Is the Government’s housing policy working?

Early next month, Minister for Housing Eoghan Murphy will publish the third major Government housing policy in four years.

The current policy, Rebuilding Ireland, aims to eliminate homelessness and to address the chronic shortage in general housing, and also social housing, by 2021. It proposed to achieve this under five headings. Below we examine how the strategy has been performing under each of the headings and assess if it has delivered on any of the ambitious promises that were made.

1. Homelessness

These targets have clearly not been met and the strategy is failing. The latest homeless figures show 7,941 people are designated as homeless in the State, up about 25 per cent on comparable figures from last year.

A second statistic is equally disappointing. In June, Murphy admitted the Government would not meet its own target of ending the practice (by July) of homeless families staying in unsuitable hotel and bed and breakfast accommodation. As of now, 647 people remain in that situation. To date, Murphy has declined to specify when this practice will end.

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The Government claims 3,000 people have exited homelessness in the past year. More than 800 of these have been accommodated through the Housing Assistance Programme (HAP) in the private sector.

It also targeted 1,600 vacant units to be purchased by housing agencies. So far, 300 have been bought. It has managed to increase the number of emergency beds available for so-called rough sleepers and plans to provide “hubs” for 200 families. Some of these measures are stop-gap rather than permanent.

2. Social housing

The Government promised to deliver 47,000 units by 2021 to reduce the numbers on the social housing waiting list, currently 90,000.

Local authorities will provide about 23,000 of these homes directly by local authorities and a little over half will be new-builds. The capital budget is substantial – €5.35 billion over five years.

In all, 1,700 hectares of potentially suitable local authority land have been identified, with the potential to build 42,500 houses.

Housing solutions are slow burners and so far the returns have been modest, at best. Only 650 social houses were built in 2016. Current projections are that 2,400 will be built this year. That’s a long way short of what is required, but at least it is an improvement.

There is a big list of measures to meet the targets. They include fast-track planning for larger housing estates, acquisitions of housing stock from Nama, reusing vacant homes, public-private partnership projects (PPP) and other schemes. Dublin City Council is also entering into a PPP with one company to build 600 houses.

Rapid-build houses also form part of the plan. Traditional houses take three years to build but these factory-built units can be completed in months. However, progress has been slow. The target for 2017 is 650. No more than 219 will be built in Dublin this year. This has been a fail.

3. Build new homes

The target is that 25,000 new homes will be built each year by 2021. The traditional measure of new house numbers is the number of new connections by the ESB. There were more than 16,000 last year, exceeding the target of 15,000.

These figures are disputed. The help-to-buy incentive for first-time buyers gives a break of 5 per cent on the purchase price, up to a maximum of €20,000.

More than 7,000 people have applied for it, and nearly 2,000 have drawn down the grant. Critics say it has not boosted the market, but has instead simply contributed to price inflation.

The building industry’s main call is for a reduction in VAT and some structured plan to allow them access finance to start projects, lowering of development levies, and help with infrastructure.

A derelict site levy of 3 per cent to be introduced in 2019 may have potential to free up building land.

4. Rental sector

The figures published by website Daft.ie suggest the strategy is not working, with an increase in rent of 12 per cent year-on-year. However, the department argues that if you look at 2017, the increase in rent has been much more modest, a little over 7 per cent (adjusted).

They attribute this to the rent pressure zones, which were introduced in January by Simon Coveney and which limit rent increases to 4 per cent annually. But has the scheme been too limited?

One factor worth noting is that the number of properties available to rent is at a record low and it is also been argued that landlords have migrated in vast numbers to Airbnb, to pick lucrative short-term leases from tourists. The company has challenged this. Nevertheless, the former minister was working on a memorandum of understanding with Airbnb and it has not yet been brought to completion.

That’s a fail. It’s clear more measures need to be tried.

5. Vacant houses

The Central Statistics Office has identified there are 190,000 vacant properties in the State. An estimated 25,000 of those might be put to use. The remainder are either beyond repair, in remote locations or are holiday homes.

In the past year, 3,000 vacant properties have been brought back into use but there are major shortfalls. The Government earmarked €32 million for a “repair and lease” scheme for vacant homes.

A €40,000 grant per property is available to repair them. The quid pro quo is it must be leased for social housing for a fixed-term. The Government hopes 3,500 units will be made available under this scheme by 2021. So far, only 12 property owners have availed of it. So this is a clear fail.

A second “buy and repair” scheme appears to have more potential. It has been piloted in Co Louth and may involve the use of compulsory purchase orders to force owners to sell or repair a vacant property. However, such a scheme is costly and it will take a long time to identify owners, and to go through the legal process.

There have also been suggestions of a vacant home tax and a suggestion to use the vacant houses of elderly people in nursing homes.