A significant shift in Government policy towards support for the public and private rental sectors and away from private home ownership is contained in the Action Plan for Housing launched yesterday by the Taoiseach Enda Kenny, Minister for Housing and Local Government Simon Coveney and Minister for Public Expenditure and Reform Paschal Donohoe. The National Economic and Social Council suggested such a move two years ago.
Justification has been based on need to keep accommodation prices affordable for both public and private tenants and to prevent a loss of competitiveness through rising wage demands. The policy change will involve extra funding and powers for the Private Residential Tenancies Board and legislative changes to provide greater security for long-term tenancies.
Transition towards a Western European-style private renting market has been coming for some time. From a position where home ownership in Ireland peaked at 80 per cent in 1991, it is now close to the European average, at 67 per cent.
The main features of the plan have been well ventilated over recent weeks: commitments to provide 47,000 social housing units by 2021 and to double the average output of private housing to 25,000 a year during the same period. The objectives set reflect a determined response to a growing homeless crisis.
A projected investment of €5.4 billion over five years will absorb about 40 per cent of the capital budget and the bulk of that investment is likely to go to the private sector. But hoped-for outcomes may not survive harsh exposure to the demands of the construction sector.
Declaring that land costs and construction costs are “out of line with other jurisdictions” the Government hopes the release of local authority, State owned and other properties for development may cut the net price of homes to less than €200,000.
In that regard, the utilisation of Brownfield urban sites, rather than traditional locations on the edge of urban areas, is regarded as necessary. The hoarding of private development land is obliquely referred to in the context that sufficient re-zoned land exists to cater for six million people. And it declares that site costs exceeding €30,000 place a finished home beyond the reach of most people.
This emphasis on reducing prices, while increasing output, is challenging. So is the proposal to expand the rental sector and bring about greater involvement by local authorities and private landlords.
These changes and the absence of some recommendations made by an Oireachtas Committee caused Fianna Fáil to question whether it would continue to support the Government.
The success, or otherwise, of the plan will hinge on the cooperation of official agencies, local authorities and private developers along with the determination of Mr Coveney to drive it forward.