The Housing Fix is an Irish Times series exploring solutions to Ireland’s housing crisis – arguably the biggest social and economic issue facing the country and its next government – in the run-up to the general election.
With more than 30 years' experience in the housing sector and having first served as a councillor in the late 1980s, Paul Smith knows something of the capacity of local authorities to deliver homes.
"If you want a mechanism or an organisation that has the ability to stop anything happening, it's a local council," says the head of housing with Bristol City Council in the UK.
Local authorities in Britain and Ireland have different structures. Bristol, for example, has a directly elected mayor – Irish cities do not, or not yet. Smith, a Labour councillor, also carries the title Cabinet Member for Housing, a role held by an unelected official in Dublin City Council.
“The thing that makes you most powerful in the housing market is being a landowner, because you can dictate what happens on your land,” Smith says.
Having power is one thing, knowing what to do with it is another. When Smith took up the housing position in 2016, the council operated a system where it built homes itself or released land to housing associations. With caps on borrowing, the council was building “practically nothing”, Smith says. Radical change was needed.
“We decided to set up a development company.”
The company, Goram Homes, has recently selected its first two sites for development. One is a suburban site which will deliver 268 homes, 30 per cent of which will be social housing. The other is a waterfront site in the city centre, which was previously used as a caravan park, and will accommodate up to 140 homes, including 40 per cent social housing.
One project uses ZEDpods, which are low-energy homes built on stilts above car parks, eliminating the need for a site entirely
“It’s a wholly owned council company with its own independent board. We’ve agreed to pass two sites to it at the moment. We passed the land to Goram, it then went to the market to find joint venture partners in the private sector to bring in extra borrowing to pay for the scheme, but to also bring in expertise we don’t necessarily have as a council,” he says.
“On each of those sites we put in value equivalent to half the cost of the development, but most of the value comes from the land rather than from money; the developer brings in the other half as finance. They also bring in their expertise – we would jointly build out the schemes. Goram would build the schemes out, and the 50 per cent profit goes to the council and 50 per cent to the private developer.”
The use of public land for any private housing is not without its critics. It has proved controversial in Dublin, mostly recently with an unsuccessful attempt by some councillors to reverse the plans of the previous council for the regeneration of O’Devaney Gardens, which is to be built with a mix of social, affordable (or State-subsidised private housing) and fully private housing for sale.
It is something Smith has wrestled with. “I am a very strong advocate of council housing, I’m also a strong advocate of councils holding onto their land ownership. But I grew up on a large council estate in south Bristol, an estate of about 3000 homes. It was all council housing and very quickly it became an area of deprivation.”
Building housing, which will serve not just those in need of State supports, is more than a money making venture, he says.
“If we are going to build beyond 60 units we will not just have council housing, not just because we want the money from the private sale, although that helps, but because we want mixed communities.
“We don’t want to create areas that have huge concentrations of people who are vulnerable and have low incomes because that is not balanced; it affects the viability of shops, it affects the social viability of the community.”
However, he says that principle cuts both ways, and in areas where the council has no social housing it will consider building 100 per cent social homes.
“On some of our council estates we are trying to get private housing to make those communities more balanced and we are trying to buy land or use land we have got in areas where there is no social housing to build social housing, and make those areas more balanced.”
Goram is not the only show in town. The council is continuing with its own separate house-building programme, following the lifting of a cap on borrowing to fund council housing by the Government just over a year ago.
It also established the Bristol Housing Festival, which despite sounding like a housing conference, is a five-year project to develop innovative solutions to housing crisis.
“It was pitched to us two years ago to promote innovation in housing, not only in how it is constructed but who lives in it. It is looking at mixing communities in a different way, of using the city as a laboratory to test new ways of providing housing.”
The council is making land available for a variety of housing projects, generally with smaller sites it isn’t using or is using in an unproductive way. One example is the LaunchPad project, where students, young people who have been homeless and key workers, such as nurses and teachers, are living in “system built” shipping container-style housing on a former car park. Another project uses ZEDpods, which are low-energy homes built on stilts above car parks, eliminating the need for a site entirely.
“We are making some sites available for a number of small-scale experimental projects, but we’ve also got two sites that are close to 200 homes each, where we are bringing in larger developers. The deal is: we make the land available, they build out the scheme, but we get back some of the housing as council housing.
“So we don’t have to borrow any more to do it, which if we were going to build we would, but we still get the same amount of council housing as we would have if we had built it.”
One of these larger festival projects is being developed by BoKlok, a company owned by Skanska and Ikea, where 30 per cent will be for social housing and 70 per cent for sale, but aimed at key workers.
The council is clearly trying everything to overcome its housing crisis, and it’s unlikely that all of these projects will be advanced beyond their initial pilots, but the point – says Smith – is that some of them could.
“While the housing festival might seem a bit left-field, we see it as a bit of a Trojan horse for trying to change how we do housing in the mainstream. We want to do as much experimentation as is possible for a bureaucracy like the council to do,” Smith says.
“We are trying to test everything to breaking point. We expect that some things will break, but what we’re trying to say is: we don’t want to anything to fail but if something does fail we can learn from that.”
Failure does come at a cost, however, not least a financial one.
