The housing debate in the general election is going to centre on one thing – home ownership. The first part of Sinn Féin’s housing plan, published this week, has refined the party’s concept of affordable housing and put some flesh on the bones. A key aspect of it is that the State would retain ownership of the land on which affordable homes are built, meaning some restrictions on the ability of the person buying the house itself to sell it on, or rent it out.
Add in the Sinn Féin dislike of the Government schemes to help buyers – Help to Buy and the First Home Scheme, in which the State takes an equity stake – and you can see the key part of the emerging debate. It will be interesting to see whether the party sticks to its previous policy of abolishing these supports, or opts instead for a phase-out as supply increases.
In the meantime, the debate has kicked off as Sinn Féin tries to refocus political attention on this area. It will say that change is needed, and that complete reform in the way homes are delivered must be central to this. Fine Gael and Fianna Fáil are accusing the party of being against “home ownership” or putting a “ban” on it, as a hyperventilating headline on a Fine Gael press release this week described it.
It is worth stepping back and putting this in context. It is clear that, whoever is in government, many billions are going to be spent on housing both from direct exchequer funds and from borrowings that are in effect guaranteed by the State. A significant chunk of this will go on affordable housing – and more on social housing and other measures. The State is going in deep, whoever is in charge, and is taking a big punt on the future of the housing market.
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Sinn Féin’s affordable housing plan has focused on a key part of the policy mix. This is aimed at people who earn too much to qualify for social housing but too little to compete in the private market. The party promises to deliver 25,000 affordable homes, available to purchase for households with an income of less than €90,000 – and a further 25,000 available for rental at prices of €1,000 a month or less.
This goes to the heart of one of the crunch issues of the housing crisis – the unaffordability of houses for many people even if they do earn a decent income – including single buyers, one-income couples or even two-income couples on average salaries.
The social impact of this unaffordability has been huge. The Housing Commission estimates there is pent-up demand for up to 250,000 new homes, due to tens of thousands of people being forced to live at home in recent years. Between 2012 and 2022, the share of young Irish adults living with their parents in Ireland rose from 38 per cent to 59 per cent.
To help them to afford homes, State cash has to go in somewhere – either by making the supply of homes cheaper, by giving buyers cash to help bridge the gap, or by a combination of both. Sinn Féin has put its money on cutting supply costs by using existing State land or buying new land to build on.
The Housing Commission report estimated that, in round numbers, households earning €50,000-€100,000 cannot afford to buy in Dublin
In its calculations, the State would meet these land-related costs, thus reducing the total cost of developing a housing unit by between one-fifth and one-third. This is how it plans to deliver houses at €250,000-€300,000 for buyers. That will be only part of the new-build market, of course.
The deal, for the buyer, is that they own the home and can plan to leave it to their family, but will be obliged not to rent it out on the private market. If they sell it, it would have to be to another affordable buyer. Discussions with the banks will be needed, to see on what terms they would extend mortgages to affordable buyers, as this will depend on getting security on the asset and being able to sell it on.
Sinn Féin argues that the constraints it would impose on selling and renting are a reasonable price for the buyer to pay for a home at an affordable price. This, the party calculates, would help create a stock of such properties for the future. In the past, allowing people to purchase local authority homes was one of the factors that reduced the public housing stock.
The Government will play up these ownership issues, though is vulnerable on its own record of affordable delivery. Ministers will reckon that voters are attached to the traditional cycle of buying a first home, selling it on at a profit to “trade up”, and seeing the value of the asset rise over time. Many may well be, but for others this route now looks unachievable.
This locked-out generation is a key election battleground: Sinn Féin will hope its demand for a reset in policy lands with this group, while Fine Gael and Fianna Fáil will say the Government approach is delivering and Sinn Féin’s plan is undermining the basic concept of home ownership and the property ladder.
There are a lot of votes here to fight for – a squeezed middle of young buyers. The Housing Commission report estimated that, in round numbers, households earning €50,000-€100,000 cannot afford to buy in Dublin. In some parts of the city the income level required will be even higher. Those earning less than €50,000 are likely to have to rely on social housing.
Before the housing crisis, people could aspire to buying a “starter” home in their mid to late-20s. Now the average age of ownership of a first home is 36. Today, many in average jobs are simply priced out.
Lying behind all this, however, remain all the knotty problems outlined by the Housing Commission, many of them centred on the planning process and the delays and risks it creates, the firepower of the sector to deliver, and the slow way Ireland goes about policy delivery.
No matter which plan for affordable housing you prefer, there is little chance of it being delivered in any reasonable timescale – or of the wider uplift needed in supply – unless these issues are tackled.