Will Budget address housing market crisis failures?
By most measures, the State’s delivery of its housing policies has for many years been disastrous. The key objectives of the Department of Housing, Planning, Community and Local Government Strategy Plan 2016-2019, and Rebuilding Ireland are to “significantly increase and expedite the delivery of social housing units, boost private housing construction, improve the rental market, end homelessness and boost overall housing supply to 25,000 new homes by 2020.” So that’s one huge failure.
The pandemic has taken housing off the front pages and has caused a temporary reduction in some rents. But the crisis is damaging society badly, preventing emigrants from returning and costing a fortune as government employs sticking-plaster solutions like the Housing Assistance Payment scheme (HAP).
At the heart of the problem is the State’s almost total failure to build affordable houses, despite having the money, the land and the planning powers. Instead, governments rely on the private sector through the Part V Housing Scheme and charities/Approved Housing Bodies.
Instead of building, the State last year bought one in four of the privately built new homes as turnkey projects. It’s also paying too much for them and pricing first time buyers out of the market. Of 19,000 completions last year, [of which 5,000 were one-off houses] bulk purchases by the State and the PRS funds left maybe 8,000 units for everyone else. People priced out of buying a house then compete to lease apartments, but rents are artificially high because one in four new tenants are State subsidised.
Meanwhile, last year, the four County Dublin local authorities between them built 228 homes on local authority land.
With 29,000 people on the County Dublin housing list and 9,500 availing of HAP rent supplements, that’s an appalling performance.
Architect Mel Reynolds, an expert in housing policy, told me that “the State is the biggest vulture fund in the country” and added that State rental subsidies are costing approximately €1bn per annum. He agreed that the best solution is a State building scheme and said that the local authorities should be able to produce high quality energy-efficient homes with gardens, and apartments, at €230-€250,000.
The local authorities have huge amounts of cheap un-zoned land available which they could re-zone for housing. There are already plenty of high quality social and affordable designs in existence, which could be replicated. Tracts of land could also be licensed to building contractors, thus solving the financing problems which are braking private sector devel
The State is the biggest vulture fund in the country says Mel Reynolds
opment. Another advantage of this steady supply, Mel Reynolds said, would be to “smooth out prices in a volatile market”.
New completions this year could be less than 15,000 units, including one-off houses. Next week’s Budget 2021 is another opportunity to ring-fence funds for a State building programme. If Darragh O’Brien, Minister for Housing, Local Government and Heritage cannot ignite the local authorities, he will join the long list of failures.
In further evidence of the demand for housing, Catherine McAuliffe, a director of Savills in Cork, tells me that their residential businesses are performing very strongly. Since the March lockdown, it has sold 73 new homes and 46 second-hand homes. Five deals which fell through during the March lockdown were re-sold at higher prices.