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430,689 not 85,799

We need to face up to what mature countries call housing need

by Rory Hearne

 

There is general acceptance that the housing crisis has reached unacceptable levels. However, the government’s current policies are inadequate to address the crisis because, firstly, they underestimate the scale of the crisis. Secondly, they deny the overall housing policy framework of ‘Rebuilding Ireland’ has failed. This article makes the case that the level of housing ‘need’ is much higher than current official estimates and that Rebuilding Ireland should be jettisoned, and a new housing policy developed. A new housing policy for Ireland should start with the aim of ensuring everyone in this country has their right to a home fulfilled i.e. access to affordable, quality and secure housing, and this is to be achieved by the state playing a central role in ensuring the building of large-scale ‘public housing’.

This public housing should be a new form of social and affordable housing – available for a range of incomes considerably higher than allowed by current social housing rules. This would involve the state, mainly through local authorities, but also through not-for-profit housing associations and co-ops, and a new state house building agency,
using public land to build high-quality, well planned and environmentally sustainable ‘communities’ of-different housing types for a range of households including workers of all incomes, families, students, the elderly and those with disabilities.

Key associated issues include facilitating and funding the correct amount of this ‘public’ housing.

Firstly, in regard to estimating the real housing need it is clear that there is a large number of households which cannot afford housing. However, estimates of housing need are restricted to the households that qualify for social housing – currently the 85,799 households on local authority lists. This list does not include tenants who are in the privaterental sector in receipt of social housing supports like the Housing Assistance Payment (HAP) and the Rental Accommodation Scheme (RAS). These tenants do not have security of tenure (they can be evicted by landlords) and therefore they are still in housing need. Neither do the official lists include some homeless households, those in direct provision, and those in domestic-violence refuges, who are all clearly in housing need.

Furthermore, there are approximately 35,000 home-owners over 360 days in arrears on their mortgages who are also clearly in major housing need.

If you add these then the total social housing need becomes 185,505 households: over double current estimates of need. This figure demonstrates the real scale of the crisis. The problem is if policies are underestimating the real scale of need they are clearly going to be ineffective in meeting the actual level of need.

However, we also know that the need for ‘affordable’ housing extends to many more households. It includes many renters in the private sector who are paying more than 30% of their income on rents (an internationally accepted definition of ‘affordable’ housing), it includes aspirant home owners who cannot afford current house prices, students and many adult children living at home with parents, couch-surfing, etc.

While it is difficult to estimate how many households this includes, the ESRI notes that a third of renters in the private rental sector have ‘high’ housing costs. If you remove the 56,000 HAP and RAS households from the private rental sector, this equates to 85,000 households in need of affordable housing from the private-rental sector. Adding
this to the estimate of housing need above gives a total of 270,505 households in need of social and affordable housing – three times the current social housing waiting list.

Another way of estimating need is to compare how countries with effective housing systems assess it. In countries like the Netherlands, Sweden, Austria and Denmark, social housing (non-market housing) comprises between 24% and 40% of all housing stock. In Ireland just 10% of housing stock is social housing. A good target for Ireland then,
if we are to solve the housing crisis permanently, is to bring our stock of social housing up to around 30% of total housing stock. This would equate to approximately 606,800 units. However, our current social housing stock is only 176,178 units.

So we would need to add 430,689 public affordable units. If we were to do this over a reasonable timeframe, say ten years, then that means providing approximately 43,000 units per year of new public housing. This could be approximately, 27,000 for those qualifying for ‘social’ housing and 16,000 for those on higher incomes.

When we compare these to the Rebuilding Ireland targets and its approach to delivery we can see clearly why the Government and Department of Housing have failed to solve this crisis. Rebuilding Ireland aims to provide between 21,000 and 26,000 ‘new’ social housing units per annum. These are interesting and useful figures because providing
26,000 new social housing units per annum, over 10 years, gets close to meeting the level of actual social housing need I have calculated earlier (at 270,000 households, but this is a static figure based on current need and assumes that housing need does not grow. In the current climate we can see this is not the case. However, the Rebuilding Ireland figures are completely misleading because approximately 18,000, or 70%, of these ‘new’ units are not new social housing stock but just various forms of subsidised private rental housing via HAP or RAS schemes.

This is a vital point to understand because not only do HAP and RAS not provide security for tenants, they constitute
very poor value for money as the state is handing over almost €750m a year to private landlords. Worse, it exacerbates the crisis by adding to demand rather than supply.

The housing crisis is a crisis of supply, but it is the lack of social and affordable supply that is at its heart. There is increasing cross-society consensus that the state must build more social and affordable housing in the form of new public housing through cost rental and other forms of social and affordable provision delivered and managed by local authorities, cooperatives and a new housing agency and that local authorities must systematically use existing CPO and dereliction meaures.

However, the government is steadfast in its commitment to not building, reverting to the flawed Rebuilding Ireland approach of ‘incentivising’ the market and relying on the private rental sector for social housing. The recent announcement of the establishment of a new Housing Agency, unfortunately, is the extension of these same policies
as it is not undertaking the building but instead relying on making deals (joint ventures) with private developers. And it plans for only ‘up to’ 30% affordable housing. This approach has not worked in the past and there is no indication it will work now. Relying on the private market to provide affordable housing is like relying
on alchemy to get rich.

What is required to solve this crisis is a structural shift where at least 30% of our housing stock comprises public
housing.

This will require a significant increase in funding for capital expenditure on social and affordable housing and an
emergency state-funded expansion of funding to get tradespeople into apprenticeships and ensure we have the skilled workers required.

The current capital allocation for new building at approximately €800m-€1bn per annum is paltry. In the coming budget there is the fiscal space to allocate an additional €2bn to capital funding for state house building annually. The government could do this by using all the fiscal space it has for expenditure (an extra €900m), allocating the rainy day fund (€500m), to housing, dropping proposals for tax cuts (€270m), and introduces a wealth tax (€300m).

The issue really is about political will, and choices. A good framework would be to guarantee the right to housing. The United Nations definition of the human right to housing embraces access to an affordable, secure and quality home. Flowing from this we should work to achieve 30% of our housing stock as public housing and dramatically
increase the capital allocation in the coming budget to ensure the non-market delivery of at least 27,000 new units per annum. Anything less is treading water, in a storm.