# HAP pushes up the rent for private renters



## Brendan Burgess (30 Jul 2021)

HAP led to increase in rental market competition – report
					

Many forced to rent as they can no longer afford to buy, finds KPMG report




					www.irishtimes.com
				




_HAP has also resulted in a greater level of competition among renters, as councils are placing those eligible for social housing in the private rental sector.

...

“This level of competition has steepened since 2016 with the introduction of the government Housing Assistance Payment scheme which has sought to deliver up to 40 per cent of its social housing requirement through the PRS,” the KPMG report said._


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## jpd (30 Jul 2021)

How could it not have? - honestly, do we really need expensive reports to show up this kind of information


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## Purple (30 Jul 2021)

While the well meaning bang on about so-called vulture funds etc the number one "bad guy" pricing working people out of the housing market is the government. The irony is their own taxes are being used to price them out. 
As usual in this country we are having the wrong conversation, shooting at the wrong target. The State shouldn't be using public money to buy existing homes for public housing. Public money should only be used for specific projects which are built from scratch by the State. 

The rental side is, of course, a bigger problem where the State used public money to put a floor in the rental market, competing with private renters  and again using their own money to price them out of the market.


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## The Horseman (30 Jul 2021)

Purple said:


> While the well meaning bang on about so-called vulture funds etc the number one "bad guy" pricing working people out of the housing market is the government. The irony is their own taxes are being used to price them out.
> As usual in this country we are having the wrong conversation, shooting at the wrong target. The State shouldn't be using public money to buy existing homes for public housing. Public money should only be used for specific projects which are built from scratch by the State.
> 
> The rental side is, of course, a bigger problem where the State used public money to put a floor in the rental market, competing with private renters  and again using their own money to price them out of the market.


I agree but I think we have a much deeper and fundamental issue in our housing policy. 

Look at council estates of the past (and even now) where they are tarnished because of a minority of troublesome people. The States unwillingness to deal with these situations are playing a part in the housing crisis. 

Look at our reluctance to evict non paying mortgage holders, tenants both private and social. 

The State should be building houses directly but they don't want to charge a reasonable rate and don't want the hassle of managing rentals. 

Until we actually have a practical discussion about housing the situation is not going to change. We need to leave emotions out of the topic if we are ever going to improve the situation.


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## Zenith63 (30 Jul 2021)

I agree with the headline, HAP has certainly driven up prices.  However that doesn't mean HAP is a bad thing.  HAP would not be driving up prices in any meaningful way if there were simply more properties available, which is the root of most of the problems we're facing in the housing market at present.

We've repeated the same mistake of creating areas where we house disadvantaged families in clusters over and over.  Multiple studies have shown that if you mix disadvantaged families in with more privileged families they have better outcomes for themselves and ultimately society.  It's just common sense really; if you're a kid walking to school and you see people in your area dealing drugs or sitting on a couch in the front garden vs. walking through a well maintained neighbourhood with none of those issues you will have totally different role models and aspirations.  HAP is an effective way of facilitating this.

There is certainly an issue around enforcement against anti-social behaviour in certain cases.  It is not fair for somebody to put all their life savings and commit to 30 years of debt to buy a property and find they are living beside individuals who cause trouble for them, devalue their property etc.  But throwing HAP out the window and building ghettos is not the way to deal with this issue.


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## Purple (30 Jul 2021)

Zenith63 said:


> I agree with the headline, HAP has certainly driven up prices.  However that doesn't mean HAP is a bad thing.  HAP would not be driving up prices in any meaningful way if there were simply more properties available, which is the root of most of the problems we're facing in the housing market at present.


Yep, it's all about supply.


Zenith63 said:


> We've repeated the same mistake of creating areas where we house disadvantaged families in clusters over and over.  Multiple studies have shown that if you mix disadvantaged families in with more privileged families they have better outcomes for themselves and ultimately society.  It's just common sense really; if you're a kid walking to school and you see people in your area dealing drugs or sitting on a couch in the front garden vs. walking through a well maintained neighbourhood with none of those issues you will have totally different role models and aspirations.  HAP is an effective way of facilitating this.
> 
> There is certainly an issue around enforcement against anti-social behaviour in certain cases.  It is not fair for somebody to put all their life savings and commit to 30 years of debt to buy a property and find they are living beside individuals who cause trouble for them, devalue their property etc.  But throwing HAP out the window and building ghettos is not the way to deal with this issue.


