Saturday 27 May 2017

Time to adopt system of 'best use' not 'last use'

O'Devaney Gardens
O'Devaney Gardens

Ronan Lyons

For those who have never been, O'Devaney Gardens is located off the North Circular Road, next to the Phoenix Park and within a five minute walk of Heuston Station and the Luas. Indeed, it is walkable to work - I live next to it and walk to Trinity every morning.

It clearly enjoys a phenomenal location but its history is more potted. It was built in the 1950s as a social housing complex to house almost 300 families moving out of tenements. However, the blocks started becoming deserted in the 1980s and 1990s as the country switched out of social housing and into private ownership, due to financial liberalisation.

The last of the residents moved out in 2016, although plans for its redevelopment long pre-dated the clearing of the 12-acre site. A plan for regeneration of the site - on a public-private partnership basis - were shelved when the housing market collapsed.

More recently, the site has found fame due to it being used for filming on the series Love/Hate. But the site is really an emblem of what is wrong with the housing system in Ireland at the moment.

For five years, there has been a worsening shortage of residential accommodation in Dublin, with just 5,000 new homes added in the city between the 2011 and 2016 censuses. By any thorough measure, this is roughly one tenth of the underlying demand, meaning that for every 10 dwellings that Dublin needed in the last few years, it got just one.

And all this time, Dublin City Council has had to sit on the O'Devaney Gardens site because neither the public nor private sectors had the appetite to redevelop it. The site captures all three elements of what is wrong with housing in Ireland currently.

The first aspect is construction costs. Even if the public sector didn't have the money to redevelop the site itself, if the city had a healthy private housing sector, private developers would have made the council an offer it couldn't refuse.

There are those who would view this as a loss to the city - and I'm sympathetic to this, as I'll explain below. But ultimately even if only private, for-profit housing had been built on the site, at least it would have helped redress some of that severe and chronic imbalance between supply and demand, with 90pc of demand going unmet by new homes in Dublin.

However, nobody made an offer - as to do so would have meant building on the site, which would not be viable given just how expensive it is to build in Ireland currently. This is particularly the case for apartments, which are precisely what should be built, in the main, on central sites like O'Devaney Gardens.

Suppose, though, that costs were low enough that private developers did want to buy the site. A second issue that emerges is around land use. If home providers were interested in that site, they would surely be interested in the adjacent six-acre military hospital or four-acre derelict site owned by the Department of Defence.

Or indeed in the 35 acres of McKee Barracks, apparently used now mainly to house the army's horses. But to bring all 60-odd acres into full use, this country needs an about-face on how its land is used.

Currently, we have a system of last use determines next use, with bus depots today in the same locations as tram depots back in the 1890s. What we need is a system where best use determines next use, with policymakers actively reconsidering what the optimal social use of a site is on a regular basis. As I've mentioned before, a land value tax internalises this, putting the onus on whoever owns the site currently, be they public or private sector.

But if construction costs were tackled and land use reformed, what would happen is that new homes would be built for those on average to above-average incomes. Nothing would be done for those on the lowest incomes.

A complete housing policy needs to tackle not just construction costs and land use but also housing subsidies too. I think it is reasonable to hope that people on all incomes could expect to afford accommodation on a site like O'Devaney Gardens - with ample green space and good transport facilities.

To do this, we need to drastically reform social housing and simplify it to one key principle: if you do not have the means to meet your accommodation needs, society will bridge that gap.

What this would mean on a site like O'Devaney is that it enables a non-profit Approved Housing Body (AHB), like Cluid or Respond, to open talks with a private developer. They would do so, leveraging the fact that they can offer the developer a 25-year lease - or indeed outright purchase - of, say, 200 of the 600 units that could go on the site.

The 'win' for the AHB is that by taking such a large quantity over such a long time frame, the agreed rent is well below the market rent. The 'win' for the developer is that with this pre-letting agreement, they can go and raise the funds to build and rent or sell the remainder.

And the 'win' for the council is that sites that they owned but couldn't use effectively are being used to house people of all incomes, reducing the fear that social housing would create a ghetto of deprivation if unsuccessful.

As it happens, O'Devaney Gardens is a site with too many, rather than too few, plans. The latest is for roughly 600 homes, including 100 houses. But finding a one-off funding solution for the prominent sites is not the same as solving Ireland's broken housing system.

To do that, construction costs, land use and housing subsidies all need fixing. And given the scale of the mismatch between supply and demand, particularly in Dublin, the sooner the better.

Ronan Lyons is assistant professor of Economics at Trinity College and author of the Daft.ie reports

Sunday Independent

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