lff12

NB LA=local authority, not the place in Southern California!!

I was reading today in the NYT a short piece on the problems that NYC landlords face with regard to rent controls.  Its relevant to Ireland because although we booted rent controls more than 30 years ago, under a piece of legislation that still impacts a very tiny number of tenants, effectively the SWA rent subsidy scheme is acting as a form of rent control, albeit for a socially marginalised and financially deprived (in some cases wilfully) tenant body.  There is a secondary effect on a class of tenant that probably includes myself, an above average earning tenant who for whatever reason cannot access purchasing, can afford what is obscenely described as "market rents" despite being well above the realistic disposable incomes of most tenants without bundling up, but chooses a lower standard of residential property due to cheaper rents.

This is the group that the NTC landlords associations are particularly moaning about - people who are living in rent controlled properties but can afford not to.  Yet what it doesn't add is how many of these folks may have started out as more needy tenants.  What is astonishing about the NY system is that effectively, most tenants would need to have been living in the building since 1993 at least if they are to qualify for rent controls already in place on the building and under a certain income threshold, while non-income related thresholds must be living there since 1971.

What this effectively means that for a "wealthy" person to still be under unconditional rent control, they need to have a tenancy dating back to 1971.  In all honestly, this would mean they would have to be at 59 years of age.

This would indicate to me that most rent controls are going to start dying off with the tenants over the next 20 years, living only the income related group, who themselves will start dying out 20 years later.

So it appears to be that the landlords are whinging about something which is really only a temporary situation and likely to change dramatically in the future.  Most genuingely rent controlled tenancies involve elderly tenants who are likely to die off and so the tenancy with them.  The reality of this artificially engineered situation does the raise the question of how rent control can possibly be blamed for housing shortages in NYC over the last 10 years when clearly it is not impacting new developments or tenancies.

Lets shift over the Atlantic to Ireland where there is a similar situation that has developed via the highly destructive influence of rent subsidies to tenants who normally would have gone into social housing up to the early to mid 1990s when local authorities effectively ceased building new social housing developments.  At some point along the way it was established legally that the responsibility to put a roof over the head of the homeless was not local authorities, but the then Health Boards (now the HSE).  So effectively this permitted the LAs to bow out of building new properties, ironically making it far less attractive financially since restrictions on the level of LA tenancies would force down the quality of new tenants to only the move impoverished and desperate in society, thus eroding the value of rents paid and hiking up the cost of new tenancies as existing tenants exercised their right to purchase their homes at discounted values.

Homelessness thus escalated in Ireland in response to a requirement for "desperation only" in order to qualify at any reasonable length of time in the cities for social housing places.  I certainly have seen lots of people who have engineered themselves into situations of total desperation in order to access social housing - indeed its an accusation constantly inflected against the lone parent community, who have little other choice than to remain on welfare until they are housed as market rents simply remain impossible for them to pay.  Some of those who do this follow it up by qualifying for higher education, where curiously enough they then qualify for better jobs than the vast majority of private rented sector tenants generally have.  But because there is now a ceiling on their rents, they are able to earn as much as they can while paying as little as 40% of the market rent.  This is particularly prevalent in newer housing association developments, which tend to house more single tenants without dependants.  Such organisations will no doubt claim that they've enabled such people to climb out of poverty, but there is a question as to how many such tenants have deliberately depressed their living standards in order to qualify for housing in order to qualify for long term cheap rents, in a similar situation to NY rent controls?

This is becoming a much bigger political hot potato as previous records for net unemployment are being smashed monthly - when I left university for the first time in 1994, unemployment stood at what was then considered a shameful all time high of 300,000 claimants.  Now the figure is 400,000 (albeit with population growth).  However the overall figure is expected to climb to 500,000 due to catastrophic job losses, I would suggest, often engineered by generous subsidies for statutory redundancy payments and a system that enables the positions to be reinstated 3 months later at whatever deflated salary the employer so wishes.  I think in the short to medium term this will result in dramatic falls in average wages in the private sector exacerbated by genuine job losses due to loss of spending power of those newly laid off.

The other sadder side of the housing crisis - which is and remains a crisis, is not only appallingly poor standards in the rented sector, and abysmal standards in LA housing, but deflation of much of the existing housing stock due to hyperinflation of land values due to a lack of proper controls on a range of malpractices such as "rezoning" of lands designated as agricultural in order to inflate values, poorly controlled lending practices at all levels, poor implementation of planning guidelines and an appalling failure to cater for infrastructure needs.  Worst of all was massive tax breaks for a range of developments including holiday homes, redevelopment of areas considered low demand, and absence of any kind of real property tax.  Add to this non implementation of what are very, very basic rental standards and here is your disaster.