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Right to buy means right for landlord to buy you out

The Thatcherite ‘Right to Buy’ has destroyed public housing in Ireland. ‘Affordable’ housing will do just the same

The myth that Irish people have a historically-rooted preference for home ownership is a long-standing cornerstone of Irish housing policy. The story goes that Irish people will always have an innate preference to own their homes, regardless of how attractive, secure and affordable renting is made.

In the middle of the country’s worst housing crisis, this myth has, extraordinarily, justified yet another round of Council-housing sell-offs, with the 2016 Tenant Incremental Purchase Scheme. Tenants are given a discount of up to 60% in the market value of their home, if they choose to buy it from the Council. It then disappears from Council stock and, a generation later, is sold onto the private market.

If there is limited evidence to support the myth that the Irish have an in-built preference for home ownership, what is clear is that government policy in the last half century has done everything in its power to grant preferential treatment to the purchase of homes.

What is touted as an ‘innate preference’ for home ownership has in fact been carefully incentivised and manufactured through decades of developer-driven housing policy.

Margaret Thatcher, Ireland and the ‘right to buy’

In 1980, British Prime Minister Margaret Thatcher passed legislation granting a legal right to all Council tenants in the UK to buy their homes. It was the culmination of her philosophy that the freedom to accumulate profit was the foundation of all human freedom. Speaking about the scheme in 1984, she said that “Spreading the ownership of property more widely is central to this Government’s philosophy, because where property is widely owned, freedom flourishes”.

Ireland 2018

Any freedom gained by those who managed to buy their Council home was temporary at best. As with all public goods that are privatised, Council-built homes were transformed into commodities to be bought and sold for profit. Now, it’s estimated that 40% of ex-Council homes are owned and let by private landlords.

The Tory Minister behind the scheme, Michael Heseltine, once said that the major victory of the “Right to Buy” scheme was “the transfer of so much capital wealth from the state to the people”. If by “the people” he meant “wealthy landlords” – then yes, he was probably right. Otherwise the darling of one-nation Toryism needs a rethink about his party’s victories.

Astonishingly, successive Irish governments’ commitment to selling off social-housing stock pre-dated, and has arguably always been stronger than even, Maggie Thatcher’s.

Provisions had been in place since the 1930s to enable tenants to buy their Council house in rural areas, and from 1966, with the introduction through the Housing Act of a nationwide ‘right to buy’, there was a surge in the numbers of publicly-built homes which were sold off.

As in the UK, the temporary benefits of home ownership have not provided security for further generations. Over time our housing stock, particularly in sought-after areas closest to the city, has been commodified just like the in UK. House built by the Council in places like Marino and Cabra regularly sell for €400,000-€500,000. Working-class estates are under threat of becoming gentrified enclaves.

Home ownership has never been affordable – so the State had to introduce schemes to make it so

A critical point justifying subsidies to home ownership is that they are designed to somehow rectify temporary problems in the housing market. Lack of affordability is blamed on a temporary market malfunction (for example, lack of adequate supply), and temporary extraordinary measures are deened necessary to enable access to that market.

In reality, however, these measures will be required forever – not just to rectify one-off market malfunctions. Michelle Norris has outlined how, in the 1960s, it was possible for a buyer to recoup up to a third of the purchase price of a house through various government subsidies. In the 1970s and 1980s, a hundred thousand Council-built houses were sold to tenants at knockdown rates, ostensibly as a way to make home ownership affordable.

And as recently as 2004, the National Economic and Social Council was highlighting that:“The high entry costs of home ownership have conferred advantages on those whose families have housing equity and disadvantages on those who do not have access to ‘parental gifts”.

Thatcher and Heseltine

In fact there has been no time when home ownership was ‘affordable’ in the sense of a majority of the country’s population being able to afford to purchase a home on the open market, unassisted by the government. Any ‘affordable housing’ initiatives delivered by this or future governments, will simply be the latest in a long cycle of state subsidies to the private market.

Is it a good use of money for the State to subsidise home ownership?

Fundamentally, what the debate about ‘right to buy’ and ‘affordable housing’ comes down to is whether it is a good use of public money to subsidise ‘home ownership’.

As debates and inaction over the housing crisis rage on, a demand for public housing is being gradually subsumed into a broad and amorphous call for “social and affordable housing”. The notion is that some people will always want to buy their own home, and that they have a right to State support equal to that of those who rent from the State in secure, affordable publicly-owned housing.

But what is being lost in this conflation of public housing and affordable housing, is that, unlike investment in public housing for rent, when the government subsidises ‘affordable home ownership’, the investment serves only one generation. The home can then be sold on to the chaotic, unjust and uncontrollable private housing market.

“Affordable home ownership” – whether through land, or through ‘right to buy’ schemes selling off Council houses – keeps the property market bubbling. It suits the developers, solicitors and estate agents who benefit from increasing house prices that the state funnels money into pushing more and more workers into that market. But it does absolutely nothing to tackle the housing crisis.

The real solution

When considering how we invest public money to tackle the housing crisis, we need to look beyond the immediate crisis, and towards solutions which prevent a recurrence of the crisis we are tackling.

Certainly, nobody will ever be satisfied to rent in the private sector, at the mercy of unaccountable landlords, and without any meaningful security of tenure. And equally, both the lack of public rental housing, and its low quality in recent years, make it an unattractive option.

But does that mean the only alternative is to subsidise home ownership? Absolutely not.

In many countries public housing is an attractive housing option, not just for those on low incomes, but for a majority. In Vienna, 60% of the population lives in some form of public and not-for-profit rental housing. What tends to characterise such a model is that public housing is open to all, not just the poorest, and that it is high quality and affordable. Often, it also includes the right to pass a lease down to one’s children. In other words, it provides exactly what those who want to ‘own’ their own home want – security, affordability and quality.

But because housing remains in the State’s ownership, these benefits accrue not to just to one generation, but to future generations also. It is certain that this is the model we all should be fighting for.

Éilis Ryan

Éilis Ryan is a Councillor for Dublin City for the Workers Party. She has proposed an innovative model of mixed income public housing for O’Devaney Gardens, and is a member of the Campaign for Public Housing.