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The Irish Housing System a Critical Overview

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The Irish Housing System a Critical Overview THE ECONOMIC AND SOCIAL RESEARCH INSTITUTE P7 THE IRISH HOUSING SYSTEM O A CRITICAL OVERVIEW rn ~r T. J. BAKER and L M. O’BRIEN O m BROADSHEET No. 17 APRIL, 1979 ° L THE ECONOMIC AND SOCIAL RESEARCH INSTITUTE COUNCIL 1978-1979 "T. K. WH]TAKER, M.SC. (ECON.), D.ECON.SC., LL.D., President o/ the Institute. " *J. F. MEENAN, M.A., B.L., Chairman o/the Council. R. D. C. BLACK, PH.D., Prolessor. Department of Economics, The Queen’s University, Belfast. F. B. CHUBB, M.A., D.PHIL., Professor, Department of Polltical Science, Trinity College, Dublin~ SEAN CROMIEN, B.A.,~Second Secretary, Department of Finance. G. DEAN. M.D., F.R.C.P.~ Director, Medico-Social Research Board. N. J .GIBSON, B.SC. (ECON.), PH.D., Prolessor, Department of Economics, The New University of Ulster, Coleraine. PATRICK A. HALL. B.E., M.S., DIP. S’FAT., Director of Research, Institute of Public Administration. *W. A. HONOHAN, M.A., F.I.A. THE MOST REV. JAMES KAVANAGH, M.A., S.T.I -~ Bishop of Zerto. *KIERAN A. KENNEDY, M.ECON.SC., B.PHIL, PH.D., Director o/ the Institute. IVOR KENNY, M.A., Director General, 5rtsh Management lnatltute. MICHAEL J. KILLEEN, B.A. (MOD.), B.COMM., D.P.A., Managing Director, Industrial Development Authority. T. P. LINEHAN, B.E., B.SC., Director, Central Statistics OHice. *P. LYNCH, M.A., M.R.I.A., Professor o/ Political Economy, University College, Dublin. CHARLES MCCARTHY, B.L., Chairman, Human Sciences Committee. *EUGENE MCCARTHY, M.SC.(ECON.), D.ECON.SC., Federated Union of Employers. *M. D. MCCARTHY, M.A., PH.D., D.SC. JOHN 5. MCKAY, B.SC., B.COMM., M.ECON.SCT, D.P.A., Acting C.E.O. City o[ Dublin Vocational Education Committee. *C. H. MURRAY, LL.D., Governor, Central Bank. J. C. NAG[E, M.COMM. D. NEVIN, Assistant General Secretary, Irish Congress of Trade Unions. THE MOST REV. J. NEWMAN, M.A., D.PH., Bishop of Limerick. TADHG O CEARBHAILL, Secretary, Department of Labour. REV. E. F. O’DOHERTY, M.A., B.D., PH.D., Professor, Department of Logic and Psychology. University College, Dublin. D. P. O’MAHONY, M.A., PH.D., B.L., Professor, Department of Economics. University College, Cork: LABHRAS O NUALLAIN, D.ECON.SC., Professor of Economics, University College, Galway. *W. 5. L. RYAN, M.A., PH.D., Professor of Political Economy, Trinity College, Dublin. REV. L. RYAN, M.A., D.D., L.PH., Prolessor, St. Patrick’s College, Maynooth. T. WALSH, D.SC., Director, An Faro* Tal~ntais. *REV. C. K. WARD, B.A.s S.T.L., PH.D., Professorj Department of Social Science, University College, Dublin. *NOEL WHELAN, B.COMM., M.ECON.SC~, PH.D., Secretary, Department o[ Economic Planning and Development. *Members of Executive Commit~ T. J. Baker is a Senior Research Officer with the Economic and Social Research Institute and L. M. O’Brien is an Administrative Officer in the Department of Finance. He was formerly a Research Assistant in the Economic and Social Research Institute. The paper has been accepted for publica- tion by the Institute, which is not responsible for either the content or the views expressed therein, Printed by the Frederick Press Ltd., Dublin THE IRISH HOUSING SYSTEM A CRITICAL OVERVIEW T. J. BAKER and L. M. O’BRIEN © THE ECONOMIC AND SOCIAL RESEARCH INSTITUTE. DUBLIN, 1979 ISBN 0 7070 0022 X CONTENTS Page Chapter 1 INTRODUCTION I First Impressions 1 Method of Approach 3 Efficiency 4 Equity 14 Chapter 2 THE NATURE OF THE HOUSING SYSTEM 17 The Tasks of a Housing System 17 Socialist and Capitalist Systems 18 The Irish Housing System 19 The Institutions of the System 20 Housing Sectors 21 Housing Policy 23 The Structure of the Analysis 25 Chapter 3 THE OWNER-OCCUPIED SECTOR 28 Introduction 28 Freedom of Behaviour 29 Security of Tenure 30 Entry to the Sector 33 House Loans 34 Criteria for Borrowing 37 The Costs of Owner-Occupation 46 Subsidies 60 Mobility within the Sector 61 The Stock of Owner-Occupied Housing 66 Chapter 4 THE LOCAL AUTHORITY RENTED SECTOR 69 Introduction 69 Security of Tenure 70 Freedom of Behaviour 72 Page Mobility within the Sector 74 Methods of Entry to the Local Authority Sector 76 Fairness of Allocation 79 Choice of Entry 81 Housing Costs 82 Subsidies to the Local Authority Sector 87 The Effects of Subsidisation 88 Administration and Maintenance Costs 92 The Nature of the Housing Stock 95 Chapter 5 THE CONTROLLED PRIVATE RENTED SECTOR 99 Introduction 99 Disadvantages to Tenants 101 Advantages to Tenants 103 Lack of Entry or Transfer 106 Lack of Public Subsidy 106 Subsidy by Landlords 106 Efficiency of Sector 108 Equity of Sector 109 Chapter 6 THE NON-CONTROLLED PRIVATE RENTED SECTOR 114 Introduction 114 Characteristics of the Sector 115 Security of Tenure 117 Freedom of Behaviour 118 Transfer within the Sector 119 Entry