The boom and bust pattern of spending on social housing in Ireland is inefficient, socially problematic and poor value for money, the Oireachtas Committee on Housing has heard.
Michelle Norris, professor of social policy at University College Dublin and member of the Housing Commission, appeared before the committee on Tuesday for a discussion on affordable housing.
In her opening statement, Prof Norris said while the “marked increase in public spending on social housing in recent years” was welcome, it followed “sharp cuts” in the late 2000s.
“This recent rebound in public investment in social housing is the latest manifestation of a long-term and problematic pattern of highly unstable public spending on this critical service,” she said.
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“This boom-bust pattern of spending on social housing is socially problematic because when public spending falls, waiting lists and unmet social housing needs expand.
“It is inefficient because when spending declines, social housing providers stop investing in land acquisition and do not replace departing staff, so it becomes very challenging to raise social housing output again, even with a rise in public expenditure.”
Prof Norris said this kind of pattern of expenditure “is also poor value for money” because it means the investment is “focused on the top of the economic and housing market cycle when land and construction prices are highest”.
She pointed to a Housing Commission report which highlighted “significant problems” in the capacity of the sector to deliver the scale of housing required, even with high levels of funding.
It found there was an over-reliance on the acquisition of homes rather than direct home building on land owned by local authorities and approved housing bodies. It also found there was inefficient output in cities where social housing waiting lists were longest.
To address these issues, Prof Norris pointed to some “particularly valuable” recommendations in the report. Social housing rents should be set at cost-recovery rates to provide a sustainable funding model for the sector, while capital funding should be reformed to make it more stable, the report said.
Finally, all social and affordable housing finance, rental income and public subsidies should be retained and recycled in the sector for future social housing delivery and maintenance.
“This would enable the maintenance of investment levels during periods when the ability of the State to do so is constrained,” Prof Norris said.
Earlier, Laura Behan, assistant secretary in the Department of Housing’s affordable housing division, said more than 14,500 homes had been delivered through affordable housing supports, such as the First Home Scheme, since 2021.
Rory Hearne, Social Democrats TD and spokesman on housing, said these figures were “completely inadequate in terms of affordable purchase delivered by the State and affordable rental”.
He said the State is “failing a generation” who are “emigrating, stuck at home and depressed”.
Sinn Féin TD and housing spokesman Eoin Ó Broin said the affordable housing schemes are “increasingly not affordable”.
The Affordable Purchase Scheme sees local authorities make newly built homes available at a reduced price by taking a share in the home equal to the difference between its open-market value and the reduced price paid.
Mr Ó Broin asked Ms Behan why affordable purchase schemes are priced on open-market value rather than the cost of delivering the unit.
Ms Behan said the “underpinning rationale” for this was that the home the purchaser is buying “would sell for that value”.
She said “the purchaser is getting an opportunity to purchase that home at a really significant discount from market value” when the local authority takes a share to reduce the price for the buyer.
