The Housing Figures Don’t Stack Up

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rory

From top: Simon Coveney TD and Minister of State for Housing and Urban Renewal Damien English TD 

The Rebuilding Ireland Plan has allocated insufficient funding, is manipulating the use of the term ‘social housing’ and misleading people with its promises

Dr Rory Hearne writes:

The government has been responding to the Apollo House action by stating that dealing with the housing crisis is its “number one priority” and that their housing plan, Rebuilding Ireland, will address the crisis through the investment of €5bn in “a truly ambitious social housing programme of 47,000 units to 2021”.

Minister Coveney claims that “There’s a real acceleration happening here in terms of delivery” and has stated that there will be more than “21,000 social housing solutions provided in 2017”. With Budget 2017 providing “for a very significant increase in housing funding (of €1.3 billion).

But the Minister’s figures and the Rebuilding Ireland Housing Action plan just don’t add up.

graph1

The graph above is the forecast provision of social housing in the Rebuilding Ireland Plan from 2016-2021. But in this you see that the new construction of social housing (represented by dark blue shade at the bottom) is only a very small proportion of the overall 100,000 ‘social housing’ units to be provided over the next 5 years.

The majority of ‘social housing’ is in fact not new build social housing at all but are various housing support schemes provided through the private rented sector such as the Housing Assistance Payment and the Rental Accommodation Scheme.

These social housing ‘solutions’ (as the Minister’s refers to, note change of language from ‘new build housing units’ to ‘solutions’) are temporary, do not provide tenants with security of tenure and most importantly do not increase the much needed supply of real permanent social housing homes.

The schemes such as RAS and HAP have not met their delivery targets due to lack of availability of private rental housing (thus the governments social housing strategy also exacerbates the rental crisis – as it is taking supply from a sector that requires greater supply – a third of all tenancies are state funded social housing schemes.These should not be classified as social housing as it is not providing a secure form of tenancy).

Of course the HAP schemes suit government because they can reduce the housing waiting lists and make it appear as if the housing crisis is being dealt with – also while subsidising private landlords and avoiding allocating the necessary increase in funding to government/local authority state provision of affordable housing.

The Rebuilding Ireland Quarterly Review published in November gave the first official figures for what is represented in the graph above and breaks down the 47,000 ‘new social housing’ units figure.

This outlines that of the 47,000 social housing units by 2021:·

It is expected that 26,000 units will be built (construction, voids, Part V) exclusively for social housing

11,000 will be acquired (by LA, AHB & HA) from the market

And 10,000 units will be leased by LAs and AHBs – this will be a mix of units from the existing housing stock and newly-built units

Now the key figure here is the new build one because this provides additional housing supply. This is particularly important in Dublin, the commuter counties and other large cities (Galway, Cork) which need new units built and do not have the same vacancy level as other parts of the country. So the actual figure for ‘new build’ social housing units is 26,000 units (just over half the headline 47,000 figure).

Now as is mentioned this also includes bringing local authority voids back into use and new housing built under Part V (the 10% social housing provided in large private housing developments). But Part V delivered just 65 units in 2015 (but 286 were in progress).

Given that Part V delivered 3,246 units in 2007 (4.5% of total 71,000 private units delivered), and that was when Part V was 20% of all developments – which has since been reduced to 10% (but developers could pay cash to the local authority in lieu of the units and this is no longer available), then using the same percentage, then on the basis of 25,000 private units per annum, Part V is likely to deliver no more than 1,250 units per annum in the coming years.

That brings the 26,000 ‘new builds’ down to 24,750.

It was also estimated that 800 local authority voids would be brought back into use in 2017 so taking that away it leaves us with 23,950 new real social housing units planned to be built between now and 2021: which is 3,991 units per annum.

At that rate of delivery it would take 22 years to house all those of the current social housing waiting lists (90,000 households) into real permanent social housing homes.

How can that, in any way, be deemed an acceptable time frame of delivery to address the crisis? Particularly given that housing need is increasing significantly.

So what about the increase in the allocation in social housing investment in Budget 2017? The total exchequer Housing allocation in 2017 will be €1.2 billion –up from €814million in 2016.

However this is the same trick – the main increase is on temporary social housing through the private rental sector. Current (mainly spent on private rental sector schemes and leasing from private sector) increases from €382m to €566m while capital expenditure (includes new building and purchase of permanent social housing) only increased by an additional €150 million from €432m in 2016 to €655m in 2017.

But the ‘housing’ capital budget appears also includes €50m for an ‘infrastructure’ fund for local authorities to enable the development of private sites for housing, the payment for previous social housing already built by housing associations, the mortgage to rent scheme, urban regeneration, €70m for retrofitting existing social housing stock, €45 million for grants for private housing and funding for schemes such as the Pyrite Remediation Scheme. So while we don’t have an exact figure we can see that the actual budget allocation for new building (and purchase) of social housing is certainly under €400 million.

