Rebuilding Ireland

The latest government housing strategy, ‘Rebuilding Ireland’, launched last week by Simon Coveney is based on five approaches, or ‘Pillars’:

• Address Homelessness
• Accelerate Social Housing
• Build More Homes
• Improve the Rental Sector
• Utilise Existing Housing

Address Homelessness:  6,107 people were recorded as homeless in May ’16 and that figure is still growing.  This Pillar promises extra inter-agency support in terms of healthcare, in particular addiction and mental health.  It aims to work on the underlying issues that cause people to lose their home, identify people at risk and provide innovative solutions such as rapid build housing and the acquisition of vacant private properties by the Housing Agency.  The aim is that by mid-2017 hotels will only be used as emergency accommodation in very limited circumstances.

At present, 1,078 homeless families, including 2,206 children, live in hotels and in bed and breakfasts. The Dublin Region Homeless Executive estimates that €47 million will be spent on emergency hotel accommodation in the capital in 2016.

Rapid Build housing started last year but became contentious in terms of cost, design and location with only 22 of the then proposed 500 being built, so there is some scepticism over this part of the plan.  Also the acquisition of vacant properties is due to start immediately with vacant homes from investment or loan portfolios of banks and other financial institutions, but many of these are not actually vacant so this part of the plan may not run as smoothly as expected either.

Accelerate Social Housing:  Up to 130,000 people and families are estimated to be on local authority housing lists.  47,000 social houses are to be provided by 2021 at a cost of €5.35bn.  This will be achieved through various social housing programmes in collaboration with local authorities, Approved Housing Bodies, the National Treasury Management Agency and the private sector, and will include 1,500 rapid build homes.  Over 450 new homes are to be built around the country through public-private partnerships in this phase, with more to be announced by the end of the year.  Building was announced for the greater Dublin area last October and the entire scheme is to be worth €300m.

The NTMA is examining the feasibility of setting up a funding vehicle along with the private sector to invest in social housing in a way that does not impact the Government’s balance sheet. Such a fund could bring in capital from the Ireland’s Strategic Investment Fund and fund the infrastructure to develop large development sites.  This special purpose vehicle could provide about 5,000 units over 5 years for social housing purposes.

Build More Homes:   The third pillar will focus on improving the viability of housing construction, with the objective of doubling the completion level of additional homes in the next four years to deliver over 25,000 homes on average per annum and will include developing infrastructure to open up new lands for development.  A key objective will be to increase housing stock in regional cities with a balance of owner occupation and built to rent.

Improve the Rental Sector:  There are currently 324,000 tenancies registered with the Residential Tenancies Board.  Almost one fifth of our population now lives in rented accommodation. The focus here will be to expand the build-to-rent sector, to implement affordable renting initiatives and to introduce legislation to govern tenancy terminations.

Utilise Existing Housing:   According to the CSO there are 198,358 vacant homes in Ireland. The final Pillar aims to ensure existing housing stock is used to the maximum degree possible.  This will involve urban and rural renewal projects to bring vacant and underutilised property back into use for both private and social housing.  The Housing Agency plans to spend €70m on acquiring 1,600 vacant properties.  It will be made easier to convert city and town centre commercial property to residential use, and there will be funding support for local authorities under the Town and Village Renewal Initiative.

Overall it is an ambitious plan which presumably will give hope to many including people experiencing homelessness and also those young adults who would like to set up home in the near future. However, it will take time to come to fruition.

A recent ESRI study showed that young adults are experiencing more difficulties than other age groups at the moment.  High rents and the need to save large deposits for mortgages mean that many young people have lost hope of ever owning their own home.

The average deposit needed in the Dublin area is now €50,000 and €20,000 outside of Dublin.  Given present employment conditions where many young people are earning less than older colleagues and many are on temporary contracts it is practically impossible for many people to have any kind of reasonable lifestyle and pay rent while saving for a deposit.

Improving the nebulous problem of the rental sector is all a bit vague at the moment although there is a promise of some help for aspiring first time buyers to be published in the Budget.

When it comes to housing the government has two options, either lower rents and house prices or subsidise those who need help.  Given the fact that so much extra housing is needed it is not feasible to lower prices as the building industry claims to be under pressure as it is and will certainly not be encouraged to build more houses if prices are to go down.  Regardless of how many houses the government can magic up with various schemes, they need the private sector on board. That is positive news for anyone linked with the construction sector.

Measures to subsidise building either directly or indirectly may allow builders to build profitably, and measures to help first time buyers may help people afford these houses but could also trigger a rise in prices.  Because housing is so badly needed it looks like the government has no option but to play ball with the building industry that is now uncompetitive, mainly because it overpaid for and is now sitting on land and refusing to develop it.

The irony of bailing out an industry that is effectively then protected from the consequences of its previous collapse will not be lost on many; it echoes the banking sector bailout but perhaps will carry less political consequences.