Breda O’Brien: Government's latest housing plan is doomed to failure

The high walls of the Central Mental Hospital in Dundrum, Dublin, are a landmark for many. The site has the potential to become a landmark in an entirely different way, as a housing development that focuses not on the needs of the market, but of families. But will it happen?

The publicly owned land at Dundrum will be released by the Land Development Agency and will be sold to private developers to build more than 1,000 houses.

Relying on private developers is doomed to failure. Even if the development conforms to the planned 60 per cent private, 30 per cent affordable and 10 per cent social housing mix, private developers sell houses in order to maximise profit. That is always going to be at odds with the human right to shelter.

Minister for Housing Eoghan Murphy has defined an affordable house as costing €320,000. And yet, he has been lavish in his praise of Ó Cualann Cohousing Alliance, for whom affordable is closer to €200,000.

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Thanks to Ó Cualann, in August Alison Griffin and Kieran Roche, who have two children and another on the way, became the proud owners of a high-spec three-bedroom house in Ballymun. It cost them €177,000. Their mortgage will be €600 a month, a considerable saving on the €1,050 they were paying in rent. Another 10 families benefited in a similar way.

Apparently, Murphy does not believe that this kind of housing can be provided on a much bigger scale.

Why? All that is lacking is the imagination and political will to do something radical.

All that is lacking is the imagination and political will to do something radical

The Fine Gael-led Government has touching faith in for-profit developers but not much at all in what might be called social– or soft – developers. A private developer works by engaging contractors. Social developers do exactly the same and increasingly, the big contractors are happy to work with them.

Scale of profit

The difference lies in the scale of profit. Ó Cualann aims only to make 5 per cent profit in contrast to a minimum of 25 per cent profit in the private sector.

To date, the Ó Cualann model has been greatly helped by the fact that Dublin City Council provides the sites at a nominal €1,000 and waives development fees.

But this might not be necessary in the future for the model to succeed. The innovative people behind Ó Cualann – Hugh Brennan, Bill Black and John Moore – have come up with an idea that means people who can afford more would pay more. The houses would still remain affordable and no one would pay more than a third of their income on a mortgage or rent.

This model prices the houses according to people’s income and their ability to pay rather than on what the market dictates.

Take a couple whose gross income is €42,500. A two- or three-bedroom house would cost them €180,000 and the site price would remain at the nominal €1,000. With a 25-year mortgage, the repayments would be €786.22 per month, about 26 per cent of net income.

A couple earning €85,000 would pay €236,000, which includes €26,000 for the site. With a 25-year mortgage, their repayments would be €1007.22, 19 per cent of their net income.

So people on very different incomes would live side-by-side in identical houses but pay according to their ability. Some people would also be renting but with security of tenure.

People on very different incomes would live side-by-side in identical houses but pay according to their ability

There would also be an emphasis on facilitating people from the local area but not to the exclusion of newcomers.

Cost-rental model

It is a very different way of thinking about housing and a very different way of using public lands.

Some housing advocates have said that the cost-rental model is a better one than the co-operative housing model advocated by Ó Cualann. (One of the reasons it briefly appeared Catherine Byrne might not vote with the Government regarding the no-confidence motion in Eoghan Murphy, was because a cost-rental experiment is being conducted in her beloved Inchicore. If the appropriate infrastructure and local amenities are not in place, she has a point.)

Briefly, cost-rental means that a housing provider raises the finance to provide accommodation and then charges rents that are sufficient to cover current and capital costs. People on low incomes are subsidised.

There is security of tenure and once the initial and running costs are met, any profit is ploughed back into more housing. This avoids the crazy situation where the Government provides social housing, sells it to the tenants and then it is released on to the private market, even though it was initially provided in a highly subsidised way using public funds.

There is a lot to recommend the cost-rental model, but people in Ireland like to own their homes. It will take a long time before people trust the cost-rental model.

Meanwhile, for the families who have already benefited from affordable homes, the Ó Cualann model represents a dream come true.

Unlike what is likely to transpire in the Dundrum Central Mental Hospital development, where private developers will make their profits, indifferent to the lack of infrastructure, the pressure on local schools or whether local people will be able to afford to live in their own area.