Therefore, the social housing units outlined in the Rebuilding Ireland plan are in fact largely various forms of private sector and privatised housing delivery. They are dependent on various forms of private financing, ‘off-balance sheet’ mechanisms, Public Private Partnerships, acquisition from the private market and delivery from Part V mechanisms.

The plan itself acknowledges that securing the social housing output is “dependent on a number of critical factors” including, most importantly,

“A functioning private residential construction sector, with levels of supply to meet demand (delivering 10% social housing units under Part V and providing a supply for targeted acquisitions)”.

Social housing provision is being privatised onto the private rented sector– which has meant a failure to achieve social housing targets and reduced private rental stock available to the wider population. This is not a ‘social housing’ strategy!

And this is where the plan ultimately fails. Its output of social housing is dependent on a very significant increase in supply in the private housing market which has already proven in its inability to do so.

What is required is an increase of the social housing capital allocation to €2bn per annum to local authorities and housing associations to ensure the building of at least 12,000 new permanent social housing units. This is alongside the changing of NAMA’s mandate to prioritise its social mandate over the maximising financial return and to ensure the 20,000 units it builds are affordable and public housing units – and to use its 3bn cash reserves to build an additional affordable and social 30,000 units.

It is only when we get close to building at least 20,000 new affordable and social housing units per annum that we can get close to addressing the national emergency of the housing crisis.

Ultimately the only guarantee of affordable supply of housing to a broad range of income groups (from the lowest income to middle income workers) is by the state through local authorities (with support from Housing associations). A social mix in developments can be achieved by the state building affordable housing available to different income groups.

This should be a mix of traditional public housing, cost rental housing, shared ownership, equity partnerships and cooperative housing. It is the time for a ‘New Deal’ in housing where we take this opportunity to ensure the provision of affordable and high quality homes as a right to all in this country.

It is great to see that Home Sweet Home’s Emergency Housing Plan includes these ideas as some of its core proposals.

Home Sweet Home outlines that there should be the provision of “a minimum of 10,000 new social/public housing units owned by Local Authorities and Approved Housing Bodies per year for the next decade in order to clear all social housing lists”.

The government should “suspend all sales by NAMA of land and assets and use its finances to deliver 10,000 new social and affordable housing units for families and low-income households”.

Most importantly Home Sweet Home outlines that this new social and affordable housing building programme can be financed through “ceasing all tax cuts until the current housing and homelessness crisis has been averted”. It states that it “is morally reprehensible that we have so far given more than €2.5 billion in tax cuts while homelessness has doubled and thousands of children are spending their childhoods growing up in hotel rooms”.

They also highlight correctly that “should borrowing be necessary, the National Treasury Management Agency (NTMA) has borrowed €500m at an interest rate of 0.81%. This low cost borrowing could provide up to 5,000 social housing units per year”. F

urthermore, they point out that in 2014 the Irish League of Credit Unions formally proposed making up to €5bn available for social and affordable housing schemes but “two years on and Government has yet to formally respond. This source of funding should be accessed as a matter of urgency”.

The reality is that the government in its Rebuilding Ireland Plan has allocated insufficient funding to the new build of permanent real social housing homes. It is manipulating the use of the term ‘social housing’ and misleading people with the figures it is using in order to suggest its plans will address the crisis – when in fact there is much less new build of real social housing in the plans than the government is trying to portray.

Rebuilding Ireland is a fundamentally flawed plan as it driven more by an ideological aversion to the state building affordable homes than evidence-based policy solutions based on meeting the housing needs and right to housing for people.

The Plan is based on the taxpayer incentivising and subsidising the private construction industry and private speculative finance through the various private rental social housing schemes, the ‘help-to-buy’ subsidy (for which there was no cost-benefit analysis done!), Real Estate Investment Trust tax breaks, the sell-off and leasing of local authority land to developers and the sale by NAMA at discount of land and property to vulture funds and investors.

The alternative approach outlined above is, therefore, urgently required. And that is why it is really important that the Apollo House and Home Sweet Home campaign gain sufficient public support to achieve this policy change.

Dr Rory Hearne is a policy analyst, academc, social justice campaigner. He writes here in a personal capacity. Follow Rory on Twitter: @roryhearne

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41 thoughts on “The Housing Figures Don’t Stack Up

  1. scottser

    …and the Rental Accommodation Scheme.

