New State body required to build homes and tackle housing crisis

Specialised body would all but eliminate administrative duplication in current system

Local authorities spent €1.5 billion acquiring 9,537 housing units in 2019. Photograph: Chris Ratcliffe/Bloomberg

Local authorities spent €1.5 billion acquiring 9,537 housing units in 2019. Photograph: Chris Ratcliffe/Bloomberg

 

The latest programme for government makes the same mistake as its predecessor, Rebuilding Ireland, in attempting to resolve the State’s social-housing problem by relying on its 31 local authorities.

Over the four years from 2016 to 2019 inclusive, the local authorities apparently delivered all that was asked of them and more. The headline figure is that they produced 100,108 housing units, 9.9 per cent in excess of the target.

Unfortunately, the waiting list for social housing fell by only 22,907. This implies an additional 77,201 applications for social housing.

Given this surge in demand, the targets are effectively containing the social-housing problem but not eliminating it.

A black spot continues to be homelessness or people in emergency accommodation. The numbers here increased 16.2 per cent to 6,277 during the last government’s term.

How then did the local authorities achieve their targets?

Total spending over the period was €5.4 billion. Of this, €3.3 billion (62 per cent) went on current spending. That is, no new housing unit or asset was created by this money.

Acquisitions of properties, the housing assistance programme (HAP) and the rental accommodation scheme (RAS) accounted for 88 per cent of current spending.

Under HAP, the local authorities pay landlords directly. However, the tenant must find their own accommodation and pay a rent contribution to the local authority based on income and ability to pay.

Spending on HAP increased 563 per cent over the four years. The average monthly rent subsidy in 2019 was €1,872.

Acquisitions

The big-ticket item, however, was the acquisition of existing properties. The local authorities spent €1.5 billion acquiring 9,537 units. In 2019, the average unit purchase price was €178,932.

A disadvantage of HAP and property acquisitions is that they increase rents in the private sector and lead to higher prices in the second-hand property market.

So what did the local authorities build? Looking at their capital or investment budget, total new builds over the period amounted to 17,904, 18 per cent of total output. But this figure is an exaggeration.

The local authorities appoint approved housing bodies (AHBs) to whom they give a maximum loan of 30 per cent as a contribution to the capital costs of new housing. The local authorities then claim these housing units as their output – which is clearly not the case.

The output of AHBs, essentially non-profit, charitable organisations, was 7,349 units, up 939 per cent over the period. The AHBs now produce more housing units than the local authorities.

What the local authorities actually produce is a relatively small number of expensive housing units. Total output was 5,627 at an average unit cost of €287,062. Given that much of the land is in local authority ownership, this seems to be an excessively high unit cost.

The other string to the local authorities’ bow is what are called voids – refurbishing unoccupied, dilapidated council–owned properties. This has all but ceased. It was down 87 per cent to a minuscule 303 units in 2019 – the average cost of refurbishing was €164,219 per unit.

The Rebuilding Ireland model prevents an out-and-out crisis – but it is not a long-term solution

Overall, the Rebuilding Ireland model seems to follow the line of least resistance in that other organisations and people are either paid or funded to achieve the targets.

On the administrative side, in December 2018, a joint Oireachtas committee on housing, planning and local government produced a damning report pointing to the lack of co-ordination between the various local authorities.

There are no common rules in assigning accommodation or how authorities treat emergency cases. They cannot even agree on a definition of homelessness.

Social-housing passport

Little seems to have changed. In the programme for government there is a recommendation to create “a social-housing passport to allow households move from one local authority to another”.

Why? There is no unified electronic system across all local authorities. If a prospective tenant applies in two local authorities, this would involve double counting.

The Rebuilding Ireland model prevents the social-housing problem from turning into an out-and-out crisis – but it is not a long-term solution.

The emphasis has to switch to capital spending – building more houses. The most effective way to do this is to establish a national building authority, employing specialised staff, with a singular objective of providing new housing units.

A national build authority could comprise of a single authority or a few regional authorities based on some city, urban or rural segregation. This would entail a diminution of the role of the local authorities, and staff currently employed by the authorities would be seconded to the new authority.

As well as providing a long-term specialised response to the social-housing problem, there would be significant cost-saving economies of scale as the administrative duplication that currently exists across the 31 authorities would all but be eliminated.

Dr Anthony Leddin is a former member of the department of economics at University of Limerick

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