New rental system must be developed to support substantialincrease in public housing supply
Wednesday 11 June 2014, Dublin.
Green Party leader, Eamon Ryan hastoday called on the government to move quickly and legislate for housingreforms on foot of the publication of the National Economic and SocialCouncil's report, 'Social Housing at the Crossroads: Possibilitiesfor Investment, Provision and Cost Rental'.
Speaking this afternoon, Ryan said: "The current modelfor the provision of social housing is not working. Direct government borrowingto finance social housing is no longer feasible and reliance on the market tomeet our housing needs has plainly failed. 100,000 families are on the housingwaiting list, and a growing number of people face the prospect of homelessnessdespite our expensive form of rent supplement to the private rented sector. Thelevel of home ownership has fallen in the last ten years, but there is no clearplan to support further growth in the rented sector.
"The government have allowed the situation to drift over thelast three years, but the NESC report sets out three changes which couldprovide the basis of a new social housing model."
1. A new 'cost rental' model
We need a new rental income model which covers thecost of new social housing construction loans. Such a transition can be madefair by balancing the subsidies we currently provide to those in existingsocial housing to subvent new construction activity, and by also diverting thesupport we currently give to the private rented sector. Controls on excessiverent increases in the private sector could help to ensure the affordability ofrent levels in the transition to this more unified model, where social housingincludes a wider variety of different income groups.
2. New financing mechanisms
The rental model will have to be able to cover theinterest payments on low-cost loans which provide the financing for newhousing. Such lending could then be excluded from the government's borrowingstatistics, as happens in several other European countries. We should look at avariety of sources of finance including the European Investment Bank, theinternational bond markets, pension funds and new public banking institutions.New institutional arrangements will also be needed so that we can aggregate theloan applications for housing associations, local authorities and housingco-operatives to scale up their level of construction.
3. Direct government intervention to increasesupply
Even with access to long-term and low-cost finance weshould not rely on the market alone to deliver the necessary increase inhousing supply. The government should use the land banks managed by NAMA andthe promotion of new student accommodation in our colleges to help deliver thenecessary increase in housing supply. Such state intervention will also have toensure that developments occur within existing urban areas, rather thanallowing the dispersed form of development which was prevalent for the last thirtyyears.
Ryan continued: "The biggest problem in making thistransition will be a lack of public faith in the ability of the politicalsystem to deliver the necessary changes in a timely and fair manner. There is alot of vested political interest in maintaining the status quo, and even thoughthe current housing model is clearly not working, there will be a reluctance tochange a system which politicians at both a local and national level arefamiliar with, and know how to manipulate for their own electoral advantage.
"This is one of the most important reforms that thegovernment has to get right. They have promised a new social housing strategyin the Autumn, and are calling for public submissions on what is possible. The Green Party will bemaking a submission in early July and will be supporting a radical shift to getus out of the growing housing crisis."
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