The Ó Cualann Cohousing Alliance has come up with an innovative solution to the catch-22 situation facing many families who find themselves earning too much to qualify for social housing but not enough to afford a mortgage on a home of their own.
"We founded Ó Cualann in 2014 to provide fully integrated, co-operative, affordable housing in sustainable communities," says chief executive Hugh Brennan.
The objective of the organisation is to build mixed developments of social and affordable housing where no owner-occupier has to spend more than 33 per cent of their net household on their mortgage. The cost of the homes is reduced mainly through local authorities supplying sites at little or no cost and waiving development levies.
"For years, housing in Ireland has been segregated on the basis of income," says Brennan. "If you couldn't afford your own home the State decided where you lived and in doing so created very big estates of social housing which became more deprived with social problems magnifying over time."
In the Ó Cualann model, social and affordable homes are mixed together one beside another to form fully integrated communities. Moreover, community spirit is engendered long before the homes are complete. “We bring the communities together to meet each other before they move in,” he says.
"It is generally accepted that 33 per cent of net household income is the most people can afford to spend on housing," Brennan adds. "We set about developing a model that we hoped could be replicated around the country. We had a lot of discussions with Dublin City Council and they provided land at a greatly reduced price and waived development levies for two developments in Ballymun. These are for owner-occupiers only as that is what the council wanted for the area. We were happy to go ahead on that basis."
Each buyer pays a booking deposit of 4 per cent and a development won’t go ahead until it is fully pre-sold. That enables Ó Cualann to secure bank finance to fund construction work.
The co-op has also come up with a novel way of reducing finance costs. “We ask our members, the home buyers, if they have additional savings on top of the 4 per cent deposit. They can put that money on deposit with us and we will pay them interest of up to 4 per cent on it.”
The interest earned is offset against the eventual price of the house. They have also received funding support from other individuals. “There are people who are looking for social impact investments and we will pay them up to 4 per cent as well. We have raised €500,000 in loan notes from this source. One individual only wants half of one per cent in interest, another is happy with 3 per cent, and the others are getting the 4 per cent rate.”
This may be a lot more than could be achieved from a bank deposit, but it is also a lot lower than the cost of a bank loan.
With two developments in Ballymun under its belt Ó Cualann is now in discussion with other local authorities and agencies around the country. "We have a site in Waterford where we are going to build 15 co-operative and five social houses. We are also talking to Limerick Council, Cork County Council, Dún Laoghaire-Rathdown, Fingal, and the Housing Agency about replicating this model in other areas."