particularly, the rental market.
Strengthen the rights of tenants and you stimulate an appetite among smaller landlords to be rid of the whole fatigue of intervention and regulation.
Increase the tax take on their returns and you accelerate their departure. The unintended consequence of changing the ratio between responsibilities and incentives is that there are fewer homes to let.
It remains to be seen how the good intentions behind Government plans to restrict Airbnb and other short-term lettings pan out.
The draft bill will oblige such properties, including those offered through online platforms, to be registered with Fáilte Ireland. This, the Department of Housing hopes, will facilitate 12,000 homes into long-term availability.
Not everyone agrees. Fianna Fáil senator Malcom Byrne told the Oireachtas tourism committee the new legislation would have a “devastating impact in rural and coastal areas” as not all properties are suitable for long-term rental.
He said: “There are lovely beachfront properties in Wexford that are beautiful in July and August, but you don’t want to be living in them in January.”
It is true that many vacancies are in family homes, often for limited periods during the festival season, and would not add to the wider stock of property.
The Irish Self-Catering Federation claims the reforms “will kill thousands of tourism jobs across rural Ireland while also putting thousands of small accommodation providers out of business”.
Ireland’s ability to build new homes is outstripped by the growth in demand. Research published in January indicated that the Republic requires between 42,000 and 62,000 each year — the current average annual target is 33,000.
CSO data shows 29,851 residential units were completed in 2022. This includes 9,148 built in the fourth quarter of the year.
Ireland is by no means alone in seeking additional regulation of the temporary sector.
In Britain, holiday homeowners will be forced to get planning permission from local councils to let their properties. Ministers are consulting on whether there should be a grace period of 30, 60, or 90 days lettings per annum before an application is required.
The ultra-flexibility on where to live and work enjoyed by some citizens was highlighted in an article in the that debated the sometimes mixed benefits of being able to operate from anywhere you can pitch your laptop.
Dave Cook, a PhD candidate in anthropology at University College, London, pointed to the impetus provided by covid-19 in stimulating appetites for working remotely and asked whether this was accelerating gentrification.
While 16.9m US citizens identify with the millennial classification of “digital nomad”, research suggests another 72m are considering making the switch.
Mr Cook said that percentages across the world could be similarly high and asked whether the cheaper living costs this trend has brought to those able to capitalise comes with a downside for others. The “others” in this case being the locals.
He concludes that the rise of “professional” short-term-let landlords is helping to price them out of their homes.
The purchasing power of the beneficiaries of what has become known as “the circular economy” can also distort the experiences of people traditionally resident in areas that are seen as desirable, such as the fine city of Lisbon where a low cost of living and clement climate are attractive for a mobile workforce enjoying remote corporation pay scales.
Mr Cook warned: “For some nomads, this is an essential life-hack. For others, it represents the polarising reality of globalisation: That the entire world should operate as an open, free market. To many, it is unethical.”
There is certainly an argument that parachuting into someone else’s parish can display selfishness and a deep lack of self-awareness, both increasingly modern traits.
The problem for politicians when they legislate to offset impacts is whether they will make things worse or better. History will be the judge, but care must be the watchword.
