The recent coverage in The Irish Times of the onward sale of an Ó Cualann-built house in Ballymun, at a price increase of more than 90 per cent in four years, highlights the fact that Ireland has yet to create a housing system which delivers affordability, inclusion and sustainability.
In such a system, both home ownership and rental, would be permanently affordable and secure.
Ó Cualann has, to date, worked to create and demonstrate ways in which home ownership can be made affordable in stable communities. This includes a “clawback”, which applies when an affordable house is later sold on the open market, recouping some of the price uplift.
The Local Authority Affordable Purchase Scheme, recently created in the Affordable Housing Act, will enable local authorities to use State land to build homes for sale to qualified buyers at below market prices
This ensures that the local authority, having supported affordability through provision of land and a waiver of development levies, has recovered its investment in the Ballymun house. But it does nothing to ensure that the property will be affordable for future generations.
The new Government Housing for All plan will devote significant resources to social and affordable housing and should give local authorities significant flexibility to ensure that affordable housing remains affordable in perpetuity.
The Local Authority Affordable Purchase Scheme, recently created in the Affordable Housing Act, will enable local authorities to use State land to build homes for sale to qualified buyers at below market prices. Unfortunately, like the clawback, the discount under the new act only applies to the initial purchaser.
Any subsequent purchaser will have to pay open market value. As a result, the scheme delivers an affordable home only to the initial purchaser and is, in effect, a slow-motion privatisation of public land.
Ó Cualann, along with many researchers, housing activists and advisory bodies, believes that what we need now are policies and programmes that increase the availability of homes that are permanently affordable. In the case of home ownership, this requires an affordable purchase scheme which delivers affordability in perpetuity.
This can be achieved by a range of mechanisms, including the State retaining the freehold interest, vesting the land in a community land trust or subjecting the property to restrictive covenants.
One mechanism is that title to a home bought under an affordable housing scheme should contain a restriction which obliges the household when selling on the property, to offer the house, at a pre-agreed price, back to the housing body which provided it originally. This price would be related to the original price plus an uplift based on wage inflation, or an agreed percentage increase of, say, 3.5 per cent per annum.
Ó Cualann believes that if the will exists then Government will find a legal and constitutional way to lock in affordability
In a rising market, this ensures that the house can be sold onward to another eligible purchaser at an affordable price. Affordability is achieved when the purchaser pays no more than 30 per cent of their net income on their monthly mortgage repayments. Any higher is judged to risk financial stress for the household. This arrangement would need the approval of the mortgage company that enabled the vendor to buy originally, ensuring that mortgage is repaid.
Ó Cualann is working closely with our community partners Permanent TSB and other mortgage providers to determine what options would be available to ensure these houses remain permanently affordable.
Another mechanism, a community land trust (CLT), is used with great success in the European Union and the United Kingdom but, has yet to be tried in Ireland. Households purchase their home, but the land remains in the ownership of the CLT. This approach has been documented by Self-Organised Architects, showing that it can engage citizens and communities in creating affordable and innovative housing solutions.
Its ongoing work on community-led housing and the introduction of CLTs to Ireland is likely to yield viable solutions for permanently affordable housing in Ireland in the near future. This will probably take the form of a shared ownership, where the CLT would own a minority stake in the property and could impose restrictions on an onward sale of the house with the agreement of the mortgage company.
Ó Cualann believes that if the will exists then Government will find a legal and constitutional way to lock in affordability, not just for the first purchaser of a home bought under an affordable house scheme, but for subsequent purchasers of that home.
Hugh Brennan is CEO of Ó Cualann Cohousing Alliance CLG