In one of the least densely populated countries in Europe one has to wonder why we have amongst the most expensive houses. We have larger households, lots of land and a large construction sector. Not only is the State pricing people out of the housing and rental markets but the general incompetence of the State, both the government we elect and the permanent Government who actually run things, is, I think, the root cause of the problem.
We don't have a single database showing who owns what property and what they are worth.
We have no functioning method of accurately calculating property taxes.
It takes years, sometimes decades, to build homes.
Because of our grossly inefficient public sector we have to charge high levies on new builds.
Because of our grossly inefficient public sector we buy existing and privately supplied new build houses and apartments out from underneath private purchasers instead of building new ones. 
Because of our grossly inefficient public sector we rent existing and privately supplied new build houses and apartments out from underneath private purchasers instead of building and renting out new ones.
Because NAMA purchased land from hundreds of bankrupt developers and then sold off large portfolios to a small number of large companies there is effectively an oligopoly controlling the supply and therefore the price of development land.
Because of our grossly inefficient and incompetent public sector and government we seem unable to use our laws and tax code to correct that problem.


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## NoRegretsCoyote (30 Jul 2021)

Zenith63 said:


> We've repeated the same mistake of creating areas where we house disadvantaged families in clusters over and over.


This is a bit of a myth. Lots of all-social housing developments have high levels of social cohesion and resident satisfaction.

What happened is that many councils kept certain estates for the really bad residents.

I went to school with kids from about a dozen council estates. Only one or two estates had serious anti-social behaviour and drug problems. The rest were perfectly fine places to live and visit.


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## Shirazman (31 Jul 2021)

Purple said:


> Yep, it's all about supply.
> 
> In one of the least densely populated countries in Europe one has to wonder why we have amongst the most expensive houses. We have larger households, lots of land and a large construction sector. Not only is the State pricing people out of the housing and rental markets but the general incompetence of the State, both the government we elect and the permanent Government who actually run things, is, I think, the root cause of the problem.
> We don't have a single database showing who owns what property and what they are worth.
> ...



A bit of a long shot here, but I'm picking up the vague vibe that you're not over-impressed by the performance of our government or public sector.     Join the club!  

But have you any constructive or viable suggestions as to how the problem could might be tackled?   Because, with all due respect, hiding behind a wall and throwing custard pies at passing public servants may be cathartic, but it isn't really going to solve anything.


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## lff12 (5 Aug 2021)

Brendan Burgess said:


> HAP led to increase in rental market competition – report
> 
> 
> Many forced to rent as they can no longer afford to buy, finds KPMG report
> ...


This is pretty much back to Tony Fahy's 2003(4?) ESRI article suggesting that the real problem with the housing purchase market was desperate tenants trying to escape a more expensive rental sector (on the grounds that tenants pay more for the same kind of property).

The other pieces of evidence here is that on the rare occasions that welfare assisted tenancies have had cutbacks made to the maximum levels of payments, there has been a very sudden fall in rents - happened around 2003 and again I think circa 2011. Rental assistance schemes have a habit of setting a floor on rents because landlords know the minimum they can get from *any* tenant and price it up accordingly.


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## AlbacoreA (5 Aug 2021)

I think we have short memories. 

It was the banks and developers, (the private sector) encouraged by the govt of the day that brought the country to its knees during the Celtic Tiger. Before this we, along with a lot of European countries out sourced our social housing, and sold off the housing stock.
Following the crash, banks and developers were risk adverse. The supply of housing has never recovered from this. On top of this we went from net emigration to net immigration. So more people less supply. Trying to recapitalize the economy, the govt policies are designed to attract foreign investment into property here, and multinationals, so more people. More pressure to inflate property. They don't really want more supply, as that would drop the value of property. So hence they do little about encouraging supply. 

After all that, HAP is a side show. LL in general don't want HAP tenants. Which is why they had to legislate so that LL couldn't refuse it. What setting the floor is not HAP. Its supply, and specifically supply at the lower end of the market. As REITs and such are mainly focused at the top end of the market where the big profits are. As supply dries up they are moving down the market. HAP might be another prop to all this circus. But its not the main cause. Rental assistance schemes have to compete with market rate. The market rate is set by the private sector. 

The public sector implements policy. For all its many faults its not the driver of this bus.


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## AlbacoreA (5 Aug 2021)

Shirazman said:


> A bit of a long shot here, but I'm picking up the vague vibe that you're not over-impressed by the performance of our government or public sector.     Join the club!
> 
> But have you any constructive or viable suggestions as to how the problem could might be tackled?   Because, with all due respect, hiding behind a wall and throwing custard pies at passing public servants may be cathartic, but it isn't really going to solve anything.



