Context for Reform of the Private
Rented Sector
Rory O’Donnell, NESC
Generation Rent : the Future of the Private Rented Sector in
Ireland
Threshold, RIA, 16 June 2015
Three Major Policy Advances
1. Goals of housing policy
2. Scale & nature of the challenge
3. Social Housing Strategy
Three Major Policy Advances
1. Goals of housing policy:
• Affordability
• Sustainability
• Inclusion (SHS, p. 17)
2. Scale & nature of the challenge
3. Social Housing Strategy
Three Major Policy Advances
1. Goals of housing policy
2. Scale & nature of the challenge:
‘one-quarter to one-third will find
it increasingly difficult’ (SHS, p. 17)
3. Social Housing Strategy
Three Major Policy Advances
1. Goals of housing policy
2. Scale & nature of the challenge
3. Social Housing Strategy
–Resumed supply & Task Force
–Promise policy to manage Buy-to-Lets
–Promise policy for private rental sector
Four NESC reports 2014-15
1.
2.
3.
4.
Social Housing at the Crossroads: Possibilities for
Investment, Provision and Cost Rental
Homeownership and Rental: What Road is
Ireland On?
Ireland’s Rental Sector: Pathways to Secure
Occupancy and Affordable Supply
Housing Supply and Land: Driving Action for the
Common Good (forthcoming)
Understanding Ireland’s Changing Tenure Mix
• The long-run role of policy & credit availability
• Recent role of housing bust & credit freeze
• The advantages of homeownership over rental
- given Ireland’s housing & rental system
• Role of rent supplement & housing supports
• Uncertainty facing tenants, landlords, investors
& public actors
It’s systemic not just conjunctural & sectoral
Homeownership
Rental
• Developers claim its not
profitable to build at
current prices
• The price at which it will
be profitable to build will
not be affordable for
many
• Landlords claim a loss at
current rents
• The rents & regulations
at which investment will
be profitable will be
unaffordable &
unattractive to many
What links these is the unstable, landdominated market & failing supply system
The Current Dualist Framing
Rent Control
OR
Incentives for
Developers/Investors
The Current Dualist Framing
Rent Control
OR
Incentives for
Developers/Investors
Need policy on both fronts
From rent control to secure occupancy
and
From ad hoc incentives to coherent supply-side
subsidies with conditionality
Secure occupancy
and
Supply-side supports
with conditionality
Putting Secure Occupancy & Incentives in a Wider Context
Active land & housing supply management
Secure occupancy
and
Supply-side supports
with conditionality
Supply-side subsidies with conditionality
Putting Secure Occupancy & Incentives in a Wider Context
Active land & housing supply management
Secure occupancy
and
Supply-side supports
with conditionality
Permanent, affordable, rental as a guiding framework for conditional
supply-side subsidies
Enhancing the Role of the Private Rental Sector: the Elements
Active land & housing supply management
Secure occupancy
and
Supply-side supports
with conditionality
Permanent, affordable rental as a framework for conditional supplyside subsidies
Social Housing
Expansion
Resolution of
Buy-to-Let
Arrears
From rent control to
secure occupancy
Secure occupancy
• Market-sensistive rent
regulation
•Make leases indefinite
•Sale no longer ends a
tenancy
•Improve dispute resolution
and
Supply-side supports
with conditionality
From rent control to
secure occupancy
Secure occupancy
•Market-sensistive rent
regulation
•Make leases indefinite
•Sale no longer ends a
tenancy
•Improve dispute resolution
and
Supply-side supports
with conditionality
•Affordable housing for
intermediate households
•Student & elder housing
•Tax reform of rental income
•Vacant space
•Reducing cost of construction
Pathways to Permanent Affordable Rental
Housing
Pathways to Permanent Affordable Rental
Housing
A strategy that is more than the sum of its parts
Interdependent Elements of a Housing Policy
Direct Public
Influence on Supply
Regulation &
Cost
Finance
Housing market & rental system are related
•
•
•
•
•
•
•
Dualist & Speculative
Unstable prices
Rents rise with asset price for
regulatory & market reasons
Tenants are involuntary &
temporary
A ‘housing ladder’
Pressure to borrow, lend & give
demand subsidies
Landlords motivation is capital
gain as much as income stream
They need flexible tenure to
achieve capital gains
•
•
•
•
•
•
•
Unitary & Land Managed
More stable prices
Predictable rents for regulatory &
market reasons
Tenants are voluntary & longterm
Less ‘housing ladder’
Finance less housing-based,
reliance on supply-side policy
Landlords motivation is income &
long-term asset security
They can bear long tenancies &
predictable rent uprating