For the past number of years, Government’s response to the housing crisis has been categorised by an over-reliance on the private rented sector and the introduction of badly-targeted subsidies which disproportionately benefit those on higher incomes and artificially inflate house and rent prices. Budget 2024 has been no exception.
The proportion of owner occupied homes in the State fell between Census 2016 and Census 2022 and now stands at 66 per cent, while the age at which more than half of homeowners own their home has increased by a decade to 36 in 2022. The capacity of a single person to purchase a home is at its worst since 2013, with the price to income ratio increasing from 4.6 in 2013 to 6.8 in 2021. Between 2012 and 2022, residential property prices rose by 75 per cent, private rents by 90 per cent, while wages rose by just 27 per cent (Parliamentary Budget Office, 2023).
In response to declining ownership rates and affordability issues, Government introduced demand-side subsidies which artificially inflate incomes and circumvent the Central Bank’s macroprudential rules. Budget 2024 extended, and expanded eligibility for, the Help to Buy Scheme to December 2025, which analysis shows disproportionately supports higher income earners to purchase higher-priced properties. Similarly, with an increase of €50 million to the First Home Scheme, a shared equity scheme with a subsidy of up to 30 per cent of the purchase price, Government policy is maintaining high house prices. Neither of these schemes will result in the building of an additional property.
Budget 2024 committed to the construction of 9,300 social homes, ignoring the shortfall of 1,567 on the 2022 target, and the likely shortfall from 2023, given that just 1,401 of a target of 9,100 social homes had been built as at Q2 2023.
The latest Rent Index Report (RTB, 2023) shows that rents have increased to a national average of €1,544 per month. Increasing the Rent Tax Credit to €750, while maintaining its current structure will not help low-income renters. Introduced in Budget 2023, the full Rent Tax Credit is available to renters who earned at least €20,000 in the previous year and who were not in receipt of any form of housing subsidy. Data published by the Revenue Commissioners shows that the distribution of this credit is regressive. Those with an Annual Gross Income of €0-10,000 received an Average Benefit of €1, while those earning between €200,001—250,000 received an Average Benefit of €814. Social Justice Ireland regrets that this credit was not converted to a grant or made refundable to benefit low-income tenants.
Budget 2024 also introduced additional tax reliefs for landlords by incrementally increasing the rental income disregard to €5,000 by 2026 on condition that they remain in the market for the full four years of the relief. There is little suggestion that these landlords would be leaving the market, and at a full year cost of €160 million, it is disappointing that Government missed the opportunity to link such a benefit to the introduction of long-term tenancies.
By not providing adequate investment in construction, particularly social housing construction, at a time of record windfall surpluses, Government has missed the opportunity to grasp the nettle of the housing crisis and provide adequate and sustainable housing for all. Continued reliance on subsidies to the private sector indicates short-term thinking over long-term social and economic benefit. Social Justice Ireland greatly regrets this lack of ambition.
Our full Budget 2024 analysis is available now: Budget 2024 Analysis and Critique | Social Justice Ireland