Ask anyone in the street if they know what the Land Development Agency (LDA) is and what it does, and you’ll likely draw a blank.
That’s despite the state body recently marking its third year in existence and it likely being the best chance we have of solving our housing crisis.
We did however hear about it in the Budget when it was announced that the LDA would be receiving another €1bn from the taxpayer, to bring its total reserves up to €3.5bn. That’s a hell of a big wallet for an incognito outfit.
So what is it? What has it been doing? And could a very recent turnaround in the LDA’s game plan prove to be an ace in the hole for a Government which appears to be failing when it comes to making a real difference in housing?
Despite being launched in September 2018 amid great fanfare by former housing minister Eoghan Murphy, it has since emerged that it was launched with just two staff — both seconded from other bodies (not full time appointments).
And if you asked for the LDA’s address to send them a birthday card, there was none. It had no offices. So the LDA was certainly all singing and dancing for its press launch (two of them at least and in someone else’s office), but ready for lift off? Nope.
But it might yet be a case of the tortoise and the hare for the LDA which by concept at least, remains the wisest and most solid idea to be adapted by Government to sort the housing crisis since Help To Buy.
It’s just a pity they didn’t switch it on with some octane in the tank.
The plan was, and still is:
-Set up a state organisation which can source, acquire, organise and feed land into the national house building machine in the same way as has successfully been done in countries like Austria, Germany and the Netherlands.
-Move towards managing down the cost of land and direct end usage, in order to produce more genuinely affordable homes. Again as per the countries mentioned. Initially, the LDA would start with low hanging fruit — existing state owned land resources. Later, it would move on to acquire land from the private sector, possibly agricultural land which could later be rezoned for residential.
By cutting out the giant windfall component which traditionally comes with agricultural land rezonings in Ireland, the resulting housing should also be significantly cheaper.
So the LDA started out by finding itself some offices and then hiring some actual staff (surveyors, procurement people, architects and so forth). Three years on it has a crew of 60. So that should be enough.
And it went about the country trying to secure tracts of State land from a smorgasbord of possessive agencies like Iarnród Éireann, the HSE, the defence forces and so on. Then it took these lands to the planners.
The treacly wheels of State moved slowly alright, but in fairness so too does any form of land development activity, whether in the private or public sector.
And maybe for once that pace of State action could prove fortuitous.
Because a recent reassessment of the LDA’s mission under the Programme For Government, combined with the interventions of the latest housing minister, has apparently caused an about turn in the final segment of the LDA’s objectives.
All this could eventually see it play a far more important role in providing genuinely affordable homes.
Private sector-driven Fine Gael policy tended in practice to discourage build-and-hold social housing. Instead it both encouraged and enabled a foreign investment funds’ feeding frenzy in the Irish housing market, which has without a doubt increased housing provision.
But it has also caused rents to rise, driven small landlords out in large numbers and made it more difficult for house hunters to buy a home, because they’re now competing with investment funds at every turn.
This meant the LDA, as first envisaged, looked like becoming yet another State machine for shovelling publicly-owned land assets into the mouths of overheated big fund boilers.
But following that recent reassessment from Housing Minister Darragh O’Brien and various political parties, the LDA has a new endgame in mind.
Sources say that since the Programme For Government, the LDA has been moved strongly in the direction of cost rental, with as much as two thirds of its output to be earmarked for it.
It will also provide so called “affordable” housing for private sale as well as regular social housing. But cost rental aimed at middle earners is now on point for its mission.
Just as before, the LDA finds the land, undertakes the planning application, contracts the building of a block of two bedroom apartments.
But now, instead of horsing it over to Cuckoo Incorporated to be let privately at rates that make the pips squeak, it holds on to that block and rents it at a level that pays for its costs over time.
Sources say rents of €1,250 per month for two-bedroom apartments in Dublin that would normally cost €2,200 plus, are part of that plan.
And, perhaps surprisingly, the LDA is now also looking at mechanisms for holding that property on behalf of the State, indefinitely.
This is, as the man says, a game-changer on what we have so far seen in Government housing policy since the crash.
At a time when the investment world and its wife — encouraged by Government — is landing in Ireland to buy up housing to rent at huge profit, one arm of the State finally might be breaking away from the default position of the taxpayer paying top dollar for rents, much of which go straight out of the state.
Call it cost rental, but if you’re also holding the property for the State, then there’s not a whole lot of difference from the best aspects of the social housing model of old.
But there are some. Not least is the fact that the rents won’t be nominal, they need to pay for construction and management in the long run.
But they will be will be genuinely affordable and aimed at squeezed middle earners in the €45,000 to €75,000 wage bracket.
Through initial sites at Shanganagh in Shankill, south Dublin, Colbert Station in Limerick and Dundrum Mental Hospital, the LDA is now determined to construct a bank of cost rental units which could run up to 10,000 to 15,000 units held by the State.
Unlike social housing, the management of these would be contracted to the private sector.
What’s more, sources say the LDA is now preparing to invite developers to provide it with parts of sites with permission but not yet developed.
All of which could be the foundation stone of a defined and all-new cost rental sector in Ireland that lights the way for affordable housing going forward.
With the LDA’s seemingly solid and sensible tortoise finally creeping onto the start line of the housing race, we can expect 2,000 units per year from next year starting at its site in Shanganagh.
But the State-run ‘hare’ in this race is Nama which, by comparison, is burning rubber.
A recent report stated Nama has 1,300 new homes under construction and 7,300 in the planning process with an estimated 1,400 residential-ready acres in the tank. Nearly 9,000 homes.
As per its remit, these are to be sold off to the very highest bidders, and, of course, to the investment funds.
Go figure. Go tortoise!!