The State should take equity in new social housing being built by approved housing bodies, an Oireachtas committee has been told.
Representatives of some of the State’s largest approved housing bodies (AHBs) told the Committee on Housing, Local Government and Heritage that construction cost inflation and higher interest rates mean that building new homes using 100 per cent state and private borrowing is facing “viability challenges”.
Declan Dunne, chief executive of the Respond housing association, said the increased cost of providing new housing was affecting the ability of not just the AHB sector but the whole construction sector to deliver new homes.
“We don’t have an affordable housing model, we have a cost rental model,” he told Eoin Ó Broin of Sinn Féin. The model meant that when costs increased, so did rent levels.
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“Costs are very different [now] to what they were previously,” Mr Dunne added.
Seán O’Connor, chief executive of Tuath housing association, suggested the Government produce a framework that would allow pension funds make long term investments in social and affordable housing.
“We ask for the consideration of a potentially off-balance sheet, ethically funded leasing model to allow pension funds to invest in social and affordable housing,” he said.
Fiona Cormican, chief commercial officer with Clúid housing association, said good proposals for the construction of mixed private and housing body accommodation on State lands were being voted down by councils and this “made no sense”.
“There seems to be an attitude in this country that private development is bad, that private developers are bad people, but the reality is that there is nobody in the local authorities out delivering houses themselves,” she told committee chairman Steven Matthews, a Green Party TD. “We are not out with bricks and shovels delivering houses ourselves. We rely on the private sector.”
Such mixed tenure proposals had the advantage that the profits made on the private element of the scheme could be used to help pay for communal infrastructure such as parks and playing pitches, she said.
The four AHBs that appeared before the committee on Tuesday told independent senator Victor Boyhan that they owned or managed almost 30,000 social and affordable homes between them and had thousands more in the pipeline over the next few years.
John Hannigan, chief executive of Circle, said there were “too many” AHBs and too few of them were actually delivering new homes.
Ireland was the only European country that insists all social and affordable housing is provided with 100 per cent debt, rather than having an equity element, he said.
Mr O’Connor said the important role played by AHBs was recognised in the Housing for All plan, with the AHBs targeted for delivering 21,000 homes by 2026.
“A significant flaw, however, is that the current system is based on 100 per cent debt funding, which in our view and that of virtually everyone in the sector, is not sustainable in the long-term. Going forward, we strongly believe that part grant or a new form of government equity has to be introduced into the funding system to ensure it is sustainable and fit for purpose.”
Brian O’Gorman, chief executive of Clúid, said the issue had to be addressed “or we have the potential of running out of road. We are not seeking additional finance, but rather a change to the way in which some of that finance is given. Some component of equity is required to make our delivery sustainable.”
In moving in this direction, the state would be following what is the norm across most European countries, he said. There was phenomenal demand for affordable housing, he said. There were more than 1,000 applicants for the 25 cost rental homes Clúid built in Balbriggan, Co Dublin last year.
Mr O’Connor said the Government should consider more geographical choice for applicants eligible for social housing with the introduction of a universal waiting list so applicants could apply to be housed in a county outside of where they are currently living.
