This is not news to anyone: Ireland is in the midst of a housing and homelessness crisis. It is a long-running crisis that threatens both the wellbeing of society and the stability of the economy. But why is there a housing crisis in the first place and what are the solutions?
To answer these two questions, we need to look at four core problems. The housing crisis is made up of homelessness, high rents in the private rental market, a lack of social housing and a lack of properties or affordability in the private buyers’ market. These four core problems are all interconnected, and they are colliding to create Ireland’s current housing crisis.
In numbers, there are currently just shy of 10,000 people State-funded emergency accommodation in Ireland, such as in hostels and hotel rooms. These include 6,363 adults and 3,624 children. In terms of social housing, more than 100,000 households are on social housing waiting lists or are receiving State help to pay their rent, mainly through the housing assistance payment (HAP) scheme or through the rental accommodation scheme (RAS).
A brief point on HAP — it’s costing the State €400m a year. That €400m is divvied up between tens of thousands of people, who use the payment to supplement their rent with a private landlord for insecure, short-term tenancies. The payment is inadvertently supporting high rents and unstable housing arrangements, and fails to contribute to longer-term solutions.
Moving on to the private rental market, the average price in this market rose by 81% between 2010 and 2017. In Dublin, renters are now spending over 50% of their income on rent.
Financial experts say that when rent is above 30% of income, it starts to impact on a household’s ability to save and cover other costs.
Let’s now wind the clock back to the crash to equip ourselves with two final sets of key figures.
Between around 2010 and 2015, due to Government expenditure cutbacks in social housing, around 30,000 social rented homes were not able to be delivered by local authorities or housing associations.
And now the final set of figures — this relates to debt. As a result of the crash, homeowners lost jobs and fell behind on their mortgage payments.
According to the Central Bank of Ireland, there are 29,000 homes in arrears. These are 29,000 residential mortgages that have “accumulated at least two years worth of missed payments”. And why does this matter when it comes to the housing and homelessness crisis?
The Central Bank estimates that half of those, so 14,500 homes, possibly housing two to three people each on average, will be repossessed. That could result in up to 43,500 people joining the already crowded crisis.
So what needs to be done? It is clear that we need homes. The Government is planning on delivering 50,000 new social homes by 2021. Researchers estimate that we need to build up to 34,000 new private and public homes every year until 2031.
That is another key point to bear in mind — the housing and homelessness crisis is both a private and a public problem. Housing comes in both privately-rented and privately-owned homes. It also comes in the form of social homes that are built either by local authorities or by approved housing bodies (AHBs) then rented from either of those two sources.
If it is a private and a public problem, then the solution also lies in both. Some insist that the market can solve the problem, which can be seen in the Government giving out €400m a year in private rent supplement payments.
Others believe that the banks should be allowed to clear their loan books and repossessions should go ahead at pace for those not paying their mortgages.
However, if either of those two approaches could cure the crisis, things would be getting nominally better by now. The solution, therefore, must be manifold.
The current solutions are in four keys areas and they are being rolled out by charities, AHBs and the State.
The first solution is using mixed-funding to pay for social housing — that means getting some money off the State and by raising the rest privately, as opposed to solely relying on the State to pay for social housing.
The second is through innovative housing projects like renewing vacant sites.
The third is mortgage-to-rent, where people in long-term mortgage arrears get to stay in their homes and now rent their once-private house from a housing charity that bought their surrendered home off the bank.
And the fourth, and perhaps most crucial one is called cost-rental. This is a house that you rent at about 30% less the market rate, your rent covers the build and maintenance of the property, and you rent it for 25 years.
All of these, albeit on a small scale, are being rolled out in Ireland, with the Government hoping to roll out the cost-rental model, which is seen as a positive disruptor to the private rented market, if the two current pilot projects go well.
Case study: ‘There’s a lot of buildings that could be used to solve crisis’
Peter, 32, spent six years of his life homeless. He now lives in a studio apartment in Dublin, which he rents from the Peter McVerry Trust (PMVT) after they restored a vacant building.
PMVT, while a homeless charity, is also an approved housing body that provides social housing just like a local authority.
“I became homeless at the age of 17. I was in transitional housing for two-and-a-half years and then slept rough for six years. I was in St Catherine’s Foyer, a youth homeless service, before I moved into my apartment with Peter McVerry Trust,” says Peter.
He explains that being homeless at such a young age was difficult.
“Being homeless at 17, I found the system very confusing and difficult to navigate and to get helpful information from.
Someone once asked me if I could go back to being 17 and do it all differently, would I? I said no, but I’d want to go through everything I experienced quicker and be homeless for less time.
Peter’s wait for social housing was “long” and something he took a “day by day” approach to, after linking in with key workers from the Peter McVerry Trust.
He now rents a studio apartment in Dublin, in a building which was brought back into use by the Trust.
While Peter is “happy” now, he misses the “community spirit” from the homeless youth service in St Catherine’s where he got on well with staff and residents.
“Life is quieter now. I’m more active now — I enjoy going for walks around the city centre and along the coast,” explains Peter.
In terms of the public perception of homelessness, the 32-year-old believes that people have a “stereotype for everything”.
“A lot of people think that people on the streets are drug users,” he says.
Prejudice and stereotypes aside, Peter thinks in solutions and when it comes to helping homeless people, he says: “There’s an awful lot of buildings that could be used to solve the homeless crisis quickly if they opened up the houses and empty buildings”.
