Lorcan Sirr: Shedsits in back gardens have potential to be an unpoliceable, cash-rent black market
The Government’s decision to allow modular housing units of up to 45sq m in back gardens without planning permission is capitulation to a populist idea without proper interrogation. The last time those in power didn’t challenge vocal narratives, it didn’t end well.The “shedsit” proposal, or auxiliary habitable dwellings as the Government now calls them, came from a lobby group which claimed it could deliver up to 350,000 small homes. Before supporting the idea to to “remove bureaucracy and red tape”, the Government did no meaningful research into how these would bed in with building regulations (ie disability access, ventilation); fire safety (particularly in back gardens of terraced houses); infrastructure (sewage and water capacity); existing communities (parking and overlooking); title (folio and mortgage lender); the relationship between landlords and “not-tenants” but licensees (meaning the owner, as in a hotel or B&B, can enter the dwelling at any time – think about that); and the potential, if not financial incentive, to create an unpoliceable, substandard, cash-rent black market. The result will be a proliferation of more bureaucracy and red tape, not less.This is just one narrative that politicians have casually accepted in discussions about housing. There are more.READ MOREGermany’s Merz says Iran is ‘humiliating’ US as talks stallSeán McGovern swore on baby’s life he was ‘not stopping’ after Regency shooting, court hearsScarlett Faulkner’s cousin (10) in critical condition after fatal car crash in AntrimEnergy crisis: Simon Harris floats one-off payments for heat pumps and efficient carsDue to demographic changes, Ireland needs thousands of new and smaller homes each year. To achieve this, investment of at least €20 billion a year is required. Judicial reviews are holding up the delivery of tens of thousands of new homes. More expensive rental accommodation will bring rents down. Ireland has the highest construction costs in Europe, and allegedly the highest building standards. Dublin needs to densify much more, and so on.All these claims are questionable. For example, Dublin city has as many people per hectare as Stockholm, Seville, Bordeaux and Munich. The research behind the lobbyists’ back garden housing plan actually estimated that it would deliver as few as 6,700 sheds-as-homes, and used a sample of only 200 houses, or just 0.009 per cent of Ireland’s housing stock, to see how many could fit them in. All proposals – especially lobbyists’ – need to be robustly assessed, but they’re not. Politicians end up defending them without understanding them. And that is a problem, because if these narratives are wrong, much time and taxpayers’ money will be wasted in solving problems that do not exist, or – as I suspect will happen in this case – in responses that will exacerbate problems and not resolve them.Memory fades quickly. The impacts of the last crisis and its consequences – ghost estates, poor quality construction, mortgage default, loss of national sovereignty – have become eroded by timeThe best-known report into the 2008 economic and property crisis was written by Klaus Regling and Max Watson, two respected economists formerly of the International Monetary Fund. They found the more extreme difficulties Ireland faced were caused by domestic, not international, failures. We made things worse.Regling and Watson found that banks struggled to avoid the herding instinct, passively following what their competitors were doing, and assuming there was safety in numbers. Blinded by profit, banks had poor insights into the risks they were facing. The pair’s report’s conclusions about the need for this to be curtailed by effective oversight were blunt: “This is where regulation can, and has to, play a crucial role. That role – never an easy one for public officials to play with confidence and credibility – is to be right, against the market.”Rather than challenging the market and its many vested interests, current housing policy is now led by industry. Deregulation in the finance sector was identified as a key cause of the economic crash, and a similar push for deregulation is currently happening in housing, especially in terms of lowering standards. This includes permitting shedsits, and reducing apartment sizes to 32sq m studios, eight of which can now fit on a tennis court. The other key review of Ireland’s economic crash was Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland, led by former Finnish Ministry of Finance economist Peter Nyberg.In explaining institutional failures, Nyberg found many examples of herding behaviour between banks – as Regling and Watson had – but also within banks, known as groupthink. Under overt or imaginary social pressure, people adopted the consensus view without any real analysis, evidence or intellectual conviction and without much thought of potential consequences.Nyberg found no serious consideration of alternative ideas. Evaluation and deliberation were synonymous with dissent and rebellion. Middle-ranking officials never queried their superiors, even when aware they were wrong. The greater the deference to the dominant narrative, the more independent thinking got eroded. Groupthink was underpinned by a widespread blind ideological belief in the efficiency of the market.Today in housing, the market – "a god that failed“, as Fintan O’Toole described it last week – is a deity still worshipped by housing policymakers.Memory fades quickly. The impacts of the last crisis and its consequences – ghost estates, poor-quality construction, mortgage default, loss of national sovereignty – have become eroded by time. Pressure to deliver growth and profits is again beginning to outweigh common sense.Moves to reduce housing standards, source 80 per cent of social housing from the market instead of building it, unnecessarily subsidise developers with €500 million, pimp Ireland to investors at French property shindigs, or ensure rents rise significantly at the expense of tenants, happen with little questioning of their appropriateness or likely outcomes. The Regulatory Impact Analysis for the legislation that introduced the new rules for setting rents contained no assessment of the possible financial impact on tenants. The typical response to suggestions of herding and groupthink is “but this time it’s different”, implying that old risks no longer apply. However, research and experience demonstrate otherwise.Increasingly evident, herding and groupthink will result in the wrong type of housing, in the wrong places, of poor quality but high prices, creating a huge economic burden on taxpayers, increased homelessness, social exclusion and division, all of which will feed political extremism. And because a house is not a crop, these effects will persist for longer than the last time politicians swallowed every line they were fed.If politicians spent half the time promoting housing that Irish households are looking for – affordable, suitable to raise a family in, and available to buy – as they do defending housing that very few want – expensive, for rent, and of reduced standards – then Ireland’s housing perma-crisis would quickly start to resolve itself.Lorcan Sirr is a senior lecturer in housing at the Technological University Dublin
