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26/07/2021

Government needs to be an active participant in the solution to the housing crisis – Martin Kenny TD

What will happen if the inn closes for Christmas?

Deputy Martin Kenny

In a bid to tackle the housing crisis Leitrim TD Martin Kenny has issued the following statement to www.leitrimobserver.ie:

Everyone accepts that private house prices are too high for working people – even those in well paid jobs – especially in the capital city of Dublin. And when the capital is boiling over, it quickly spreads out to other cities and across the country. The high price of houses is then reflected in the extremely high rents being demanded.

Therefore, most people accept that it’s in the public interest for the State to intervene and take measures to control excessive rents and exert downward pressure on excessively high private house prices, particularly in our main cities.

In this housing crisis there are many issues to be dealt with, such as the bulk buying of homes by large investment funds only then to rent them out at huge prices, or the shortage of private housing supply through slow delivery and access to finance for smaller builders. However, today I want to focus on the role of the State in building houses on land owned by the State in our main cities.

Unfortunately, the impact that State action can have in relieving the housing crisis is not being utilised by this Government. The refusal to maximise the role of the State in dampening down runaway house prices, by building on land owned by the State, is the real reason why Sinn Fein have objected to some housing proposals in our major cities.

It has been long settled that it is best to provide a mix of social housing owned by the State and private housing owned by citizens, matched with good social and community infrastructure in housing estates being built on State owned land. However, there are important choices when it comes to the model and means of delivery used to provide these housing objectives.

One option for building on State land being proposed to local authorities in Dublin is some version of a deal between the Council and a big developer. The developer builds all the houses, with about 30% as social housing for the local authority to rent to people on the housing list.

Between 20% and 30% would be sold at a more affordable price to people who can’t afford the excessive high cost of the open market and the rest is sold by the developer at full market price. The developer would be paid a price for the construction of the social houses and a deal is done on providing the land. The land is either very cheap or free to build the rest of the houses. In exchange, the developer agrees to sell a portion as affordable houses. There is often, however, disagreement on what is an affordable price.

The big problem is that almost half the houses are sold by the developer at full market price, thereby fuelling the mad inferno of high private house prices. So, a large portion of these houses built on State owned land puts upward pressure on house prices and creates a large private profit for the developer; this is a bad model which Sinn Fein opposes, simply because it puts extra money in the pockets of developers all the while facilitating further fragmentation of an already broken market.

Sinn Féin supports a model in which the local authority designs a mix of housing types and contracts out the building of all the houses and amenities at a competitive price. Between 30% and 50% of the houses would be for social housing and the rest sold by the local authority at a genuinely affordable price.

This would mean that a greater number of houses would be in the affordable price range and this would apply downward pressure on adjoining private housing. The delivery of these affordable homes would not only give those struggling to find a home hope, but it would also decrease demand for private housing.

This is vital as it is the excessive demand for private housing that continues to push rents and prices further and further away from working people. This is a result of an insignificant public housing stock, and so when the State provides an alternative in the form of social and affordable housing, the private market will have to adjust downwards.

When Sinn Fein is seeking to have the State use its ownership of development land in our main cities, to provide quality social and affordable housing, we are doing so in the public interest. We are not opposed to private housing.

In fact, we encourage it and want to see more people being able buy houses to live in and raise their families. Ireland has had a good tradition of home ownership where most people would buy a house and pay their mortgage as a natural part of life’s progression.

This model of home ownership by the ordinary person means that the wealth or value of the house becomes an asset in time and therefore wealth is distributed more evenly among the population compared to other countries where owning a home is not normal for working people.

In many European countries where people rent all their lives the State has strict rent controls and long term renters have very well established rights of tenure; but the property is owned by someone – usually a big property company or a very wealthy landlord with multiple properties.

If the prices of private houses in Dublin, keep growing out of the reach of ordinary people, it will be only the very wealthy and property companies that will be buying homes in our main cities. We believe that would be a disaster for Ireland and that is why Sinn Fein will continue to press the Government to be an active participant in the solution to the housing crisis.

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