People need homes not hyperbole

Posted: November 28, 2014 in Housing

The Government has finally published their much anticipated social housing strategy. It promises to meet the housing needs of 110,000 families over the next six years.

According to Minister Alan Kelly, come 2020 all of the families languishing on council waiting lists or trapped in long term rent supplement will be adequately housed.

The strategy promises a substantial increase in direct government funding for social housing and a serious attempt to secure private investment through a number of off-government balance sheet vehicles.

The big question is will it deliver? The straight answer is no.

The new plan fails to provide any response to the growing tide of homelessness. It is silent on the crucial issue of rent supplement caps and rent controls despite the fact that spiraling private sector rents are pushing families into homelessness every single day.

What the strategy does propose is to build, buy and refurbish 35,000 social houses over six years and transfer 75,000 long term Rent Supplement claimants onto two other government subsidised schemes.

Rent Supplement is an emergency payment from the Department of Social Protection to people living in the private rental sector who are unable to meet the full cost of their rent.

There are currently more than 70,000 households in receipt of this payment. The new housing strategy is proposing to transfer 50,000 of these households from rent supplement to two other schemes, the Housing Assistance Payment (HAP) and the Rental Accommodation Scheme (RAS).

They will stay in private rented housing but the state subsidy will be paid by the Department of Environment. They will be able to work full time but will come off the housing list.

Crucially for those transferred to HAP the length of their lease will be agreed by the tenant and landlord, while those on RAS will be subject to 4 year leases.

They will still be left vulnerable to the vagaries of the market while at the same time lose out on any meaningful chance of a permanent Council home in the future.

As for the 35,000 promised social houses the numbers just don’t add up. The headline figure commits €3.8bn over six years. €700m of this will be put into off balance sheet vehicles to leverage in private sector investment.

But the direct state investment is underwhelming. During Phase 1 of the plan Government will invest €800m a year for three years. This is only €210m a year above 2014 levels. In Phase 2 of the plan the spend will fall to €400m a year, almost €200m less than 2014 levels.

This is not a major investment in social housing. All the Government are doing is reversing the cuts to capital spending on housing that they themselves introduced since 2011. This reversal will only last for three years after which direct state investment in social housing will fall to its lowest levels for decades.

Clearly the Government is banking on the private sector to fill the hole that they themselves are leaving in the financing of their own plan. The problem however is that the off-balance sheet funding mechanisms outlined in the strategy are complex and cumbersome and unlikely to deliver.

And here lies the real problem. The reason why we have a housing crisis is because for decades the state has been trying to offload the responsibility for providing social housing to the private sector.

During boom and bust, under Fianna Fáil, Fine Gael and Labour this approach failed. Yet here we are with a Government once again hoping that the private sector will provide the answer.

The solution to the housing and homelessness crisis is not that complex. We need more social houses and we need some mechanism to protect those living in the private rented sector.

We don’t need to reinvent the wheel. Local authorities and voluntary housing associations are best placed to deliver the homes that people need. Housing bodies need direct state investment of an order way above that detailed in the Governments new strategy. They also need to be let establish their own arms-length companies to secure off-balance sheet loans from the Housing Finance Agency to further increase supply.

The Social Housing Strategy 2020 is not ambitious. It will not meet the housing needs of 110,000 households. Even if it meets the 35,000 social housing target this is less than impressive.

During the 1950s the State built more than 50,000 social houses . During the 1970s Government built 63,000. Yet at a time when it is cheaper than ever to borrow and build Fine Gael and Labour hope to deliver at best 35,000, and even those target is highly dubious.

The strategy is light on funds, heavy on bureaucracy and over reliant on the private sector. It undermines the role of local authorities and adds significant administrative burdens on Council housing departments that are already stretched to breaking point.

Most important of all it will not deliver the promised 35,000 housing units and will do nothing for the hundreds of families trapped in hotels and hostels desperate for a home before Christmas.

  1. […] Eoin Ó Broin – People need homes not hyperbole […]

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