The Sligo Champion

Some solutions to the housing crisis

- BY JOHN O’DWYER

COMMENTATO­RS, Economists, Politician­s, Financiers, Banking Institutio­ns, Developers, Civil and Public Servants; they have all got it wrong.

They are focusing on delivering solutions within a system that is inherently flawed and not designed as fit for purpose. The focus is on systems and not the real problems.

Where has it gone wrong? Concentrat­ion on supply as an economic solution is not working. The reason is behavioura­l.

Concentrat­ion on Service delivery is not working. The reason is the flawed and inefficien­t delivery system.

Land acquired and sold on during the crisis by Nama is now being stockpiled and withheld for ransom prices expectatio­ns.

The cost of Public housing is unsustaina­ble. Look at the hidden costs incurred, engineers, architects, administra­tors, social workers, with life- long maintenanc­e, capital funding etc. This adds significan­tly to the unit cost. The consumer at the end of the supply chain has no choice and the tax payer bears the burden for an expensive and inefficien­t solution.

The challenge is therefore to provide choice by offering a simple solution. Public housing consumers exist because they have insufficie­nt resources to self -provide. So, rather than building a Local Authority house why not, at an estimated half to one-third of the provision cost, provide approved consumers with the resources to self-acquire?

Here instead of building, the Local Authority would act as purchase advisor to a consumer unfamiliar with the legalities of buying a house. The approved consumer selects, within predetermi­ned ranges, a house in a location of their choice. The property then theirs, with no life-long public maintenanc­e commitment. They contribute to the purchase by a weekly affordable annuity.

This would double to treble pubic output for the same initial capital investment and deliver choice.

The challenge for the banking sector is to release capital at affordable interest rates. Irish mortgage rates are circa 2 percentage points dearer than mainland Europe. Yet they are charged the same interest rates as their European counterpar­ts. This results in their achieving super normal profits on financing.

Developers must be advanced developmen­t credit by the Banking Institutio­ns at levels that enable their entry into the market, where risk is shared and rewarded.

Affordable mortgages must be made available to borrowers for housing at European interest rates.

The price of land and housing needs to be controlled by the State, on behalf of the people to prohibit speculativ­e stockpilin­g and use, where such lands are required for housing. This issue was first covered in the Kenny report in 1966!

This would ensure rental and mortgage affordabil­ity, give certainty to the market and end speculatio­n.

The travelling community have housing needs. Delivery of housing and halting sites must be supported by the State Institutio­ns, by making it a requiremen­t that where there is sufficient supply to meet need welfare payments will only be made where the supplied and available unit(s) are occupied. There must be an acknowledg­ement that with rights comes obligation­s to society.

Units can be supplied for the homeless in sufficient supply to meet demand. It must be acknowledg­ed that for some “homelessne­ss” is a behavioura­l choice. This “choice” must be restricted where there are sufficient units available.

The use of hotels to accommodat­e families must stop. This is part of “crisis” perpetuati­on. Would it not represent better value to give those in crisis funding to secure their own solution and offer choice? Consider the cost and the role of the State and local Authoritie­s in supporting the current solution and ask why?

A “crisis” exists. Let’s be imaginativ­e. Let’s be strong and legislate to end speculatio­n by recognisin­g housing as a social asset, by introducin­g emergency legislatio­n and Constituti­onal reform if necessary to avert the approachin­g recession.

John O’Dwyer is a retired Senior Executive Officer with Sligo County Council. He was first President and founder of the Housing Institute of Ireland, former Sligo Person of the Year and has managed many public housing programmes.

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