You have to look how places like Austria tried to keep housing affordable. I'm not saying it worked but it was trying to keep the heat out the market. https://www.equaltimes.org/can-vienna-s-model-of-social#.YQs5PohKiUk


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## lff12 (5 Aug 2021)

AlbacoreA said:


> I think we have short memories.
> 
> It was the banks and developers, (the private sector) encouraged by the govt of the day that brought the country to its knees during the Celtic Tiger. Before this we, along with a lot of European countries out sourced our social housing, and sold off the housing stock.
> Following the crash, banks and developers were risk adverse. The supply of housing has never recovered from this. On top of this we went from net emigration to net immigration. So more people less supply. Trying to recapitalize the economy, the govt policies are designed to attract foreign investment into property here, and multinationals, so more people. More pressure to inflate property. They don't really want more supply, as that would drop the value of property. So hence they do little about encouraging supply.
> ...


To be fair I think the second the state indemnified and took state interests in Anglo in particular, this was hard to avoid without huge effort - effort that never even started - as the states interest then became conflicted between reflating the property bubble of 2007 in order to reimburse the exchequer to pay for the costs. That's a massive conflict of interest. It manifests itself most obviously in the state switching from capex to opex in long leasing of housing rather than direct/contracted builds, but ultimately its made itself more dependent than ever on the profit of the housing market and made the interests of the construction sector its own. The taxpayer who doesn't own property is the loser here. All that's happening is that the interests of the sector are concentrated in different hands - institutional ones. It doesn't help that for years people were promised of the need to institutionalise housing rentals - it could have been done by demanding social returns from NAMA & tying REIT taxation to be conditional on submarket rents & funding of lower cost building for the retail market.
We have a messy market that is totally consumer unfriendly. But its unfriendly in a different way than it was in 2006.


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## AlbacoreA (5 Aug 2021)

I would agree that a good opportunity to restrict the property market to sustainable growth across all types of housing was lost with Nama and REITs.


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## lff12 (5 Aug 2021)

AlbacoreA said:


> I would agree that a good opportunity to restrict the property market to sustainable growth across all types of housing was lost with Nama and REITs.


It could have been different, but the state's "interest" was always in maximising the value of the NAMA portfolio and this inevitably would come at the expense of non owners and taxpayers (regardless of ownership status) alike.


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## AlbacoreA (5 Aug 2021)

I don't think they did that. They seemed to sell off property below market cost, even below what local authorities were offering, in order to get a fast sale. When a fast sale wasn't required at all.  If local authorities had acquired these properties they would have delivered value to the state for a very long time. Instead they were sold off cheap, leaving the local authorities to buy or rent properties at the market rate and above.


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## NoRegretsCoyote (5 Aug 2021)

AlbacoreA said:


> I don't think they did that. They seemed to sell off property below market cost, even below what local authorities were offering, in order to get a fast sale. When a fast sale wasn't required at all.  If local authorities had acquired these properties they would have delivered value to the state for a very long time. Instead they were sold off cheap, leaving the local authorities to buy or rent properties at the market rate and above.


This is a myth. Nama offered about 7,000 properties to local authorities, which took just under 3,000 of them.

45% of Nama's portfolio was outside Ireland. From what I can tell about 15% of it was residential.  There were never unending rows of semi-Ds available to Nama to provide to local authorities.


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## Thirsty (5 Aug 2021)

What is interesting is the number of countries around the world who state they have a 'housing crisis'; either its a global issue or other countries has a different view on what consitiutes a 'crisis'


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## AlbacoreA (5 Aug 2021)

I didn't mean all the properties were suitable for housing, or local authorities. Just that I don't think they maximized the value of the portfolio.

The example of local authorities, was just one example. There were others sold to developers that seemed very cheap. 

We can see local authorities buying very expensive properties due to the lack of supply. its just hard to rationalize that. I know when I was selling property, the local authority was paying market rates. But the downside their process was much slower than just selling to a private buyer. Perhaps the reason Nama sold elsewhere.


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## NoRegretsCoyote (5 Aug 2021)

@AlbacoreA 

Over the years Nama has been criticised for selling its portfolio both too quickly and too slowly!


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## AlbacoreA (5 Aug 2021)

Its not impossible for both to be true


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## Purple (11 Aug 2021)

Shirazman said:


> But have you any constructive or viable suggestions as to how the problem could might be tackled?   Because, with all due respect, hiding behind a wall and throwing custard pies at passing public servants may be cathartic, but it isn't really going to solve anything.


Nope, there’s no easy fix. There’s a global shift in wealth from labour to capital. It’s been going on since the 1970’s but it’s really taken off since the worlds central banks started printing money after the last crash. The post COVID stimulus will probably make it worse. We are a small ship floating in a global ocean. All we can do it run our ship as best we can but our best falls far short of the mark. 
it would be a good start if we just acknowledged the problem, recognised that the haves and the have nots are those who own property and those who don’t, not those with high incomes and those on low ones.


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