Still Waiting for Housing

on Friday, 21 April 2006. Posted in Issue 52 Mental Illness in Irish Prisons: A Solitary Experience?, 2006

Peter McVerry SJ
April 2006

 

Housing Need

The findings of the Local Authority Assessments of Social Housing Needs, carried out in March 2005, were released by the Department of the Environment, Heritage and Local Government in December 2005.1

The figures show a reduction in housing waiting lists of 9.8% from the previous assessments in 2002 (Table 1).2

 

Table 1: Households Awaiting Social Housing

1993         1996 2002            2005

28,624     27,427      48,413     43,684 2

Dublin saw a de-crease in waiting lists of 20% (from 15,674 down to 2,608); Limerick City Council had the largest increase, with waiting lists rising by 49% (from 581 to 867).  

In a comment on the overall decrease in waiting lists, the Department claimed that: 

Continuing increases in overall housing output and growth of both social and affordable housing provision are having positive impacts on waiting lists. 2004 was the tenth successive year for record house completions - with 76,950 units completed - demonstrating that the government measures introduced in recent years have been successful in boosting the supply of housing to meet the unprecedented demand. House completions in Ireland are at the highest level in Europe in relation to population - around 19 units per 1,000 population.3
Both the waiting list figures and the Department\'s reasoning require further analysis.

At this rate, some households currently on the waiting list would be finally housed in 2030 - provided no other households join the waiting lists between now and then!

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The Reasoning
The Department\'s analysis of the reasons for the decline in the recorded figures also requires reflection.  The Department is, of course, correct in saying that the "growth of both social and affordable housing provision" has contributed to a decline in the  waiting lists.  However, the thrust of the Department\'s argument is that the overall growth in housing output is having an impact on waiting lists. Well over 90% of that output is private housing, and its huge growth has not been accompanied by even a stabilisation of house prices. On the contrary, prices have continued to rise, so that some people who previously could have afforded to purchase a home are priced out of the market and onto social housing lists. 

Furthermore, the reality is that the majority of those on social housing waiting lists may never be in a position to afford to purchase, even if house prices moderated. In the circumstances obtaining in Ireland right now, the housing waiting lists are dependent, not on the total housing output which is the focus of the Government\'s claim that the situation is improving, but on the affordability of that housing,  and on the level of provision of social housing and, to a much smaller extent, of subsidised housing for purchase (so-called \'affordable housing\'). 

Housing Prices
Between 1993 and 1996, the number of people waiting on social housing actually de-creased.   It was during the core years of the Celtic Tiger that the numbers almost doubled.   These were the years which saw the exponential increase in house prices, which made it impossible for an increasing number of people, especially first-time buyers, to own their own home. 

Between 1994 and 2004, the Consumer Price Index rose by 35%.   During this period, the average new house price rose by 243% (over seven times the Consumer Price Index) while the average second-hand house price rose by 322%.  Even more telling is the comparison of house prices with the average industrial wage:  in 1984, the average price of a new home was 4.3 times the average industrial wage; in 1994, it had dropped slightly to 4.2 times; in 2005, it was 9.1 times the average industrial wage (11.5 times in Dublin).5 

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The cause of such exceptional house price rises is clear:  a substantial increase in population due to the need of the Celtic Tiger for workers, an increase in incomes for those at work, the willingness of financial institutions to make funding easily available for borrowers - including investors and speculators - and low interest rates all combined to create a market situation where developers could \'name their price\'.

Options for controlling the price of houses were available, and recommended, to Government.   40% to 50% of the price of a house is due to the price of land.  In 1973, the Kenny Report recommended legislative change to enable land designated for housing to be compulsorily purchased by local authorities at existing use value plus 25%.   This recommendation, although put forward by a High Court Judge, was immediately dismissed as unconstitutional by politicians. The cosy relationship between politicians, builders and developers revealed in recent Tribunals might suggest a reason. Thirty years on from the publication of the Kenny Report, the All-Party Oireacthtas Committee on the Constitution came to the view that there were, in fact, no constitutional barriers to the enactment of legislation to give effect to the Kenny recommendation on the price of land.6  The Committee\'s Report was published in April 2004 - and since then there has been no indication by the Government of any real intention to act on the Report\'s recommendations.  

