Rory Hearne: State is creating artificial scarcity of homes
Bodies Homes Of Country, Social Housing 20% All The 40,000 Own Approved Housing Across
Approved housing bodies (AHBs) are not-for-profit organisations that have come to play a central role in the delivery and management of social housing in Ireland.
This is a positive development, with their focus on high-quality design, estate management, and building communities.
They should be supported to significantly expand their provision of social and affordable housing, in addition to increased delivery by local authorities.
However, inadequate Government funding and a failure to provide land is limiting AHBs while investor funds outbid them in acquiring homes.
There’s also a danger, as the Minister for Housing encourages equity investment in cost rental, AHBs could be forced to follow the UK policy of becoming ‘for-profit’ providers, with detrimental impacts on tenants.
There are over 500 AHBs, or voluntary housing associations, in Ireland, owning 40,000 social homes.
That’s 20%, or 1 in 5, of all permanent social housing.
They are charities and provide specialist expertise in housing for older people, disabled people, homeless people as well as mainstream social housing for families.
The largest ones, like Clúid, have 9,000 homes across the country, Tuath Housing has 7,000, and Respond has 5,400.
As organisations, solely focused on social housing, AHBs have developed an expertise in delivering and managing social homes, tenant support, and nurturing vital community development.
While local authorities also have this expertise, in some cases it is limited by having fewer resources dedicated to ‘hands-on’ estate management.
Both local authorities and housing associations increased their delivery of social housing in recent years.
Clúid, for example, directly built 545 homes over the last three years, and plans to build 293 homes next year.
Respond, has commenced construction on 2,757 homes in the last three years.
AHBs provided around 2,000 new-build social homes last year, almost as many as local authorities.
Cork City Council built just 76 homes in 2020, while AHBs built double that, 174.
Cork County Council built 248 units in 2020, while AHBs built 198.
Dun Laoighaire built no local authority home in 2020, while AHBs built just 18. In the entire Dublin City, AHBs built 113 units in 2020.
Fingal Council built just 46 homes in 2020, while AHBs built four times that.
Kerry County Council built 38 homes in 2020, while AHBs built 167.
Louth County Council built 218 homes in 2020, more than the combined total of three Dublin local authorities.
Clearly, without AHBs, we would not be delivering the same level of social housing output.
Not-for-profit AHBs must be funded sufficiently to deliver quality services and homes to enable the ending of homelessness.
Yet they’re forced to engage in constant fundraising because state funding is inadequate to address the scale of housing need.
We must avoid UK policy where housing associations have become private landlords, raising rents and evicting tenants.
There are now ‘For Profit’ AHBs in England, backed by venture capital funds or pension funds looking to invest in assets.
Here in Ireland, AHBs have delivered cost rental homes, affordable rental homes for those above social housing income limits.
But in the Affordable Housing legislation cost rental was opened to ‘for-profit’ investment.
The Act allows “financing costs” associated with cost rental to include “equity returns”.
AHBs are currently not-for-profit, social landlords, managing homes not real estate assets. All income generated in rents is reinvested in new public housing and maintenance.
The Irish Council for Social Housing (ICSH), the national federation of AHBs, is clear cost-rental homes should be provided by non-profit providers.
Safeguards are needed to ensure that cost-rental homes don’t become part of investor fund’s ‘asset portfolio’.
Institutional investors also negatively impact on AHBs seeking to purchase property and land for use as social housing.
Funds have access to global equity enabling them to outbid AHBs.
This inflates land and property prices and means higher rents, making housing more unaffordable.
ICSH highlight that “the dominance of Institutional investment in the private rental sector has impacted on the availability of home, land and unit price and this has a negative knock-on impact”.
It makes AHB cost-rental ambitions challenging in site and unit delivery costs.
Internationally, AHBs play a central role, alongside local government, in delivering social and affordable housing.
In Denmark, 760 non-profit housing associations own half a million homes, over 20% of the country’s housing stock.
The government's Housing for All policy commitment is to expand capacity and delivery by local authorities and AHBs, a positive goal but one that's limited in implementation.
For example, tens of thousands of cost-rental homes are needed to provide affordable homes and impact on reducing market rents, yet only hundreds are being delivered.
The lack of sites is a major barrier to social housing delivery for AHBs.
Karen Murphy, ICSH policy director, highlights that “AHBs, local authorities and the Land Development Agency have a mandate to serve the public interest, and this means developing valuable state assets through long-term investment in public housing”.
Cluid also “continue to experience barriers to our direct build projects caused by a shortage of available land.”
Rising costs in construction and labour shortages are also challenges for AHBs.
This points to the necessity for a state home building company that I highlighted in this paper, that would directly build for AHBs and Local Authorities.
The state, through local authorities, NAMA, and the Land Development Agency, has a massive land bank.
Yet AHBs are being limited from delivering a greater supply of homes by the lack of land, which the state could be providing.
They, and local authorities, are also limited in the delivery of cost rental homes by the Government’s obstinate refusal to expand borrowing, as recommended by the ESRI.
The state is effectively creating an artificial scarcity and shortage of homes.
This approach results in rising house prices and rents.
Government should put aside its ideology of conservatism and put all the resources at its disposal into supporting AHBs and Local authorities to deliver more homes.