A year ago Minister for the Environment Alan Kelly launched Social Housing Strategy 2020, which aims to deliver 35,000 new social-housing homes over six years and involves an investment of €3.8 billion. This was widely welcomed as an ambitious response to the severe shortage of social housing.
Kelly has now announced a new tenant-purchase scheme that will come into effect in January. Tenant purchase has been an integral feature of Irish housing policy for many years. But this is a scheme with a difference.
If you are a local-authority tenant and you earn as little as €7.40 an hour (the minimum wage in January next year will be €9.15) you will be able to buy your local-authority home with a whopping 60 per cent discount. So if the house is worth €125,000 it will be yours for €50,000.
Let’s consider the consequences of this munificence.
There will be less social housing. Whichever way you dress it up, if you sell off assets at a loss it means you have fewer assets left.
The average discount will probably be 50 per cent, so the proceeds of the sale of 10 houses would be enough to buy five replacement houses. The State loses five houses.
At a time of severe shortage of social housing, when the Minister is rightly exhorting everyone to focus on increased output, it beggars belief that the State is hell-bent on selling off existing stock at half price.
Badly targeted
It represents a huge windfall to the fortunate tenants who will benefit from this scheme. But people on social welfare, who need a handout the most, will get nothing. So it is extremely badly targeted.
It is a very inefficient way of spending taxpayers’ cash (losing income is the same as spending) because the money will be tied up in property and will not be spent on goods or services, and so will not contribute to job creation.
The tenant purchaser will take over responsibility for repairs and maintenance of their home. It is difficult to see how someone with an income of €300 a week is going to find the money to replace a boiler or mend a roof.
Furthermore, loans for tenant purchasers are to be provided by local authorities, but it was reported two years ago that a very high proportion of local-authority mortgages were in arrears. There must be question marks over the capacity of people on such low incomes to maintain their mortgage repayments.
It is also manifestly unfair. If you live in an apartment you will not be eligible; if you live in a house that was built under Part V (10 per cent of new private housing developments are reserved for social housing) you will not be eligible; if you are a tenant of a housing association (independent providers of social housing – Clúid Housing is one of the largest) you will not be eligible.
Private rented tenants And, finally, what about 300,000 private rented tenants who would love the opportunity to buy their home at half price? They get nothing
.
Kelly claims the sales will generate additional funds for investment in social housing, and local authorities will save money by not having to pay for the maintenance of sold dwellings.
Yet these modest benefits are far outweighed by the cut in the value of State assets. This is a misleadingly selective analysis.
I have spoken to many politicians about this, and most admit privately that tenant purchase at a discount is a disastrous policy – yet only a tiny number are prepared to say publicly what they believe.
There is nothing wrong with tenants having the right to buy their homes at the full value; and Clúid would support a modified shared-ownership scheme that would enable people on lower incomes to purchase a proportion of their home. But while tenant purchase at a discount is very good news for a very small minority, it is very bad news for other tenants, the taxpayer and the State. Simon Brooke is head of policy at Clúid Housing and part- time assistant professor at the school of social work and social policy at Trinity College Dublin