How did it come to this? The powers-that-be have decided to lift the eviction ban as working families face homelessness. We simply do not have enough housing for our population – never mind the influx of refugees. The housing crisis is not new, it is exacerbated at the moment, but not new. An Irish Times January 2020 analysis of the housing crisis shows housing and rentals have been largely unaffordable over the past decade, completely outstripping income levels with the exception of a couple of years.
With this enduring level of pent-up demand for housing and rentals, why on earth are we not building more houses? Why are there so many long-term abandoned properties. Some 48,387 properties were identified as abandoned in both the 2016 and 2022 census. Why aren’t the wealthy in Ireland investing in Irish real estate?
Why are we finding ourselves in a situation where we, as a nation, are struggling to incentivise building, buying and investing in property?
We keep on hearing that there is no quick fix for this mess. I disagree. I think the government has found the solution and implemented it with resounding success. I refer to the Offer a Home Accommodation Recognition Payment (ARP) scheme for housing Ukrainian refugees. According to the Department of Social Protection, 5,558 properties are currently participating in this programme. Ours is one of them.
We inherited the family farm in 2010, but lived elsewhere at the time, which left a perfectly good farmhouse vacant. Initially we wanted to renovate it, sell our own house and move there. A few meetings with our local planning office put paid to that idea. Our plans and ideas were shot down. I understand the need to safety regulations and some oversight of scale and sympathy with the surroundings, but the level of detail and demands involved approving the size and placement of windows and external finishes. Regulatory over-reach doesn’t begin to cover it. It seemed we either built the house the planning office wanted or none at all. So the farmhouse remained empty. We thought about renting it, but between the cost of renovations, the tax take on any rental income and the difficulties of removing tenants in Ireland, we opted out.The farmhouse remained empty.
When the ‘offer-a-home’ scheme was announced, my husband and I did not hesitate to ready the farmhouse for a family. The previous barriers to renting the farmhouse disappeared with this programme. An inspector came to ensure that the utilities were all working and the house was clean and in good order. From there, the license agreement stipulated that both the tenant and landlord could discontinue the agreement with a few weeks notice without penalty. The ease of entry and exit were the primary motivating factors in deciding to join the programme. The fact that the accommodation payment is tax-free, means less administrative burden and nearly as much income as we would earn after tax renting it on the open market. We are both delighted that the farmhouse is occupied again. It’s a huge relief to see it lived in. We are also blessed with a lovely family and have enjoyed helping them settle in.
The question is, why isn’t this policy part a the national solution to the housing crisis? The planning, regulatory, tenancy and tax policies involved in both building and entering the rental market are prohibitive for the vast majority of the population. Everyday people inherit properties. Normal people who have jobs and families and busy schedules. Small investors with a little extra cash can, theoretically, buy or fix up a property for rental. Traditionally, putting extra cash into a second property and earning rental income was a standard playbook for cautious investors. Traditionally, being a small landlord was worth the investment of time and money and resources. Not in Ireland, not any more.
Unless you are buying or building your own family home, you’d have to be nutter to invest the time, energy and financial resources to enter the property market as a small landlord. First there is the planning process, which is prohibitively expensive and time consuming. A conversation with anyone that has survived it will tell you that it can be a torturous often years-long process. It is a major barrier to investment in building or renovations for an average investor.
Secondly there is a landlord problem. The tax and tenant’s rights regime in Ireland is stacked against you. If you have enough extra funds to buy a second property, chances are you are in the highest tax bracket and you’ll be paying the government 50% of any rental income you receive. That’s starts to look like chump change when weighed against the risk of poor tenants. If you have any issues with your tenants, whether it’s lack of payment, anti-social behaviour or property damage, hard luck. The difficulty of removing tenants in Ireland is prohibitive to small landlords.
Housing is like any other industry Ireland is looking to encourage and attract. It is worthy of tax incentives, support and certainty. When houses were needed in a hurry, the government knew exactly how to get the supply going – slash tax and regulatory barriers. A family building their own home or investing in a rental property should be supported and encouraged in the same way. As it is they are micromanaged, hassled and bled dry with planning regulations, fees and taxes with the risk of being saddled with terrible tenants. Property is only an attractive investment if it is actually yours. The right to manage your own private property is what is at stake here. Housing doesn’t need more regulation or government interferences. It needs much, much less.
Clare Frances, MBA, Msc. Applied Social Research writes from Wicklow on the nexus of social research and public policy. You can find her on the People’s Guide to Research on Substack.