Delivering genuinely affordable homes for working people to rent and buy will be one of Government’s biggest challenges in 2021. Despite the pandemic, prices continue to rise. Data from Daft.ie, the Residential Tenancies Board and a range of industry sources all show a one-way trend.
Meanwhile, supply is falling. According to the Residential Tenancies Board, since 2017 there has been a loss of 20,000 rental properties in the market.
Due to Covid-19 restrictions home completions for 2020 will be significantly below the expected 22,000. Even if the Government’s 25,000 home-completion target for 2021 is met, it is 10,000 less than what the National Development Plan requires.
Housing to buy or rent is less affordable today despite a plethora of initiatives under the last government’s Rebuilding Ireland housing plan.
The Local Infrastructure Housing Activation Fund of €200million was launched in 2016. It promised to help deliver 20,000 homes by the end of 2019.To date just 2,162 homes have been delivered, and only 925 of these at a discount, although still too expensive for most working people.
The Serviced Sites Fund of €300million was launched in 2018. It promised to deliver 6,200 affordable homes to rent and buy by 2021.To date not a single home has been delivered, with just 153 under construction in Cork and Dún Laoghaire.
The affordability of these homes has also been questioned. Rents will start at €1,200 per month, with house prices ranging from €290,000 to €360,000, again well beyond the reach of many working families.
The Rebuilding Ireland home loan has been more successful. However, it only works where house prices are affordable. With the average loan offering in Dublin City below €200,000, is does not bridge the affordability gap there.
Applications, approvals and drawdowns have also been badly hit by Covid, down respectively by 50 per cent, 46 per cent and a staggering 70 per cent this year. The blanket ban on drawdowns for those on the Employment Subsidy Scheme has hit particularly hard.
Even the Help to Buy tax relief is of questionable value. Some 40 per cent of those who availed of the scheme did not need it. Critics, including the former governor of the Central Bank Philip Lane, claim it helped to inflate house prices.
Thankfully Fine Gael's failed Rebuilding Ireland housing plan ends in 2021. Fianna Fáil is back in charge of housing, and has promised a new plan this year. On the basis of what it has done so far there is no evidence that it will be any different to what came before.
In Budget 2021 Minister for Housing Darragh O’Brien secured just €110million extra for affordable housing. A sum of €35 million will deliver 350 affordable rental homes via Approved Housing Bodies. While this is welcome it is nowhere near the scale recommended by either the Housing Agency or the National Economic and Social Council.
Meanwhile the €75 million for a shared equity loan for private sector purchases has proved controversial.The scheme was designed by two property industry lobby groups Property Industry Ireland and Irish Institutional Property. It is based on a UK scheme introduced in 2013, which has been widely criticised for inflating house prices, assisting those not in need of assistance and putting both the home-buyer and taxpayer at great risk.
Some of these criticisms have been echoed by senior civil servants here. Last September the secretary general of Public Expenditure and Reform, Robert Watt, in an internal departmental email, said that "the property industry want an equity scheme because it will increase prices".
Separately, Government will claim that its revised Land Development Agency will deliver affordable homes. But given that the Bill defines affordable as “below the prevailing market price or rent in the local authority area”, this too is a questionable claim.
It seems that Fianna Fáil is back to its bad old ways of appeasing big developers irrespective of the consequences for working people.
So, is there an alternative? The answer is yes, but only if the focus is on bringing down the cost of housing.
The State must become involved in the direct delivery of large volumes of affordable homes to rent and buy. With government borrowing at negative interest rates, now is the time to invest in critical infrastructure.
Building public homes on public land in large mixed-income developments with social rental, affordable cost rental and affordable leasehold purchase homes can ensure rents below €900 per month and purchase prices below €230,00.
The Government also needs to increase competition in the construction sector to ward off recent increases in public housing tenders from private developers, a particular problem in Dublin.
Reforming the public procurement process and establishing a State construction company, with funding from the Irish Strategic Investment Fund, would assist greatly.
The Government must also work with the private sector to dampen market prices. Real active land management is more urgent than ever, and can only be achieved through a strong State agency with comprehensive CPO powers and a significant budget.
Home Building Finance Ireland should be repurposed to focus on providing developers who deliver genuinely affordable homes with low-cost finance.
The private sector residential development model is broken. It cannot deliver genuinely affordable homes for working people. A new approach is urgently needed.
Unfortunately, based on Fianna Fáil’s performance to date, that will require a change of government.
Eoin Ó Broin TD is Sinn Féin’s housing spokesperson