During the Celtic Tiger years, the Bacon reports7 recommended both the elimination of mortgage interest relief to investors and second-home buyers and the introduction of a punitive tax to discourage speculation.

While the first was briefly introduced, it was quickly reversed, after intensive lobbying by the property industry; the second was never seriously considered.  

The failure of Government to introduce policies that could have controlled the price of housing has consigned many who could have been enabled to purchase their own homes to long waits on social housing waiting lists. 

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Provision of Social Housing
Social housing for those households who cannot afford to purchase housing in the market is provided primarily through local authority housing at affordable rents, based on the income of the household.  It is also provided through voluntary housing associations who, with Government financial support, have created over 11,000 social housing units since 1993.

Analysis of trends in social housing output reveals that the Department\'s positive view of the increase over recent years in both social and affordable housing provision is too optimistic. Table 2 shows that despite the growth in local authority and voluntary housing association house completions since 1993, new social housing constitutes only a very small percentage of overall housing output.

Table 2:  Growth in Housing Output Since 1993

Year             Total Number of           Social Housing       Social Housing

House Completions        Completions          as % of total output

 

1993                                    21,391                        2,090                                       9.8%

 

1999                                    46,512                        3,488                                       7.5%

 

2004                                    76,954                      5,146                                        6.6%

 

2005                                        80,957                     3,819 (in the first 9 months)     7.2%


A proper analysis of social housing provision requires a longer timeframe.  The figures for current output look very different if compared to both the 1970s and 1980s (when the country was awash with debt!) and the level of output up to 2012 recommended by the National Economic and Social Council.

The 1970s and 1980s
From 1972 to 1986, the number of local authority houses completed each year ranged from a low of 5,500 to 8,794. Table 3  shows that in 1985, the number of new social housing provided was higher than the 2005 estimated figure. Social housing represented 27% of the total new housing in 1985; now it struggles to go much beyond 6%.

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Table 3:  Housing Completions 1975 to 1985


Year                Total House                      Social  Housing

Completions                     Completions

 

1975                       26,892                                            8,794

 

1980                       27,785                                            5,984

 

1985                          23,948                                          6,523


In 1987, the decline in social housing output began and, as Table 4 (p. 14) shows, only 3,074 houses were completed in that year.  Thereafter, the number of completions dropped to a low of 768 in 1989 and remained low for several years.

Table 4:  Housing Completions 1987 to 1992

 

Year                  Total House                      Social  Housing

Completions                         Completions


1987                                    18,450                                                         3,074

1989                                      18,068                                                       768

1992                                      21,391                                                       1,482


In 1993, funding for voluntary housing associations to build or purchase social housing began.   The number of local authority houses being built again began to increase, but was still substantially less than the output during the 1970s and 1980s.

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Table 5:  Housing Completions 1993 to 2000

 

Year                  Total House                      Social  Housing

Completions                         Completions

1993                            21,391                                           2,090

 

1996                            33,725                                           3,593

 

2000                            49,812                                           3,155


