Some solutions to the housing crisis
Commentators, Economists, Politicians, Financiers, Banking Institutions, Developers, Civil and Public Servants; they have all got it wrong.
They are focusing on delivering solutions within a system that is inherently flawed and not designed as fit for purpose. The focus is on systems and not the real problems.
Where has it gone wrong? Concentration on supply as an economic solution is not working. The reason is behavioural.
Concentration on Service delivery is not working. The reason is the flawed and inefficient delivery system.
Land acquired and sold on during the crisis by Nama is now being stockpiled and withheld for ransom prices expectations.
The cost of Public housing is unsustainable. Look at the hidden costs incurred, engineers, architects, administrators, social workers, with life- long maintenance, capital funding etc. This adds significantly to the unit cost. The consumer at the end of the supply chain has no choice and the tax payer bears the burden for an expensive and inefficient solution.
The challenge is therefore to provide choice by offering a simple solution. Public housing consumers exist because they have insufficient resources to self -provide. So, rather than building a Local Authority house why not, at an estimated half to one-third of the provision cost, provide approved consumers with the resources to self-acquire?
Here instead of building, the Local Authority would act as purchase advisor to a consumer unfamiliar with the legalities of buying a house. The approved consumer selects, within predetermined ranges, a house in a location of their choice. The property then theirs, with no life-long public maintenance commitment. They contribute to the purchase by a weekly affordable annuity.
This would double to treble pubic output for the same initial capital investment and deliver choice.
The challenge for the banking sector is to release capital at affordable interest rates. Irish mortgage rates are circa 2 percentage points dearer than mainland Europe. Yet they are charged the same interest rates as their European counterparts. This results in their achieving super normal profits on financing.
Developers must be advanced development credit by the Banking Institutions at levels that enable their entry into the market, where risk is shared and rewarded.
Affordable mortgages must be made available to borrowers for housing at European interest rates.
The price of land and housing needs to be controlled by the State, on behalf of the people to prohibit speculative stockpiling and use, where such lands are required for housing. This issue was first covered in the Kenny report in 1966!
This would ensure rental and mortgage affordability, give certainty to the market and end speculation.
The travelling community have housing needs. Delivery of housing and halting sites must be supported by the State Institutions, by making it a requirement that where there is sufficient supply to meet need welfare payments will only be made where the supplied and available unit(s) are occupied. There must be an acknowledgement that with rights comes obligations to society.
Units can be supplied for the homeless in sufficient supply to meet demand. It must be acknowledged that for some "homelessness" is a behavioural choice. This "choice" must be restricted where there are sufficient units available.
The use of hotels to accommodate families must stop. This is part of "crisis" perpetuation. Would it not represent better value to give those in crisis funding to secure their own solution and offer choice? Consider the cost and the role of the State and local Authorities in supporting the current solution and ask why?
A "crisis" exists. Let's be imaginative.
Let's be strong and legislate to end speculation by recognising housing as a social asset, by introducing emergency legislation and Constitutional reform if necessary to avert the approaching recession.
John O'Dwyer is a retired Senior Executive Officer with Sligo County Council. He was first President and founder of the Housing Institute of Ireland, former Sligo Person of the Year and has managed many public housing programmes.