    These social housing ‘solutions’ (as the Minister’s refers to, note change of language from ‘new build housing units’ to ‘solutions’) are temporary, do not provide tenants with security of tenure

    nonsense, of course they do. a RAS tenant is deemed to be a council tenant in private rented property. if the landlord wants the property back then the local authority have to rehouse, usually in the next available unit which could be either an orthodox council property or a voluntary unit.

    ‘doctor’ my hole. i wish bs would stop pandering to this gobsheen’s pretensions.

    1. realPolithicks

      “if the landlord wants the property back then the local authority have to rehouse, usually in the next available unit which could be either an orthodox council property or a voluntary unit.”

      Is this comment meant to be a joke. This is exactly what the problem is, there are no local authority “units” available, so if a person has to leave the rented property they often have no where to go…that’s how they become homeless.

      1. scottser

        it’s not a joke – local authority units become available all the time. they may not be building but they are leasing, capital funding and buying properties.

        btw, i was referring to the rental accommodation scheme in my post above, not regular private rental. RAS is considered a final offer of social housing and provides lifetime security of tenure, which is something the good ‘doctor’ fails to understand.

        1. scottser

          yes, the ‘doctor’ thing gets my goat. it shows him to be a pretentious w@nker. and dav, i’m over ten years working with homeless and i’m more of an expert than you or hearne.

      1. Hank

        Well perhaps a party of landlords aren’t the best people to be tasked with improving the current situation for tenants.
        I just got landed with a €200 a month rent increase as a direct result of that genius Coveney giving notice before introducing a cap on how much landlords can increase rents by.

        Thanks Simon, that’s really fixed the problem.

        1. Anne

          you have to be given 3 months written notice…to come into effect when the lease is up..not in advance. That notice period might preclude your landlord from increasing your rent by more than the 4% allowable.

          Ring Threshold.

          1. Hank

            The increase doesn’t come into effect until March so they’ve given me 3 months notice.
            They’ve also provided me with 3 similar and similarly overpriced properties (which I’m pretty sure are all also owned by them) in the same area with similar rents so, legally if not morally, they’ve covered themselves.
            The problem is I live in a very desirable area and the lease that I signed when I moved in has expired so I’m not in a very strong position to negotiate.
            If I protest it, they know if they put it on Daft, there would be a huge line of people wanting to move in.
            There are a lot of people in worse positions than me. I’m reasonably well paid and have no dependents but still with rent, car insurance and the general cost of living a reasonably frugal existence all spiraling ever skywards, I’m finding I have to cut corners all the time just to survive. A mortgage would be cheaper but, if you live in Dublin and don’t have parents that are in a position to help with a deposit, it is nigh on impossible to live and save the necessary 20% downpayment.
            The problem is we have a government who have actively created a situation where accommodation is a commodity as opposed to a social necessity.

          2. Sheik Yahbouti

            Hank, I wonder when young professionals like yourself are going to get sick of being “frugal” and demand the right to actually live from our current crop of shit bag politicians. My own generation protested as best we could, but there were too few of us and too little solidarity from our fellow suffering citizens. Too concerned with being obedient and scared of losing the little they had. I have high hopes that your generation could be the one that takes that final step – am I doomed to disappointment again?

          3. Anne

            Hank/Increasing Displacement..

            You should ring Threshold.

            If you’re in a rent pressure zone, he’s not allowed increase the rent by more than 4%.

            Here –
            http://www.threshold.ie/download/pdf/rentpredictabilityfaqs.pdf
            Q8.
            If I am a tenant in a Rent Pressure Zone, how can I be sure that the rent I am
            asked to pay is in line with the Rent Predictability Measure?
            Your landlord issues you with a notice of rent increase when such an increase is due. In this notice the landlord is required to provide information
            and the calculations that demonstrate that the rent increase is not more than 4% p.a. for the period since the rent was last set . A rent increase calculator
            and sample rent reviews will be available on the Residential
            Tenancies Board website, http://www.rtb.ie , to assist you in determining the maximum increase permitted. Sample rent review notices for rent pressure zones will also be available.

          4. Anne

            You might find this helpful also –

            http://www.rtb.ie/docs/default-source/legislative-changes/new-measures-introduced-in-line-with-rental-strategy-23-12-2016.pdf

            In page 1/2, there are examples given of how the 4% can be worked out, for people in your exact situations, where the rent is coming for a review.

            It shouldn’t be more than 4%.. 200 euro increase? I take it your rent wasn’t 5k a month.

            Don’t agree to anything until you make sure it’s allowable. I had a co-worker whose landlord – also a solicitor by the way was trying to increase her rent by 400 euro a month, a few months ago, after she only there for a year. He wasn’t long grovelling up to her though when she became aware of the legislation and was advised of the enquiries she was making.