In summary, in the 1970s and 1980s, new social housing, as a percentage of total housing output, was between 20% and 33%.   (Actually, from 1922 up to the mid-1960s, 50% of all housing output was social housing.) The increase in the past few years, while welcome, still puts the provision of new social housing well below 10%, despite the scale of need established by the local authorities assessments - which as already argued are unlikely to have captured the true extent of the requirement for social housing. NESC RecommendationsThe National Economic and Social Council (NESC), in its December 2004 Report, Housing in Ireland: Performance and Policy, recommended that an average of over 9,100 additional social housing units be provided each year between 2005 and 2012. In other words, NESC envisaged an increase over eight years of 73,000 units, net of tenant purchase. This would bring the number of social housing units up from 127,000 in 2004 (in 1961, there were 125,000 social housing units available) to 200,000 by 2012.8    In the ten years from 1995 to 2004, an average of 4,275 social housing units were provided each year, less than half the output recommended by NESC.   However, the overall position is worse than these figures indicate.   Since the 1980s, when the public finances were in dire straits, local authorities have encouraged their tenants to purchase their homes, at substantially reduced prices.   This provided the local authorities with badly-needed finance and also reduced the cost of maintaining local authority homes.   This policy has continued to the present day.   When the sale of local authority houses to sitting tenants is taken into account, the actual increase in social housing units over the past ten years was only 3,300 per annum.    To meet the target set by NESC, the number of new local authority and voluntary housing units being provided would need to more than triple over each of the next seven years.   There is no evidence of any sense of urgency in any political party to make a commitment to expand social housing output to this level.   In the light of the current need for social housing, the policy of selling social housing units is difficult to justify.   It seems even more absurd to sell existing social housing units at substantially less than market prices when they have to be replaced by building or purchasing replacement units at the full market price. Those who wish to purchase their own homes can now do so through affordable housing and shared ownership schemes which were not available to them in the 1980s when the policy of selling social housing was encouraged.   The Cost of FailureThe cost of failure in Irish housing policy (if it can be called a housing policy at all) is, of course, borne primarily by those households who have to continue to live in unsuitable, overcrowded, rundown accommodation, in insecure B&Bs or hostels for the homeless.  The stress entailed in living in such unsuitable conditions can destroy relationships between partners leading to the break-up of the family unit; it can seriously damage relationships between parents and children, lead to increased mental health problems, early drop-put from school, and youth homelessness.   

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However, there is also a quantifiable financial cost to the State.   Many thousands of households who could have purchased their own homes if the price of housing had been controlled, now have to be provided with housing by the State, either at market house prices in social housing units or with considerable financial subsidy in affordable housing.   Many on the housing waiting lists are currently living in private rented accommodation, often very sub-standard, sometimes unfit for habitation, at enormous cost to the State in rent supplements.   In 1994, 30,000 households were receiving rent supplements towards the cost of private rented accommodation:  by 2004, this had doubled to 60,000.    Furthermore, the cost of renting had escalated: a small bed-sit which in 1994 could be obtained for €40 or €50 now costs €120.   Thus the cost to the State of supporting people in private rented accommodation has risen from €7.8 million in 1989 to €354 million in 2004.

Public-Private Partnerships
The apparent success of public-private partnerships in providing expensive transport infrastructure has prompted the idea that such partnerships might be successful in providing expensive housing.   This mechanism involves providing private developers with land, owned by the local authority, free of charge in return for an agreed number of social and affordable housing units.   In this fashion, the local authority can obtain needed social housing at apparently no financial outlay.

The first PPP project in Dublin was at Fatima Mansions, which was originally built in the 1950s and contained 394 social housing units on an eleven-acre site.   There is no question but that by early 2000, it urgently needed redevelopment.  In 2002, after consultation with residents, it was proposed to demolish the existing complex and replace it with 220 social housing units and 280 private housing units, the funding to be provided by Government.  While this entailed an overall loss of 174 social housing units, both local residents and the local authority were agreed that the concentration of 394 social housing units in a small area was undesirable.    However, in 2003, it was announced that the funding had been withdrawn and that the redevelopment would now be delivered through a Public-Private Partnership.   The plans were revised to require the developer to provide just 150 social housing units (value approximately €22.5 million), along with 450 private houses, in return for 14 acres of prime land (value between €100 million and €140 million).9 

While no actual cash is required from a local authority which is struggling to balance its books - and therefore sees this as a very attractive option - the cost to the State of securing these 150 social housing units is enormous. There is surely an urgent need to reconsider any further use of a mechanism that so heavily subsidises private sector developers for such limited public return.   

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Homelessness
People who are homeless are dependent on the availability of social housing if they are to have any chance of obtaining secure and affordable accommodation. Homelessness - an Integrated Strategy was launched by the Government in 2000 as a co-ordinated response to the problem of homelessness in Ireland.  It proposed a series of interventions targeting accommodation solutions for homeless people, as well as interventions relating to health, education and employment.  Funding increased from €12.6 million in 2000 to €45.7 million in 2004.  While many positive developments have taken place in relation to addressing the problems faced by homeless people, I confine myself here to the critical issue of accommodation.   

Under the Integrated Strategy, each local authority was required to assess the homeless situation in its area and prepare an Action Plan to provide accommodation for those assessed as homeless.  Local authorities were also required to allocate a certain proportion of their lettings to provide suitable accommodation for homeless people.  

