From Socialist Voice, January–February 2009

A state bank is the only solution to the housing crisis

The latest statement by the chairperson of the Housing Committee of Dublin City Council, Eric Byrne (Labour Party), about the number of empty affordable houses not being taken up by buyers in Dublin, and his response to the proposal that they be used to house people on the waiting list, demonstrates how far this capitalist system is removed from meeting the needs of the people.
     Byrne’s response was that if these houses were given to people on the housing list, those who had already bought houses through the affordable-housing scheme might sue the city council, and the council could face a backlash generally from those who have bought private housing.
     The degree to which society has been corrupted in its thinking about how people are to live and how we should share the planet with our fellow human beings is evident most clearly in housing policy in Ireland. This is divided sharply on class lines, and has also been reflected in taxation policy for decades.
     Dublin City Council has €200 million in housing stock that has not been sold and is costing €333,000 a month in bridging loans and fees. Offers made to approved applicants are being rejected at a rate of up to 80 per cent since September last.
     Forty-three per cent failed to reply, 20 per cent said that the cost was too high, and many others said that the location was a problem. According to the council, the main reason they are not being bought is that they are not much cheaper now than private housing, and the council has a claw-back clause for use if an affordable dwelling is sold on within twenty years.
     This brings up the question of how people think of housing. Do they want a place in which to live securely, or do they want to think of their home as an investment? This is so dominated by a private-property ethos, and so deeply is this rooted, that discrimination against those who are not house-owners should be listed along with the other legally defined forms of discrimination.
     To suggest that someone could sue the city council if they rented the housing to people on the housing list is abominable. If such an unlikely event were to occur, legislation could be immediately enacted to protect the public authority. Dublin City Council is quite capable of asserting its authority, though only when it is directed against deprived people.
     Are they not afraid of being sued by the people conned into leaving city-centre public housing on promises of renovation by so-called public-private partnership deals that have collapsed? Are they not afraid of being sued by the people who were forcibly removed from communities in the inner city over the years, to housing estates far outside the city, with no facilities, instead of renovating the housing stock in the city?
     What they have been doing is facilitating their relatives and friends in the building industry—the same ones that have now bankrupted the country.
     Seventeen per cent of total housing stock was vacant in October 2008; and some economists say it is nearer to 20 per cent. Fifty-one per cent of new house purchases were for second homes last year. And to say “second homes” is understating the inequality, as some people have five, ten and more houses and apartments. Forty per cent of rental accommodation was vacant last November. Around the country there are partially built houses and apartments, abandoned by speculator-builders.
     All this is the result of greedy speculators and Government tax policy favouring holiday homes and the landlord class, and of course their building-industry friends. The result is a physical environment that is cheap and shoddy and will be a future nightmare.
     In Dublin, most of the second homes are for renting, and many are for the elite for staying in Dublin for football matches, parties, and meetings. Many are TDs and their families and pals; so do we really expect these people to care about the housing lists?
     It is well known that the housing boom resulted in low-quality housing being built by people who don’t care how other people live, in most cases sub-standard apartments with minimal space, no facilities, no storage, no soundproofing, and no local amenities. By contrast, the standard of newly built social and affordable housing has risen quite substantially. However, they have put many of these developments in remote, inaccessible places; hence the high rate of refusals, because of lack of amenities and the cost of travelling.
     When will this country rise above its ingrained hostile housing attitudes on grounds of class and begin to realise the value of integration, with mixed housing rather than social exclusion?
     An effort was made by the Government a few years ago to change this mentality, by requiring that 20 per cent of housing development be set aside for social and affordable housing; but it fell at the first sign of opposition. This 20 per cent was agreed with the developers at a discounted price. The Government then passed on the names of approved applicants to the developer; but if the developer didn’t sell them, the council had to buy them.
     This worked until the private market collapsed and the council had to buy them; and now they say that they can’t afford to keep this housing stock, as the loans are costing too much to repay. So they are going to be sold off, at massive discounts, to private buyers.
     The attacks on public services are always on the grounds of staff costs and the cost of public services; but no economist points at the bureaucracy of housing for the benefit of private property. Dublin City Council buys houses from developers at excessive prices, pays massive loans to banks, and pays service charges to other Government departments and private management companies, while all along it could build the houses directly, borrow from a non-profit financial institution, and rent directly to the people.
     A radical change in housing policy is the answer. This is where a state bank is the real alternative; and instead of the Government propping up rogue banks with billions of euros it could serve all the Government’s financial needs, secure our pension funds, hold our savings, give low-interest loans to other public agencies, such as for housing, and provide loans for local government. Credit unions and trade unions would know that their funds would be safe, unlike what is now happening to them.
     Are we going to allow publicly funded housing to be handed over to speculators rather than earn money for local councils and the Government? Workers are being called on to do their “national duty” and accept cuts in pay, while the shareholders of the banks are so afraid of any Government control that they are selling their shares even when they know this would ruin the bank, with shares now hovering at 33 to 47 cents instead of €22 to €23 in 2007.
     These are the people who we are supposed to look up to as leaders of the country, and whose view on how a society should run are an example. These are the speculators who describe falling house prices as a bad thing, with the news media continually reporting on falling house prices as a calamity.
     Falling house prices are a good thing for anyone needing housing! “Negative equity” is the buzzword. For those who have a home of their own it should be seen in a proper light as a home, and not an investment opportunity.
     A change in mentality about what is important to us as a society is needed. Unfortunately, because of corruption and speculation, average house prices rose from €62,000 in 1997 to €229,000 in 2006 (the 1997 price already double what it should cost), and as a result many people have unsustainable loan repayments, and now many are unemployed as well.
     A state bank, to which loans could be transferred and arrangements made in cases of difficulty, is the answer. The fact that a system of exorbitant house prices and bad housing policy has been operating for so long, causing many people to lose value on their houses, does not mean that a corrective policy cannot be undertaken. That is like saying that no social progress can be made because people previously have been damaged and it would be unfair in comparison with those who are now protected.
     The immediate solution is to use existing public housing for people on the housing list, and for the unions to fight against any public housing stock being handed to private speculators. The ICTU, SIPTU and Focus Ireland in a joint pre-budget statement called on the Government to build 18,000 housing units in 2009, at an estimated cost of €4 billion. They need to keep the pressure up and defend our public housing stock.
     The solution offered at the meeting of Dublin City Council on 20 January is a sop to stop criticism and opposition by proposing a completely wrong short-term solution. They are setting up a scheme with yet another Government department (Department of the Environment and Local Government) to temporarily house people on the housing list in these unsold houses—but only until they can be sold.
     One small example of where money can be found is that instead of paying €392 million to private landlords in rent subsidies for exorbitant rents last year, and more than €14 million paid in mortgage interest supplement, use this money for the public housing programme. A new tax on second houses would either bring in extra revenue or cause more houses to be sold, so making house prices lower and more accessible to people generally, and would reduce the total of 56,000 people on housing lists.
     As money is being thrown around so liberally to banks and financial robbers, this money would be better spent in buying suitable empty houses at discount prices for the state, and offering loans for public housing that reflect the real cost of construction.
     However, as with other reforms, a solution is limited that does not include industrial development outside Dublin, reform of urban land prices, and the curtailment of financial predators by offering state and county council alternatives.
[DUB]

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