The housing crisis will be exacerbated by Brexit, experts to warn TD



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Tanaiste Simon Coveney with EU negotiator, Michel Barnier. Photo: AP
Tanaiste Simon Coveney with EU negotiator, Michel Barnier. Photo: AP

Brexit will play havoc with the housing sector that has been a disaster, experts will warn today.

Two different bodies were set to elaborate on how rent increases will likely deteriorate after Britain left the European Union.

However, the cost of buying a house can go down, because the negative impact on domestic economic activity decreases the ability of workers to save for deposits.

The Institute for Economic and Social Research (ESRI) believes that the state must be prepared to:

• Lease Pressure Zones for review.

• More families need State assistance to pay rent.

• Construction of the private sector will fall, which means the Government needs to invest more in social housing.

• Slowing decline in mortgage arrears.

However, the increase in loan interest rates can be limited.

Fluctuations

Separately, the Nevin Economic Research Institute will notify TD and senators that housing demand will experience "greater fluctuations" as a result of Brexit.

There will be "significant regional differences in the impact of Brexit on the Irish housing market", with "special pressure on the rental sector in the Greater Dublin Region".

Rent in the capital is 36pc higher than the peak of the Celtic Tiger explosion.

The two bodies will give a briefing to the Oireachtas housing committee today.

In his opening statement, Kieran McQuinn, research professor and chief economist at ESRI, will describe the threats to Government policies that exist in housing.

He will point to Payment for Housing Assistance (HAP), which will soon become the main social housing support associated with income for private tenants.

"If income and employment growth is slower than anticipated due to Brexit, the number of families that qualify for HAP for years to come is likely to be higher than currently estimated," McQuinn said.

Lease Pressure Zones, which limit increases to 4% per year in some urban areas, "may require more revisions".

The main target of the Irish Government Reconstruction project is to have more than 20,000 houses built every year.

However, McQuinn will warn that "greater uncertainty" because Brexit "is likely to result in lower housing demand and supply".

There will also be big implications for housing finance.

That came when the Brexit talks dropped to the wire, with the European Union insisting that Britain agreed to "level playing fields" if permitted to enter customs arrangements throughout Britain.

In particular, the EU team negotiator Michel Barnier is understood to have warned the UK must comply with EU environmental and labor laws during the term of the agreement.

This is likely to create further difficulties for British Prime Minister Theresa May in front of the house, as many lawmakers will argue this number is "trapped" by EU rules when they want to negotiate a new trade agreement.

This will also limit the ability of the British government to provide state assistance to certain economic sectors.

Fatigue

However, sources say "whatever is lacking" will be regarded as providing "unfair advantage" to Britain in the post-Brexit era.

"There is fatigue about backstop across the UK in other EU capitals. At this stage it is likely the EU27 will go for it but they will want to study small print very carefully," they added.

All parties now accepting this week are the deadline to sign a withdrawal agreement in London if a special meeting of EU leaders will be called up for the last week of November.

Mr Barnier of the EU's foreign minecraft briefing yesterday on progress, said that "as in negotiations, the last stretch is always the most difficult".

He met privately with Tanaiste Simon Coveney afterwards to provide more detailed updates on negotiators relating to the Border.

Mr Coveney said support "is now stronger than before" to ensure there are no hard borders.

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