From top: Minister for Finance and Public Expenditure & Reform, Paschal Donohoe with Minister for Housing, Planning and Local Government, Eoghan Murphy; Tony Groves

Money is not a problem. A simple sentence, repeated over and over by Housing Minister after Housing Minister. Five words designed to give the impression that the Government are throwing all the necessary resources at tackling the housing crisis. Money is not a problem.

Maybe money should be a problem. In fact, given Fine Gael’s self-styled nonsense about being the party of the fiscally responsible, money should be placed at the very centre of the housing crisis.

Minister for Finance, Paschal Donohoe nearly guffawed on RTE last week when he parodied Oliver Callan parodying himself. When told Miriam that “I’ve only got a certain amount of money” I grimaced. No one in the RTE studios thought to ask why the Minister(s) for Housing keeps saying “money is not a problem”, when the Minister for Finance clearly thinks very differently.

But this little insight into the lack of Fine Gael economic insight aside, the real issue is that money really isn’t a problem. It’s the squandering of it that is.

I’ve been lucky to sit down and chat with a host of experts on the housing crisis, all of whom agree on one thing. Fine Gael aren’t putting the resources into the right areas. The economic reality is that this government, the one so obsessed with the Debt to GDP ratio, are burning money.

Take the homeless hubs, or as Mary McAuliffe calls them poor warehouses. The average of cost of housing a family in €69,000. Dublin City Council currently have over 950 vacant units in need of a refurbishment. The cost of the refurbishment would be between €30-50k and the works could be completed in a few months.

For €47 million we could give 950 families a home, a permanent home. Instead, in November 2017 alone over 1,530 families were accessing emergency accommodation. The average time spent in the emergency accomodation system is 3 years. In “money is not a problem” world that’s a cost of about €316 million. €316m to warehouse a national disgrace, or €47m to make a serious effort to address it.

If Fine Gael want to be taken seriously as custodians of the economy, and they do, then they need to address their economic lunacy in tackling the housing crisis.

But wait, there’s more. The current crisis isn’t just a homelessness crisis, there’s also a drastic crisis in the availability of affordable housing. Affordable housing should be, by definition, housing that is affordable to the average worker.

Taking the latest CSO stats on a double income household and current mortgage lending rules the cost of an Affordable Home should be in or around €240k.

Yet in “money is not a problem” world the state are buying homes and selling them to people at a 15% discount on the market value. Given that the average cost of a house in Dublin is now €365k this is not affordable housing, nor is it anywhere in reach of the average couple.

This wouldn’t be such a disgusting waste of money if it wasn’t for the fact that, as shown by the Ó Cualann Cooperative, family homes can be built for between €151-168K. That’s affordable housing. It can be done quickly, cheaply and to high building standards. I know, I’ve seen them.

The State could do this on a wide scale, but they are married to private developers and the “free-rigged-market”. The money that is not a problem, is going to developers, at roughly 2.5 times the cost per unit when compared to the Ó Cualann Cooperative.

Finally, for today, there’s another black hole that is swallowing money that is not a problem. It’s called the Housing Assistance Payment (HAP) and it devours over half a billion euro a year.

HAP as a temporary scheme is a good idea, as architect and activist Mel Reynolds told me, “you need to keep the patient alive”. But as a long term strategy it is disastrous, socially and (are you listening Fine Gael) economically.

The average HAP payment is €825 per month. A mortgage of say €190k over 20yrs at 3.5% would have a monthly repayment of €800. Now, if the government wanted to they could borrow money at near 0% rates, build houses, or pay someone like Ó Cualann to build them and rent the homes on long term leases, SAVE the state a fortune in HAP and other rent assistance schemes and still own the underlying asset.

These things aren’t complex. What we are doing now is complex. Fine Gael are supposed to be the party that fixes the economy. But they are burning money by choosing the most costly solutions to the crisis.

We need a real plan, it’s no longer any good Eoghan Murphy sticking his finger in the dyke, unless there’s an affordable housing scheme getting built behind him. So listen out for the “money is not a problem” mantra and tell them straight, “no, but it should be, it is the economy, stupid”.

Tony Groves is the co-host of the Echo Chamber Podcast and blogs at EchoChamberPod. You can Subscribe to the Echo Chamber Podcast by clicking here for iTunes or here For SoundCloud.

24 thoughts on “Money Problems

    1. LennyZero

      “The cost of the refurbishment would be between €30-50k and the works could be completed in a few months.”

      How many months? Whats the source on refitting 950 units in a few months?

      1. Rob_G

        I am also interested as to where the 30-50k figure came from – is this from any published figures, or a best guesstimate?

  1. rotide

    I’d agree with your central theme that money is not the problem. Money is thrown at the housing/homeless problem hand over fist and nothing changes. I’d disagree that it’s how the money is spent and say (as someone who defendds the govt a lot) that it’s more down to a complete failure to properly tackle the problem in all facets, not just financially.

    I know how much you love constructive criticism Tony but I have to point out that this article wouldn’t get published by any half decent editor with the ability to read. You really need to explain to the uninitiated what the Ó Cualann Cooperative is and what the HAP is. You use both of these as central arguments and give no background on them whatsoever. A reader should not have to google central points of your article to understand it. Once is bad, twice is unforgiveable,.

  2. LeopoldGloom

    Those Ó Cualann Cooperative houses are grand and all, but they’re surrounded by wasteland, parked right on the M50, very near a few industrial estates and very near a halting site.

    A trip to the local shop is also risky depending on time of day

    For the area they are in, they cost too much.

    1. BobbyJ

      But the Ó Cualann Cooperative development demonstrates what is possible if local government provide co-ops with land to build (site location will vary from local authority to local authority).

      Co-ops build with profit margin of 5% in mind, private developers look for 20% minimum.

      1. Cian

        Are co-ops scalable?
        If the government decided to build 10,000 houses each year for the next 5 years, would co-ops be able to provide this (at 5% profit) or would they need to get the private developers to do this (at 20%)

        1. BobbyJ

          Surely a mix is possible (co-ops, local govt builds, baugruppen type collective builds, private developers, etc).

          But we’ll never know unless central and local government move away from current market only based (housing as a commodity) policies.

    1. Cian

      I disagree – a bad article. However I agree with him: the State needs to start building affordable housing ASAP.

  3. Cian

    Tony, where did you get your figures from?
    ” A mortgage of say €190k over 20yrs at 3.5% would have a monthly repayment of €800. “
    eh, no. Closer to €1,100 per month.

    Your figures are 70% of what they should be. I thought you were a “financial consultant”?

    1. Mayor Quimby

      a financial consultant who thinks 3.5% is an appropriate rate over 20 years!

      Says a lot about him

      1. Taunton

        3.5% is a fair representation of what a lot of people pay.

        4 years ago I started at 3.7, managed to get it down to 3.0

    2. realPolithicks

      I’m guessing that he means a mortgage of 190K with a 20% deposit which would mean 152K at 3.5% over 20 years..approx 882 euro per month.

      1. Taunton

        190k wouldn’t get you a garden shed in any urban center. This renders his numbers kinda pointless

      2. Cian

        I’m not convinced… 800/month would let you borrow 138K.
        – Perhaps he meant a 190K house, with a 27% deposit?
        – Perhaps he meant a 190K mortgage over 33 years?

        Or perhaps he wanted to make a comparison to HAP payments and the numbers didn’t fit so he just made them up?

  4. phil

    FG choosing the most expensive option is by design , they will never allow a socialized solution. I dont hear private landlords or hoteliers complaining , do you ?

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