Affordable Housing Is Not Some Impossible Dream

We have a housing crisis in Ireland. The two key aspects of this crisis are:

• There is an inadequate supply of housing, and there hasn’t been for years now. 
• The cost of buying or renting accommodation keeps rising. For many people, housing is their biggest expense. And it is simply unaffordable for many more. 

Is this crisis the consequence of increased immigration to Ireland? No. While more people looking for accommodation obviously means more demand for housing, what’s not so obvious to many people is why our housing market isn’t responding adequately to this greater demand. Is it down to planning issues? No. There are planning issues in the country. But that doesn’t explain the prolonged inadequate supply either. 

The housing crisis is the result of government housing policies that all share the core (and unstated) goals of increasing the value of housing, and increasing its earning potential. When viewed in these terms, governmental housing policies have been very successful. And will continue to be effective for these particular goals – at least while the economy remains robust and growing.

So the news this week that rents have risen by 4.4% from last December to this March isn’t really that surprising. There has been an increase in supply of properties available to rent also. But this increase may be due to landlords waiting until the new renting rules were put into effect to put new properties on the market. And this increase in supply doesn’t in any way meet the huge demand for properties.

So what are the problems with government housing policies? I’m going to list some of the obvious issues. Affordable housing is possible – but it requires making difficult changes that will ruffle the feathers of some big birds.

Problem #1 – Housing as an investment opportunity

Ever increasing property prices and rents. These goals are great for people who make a living from housing. But these goals are not good for people who rely on housing for living in. Aren’t they sometimes one and the same people? Sometimes, yes. But Fine Gael and Fianna Fáil have made it clear, year after year, they want more “professional” (i.e. large corporate) landlords. These corporate/institutional landlords may be quite removed from the housing concerns of ordinary people living here.  And of course politicians are always keen to assure home-owning voters that the value of their most valuable asset is not going to drop in value under their policies.

Is the Professional experience better?

When it comes to renting in Ireland, it seems not. 

Last year, the country’s largest private landlord, IRES REIT, was caught trying to to charge a renter “common area” fees, despite an earlier agreement not to. Under Rent Pressure Zone legislation landlords can only increase rents by a maximum 2% per year for tenants. These common area fees are seen as an attempt to increase revenue from tenants with charges that are outside the RPZ legislation. Very professional gouging, in fairness.

And this year there have been some notable examples of large corporate landlords attempting to evict tenants because of the new rent rules that came into effect on March 1st this year. There are a couple of reasons why they may want to do this.

1. The new rules classify landlords who have 4 or more tenancies, or who are a registered company, as large landlords. It also classifies most tenancies entered into on or after March 1st, 2026, as Tenancies of Minimum Duration. After a 6 month initiation period, TMDs become 6 year, rolling agreements that enhance tenant security. Large landlords can only end these tenancies if the tenant is not complying with their obligations, e.g. they’re not paying the rent, or if the property is no longer suitable, e.g. it has become overcrowded or inaccessible due to the particular housing needs of the tenants.
2. Previously, landlords were bound by the RPZ rule regardless of whether the tenancy was existing or new. With the new rules, landlords can now reset the rent to a “market-rate” rent with every new tenancy, provided they did not end the last tenancy through no-fault of the tenants. Also, the 2% cap on annual rent increases does not apply to newly built apartments or new student-specific accommodation, these apartments can increase by the rate of inflation. It’s important to know that there is still wide variation in what the market charges for different tenancies. It can be very easy for landlords to claim that the market rent is hundreds of euros more than what the previous tenants were paying. It can be just as easy for tenants to show the market rate is a much lower price than what the previous tenants were paying. But crucially, very few new tenants are prepared to dispute the rents that have been set in the new tenancy they have managed to find – usually after months of searching for a place. This is one of the reasons why critics of the new rules argue that they will push up rents.

