‘Magpie’ councils pinch new homes from young buyers
THE State has ramped up its purchase of private houses, in a move that is crowding first-time buyers out of the market.
Local authorities and Government-funded housing associations have stepped up their buying of new homes. Meanwhile, the construction of social housing continues to fall.
Some councils built no social housing last year. This put huge pressure on supply from the private sector.
THE recent release of social housing ‘new build’ statistics shows an overall increase of 51pc in the quantity of housing delivered by local authorities and Approved Housing Bodies. Output was up from 3,753 new build social houses in 2018 to over 5,000 last year.
This appears good news, but unpicking the headline figures – not easy from the way they are presented by the Department of Housing – highlights disconcerting trends in who is delivering housing, who is not, and how it is being done, particularly by local authorities.
What is evident is a noticeable shift away from the traditional practice of councils directly building houses.
Overall, in 2018 houses that local authorities built directly comprised about one in three of the overall social housing new build output. Last year that was down to less than one in five.
In areas of highest social housing demand, the decline in builds by local authorities is even more acute. Dublin City Council’s own output decreased by more than 75pc from 2018 to 2019, going from 201 directly built houses to just 45 year to year. Of this 45, some 24 were refurbishments of apartments in Priory Hall, hardly new build.
Dún Laoghaire-Rathdown local authority, the country’s wealthiest, built 17 houses last year, which was a sharp decline from 120 in 2018. Fingal is down from 75 directly built houses in 2018 to 54 in 2019. South Dublin went from 238 to 112 over the same period, and Galway City Council’s own direct build output declined from 14 houses to zero, despite their social housing waiting list of over 1,500 households.
Of the major city areas, only Cork City Council managed to increase its direct build output from 93 to 110 year on year, and Limerick City and County Council from 45 to 57 social houses.
Overall, 11 counties saw their own social housing direct build output decrease in 2019. Some councils built no houses, including Roscommon, Tipperary and Westmeath.
In Laois, the county council built one social house itself last year, with an additional 10 being supplied by an Approved Housing Body. Laois’s social housing waiting list has over 800 households and local councillors there, like others nationwide, are rightly frustrated with the slow pace of delivery.
The number of new build social houses supplied by Approved Housing Bodies has also declined from 415 in 2018 to 350 in 2019, a 16pc drop.
If councils are not building themselves, as they did so well for decades, then how are they managing to increase the new build output? The answer is through the acquisition of turnkey housing.
These are houses delivered ready to occupy (in ‘turnkey’ condition), usually destined for the private market and especially first-time buyers, but then bought by the State.
Sometimes builders who are running short of finance, or to whom banks are curtailing a line of credit, approach local authorities asking them to buy all or a phase of their housing development. This helps keep the builder in business. Often, local authorities approach builders and offer to buy the part-built housing when complete.
Overall, turnkey purchases have gone from 55pc of all new build social housing output in 2018, to 74pc last year. This is a phenomenal increase in the use of the private sector to deliver housing.
Politicians argue that it does not matter who delivers the housing, but this is simplistic.
Firstly, as the private sector developer has land costs, finance to pay, and profit to make, so the purchase price of turnkey housing will usually be more expensive than direct build by the local authority.
As the housing is not built by the local authority, the control of quality is also difficult.
In buying developments from builders, local authorities are then contravening government policy on not having estates comprised entirely of social housing.
Finally, analysis shows the State accounted for almost 30pc of market housing last year – this is new estate houses and apartments. Local politicians will feel the brunt of younger constituents’ frustrations when they see what is usually more affordable housing bought by their council to house social tenants.
The Department of Public Expenditure and Reform’s 2018 report on social housing said that in areas of high housing demand it makes more financial sense to build than to rent properties for social housing. Yet it is in these areas that we have seen the highest increases in new houses being acquired from the private sector, up 70pc in the four Dublin local authorities last year.
Questions need to be asked about why local authorities have abandoned house building in favour of increased reliance on the private sector.
Are there skills and capacity shortages in local authorities? Is Government ideology favouring the private sector over the public, influencing council housing decisions?
Or, most likely, has the Department of Housing made the process of building so difficult that councils have simply given up trying?