Large proportion of €451m social housing budget not spent

Large proportion of €451m social housing budget not spent

Local authorities are set to significantly miss their targets for spending on building social houses, despite the country’s escalating housing crisis writes Daniel McConnell.

The Irish Examiner has learned that because of “problems between the Department of the Environment and local authorities”, a large proportion of the €451m capital budget for building social housing this year will not be spent.

However, it has also emerged that a “significant majority” of the €1.7bn set aside last year for the period 2015-2017 by then minister Alan Kelly to build social housing has not yet been spent by local authorities.

“They have not spent their allocation of capital for 2016 and are not on target to spend it,” Finance Minister Michael Noonan has said. “There are other problems in the relationship between the Department of the Environment, Community and Local Government and the local authorities, as well as in the capacity of the local authorities to use the funds they are given.”

Large proportion of €451m social housing budget not spent

The news comes as the Master of the High Court has called on the State to nationalise repossessed homes in order to address the country’s housing crisis, which has seen the number of recorded homeless people almost double to 1,700.

Edmund Honohan, speaking at the Oireachtas Housing Committee yesterday, said compulsory purchase orders (CPOs) should be used to acquire repossessed and vacant lands in a bid to address the crisis.

However, the news that councils across the country are failing to spend their allocation for social housing is set to dominate a meeting of local authority chief executives and Housing Minister Simon Coveney tomorrow.

A spokesman for Mr Coveney told the Irish Examiner that the minister “will listen and discuss” any issues as to why the money is not being spent with the CEOs when they meet.

The Department of Housing attempted to play down the underspend last night, saying the drawdown on funding will ramp up toward the end of the year.

“Traditionally, the spend on social housing is more pronounced in the second half of the year and in particular in the final quarter as schemes are completed/purchased and funding drawn down before the year’s end,” a spokesman said.

“Minister Coveney will be meeting with CEOs of local authorities later this week and he will be encouraging them to speed up the delivery of their social housing programmes.”

Mr Honohan’s comments yesterday that the State should nationalise repossessed homes to address the country’s housing crisis, have sparked controversy.

“Vacant housing is in the public interest and housing where the owners have been served with orders to quit,” he said. “Once their right to redeem is extinguished, at that point the State could decide to acquire all of those.

“So it is a big bang, we acquire all of those loans, we pay off the previous loans and we then decide what to do with it. There is an important byproduct for those people in mortgage arrears, if the State steps in and buys all those properties, then we have instant freeze on repossessions and we put in place the mortgage-to-rent scheme.

“We could flip them over and rent them to the people who live there. If there is a crisis, and there is, let’s not play around with joke solutions like modular housing. Let’s get in there and do what is needed.”

But Patrick Sweetman of the Law Society, urged caution on Mr Honohan’s demands, saying they could end up costing the taxpayer more and there is no guarantee it would work in speeding up the acquisition of land.

“It is a lengthy process and open to challenge,” he said. “You could make the order now and pay in two years’ time, that is true, but you will pay interest on that at a pretty high rate. It is not, from an economic point of view, very attractive. That process tends to lead to a higher open market rate than otherwise would exist.”

This article first appeared in the Irish Examiner..


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