I am not against large corporate landlords. My issues are not with landlords but with the broken nature of our housing market. But I will say this for small casual landlords – who may be renting out a property or properties they inherited; they often set the rent and forget about it. It remains the same for years. Which is very helpful when you are trying to argue that the market rate the landlord is using to set prices is far from indicative of typical rents for that sort of property. If all landlords were large corporate landlords the one thing we could be sure of is that all rents would be increased to the maximum allowable at all times. That’s not the fault of these landlords. The fault lies in how expensive the rents are in the first place.

Problem #2 – Our State has delegated much of the provision of social housing to private landlords and Approved Housing Bodies

In order to understand why this is a problem you need to understand how, very basically, housing works in this country. I’m going to explain this as if you are an alien who has landed in Ireland with no clue of anything. Or as if you’re a Minister with responsibility for Housing, or a Taoiseach or a Tánaiste.

There is private housing that private individuals or corporations own, and there is public housing that is owned by local authorities (your local city or county council). There are also Approved Housing Bodies which are a mixture of housing charities and not-for-profit organisations who provide and manage social and affordable rented housing for people who cannot afford to buy or rent privately. 

The private housing market should be housing people who can afford market rate rents or who can afford to buy their own properties.

The public housing (or social housing if you prefer), owned by local councils, should house people whose income doesn’t allow them afford market rate rents and who don’t own any suitable alternative housing themselves. 

Housing charities play a crucial role in housing markets by providing housing for people who have special housing or support needs. This sort of specialisation is often best handled by charities rather than governmental (local or state) bodies who may have a much wider mandate. But the fact that there are so many different types of organisations now providing social and cost rental properties that cannot be classed as housing charities does signal a problem with this sector.

Our State is subsidising private rents and reducing the supply of private rental units

The majority of social housing should be provided by the state, through local authorities. And people living in private rented properties should be the people with incomes high enough to afford private rents. However in Ireland a huge number of tenants in private rented properties have incomes which are low enough to make them eligible for social housing. But there isn’t enough council housing to house these tenants. And there hasn’t been an adequate supply of local authority housing for decades. So what the government does instead is pay part of the tenants rent either through the Housing Assistance Payment (HAP) or the Rent Supplement scheme (or the Rental Accommodation Scheme).

Under Rent Supplement a portion of the rent may be paid to the tenant who then pays the landlord this money together with their share of the rent, or it may be paid directly to the landlord with the tenant then paying just their share to the landlord. Under HAP the HAP section pays the landlord all of the rent* (up to a certain price, which varies from county to county). The tenant then pays the HAP section the local authority rate of rent. *In areas of high demand, like Dublin and Cork, the tenant will often have to up the rent paid to the landlord, often by a couple of hundred euros or more per month.

When people say that our government is subsidising rents and pushing up prices further, this is part of what they are talking about. Our State is paying each year millions to private landlords, like IRES REIT, to house people who are eligible for local authority housing. This is both absorbing supply of private rental housing and acting as a price floor for rent prices.

It’s supply and demand, plain and simple.

No, no it isn’t.

If you aren’t aware of how it all works, you may have been persuaded by arguments about how we have a housing crisis because of the number of migrants here have pushed up demand and made rents unaffordable – but I hope I’ve made it a bit clearer that this is not really the issue. 

Rents in the private housing market are so expensive in large part because our State is renting a lot of private units to house people who should be housed in social housing. And the schemes they have in place to help these tenants pay rent act like a price floor for private rents and push them upwards. Housing Ministers also have consistently refused to freeze rents, apart from during the Covid era and that was more for public health reasons. They begrudgingly brought in measures (RPZ legislation) to restrain increases to rent prices. And if you remember the increases landlords were trying to implement prior to the RPZ rules you’ll know how necessary (and inadequate) these rules are. 

So when someone starts to explain the Housing Crisis in Ireland and begins talking about a simple supply-and-demand dynamic you should now realise that they do not know what they are talking about. The housing policies the State uses are in part responsible for a restricted supply in private rental market and for pushing up rents, to the extent that the cost of renting in this country no longer reflects what people can actually afford to pay.

But that’s just renting, why are house prices so high?

