Simon Coveney - Village Magazine

April 2017 3 3

“Many years of pro-cyclical policies contributed to the

crash that caused a decade of inactivity, and it will take

a number of years of the correct ones to put things right”.

Concededly tax incentives and grants contributed to the boom and

crash. But is the government now working against the economic cycle?

The Help-to-Buy scheme was widely criticised on its introduction in

2016 as being pro-cyclical and inﬂationary. To date there have been

3,750 successful applicants for the scheme at an average cost

of €15,000. Just 3,606 new homes in housing estates were sold last

year and recent ﬁgures suggest that house prices have increased

by €15,000 in three months. Current price inﬂation may get into double

digits and will signiﬁcantly erode affordability for those attempting to

get on the property ladder. By June we may see two Help-to-Buy appli

cants for each new home coming to the market.

“The most recent monthly activity report indicates

15,256 homes were provided last year and commence

ment notices in the year up to the end of January 2017 show an increase

of 44% year on year”.

The Department of Housing ﬁgures use connections of dwellings to the

electricity supply as a proxy for completions, and dwellings vacant for

two years or more are double-counted as new-build completions when

connected even if they have registered in ﬁgures before. Given the large

volumes of vacant NAMA and ghost-estate units, this methodology

gives inﬂated new-build levels and creates a false perception of dyna-

mism in the market. In 2016 there were just 3,606 estate homes

developed and sold, and a similar number of one-off homes commenced

along with 75 local authority houses - less than 8,000 new homes in

total. Not 15,256. This has been highlighted in this magazine and else

where. Yet the Minister ignores the reality. Ofﬁcials have never

explained how they get to double these ﬁgures, 15,256, for new-build

units completed. It is reasonable to infer they cannot.

VILLAGE VERDICT

True, but with a misleading implication about current policies.

VILLAGE VERDICT

Deliberate untrue misstatement on a central plank of govern-

ment performance, an issue the Minister accepted in May 2016 is

“a national emergency”.

In an article on 27 March in

the Irish Examiner ‘Simon Coveney

Looking at All Means of Getting more

Houses’, the Minister for Housing

made serious and precise statements

about the housing market.

Mel Reynolds checked them.

TRUTHCHECK

“Housing is probably the

number one priority for this

Government”

Simon Coveney, Minister for Housing

11 May 2016, the Irish Examiner

CLAIM

Simon

Coveney

and key housing facts

3 4 April 2017

“One of the central elements of ‘Rebuilding Ireland’ involves

an unprecedented commitment of €5.35bn for social hous-

ing. We are determined to help individuals and families that are homeless

and those on social housing waiting lists”.

Housing 2020 was launched in 2014 and proposed a budget

of €3.8bn and 35,000 social homes in ﬁve years. Between 2014 and 2015

there were less than 1,000 local authority and voluntary and co-operative

social homes built. Homelessness has increased by 190% since 2014. Child

homelessness has increased by a shocking 250% in the same period.

Ofﬁcial ﬁgures show that 4,875 adults and 2,546 children are sleeping

in hotels, B&Bs and hostels.

As part of the plan to tackle homelessness, the Government promised

200 rapid-build homes by the end of 2016, a further 800 this year, and a

further 1,500 next year. Just 22 have been built so far. Department Hous

ing Plans consistently missed targets by some distance.

“Last year 18,300 social housing solutions were put in

place and this year that ﬁgure will be over 21,000 and we

will spend €1.3bn making it so”.

‘Solutions’ is the Department’s term and includes rent supplements,

assistance, emergency hotel accommodation and private and public social

housing - all forms of social housing assistance. Many would not know

that rent supplements was a ‘social housing solution’. To illustrate the low

level of state construction, in 9 months of 2016 just 161 Local Authority

homes were built. This is actually double the rate of the preceding year.

The private sector is similar - the number of Part V social homes deliv

ered by the private sector was 37 in 2016, it was 64 in 2015 and 67 in 2014.

Government relies heavily on the ‘hands-off’ involvement of charities and

approved housing bodies for social housing, and of course on private

sector rentals with no security of tenure.

“In terms of social housing construction, 650 homes were

built last year, 1,800 are under construction on sites around

the country and 8,430 are at various stages in the pipeline of delivery”.

Construction activity has started on 1,829 units and 3,262 housing units

are at some stage of pre-development. However, one third of the total men-

tioned, 2,687, are ‘under consideration’- these schemes may or may not

proceed and may well be cancelled. Minister Coveney includes these as “in

the pipeline of delivery”. For most people anything that is metaphorically

in a pipeline cannot be stopped. So this is misleading, not really true.

Furthermore, Housing Department equation of completions with ESB

connections means that existing local authority voids refurbished will be

double-counted as new build completions, inﬂating ﬁgures again.

“That’s why we brought in a €200m housing infrastruc

ture fund to unlock these sites. I will be shortly

announcing funding for roads, bridges and amenity infrastructure that

will facilitate the delivery of tens of thousands of new homes across

the country”.

The €200m infrastructure fund – over fully ﬁve years - for housing infra-

structure is a pro-cyclical developer incentive. Designed to 'unlock'

23,000 ‘affordable’ units, details have now been provided of various

impressive bridges, link roads, and Dart stations to be funded 75:25%

between the Exchequer and local authorities. Nevertheless it is unclear

whether details of the 23,000 affordable units have been agreed

between landowners and local authorities, and the Department. It

would appear to make little sense if what are effectively incentives to

developers are being paid in advance of agreements on unit size, loca

tion speciﬁcation, delivery date, and most obviously affordability

including price of the suggested units, There is no guarantee that the

developers will pass on the beneﬁts of their incentives end-purchasers

and tenants. The Department claims that it “is determined that the fund

will, in addition to stimulating supply in an overall sense, also encour-

age a strong mix of private, rental and social housing delivery at

appropriate locations and create attractive places to live at affordable

prices and rents”. However, it simply has not put in place detailed meas-

ures to guarantee that “Departmental determination” translates into

public goods.

To put this ﬁgure, which on ﬁrst inspection sounds impressive, in

context the €200m fund equates to a government grant to developers

of €8,700 per unit spread over 23,000 units over 5 years. Given that cur

rent average-house-price inﬂation (for the last three months) is running

at €15,000 per unit, it would appear that the infrastructure grant is the

equivalent of seven weeks house-price inﬂation. This €200m may be

better spent on outright funding for 1,000 - 1,500 new local authority

homes in Dublin and around the country. Given the Government’s cur

rent budget of €40,000 per ‘repair and lease’ unit, for maximum impact

the fund could target existing vacant buildings and upper ﬂoors, refur-

bishing 5,000 local authority voids and private vacant units throughout

the country. Existing vacant units need no new infrastructure or ser-

vices, are centrally located and cost a fraction of what it costs to build

a new apartment or house.

Village Verdict

True but optimistic.

VILLAGE VERDICT

True but misleading.

VILLAGE VERDICT

Misleading and untrue.

VILLAGE VERDICT

True but sounds much more impressive than it is.

OVERALL VERDICT

While it contains smatterings of

truth and optimism, overall Minis-

ter Coveney’s statements on the

central plank of his, indeed per-

haps the government’s, platform

are misleading, blatantly so in the

case of ‘housing solutions’ and sometimes deliber-

ately untrue, particularly in the case of the key ﬁgure

of homes built. Since his department has been advised

of this, it is reasonable to assume some of the key

statements are deliberately misleading: falsities.

CLAIM

POLITICS