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Friday 19 October 2018

Radical report shows pathway to avoiding future crises while providing housing for those in need

(Stock picture)
(Stock picture)

Paul Mela

It's probably worth noting at the outset that the 'Future of Council Housing' report is not written by a pair of right-wing free-marketeers, and funded by a think-tank which doesn't believe in big Government.

It was funded by the Community Foundation of Ireland, an organisation which professes to "advocate a fair, caring and thriving Ireland", and co-authored by chair of national housing charity Threshold, Aideen Hayden, and UCD academic and chair of the Housing Finance Agency, Professor Michelle Norris.

Both are highly respected housing experts, committed to ensuring that people have access to secure, affordable and high-quality homes. So when they suggest that local authority rents are too low, that councils should cease selling their stock and a new funding model be developed for the sector, they're worth listening to.

Perhaps the most contentious recommendation is that tenants in under-pressure areas no longer be given the right to purchase their home.

This report is not the first time this suggestion has been made. There's many in the housing sector who question why the State would build a property at enormous cost, only to sell it on at a hefty discount.

While many dream of owning their home, unfortunately it's just not a reality for all. This report makes the point that the costs of building the property are rarely recouped in the sale price, and suggests that what's more important than home ownership is ensuring that good quality, well-maintained and affordable accommodation is provided.

This is where it gets radical. Currently, local authorities fund provision of social housing in most cases by drawing down Government funding. In times of plenty, the money flows and social housing is built, but during economic downturns it dries up. The report notes it fell from around €1bn a year at the height of the boom to just €55m in 2013, but has since risen to €561m.

But the best time to build is during downturns, as land is cheaper and construction costs more competitive. But if the Government has no money, it's a moot point. When the economy recovers and cash is flowing to State coffers, it's paying more than it needs to.

The second issue is around maintenance. Councils are again largely reliant on central Government funding, but it's not enough. So instead of investing all the time, the stock deteriorates to the point that expensive regeneration programmes are required.

There is also a 'perverse' incentive to sell stock to fund upkeep and repairs, it says.

The solution? Let the councils get on with the job.

The report says that evidence from other western European countries with large social housing sectors indicates that long-term, cheap loans that are repaid using rents represent best value for money.

Rents are linked to the cost of providing homes (the funding costs), and ongoing management and maintenance of the unit. Councils can plan maintenance programmes over the long term, because they have funding certainty, while Government avoids making politically unpopular spending cuts during economic downturns.

Tenants would be affected - average weekly rents are €50.63 - but the report suggests that many in social housing could afford to pay more. The cost-rental model is "generally significantly lower" than market rents, but also predictable as they would be fixed or linked to inflation. Those on very low incomes, who are really struggling, would be subsidised by the State. Over the long term, this system would be cheaper, the report notes.

We need more social housing, particularly in urban areas, and are playing catch-up after years of under investment. We know maintaining a home involves constant investment, but if works are regularly carried out the unit remains of high quality.

Regardless of the national economic picture, people always need homes. This report presents a radical approach to the problem of how to avoid boom-and-bust cycles of investment.

And for that alone, it's worth serious consideration.

Irish Independent

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