Politicians have raised concerns that a major push by the Land Development Agency (LDA) to deliver cost-rental homes will not lead to affordable payments for the tenants of those homes.
People Before Profit TD Richard Boyd Barrett said at a meeting of the Oireachtas committee on housing on Thursday that it is "alarming" that the LDA cannot yet say how much rent will be at its first big development at Shanganagh, Co Dublin.
However, Government TDs at the meeting defended the cost-rental plans, with the Green Party's Steven Matthews arguing they could be a "game-changer".
His party colleague Francis Noel Duffy described the LDA's working assumption that 75 per cent of the homes it delivers will be cost rental as "excellent".
Under the Government’s Housing for All plan to tackle the housing crisis, the LDA will be the State’s primary channel for the development of cost-rental housing. It will also deliver affordable purchase and social housing.
The LDA’s new chairman Cormac O’Rourke outlined the expected proportion of cost-rental homes to be delivered as he briefed TDs and Senators on the committee on Thursday on his organisation’s plans for more than 10,000 housing units to be provided in the short to medium term.
He told Social Democrats TD Cian O’Callaghan that it will take up to four years for the LDA to begin delivering about 2,000 homes per year, for cost-rental, affordable purchase and social housing. Mr O’Callaghan asked if the LDA is ruling out delivering private, full market-price homes. Mr O’Rourke said: “We do not see a role for ourselves in delivering housing for private sale.”
The cost-rental model of housing involves rates of rent that cover the cost of constructing and maintaining the homes, thereby delivering a rent for tenants of the homes that is below market prices. It is aimed at people whose income is too high to qualify for social housing.
Mr Boyd Barrett was highly critical of the cost-rental plans, suggesting the rents will be in excess of the approximately 15 per cent of income people pay for social housing. He said one non-LDA cost-rental project on Enniskerry Road will see rents of €1,200 per month, which he said is “completely unaffordable for many individual workers”.
Mr Boyd Barrett also raised concern that rising construction costs will impact on rents in LDA projects.
He suggested the LDA’s mandate was to take “very large swathes of public land” – where previously social housing would have been delivered – to be used for “a regime of so-called affordability but actually much higher than traditional council rents”.
He highlighted the case of the Shanganagh scheme in his own constituency, saying he was told the mix of housing there is to be 200 social homes, 306 cost rental, and 91 affordable purchase.
Construction at the Shanganagh site is expected to begin this year.
Mr O’Rourke told the committee that the LDA will try to deliver housing at as low a cost as possible. He said he could not say what the cost of rent or of affordable purchase homes in Shanganagh will be as the tenders for the project are still being evaluated and they will be subject to approval.
Mr Boyd Barrett said it was “quite alarming” that this is not known.
However, Fianna Fáil’s Paul McAuliffe said it’s “preposterous” to suggest that the cost of rent in Shanganagh could be known before the cost of the units has been agreed. He also suggested that the aim of cost rental is to compete with the private rental market, not to seek to roll out an expanded version of social housing.
Sinn Féin TD Eoin Ó Broin raised concern about the approach to such cost-rental projects.
He suggested the approach being taken is to have the cost of delivery of the unit set the rent for it irrespective of whether it is genuinely affordable.
Mr Ó Broin suggested the starting point should be setting an affordable rent at below €1,000 per month and then use the structure of the financing of developments to deliver this.