The housing policies of the past decade have failed. Over reliance on private developers and institutional investors to deliver a sufficient supply of homes in the right places and the right price has not worked.
The most pressing question is not whether we need a change of approach, but how profound should that change be.
This week’s Economic and Social Research Institute (ESRI) report on state investment in public housing is significant in this regard. The ESRI rightly concluded that the private sector cannot deliver enough homes to meet demand. They also argue that the private developers and institutional investors can not deliver genuinely affordability.
While the language of the report may be dry and cautious the message is very clear. Unless the State steps in on a scale never seen before, house prices and rents will continue to rise.
Successive governments over-relied on the private sector to increase supply . . . the policy tools used to attract private investors and developers have created an increasingly dysfunctional market
The ESRI proposal that Government should double direct capital investment in social and affordable homes is more than significant. It would see the State become the direct developer of half of all new homes.
Sinn Féin has been making this case for some years. We have consistently argued for increasing direct capital investment to at least €2.8 billion annually to deliver 20,000 public homes a year, 12,000 social, 4,000 affordable cost rental and 4,000 affordable purchase.
Local authorities, approved housing bodies and community housing trusts would drive the delivery of homes for all those unable to access secure and affordable accommodation in the private market.
Such a scale of investment would not only be good for those availing of these homes. It would help moderate private sector prices, boost local economies as people would have more disposable income and improve our competitiveness through reduced housing cost-driven wage claims.
The case for large-scale State investment in public housing on public land to meet social and affordable housing need has never been stronger or more widely supported.
Regulation
While Sinn Féin’s primary focus has been on increasing public housing output we also believe that we need a paradigm shift in how the State regulates and activates private sector supply.
The rightful anger at the bulk buying of entire estates by large institutional investors has highlighted yet another consequence of bad housing policy.
Not only have successive governments over-relied on the private sector to increase supply, but the policy tools used to attract private investors and developers have created an increasingly dysfunctional market.
The argument is not that private investment has no place in our housing system. Rather it is about what is the right type of investment and how should the State regulate and activate the investment to deliver good quality lower price homes.
Excessive tax reliefs, first for household investors during the Celtic Tiger years, and then for institutional investors post the 2008 crash, have fuelled speculative price bubbles. This, in turn, has pushed up development costs, house prices and rents.
The days of excessive tax breaks and infrastructural grant aid must come to an end
Bad fiscal policy has been exacerbated by bad planning policy including the strategic housing development process and retrograde changes to apartment design standards and height guidelines.
This has incentivised ever greater volumes of investment into high-end student accommodation, apart hotels, co-living and executive apartments.
The consequence is that too much of what has been built, or proposed to be built, is the wrong kind of accommodation, in the wrong place, at the wrong price.
The recent purchase of the Poolbeg Strategic Development Zone site by the Johnny Ronan Group is a case in point. By paying significantly over the guide price, the developer and his investors have created a dilemma.
To make a return they will need to max out the volume of high-end, high-price build-to-rent accommodation. This will make the delivery of the 500-plus affordable homes required by the SDZ virtually impossible.
Almost all of the 3,000 homes in this last remaining city centre site of strategic importance will be out of reach to even well paid workers.
Scrap
Thankfully, there is an alternative. Government must scrap the sweetheart tax and land deals for developers and investors.
This approach should be replaced with an increased focus on large-scale refurbishment of vacant properties, intelligent use of rezoning brownfield sites, local authority-led masterplanning, and State-led commercial supports for site servicing and financing of private developments.
The days of excessive tax breaks and infrastructural grant aid must come to an end. Where the State activates private sector development it should be in exchange for improved placemaking, increased affordability and providing a commercial return for the taxpayer.
Our dysfunctional housing system can be fixed. This will require a paradigm shift in public policy and public housing output. It will also involve replacing the speculative private sector development model with a better regulated and more stable private sector focused on long-term affordable housing need not short-term financial gain.
Eoin Ó Broin TD is Sinn Fein spokesperson on housing