As a result of the Strategy, there was a significant increase in emergency accommodation provided for homeless people, which has led to a substantial decrease in rough sleepers.   However, the provision of long-term accommodation for homeless people has been less successful.   Some local authorities did, in fact, ring-fence a certain proportion of their lettings for homeless people (Dublin City Council, for example, states that 30% of its lettings now go to homeless people).   

However, few local authority housing units are suitable for single homeless men, who are the majority of homeless people.  They have little hope of getting into local authority accommodation.  Their best option for now lies with two new developments:  the Access Housing Unit, run by Threshold and the Rental Accommodation Scheme which is about to be introduced.   

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The Access Housing Unit seeks out private landlords who are willing to rent accommodation of suitable quality to homeless people.   It builds a database of such accommodation and tries to match the needs of homeless people with the accommodation available.   It is a valuable, but very limited, option for homeless people.   Few landlords are willing to subscribe. Established in 2003, the scheme created 83 tenancies in that year, and 80 tenancies in 2004.

The Rental Accommodation Scheme places the onus on local authorities to secure accommodation for those who have been living, with rental subsidies from the State, in private rented accommodation for more than eighteen months.  It remains to be seen what effect this will have.

Despite the admirable objectives of the Integrated Strategy, the increased funding and the undoubted improvements in services for homeless people that have followed, the bottom line is that the number of homeless people recorded in 2005 was only marginally less than the number recorded in 2002.

Conclusion
Since 1996, there has developed a serious housing crisis for households on low or modest incomes who cannot  access the private housing market.   While there has been an apparent small decrease in the number of households waiting for social housing in the last three years, the level of provision of social housing is grossly insufficient to relieve the crisis that exists for so many.   As yet, there has been no evidence of any political will to invest in social housing to the extent recommended by the National Economic and Social Council, namely an additional €500 million to €600 million per year. In the current negotiations for a new Social Partnership Agreement, the NGO sector will undoubtedly press for a commitment to meeting the NESC targets for social housing. Whether the new Agreement includes such a commitment will be an indication of the Government\'s attitude to the issue of social housing.  It might be added that, in any caring society, particularly one with an abundance of resources, the provision of such a basic necessity as housing would not be an issue for discussion in Social Partnership negotiations. It should simply be done. 

Over the past decade, there has been no evidence of any political will to take measures to substantially impact on the cost of land or housing.  There is, however, evidence of increased reliance on the private sector to meet social housing needs, a sector which is, obviously, motivated primarily by profit.  In the absence of major policy change, and of a major expansion in capital investment, the outlook for low-income households seeking housing continues to look bleak.

References:      
1.    Department of the Environment, Heritage and Local Government, Local Authority Assessments of Social Housing Needs - 31 March 2005, Dublin, 9 December 2005.   
2.    Assuming average household size, this represents about 126,300 persons.
3.    Local Authority Assessments of Social Housing Needs - 31 March 2005, p. 2. 
4.    P.J. Drudy and Michael Punch (2005) Out of Reach: Inequalities in the Irish Housing System, Dublin: tasc at New Ireland.    
5.    Ibid.
6.    The All-Party Oireachtas Committee on the Constitution (2004) Ninth Progress Report: Private Property, Dublin: Stationery Office, p. 19. 
7.    Peter Bacon and Associates, (1999) The Housing Market: An Economic Review and Assessment, Dublin; Peter Bacon and Associates (2000) The Housing Market in Ireland: An Economic Evaluation of Trends and Prospects,  Dublin.
8.    National Economic and Social Council, Housing in Ireland: Performance and Policy, Dublin: National Economic and Social Council, 2004 (NESC Report no. 112).
9.    P.J. Drudy and Michael Punch, op. cit., pp. 154-80.

When Ireland became an independent State it inherited some appallingly bad housing conditions. This was most notoriously the case in the severely deprived areas of inner-city Dublin, but inadequate and overcrowded housing which lacked basic facilities was also prevalent in towns and villages and rural areas around the country. Read full editorial

Working Notes is a journal published by the Jesuit Centre for Faith and Justice. The journal focuses on social, economic and theological analysis of Irish society. It has been produced since 1987.