Home ownership dreams are being shattered by failed housing policy

OPINION

Too many people are locked out of home ownership, raising families in box rooms or paying exorbitant rents in the private rented sector.

But there is a better way, writes Cian O’Callaghan TD

THE dream of owning your own home – or renting at a sustainable cost – is getting further out of reach for most people as the Government continues to pursue failed housing policies.

The evidence is plain to see.

According to a new report from the Central Statistics Office (CSO), the cost of basic products and services in Ireland was 35.4 percent higher than the EU average in 2019.

The CSO study suggested that the main reason for the higher cost of living in this country was housing.

Earlier this year, ‘The Real Costs of New Apartment Delivery 2020’ report, published by the Society of Chartered Surveyors Ireland, found that the all-in cost of private developer-led delivery of medium-rise two-bedroom apartments in the Greater Dublin Area ranged from €411,000 for a low-spec unit in the suburbs, to €619,000 for a high-spec one in the city.

These prices are completely out of reach for most people.

To put this in context, a couple with a joint income of €90,000 would struggle to get mortgage approval for a low spec apartment in the suburbs.

A breakdown of the construction costs of apartments shows that ‘hard costs’ – or build costs – comprising labour and materials account for less than half of the overall delivery cost of new apartments.

Soft costs include risk, contingency, profit margins, VAT, land purchase and professional fees.

The best way to deliver affordable housing is to cut out some of these soft costs that private developers are tied too.

At present, the State can borrow at negative interest rates, and with no need to build in profit margins it is well placed to deliver homes that are affordable.

In recent weeks Fingal County Council announced that, in partnership with Ó Cualann Cohousing Alliance, affordable homes will be launched at Dun Emer in Lusk.

These will range in price from €166,000 for a 2-bed apartment to €258,000 for a 3-bed semi-detached home.

This would mean a monthly mortgage repayment of €698 for a 2-bed apartment or €1,085 for a 3-bed house.

This a good example of affordable homes being delivered on public lands.

This is a model that could and should be replicated across the country.

Key to ensuring the delivery of affordable homes is building up a sufficient pipeline of land that is suitable for development.

We need a consistent supply of land available at low-cost specifically for the delivery of homes that are affordable and within reach of people on average incomes.

There are some really good examples in other European countries of how land is strategically managed.

In Germany, the planning law freezes the value of land when the local municipality decides to designate an area for residential construction.

The municipality then acquires the land, produces a masterplan for development, puts in the necessary infrastructure and uses the uplift from selling plots of land to pay for this investment. There is almost no scope for individuals to profit from land speculation.

In the Netherlands, local municipalities play a similar role in assembling land for development which include powers to use Compulsory Purchase Orders (CPO) to build up strategic landbanks.

The availability of these CPO powers mean that they are rarely ever used.

Municipal plans can specify the different types of housing required, including social renting with definitions of maximum rents.

In contrast, when a local authority in Ireland rezones land, the landowner makes a windfall profit with land turning from agricultural use to residential use, turning landowners into multi-millionaires overnight.

When the State invests in infrastructure to enable delivery of homes on this land, the private landowner again reaps the benefit of increased land values.

All of these increases in land value are then reflected in the final price of a home.

For the sake of future generations, the Government needs to reimagine how it delivers affordable housing.

This means putting the needs of those who dream of owning their own home front and centre of housing policy. With a proper leadership and vision, this can be done.

Cian O’Callaghan is a TD for Dublin Bay North and Housing spokesperson for the Social Democrats