Delivering truly affordable homes to buy and rent in Dublin city is possible, but we need to double the state subsidy.
There has been a lot of criticism of the introduction of a shared equity scheme by Minister for Housing Darragh O’Brien. This criticism is grounded in the suggestion that the policy will increase the price of housing for ordinary purchasers while increasing profit margins for developers.
An increase of the Serviced Sites Fund from €50,000 to €100,000 per unit for Dublin city would do neither of those things. This fund is a state subsidy that supports the construction of affordable purchase and affordable or cost rental homes.
For the first nine months of 2020, there were just over 1,800 new homes transacted throughout the whole of Dublin county out of 5,000 nationwide. According to the National Planning Framework estimates, Dublin needs more than 6,000 new homes every year to meet population growth and demand. In terms of meeting social housing demand, there were 16,160 households on the Dublin Housing Waiting List as of June 30, 2020.
The new shared equity scheme should benefit first-time buyers, but with an expected ceiling of about €400,000 for new homes in Dublin and property prices rising in the city, this will still place home ownership out of reach for many in our capital and will do nothing to drive down the high cost of rent.
Dublin city councillors recently approved a scheme to develop 1,000 homes on a prime site of O’Devaney Gardens which will deliver affordable homes at a purchase price of €300,000. At the moment, 200 of those homes are earmarked for affordable purchase, but there are potentially another 500 homes which, instead of being sold to a large ‘build-to-rent’ investor, could also be sold as affordable homes for purchase or leased at an affordable rent.
This is only economically viable, however, if the capital subsidy that local authorities or approved housing bodies can benefit from, is doubled for Dublin to reflect the huge disparity in land cost versus the rest of the country.
In another development by Dublin City Council on Emmet Road, formerly St Michael’s estate, almost 500 new homes will be built, 400 of which will be cost-rental. With a capital subsidy of €50,000 per unit, rent for a tenant will be €1,500 per month, but if the subsidy was doubled, rent would be closer to €1,200 per month. The average market rent in Dublin is still close to €2,000.
A third housing development by the council, which is languishing because of opposition, is the Oscar Traynor Road scheme. A majority of councillors, regrettably in my view, voted in November 2020 against the development of 853 homes, principally because they objected to a private developer building homes on public land.
In addition to delivering 250 social houses in an area where one in three people on the social housing waiting list reside, this project would also provide 170 affordable-purchase homes. But the development of these much-needed homes is at a standstill.
If there was a doubling of the site subsidy, however, not only would it bring the purchase price of an affordable three-bed unit on this site down to €250,000 or a one-bed to below €200,000, it would make at least an additional 200 homes viable for cost-rental.
It would be extraordinary if a majority of councillors continued to block the development of affordable homes in our city at those prices.
Sinn Féin voted against O’Devaney Gardens because it claimed it could build a one-bedroom home for €174,000 and a three-bedroom home for €267,000 on the same site.
In the Dáil, Sinn Féin’s housing spokesman claimed that an average social home can be built for €181,000 in Dublin city. These are fantasy figures.
The actual average construction unit all-in cost for social or affordable homes for Dublin City Council for a scheme involving apartments and houses is just over €450,000.
We need to find ways to drive down costs while maintaining quality standards in both construction and design, and a Commission on Housing should be established to help achieve that outcome.
The need for a commission and better mechanisms to drive down costs cannot, however, serve to delay the pressing social need for more houses in our city and greater affordability for both renters and home buyers.
Similarly, the single best way to defeat disinformation and illusory alternatives is to demonstrate that the state can in fact deliver affordable homes in our city while avoiding the boom-bust cycles of the past.
It is not inevitable that, in attempting to defeat the three strands of our housing crises of homelessness, affordability and supply, deep philosophical divides or polarisation between political parties and voters alike will always remain.
Borrowing now to subsidise affordable homes into the future presents a real opportunity to cut through that divide and deliver affordable homes for our citizens.
James Geoghegan is a Dublin Bay South Fine Gael councillor