Friday 25 May 2018

Home truths: Budget 2018 recycles old promises into new pledges

Paschal Donohue outside the Dáil last Tuesday before presenting the Budget to the chamber
Paschal Donohue outside the Dáil last Tuesday before presenting the Budget to the chamber
Mark Keenan

Mark Keenan

The blue suits of Government who like to get up early in the morning also like presenting their 'new' housing plans to the nation with all the 'old' unfulfilled promises rolled into them.

The suits are a bit like a gang of kids rolling around a big dirty snowball - of unfulfilled housing promises.

Round and round they go, rolling new promises into the old ones to make a bigger ball which they then park on our doorstep on Budget Day and say "Look what we've got for you!"

Last year's rolling exercises saw them produce the 'mega' snowball that is Rebuilding Ireland. It was largely made up of previous housing targets which were never met. Now Budget 2018 has taken that ever growing manky snowball of unfulfilled promises and rolled a few more new ones into it.

The growing problem for those of us charged with making sense of ever landing new housing promises from Government is the ever enlarging digging exercise required to determine which promises/targets are new and fresh in the latest big housing targets snowball and which are in fact manky old unfulfilled promises which have been rolled around in that snowball for years and years.

For example those who heard Paschal Donohue's speech could be forgiven in thinking that he was going to be spending €1.8bn on housing this coming year. He said: "This Government is going to spend €1.8bn on housing." Well maybe he is going to spend that €1.8bn, but it should have been crystal clear that he's planning to do so over the next four years and that €1.3bn of that amount had been promised already last year under Rebuilding Ireland.

Muggins here, one of those charged with making sense of it all on Budget Day, spent most of that day harassing officials at the Department of Housing to try to determine which bits of of the mega €1.8bn promises snowball were 'new' and which bits were those manky 'old' unfulfilled promises which are carried along as well.

After digesting the minister's speech and being none the wiser on that new/old divide, I emailed the department at 4.10pm to tell them that I was "confused" by the Budget announcements on housing. I had just two questions for deadlines by 5pm.

1. How many brand new social housing units were announced today?

(By "brand new" I meant homes to be built rather than acquired from existing stock and also homes that had never been announced before - as part of any other plan or tally before by Government until last Tuesday?)

2. How much money is being allocated to provide these "new" homes?

Initially I was informed that the officials were busy because it was Budget Day, and not to expect this detailed clarification soon (and they were busy in fairness). I did get a reply from the Housing Department at 7.10pm. And it was detailed. Here is the gist of it (rewritten for ease of digestion):

"The original figures under Rebuilding Ireland showed 26,000 new builds, 11 acquisitions and 10,000 leases - which adds up to 47,000 homes promised by 2021. With the extra state money, the state will be able to push through an extra 3,000 direct new builds and can also realign existing expenditure from acquisitions to other builds. In the big plan it means we will now see 33,500 homes built, an acquisition of 6,500 more existing properties for social housing and the leasing of 10,000 units."

Now, the big numbers to watch here are the numbers of homes "built" as opposed to leased or otherwise "acquired" because all of these other homes already exist. So leasing or acquiring them doesn't do anything to help the housing crisis.

So when we break down that big Budget snowball, the "new" stuff in it is the difference between 26,000 "built" homes and 33,500 - an extra 7,500 built over the next four years. That's less than 2,000 per year. This in a country in which we are told we require between 20,000 and 50,000 new homes per annum depending on who you talk to.

And now look at the additional money flagged - in reality an additional €500m over four years or €120m a year. That, at 200k a house (what they cost right now) is really working out at about 600 houses per year. That's the reality. The Government says the Budget promises 3,800 more over four years, so maybe they know where to get them cheaper. But there are other Budget promises which will undoubtedly help enhance the homebuilding climate.

In theory a penal levy on land hoarding should help push housing to the market. But if this impacts at 10pc over the next three years when house prices could increase by 30pc to 40pc in the same period, then this is a slight deterrant.

Then there's the new finance scheme. For a long time we have heard from builders that they can't get affordable bank finance for new schemes. The newly announced state finance agency, Home Building Finance Ireland (HBFI) is to be given a potential total spend of €750m. But once again at €200k per new home, the reality is that it can finance the grand total of 3,750 additonal small homes in the private sector - and over four years. That's less than 1,000 financed homes per year. So while the blue suits run around rolling new promises of 1,000 homes here and 3,000 homes there (over four years) into the big ball while failing to fulfil any of those promises made in years past - the experts say we need at least 20,000 per year. They're making a big balls of it.

Indo Property

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