The schemes the government uses to make house prices more affordable also act as subsidies for house prices. And because the cost of renting is so high this pushes up the demand for owning a property. No one who can get a mortgage is going to waste a third or more of their wages on rent. There is also an inadequate supply of housing for purchase in the private market. There are many reasons for this – but it is impossible to ignore the fact that it is more profitable for developers to have an excess of demand in the market. They higher prices they sell their properties at the better. And if the government keeps introducing schemes to help buyers pay unaffordable prices, what incentive is there for developers to build enough to meet the demand. 

To be clear, I’m not saying let’s first get rid of schemes to make renting and home-buying more affordable

That would be crazy. I’m saying our State (through local government) needs to be the main supplier of social housing in the country. People who are eligible for local authority housing should be housed in good quality local authority housing. And good quality local authority housing is actually great – and helps push up standards in private housing too.

We need a massive building project to build enough (top-quality) local authority housing to clear the housing lists. And we need to keep building enough local authority housing each year to consistently do this. 

The truth is, Ireland stopped building adequate levels of local authority housing as far back as the 1980s. We had to “tighten our belts” and strict public borrowing controls led to a massive reduction in the construction of public housing. The State began offering tax incentives for landlords to buy properties to rent. Slowly government shifted its role in our housing market from a direct provider to more of a market manager. Which has led us to where we are now – having housing policies whose true goals are to keep prices rising. It’s not sustainable.

Different government politicians might like to point out that over the past couple of years we’ve ramped up the delivery of public housing to match 1970s figures, but remember we are dealing with a shortfall of public housing that is decades, not years, in the making. The goal shouldn’t be to deliver more than we have before. The goal should be to clear the housing lists. This would free up so much housing in the private rented market, which would cause rent prices to decrease and in turn affect house prices, as renting could even become a viable alternative to buying.

Problem #3 – If we make housing affordable, prices will fall

It sounds stupidly simple. But actually, this is a real problem. I think this is why the goal of our housing policies is basically to keep prices up and rising. 

But first things first, what even is affordable?

According to the CSO, the median price of a dwelling purchased in the 12 months to February 2026 was €390,000. The national median annual income is €44,816. So, the average home costs over 8 times the average annual earnings. I think it’s probably more useful to look at the median household income of €61,666 (the devil’s in the details ;-) The average dwelling costs over 6 times the average household’s earnings.

The Demographia International Housing Affordability Survey defines a house price to income ratio, the median house price divided by the median annual income, of 3 or under as “affordable”, 3.1 – 4 is “moderately unaffordable”, 4.1 – 5 is “seriously unaffordable” and over 5.1 is “severely unaffordable”. 

Whether you are looking at the price of housing in terms of an individual’s average earning or a households, it is clear that housing in this country is “severely unaffordable”.

For housing to be affordable in this country with our median household income of €61,666, an average dwelling would cost less than €185,000. And if prices fell to that extent, or even to being “moderately unaffordable”, many homes would go into negative equity.

I don’t think this is something that politicians have accepted at all. House prices are unaffordable. Our housing policies keep prices up and increasing. The situation is not sustainable. And to make housing affordable the price of housing and renting must drop significantly. 

It’s scary. But it’s not an impossible situation. There are various things we can do.

1. Increase borrowers power to renegotiate/restructure mortgages with lenders
2. If financial institutions wanted to sell the now over-valued mortgages to another institution, the State could buy them at a discount. But instead of selling them on the State could pass on some of the discount to borrowers and let local authorities manage the loans and take repayments.
3. The existing Mortgage-to-Rent scheme could be used/expanded

Obviously, these solutions would work best in a robust and growing economy. It will be much harder to fix housing if the property prices fall due to external economic pressures, rather than as part of a carefully managed policy to make housing affordable.

Is Affordable Housing really worth all this effort?

Yes.

I want to post this today – and I’ve run out of time. So, if you really are asking this question – just trust me on this, yes. It really will be worth it, for our competitiveness, for social cohesion, for a better monitored housing market with better standards. Yes. Yes. Yes.