to the Sector 120 Housing Costs 122 Subsidies 124 Regulation of the Sector 125 Supply of Accommodation 127 Efficiency of the Sector 128 Equity of the Sector 131 vi Page Chapter 7 THE PERIPHERY OF THE SYSTEM 132 Introduction 132 Rent-Free Accommodation 132 Squatting 134 Mobile and Temporary Dwellings 137 Alternative Tenure Forms 140 The Outer Fringe 141 Hospitals and Other Non-Household Institutions 142 Hostels and Shelters ;43 Shared Accommodation 144- Conclusions 148 Chapter 8 THE PROVISION OF NEW HOUSING 150 Introduction 150 The Planning Framework 151 Stages in the Development Process 154 The Pre-Development Landowner 154 The Private Housing Developer 157 The Nature of New Housing 160 Local Authority Development 162 Output of Dwellings 164 Building Costs 167 Cyclical Fluctuations 168 The Price of Building Land 171 Chapter 9 HOUSEHOLD CHARACTERISTICS 179 Introduction 179 Household Composition 179 Household Composition and Dwelling Size Preferences 183 Tenure Preferences 191 Tenure Type and Household Income 193 Conclusion 196 vii Page Chapter 10 AN ASSESSMENT OF THE HOUSING SYSTEM 198 Recapitulation 198 Efficiency 198 Access to Sectors 199 Transfers within Sectors 202 Adaptation of the Housing Stock 203 Maintaining and Managing the Stock 2O8 The Role of Pricing 209 The Market Sectors 211 The Non-Market Sectors 213 Price Discontinuities between Sectors 214 The Equity of Price Differences 216 Other Aspects of Equity 220 Disparities in Access 220 The Principal 1 nequity of the System 223 The Role of Public Policy 226 The Framework of Legislation 227 The Flow of Public Funds 230 Capital Expenditure 231 Public Subsidies 234 Subsidies to the Local Authority Sector 235 Sales to Tenants 240 Subsidies to the Owner-Occupied Sector 241 Subsidies to the Private Rented Sectors 249 A General Assessment 250 Chapter 11 RECOMMENDATIONS 256 Introduction 256 Research Recommendations 256 Policy Recommendations 258 REFERENCES 261 viii LIST OF TABLES Table Page 1.1 Some Housing Quality Indications 2 1.2 Resources Devoted to Residential Construction 8 3.1 House Purchase Loans 36 3.2 Income of Borrowers by Institution, 1977 45 3.3 Average Weekly Housing Costs for Owner-Occupiers in 1973 49 3.4 Typical Owner-Occupied Housing Costs, 1976 52 3.5 Housing and Inflation, 1968-76 56 3.6 Typical Costs of Moving House, 1976 64 4.1 Typical Differential Rents, 1977 85 4.2 Average Weekly Housing Costs for Local Authority Tenants, 1973 and 1975 86 5.1 Unfurnished Private Rented as Percentage of Total Dwellings 100 7.1 Adults in Shared Households 146 8.1 The Structure of the Construction Industry 159 8.2 New House Building, 1949-1976 165 9.1 Household Composition. 1971 180 9.2 Age of Head of Household 182 9.3 Dwelling Size and Household Size, 1971 186 9.4 Size Distribution of Housing, 1971 188 9.5 Household Type and Tenure Status, 1971 192 9.6 Household Income and Expenditure by Tenure Type 195 10.1 Public Capital Expenditure on Housing 232 IN presenting an overview of a field as large and complex as the housing system of a nation, the problem of selecting material is obviously acute. There are simply so many facts. opinions, and theories relevant to the subject that to present them all is impossible. To present even a high proportion of them would result in a massive tome, in which the reader would find it difficult to observe any coherent pattern. We have, therefore, had to be selective, including only what appear to us to be the salient features of the system. We have, however, attempted to select objectively, rejecting those items which appear relatively trivial within the total context of the system as a whole. We have not consciously selected some facts or rejected others in order to conform with any preconceived ideas of how the system does, or ought to, operate. We have, however, ordered the facts at our dis- posal according to coherent, if somewhat novel, theories of efficiency and equity, seeking thereby to provide a consistent picture and some fresh insights. The references in the text give some indication of the written sources we consulted. To any author who believes he can detect unacknowledged echoes of his views we can only apologise, with the plea that it is inordinately difficult to keep track of the origin of every idea one comes to hold. With regard to our other principal source of information-- personal discussions with many individuals in such organisa- tions as the Department of Local Government, Dublin Cor- poration, An Foras Forbartha, Estate Agents, Building Societies, Builders, The Construction Industry Federation, Landlords’ Associations, Dublin Flatdwellers’ Association. Sinn Fein, Dublin Artisans’ Dwelling Company, UCD and the Centre for Urban and Regional Studies in Birmingham University--we have decided in general to make no attempt to attribute information, views or comment.
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