“That’s true, but it’s much less expensive than dealing with the consequences of a broken housing market. As a council we are spending about €18 million a year on homelessness. We wanted to break out of that cycle of our funding being directed towards our failures rather than our successes, “ he says.
“For me it has always been that choice in terms of looking at the city. Do we try and cut ourselves out of the problems we’ve got and manage decline in the city or do we try and grow ourselves out of the financial problems we’ve got? Housing requires capital investment but it pays back over and again. The investment we’re making will save us money and improve the city at the same time.”
Would it work here?
Would Bristol’s approach work in Ireland? The potential for a council-owned development company to build housing was explored in Dublin. In May 2014, in response to the dire need to refurbish thousands of council flats, and with little prospect of funding forthcoming from central government, Dublin City Council examined the possibility of setting up an “arm’s length” development company.
A report by the city council’s housing department stated the model “allows social housing investment without completely passing ownership of housing stock out of council control”.
It noted there was precedent for this type of entity, most closely in the shape of Ballymun Regeneration Limited, but also with the Dublin Docklands Development Authority and the Grangegorman Development Agency.
However, the report said, the council would have “some reservations at present with this option”, questioning how the funding would be repaid.
Nevertheless the councillors remained committed to this option, passing motions to that effect at the end of that year. After this, the proposal seemed to fade away.
Dublin City Council’s head of housing Brendan Kenny is ambivalent about the idea, and also unsure if it is what councillors really want, regardless of what they may have voted for. “It is something we have talked about in the past, but it really hasn’t gone anywhere,” he says.
“When we looked at it before, we were in a different environment. In 2013 and 2014 there was just no money coming from central government for housing. But then the AHBs [approved housing bodies] came into their own because they were able to borrow money. “
Irish local authorities operate in a different funding environment from their UK counterparts, something Kenny sees as a distinct advantage.
“In the UK they have set up companies, but their system of funding housing is different to ours. With the system we have, where we are centrally funded by government, I just don’t really see the benefit of it here. The advantage we have is that social housing is funded centrally, and while development might be slow, that surety of funding is important.”
Kenny, who has previously described the social housing procurement rules as “horrendous”, says he could save time and money if allowed to select contractors directly. “I would like to see things moving faster. But a lot of the delays are due to local objections to social housing.”
A company would also need to “wash its face” financially, and some private development on public lands would be needed to get the cash in to service the company’s loans, he says.
“In that regard alone, I don’t even see how it would get off the ground. There is no reason a local authority can’t be involved in private development except that there would be political opposition to it.”
However, Kenny says a form of a housing company is coming in the shape of the new Land Development Agency (LDA), a commercial State-sponsored body which will be building private and social housing on public lands.
“There is no reason we can’t give land to the LDA, and it can borrow from other sources. With big sites in the future, we, and other local authorities as well, might simply transfer them to the LDA. That is what they were set up to do, have a single focus on large sites. Councillors might be more willing to transfer to the LDA than to a private company, but the LDA will still have to wash its face by having some private development.”
Councillors’ enthusiasm for the LDA is by no means guaranteed. The agency was recently invoked when councillors were wavering on the development of O’Devaney Gardens, and transferring the site to the LDA was not seen as a palatable alternative.
“The LDA wasn’t used as a threat,” Mr Kenny said. “It was used to really remind councillors of the reality of the situation.”
Housing has become polarised between those who want only social housing built and those who want housing left to the private market
Sinn Féin TD Eoin O’Broin proposed setting up a council housing company or trust when he was a member of South Dublin County Council in 2013.
“At the time we couldn’t get capital funding to build. The idea was of an arm’s length company, a vehicle fully controlled by the local authority, to borrow off balance sheet to build,” he says.
“Two issues emerged: the body would need collateral, so the four Dublin local authorities would need to transfer existing stock to it, and also whether or not it could be off balance sheet. It went around the houses for a couple of years, but in 2016 it became clear that it would still be on balance sheet, because it wouldn’t be a commercial company.”
The issue centred on whether the entity would be building social housing or a mix of social and private housing. The likelihood that more than 50 per cent of the housing would have to be for sale in order to make it commercially viable made it an unattractive proposition, says O’Broin.
Keeping the company on balance sheet meant it was still dependent on central government for funds, and therefore not giving it any advantage over local authorities in developing housing.
“In the end we knew it wasn’t something that made an awful lot of sense. I don’t see the merit in it now that I know what I know,” he says.
“Dublin local authorities have enough experience; if they were given enough money and enough staff they could do what needs to be done.”
Labour city councillor Dermot Lacey believes the creation of an arm’s length housing company is not without merit.
“My view is the housing crisis can’t be solved by any one measure. That’s why I have been actively supporting AHBs and why I think a council-owned company, a type of housing trust, could be another part of the jigsaw.”
Housing has become polarised between those who want only social housing built and those who want housing left to the private market, he says.
“Both views are wrong. There are a lot of people in the middle who are left out, who need affordable housing to rent or buy, but their needs are being neglected,” he says.
“We need to move away from having developments of total social housing. We need to be a housing provider for the university professor and the person who needs social housing, with both living in the same type of apartment but paying different rents.
“In that way a municipal housing trust could work, because you would have the money from the higher rent and it could be very useful. Resolving the housing issue is about putting all the pieces together. If you don’t have all the pieces you can’t complete the jigsaw.”