            There’s plenty of the gougers not following the law. Look into your rights.

      2. martco

        (I’m literally laughing my bollox off here)
        you cannot see ANY conflict of interest here? or do you reckon on them using Chinese walls. inside their heads. or something.

        1. Andy

          Do you reckon he makes more money from being a politician than he does from being a landlord?

          So let’s take this to its logical conclusion;
          No doctor can be health minister,
          No lawyer can be justice minister,
          No teacher can be education minister,
          No farmer/culchie can be agriculture minister
          No one with a phone can be communications minister
          Etc etc etc

          So who could be housing/environ minister? Can’t be a landlord, can’t be anyone with a house they own as they’re benefiting from tight supply as prices increase, can’t be a renter as they benefit from securing their tenure to the disadvantage of future renters. So effectively it has to be a homeless person. With their stellar life skills I’m sure they’d solve the problem overnight.

          1. Stev

            Congrats! You win dumbest comment of the year and it’s only the 5th Jan! Are you another persona for Louis le moron?

          2. Turgenev

            False equivalence. The next in that list of experts would be an architect as housing minister.
            If you wanted to make a genuine list of people who might be excluded from being ministers, what about
            No drugs company executive should be health minister
            No monopolist textbook publisher should be education minister
            No water company executive should be environment minister
            No seed multinational lobbyist should be farm minister
            No shipbuilder should be fisheries minister
            No eurobanker should be minister for enterprise
            No alt right propagandist should be…
            (But meanwhile, when Ireland actually solved its most terrible homelessness crisis, in the 1930s to 1950s, it did so by massive building of council houses and flats. The same building programme kept house prices damped down to a level where people on ordinary wages could save, get a loan and buy a home. It’s hard to understand why this solution, which worked well before, is not adopted.)

          3. Andy

            @Turgenev
            Disagree – architects derive their core income from construction so how are they not conflicted? Essentially, you list can be summarized as no member of the “Elite” (as defined by the average SJW with a blog) can hold ministerial office?

            As to your second point, unrelated to this sub-post chain, I agree. There needs to be a large increase in state/LA sponsored social house building.

            However, marrying that with the requirement* for mixed tenure is the problem. No longer can you have large concentrated social housing. How do you have state sponsored developments where a proportion of end-units are sold to private owners? Mr Hearne et al want a much higher proportion of social units per development – How many private buyers would want to buy units in a development with >30% or >40% social tenants? I’d imagine (i) it wouldn’t be that many, or (ii) the prices would have to be very very attractive (more subsidization akin to the sell off existing council houses at huge discounts to social housing tenants)

          4. Sheik Yahbouti

            Your disagreeing with Turgenev doesn’t make him incorrect. it makes you incorrect, as is perfectly obvious.

  2. Jake38

    “What is required is an increase in the social housing capital allocation to €2bn per annum….”.

    From where?

      1. :-Joe

        Ah.. jayzuz, that would make common sense…

        Are ye losing your mind…. or wha’?

        You’ll never get into power with that sort of carry-on Ted…

        :-J

  3. PaddyLicken

    RAS and HAP are good value and perfectly effective in scenarios of normal supply, if it puts a roof over the head of a person/family in need then it’s an effective solution. Just building social housing for everyone under a certain threshold is ridiculous and doesn’t appreciate the range of difficulties experienced by those looking for housing. some will need a family home, some a helping hand. one size doesn’t fit all

  4. Kenny Plank

    I don’t think you should be using a phrase like “Stack Up” without a trigger warning for the Mullally Muffia Millennial readers….

  5. Ferret McGruber

    “The Plan is based on the taxpayer incentivising and subsidising the private construction industry and private speculative finance through the various private rental social housing schemes, the ‘help-to-buy’ subsidy (for which there was no cost-benefit analysis done!), Real Estate Investment Trust tax breaks, the sell-off and leasing of local authority land to developers and the sale by NAMA at discount of land and property to vulture funds and investors.”

    And that’s without mentioning the ridiculous tax incentives (meaning paying no tax) being used by vulture funds, amounting to billions in lost tax to the state.

  6. Barry Richards

    What taxes does Rory want to raise? Money does not grow on trees! So many academics with grandiose plans! Unfortunately not as fortcoming on the tax rises necessary to pay for their pie in the sky ideas. The Irish media never challenges them.

  7. :-Joe

    Rory will ye just stop all this nonsense and run for a seat in the government….

    Preferably a seat near Enda Kenny’s throne where you can verbally slap him every other half-hour and wake the funker up…

    Our minister for housing and whatever it’s supposed to be called is also a lanlord and has a sideline in property speculation and development…

    Coincedences everywhere… nothing to see here…

    :-J

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