Creating the supply of affordable housing in Ireland is a Government priority, underpinned by Rebuilding Ireland. But what is affordable housing?
Three schemes are identified by Minister Murphy’s Statement on Affordable Homes:
- Rebuilding Ireland Home Loan
- Affordable Purchase Scheme
- Affordable Rental Scheme
The Rebuilding Ireland Home Loan and Affordable Purchase Scheme both define eligible applicants as having a maximum household income of €50,000 as a single applicant, or €75,000 for joint applicants. However, each of these schemes require applicants to be mortgage eligible as per Central Bank rules.
So, what is affordable for those in our communities who do not qualify for social housing or a mortgage?
Perhaps the answer lies in the Affordable Rental Scheme?
This scheme uses a cost rental model, meaning the rent payable is calculated on the cost of building the property, together with ongoing management, maintenance and finance costs and therefore is not directly related to Market Rent. A pilot project is currently being progressed by Dun Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an Approved Housing Body, using publicly-owned land. But the regulation defining the operation and eligibility of these schemes has yet to be finalised.
So, are we any closer to defining affordable housing in Ireland?
With a definition on eligibility for the Home Loan and Affordable Purchase Scheme, the answer is yes - in part. But clarity is still required on how we can bridge the gap for those considered in most need to realise the ambition of affordable housing supply.
So, what is next for affordable housing?
There is a consensus for a sustainable, good-quality supply of affordable housing in the long-term, be it for renters, first-time buyers, families or those falling into the ‘gap’. The above Schemes all assist, creating recognition of an affordable sector in Ireland, however their longevity and sustainability may be challenging in the long-term, particularly as both the Affordable Purchase and Rental Schemes rely on the supply of State lands.
Recognition that a single solution to such a wide-ranging need is unlikely, and that additional model(s) offering long-term certainty will enable engagement with the private sector, developers, funders and investors as well as the public, to plan and invest in affordable homes is required.
Further stimulus, schemes and supporting funding which can leverage the positions of existing Approved Housing Bodies (AHBs), Land Development Agency (LDA) and Local Authorities to work in collaboration and partnership with the private sector may optimise value for money, answer the challenge of capacity and resource, enhance industry skills, whilst delivering increased supply of good quality affordable homes.
Although we must learn from past lessons, an open mind is required to fully identify the opportunities ahead.
Acceptance by stakeholders of the role that capital markets can play in providing appropriately priced and structured long-term funding is required. While there is capital seeking to access the sector, it can only do so if there is an appropriate risk-sharing model. Schemes such as Cost Rental, Joint Ventures, Shared Ownership and enabling AHBs to fill the affordable rental gap are no doubt up for consideration.
In a market where developers are increasingly squeezed by rising construction costs and slowing house price inflation, a tightrope must be walked to ensure any measures do not negatively impact overall housing supply.
Whilst overall housing need is currently outstripping supply and fiscal constraints continue, the next steps must be underpinned by greater dialogue and engagement with the market to ensure viability from both a supplier and occupier perspective, ensuring medium to long-term measures encourage a market balance and overall housing delivery. Needless to say, this is easier said than done. Key to any implementation mechanism will be a forward looking approach, particularly considering the inherent market lag time.
There is certainly drive to supply affordable homes, it will be interesting to see how the Government engages with the market and approaches the next steps for affordable housing in Ireland.
Ebba Mowat, Savills Development Consultancy.