Case study: ‘I’m in my home. That’s main thing’
In 2018, Anna Gallagher surrendered to the bank the home she had lived in since 1999. Her home was bought from the bank by the approved housing body, iCare. Anna now rents her home, on a 25-year lease, from iCare. This solution is called mortgage-to-rent, whereby people with unsustainable mortgages, and who have been deemed eligible for social housing, can surrender their home and rent it instead.
“My situation was that my husband took his own life and I was left with the mortgage. He died in 2010.
“There was no one to contact. Ten months after he died, I heard of David Hall (director of the Irish Mortgage Holders’ Organisation and now CEO of iCare). I saw him on the telly and, at the time, he wasn’t even doing anything with mortgages. We had been in the house, and paying the mortgage, from 1999 to 2010.
“My husband died in February 2010 and the letters (from the bank) started coming straight away. My only solution was: ‘Will I go to the corporation’ or ‘what if I’m homeless? What am I going to do’?” says Anna.
The 53-year-old says the letters from the bank over her arrears “just kept coming” and she could not think of a solution.
“It was getting to the stage where I wasn’t even buying a cushion cover for the house. I wasn’t even going out, in case someone would come and I’d be afraid the house wouldn’t be here when I came back. When I’d get the letters, I’d just put them in the press,” she says.
"I couldn’t wait for the weekends to come, because there’s no post at the weekend.
"It affected me badly. I was dealing with this as well as grieving and then looking at my two girls grieving their father,” says Anna.
In 2018, after nearly eight years of dealing with the banks, the option of mortgage-to-rent was put on the table.
“Just last year, there was light at the end of the tunnel. David Hall said: ‘It will either go this way or that way’. He didn’t give me false hope. If I went to court over the house for repossession, it would just delay it and I’d be in the house for another two years, but that would be it,” she says.
Instead of delaying the repossession of her home by going through the court process, Anna became one of the first 19 tenants of iCare’s in November 2018. In one day, she surrendered her home to the bank, iCare bought the home from the bank, and Anna signed a 25-year tenancy agreement. The main thing people ask Anna is: ‘what is it like to hand your home over?’
It didn’t bother me. People asked me what it was like giving up your house, but you can’t expect to hold on to something if you can’t pay for it.
“You can’t have it every way. I couldn’t sleep. I can sleep now. I couldn’t get it fairer,” she says.
“I’m living in my home; that’s the main thing. I didn’t have to up and leave and find a new place. Had my husband been alive, we would have fought this together. It was a lovely, happy solution for me,” adds Anna.
To celebrate, Anna got her kitchen and ceilings painted before Christmas and got new cushion covers, and other interior items.
While she got great support from her neighbours, with everyone wishing her well, Anna believes a more humane approach should be taken with those in mortgage arrears.
“The Government should have somebody out there to see these people in arrears, see these families, before the letters from the banks start arriving. Have a heart. There should be more humanity.
“It shouldn’t just be letters; you’re just a number to the bank, they don’t care. There are people taking their lives over this,” she says.
While she doesn’t know if everyone in her predicament would follow the path she has taken, Anna believes that, for her, “it’s been a good solution.”
Solution 1: Cost-rental
A concept called the cost-rental model is considered the missing link in the Irish housing market. But what is it?
Cost-rental is affordable, high-quality rental accommodation, provided by the State or local authorities. The rent is used to cover the cost of constructing the accommodation over the life of a long-term building loan.
“The simple premise is that you build homes and the rent is affordable. It is 20% to 30% lower than the private for-profit rental market and the cost of rent reflects the cost of providing and maintaining the homes. You’re taking out the developer’s profit,” explained Donal McManus, CEO of the Irish Council for Social Housing (ICSH).
But how does it work and who qualifies?
“If you’re a family and you can’t qualify for social housing, which is usually if your household income is below €35,000 generally, and you can’t afford to buy then you look at renting. If you can’t rent what do you do then?
“Cost-rental is the intermediate market. It’s the positive disruptor in the private rental market,” said Mr McManus.
There are currently two pilot projects in Ireland. Two approved housing bodies, Túath and Respond, are involved in developing one of them. The two housing developments, one in Sandyford and the other in Inchicore will deliver nearly 400 cost-rental homes.
The Department of Housing said it will use what is learns from these two projects to roll out the concept nationwide.
“There are currently two cost-rental projects at Enniskerry Road, in Dún Laoghaire-Rathdown and St Michael’s Estate, Inchicore, which will deliver 50 and 330 cost-rental homes, respectively.
“The experience on these projects will inform a national cost rental framework under which similar projects will be rolled out on a wider scale,” a spokeswoman from the department told the Irish Examiner.
She said the Government was “committed to the introduction of the cost-rental sector”.
The spokeswoman also added that the rents will be 15%-25% lower than the market rate, based on an estimate by the National Development Finance Agency (NDFA).
In terms of where the money will come from to build this new sector of housing and who will act as landlord to the tenants, the department’s spokeswoman said these details have not been ironed out.
“The department is engaged with the National Development Finance Agency, the European Investment Bank and the Land Development Agency to develop the optimum funding and delivery mechanisms to support cost-rental delivery at scale in Dublin and in other urban areas. The model is not completely finalised yet but should be run by local authorities or voluntary bodies,” she said.
The two voluntary bodies currently involved in the pilot project believe this new sector of housing will greatly help Ireland’s housing crisis, but that we need to implement it quickly.
“You don’t need to be on a council waiting list to be in need of affordable housing today. Hundreds of thousands of people and families up and down the country require assistance.
“We want to help provide affordable housing to hard-pressed families in the squeezed middle market. Affordable and cost rental housing is the missing link of housing policy along with new affordable shared ownership models,” said Sean O’Connor, CEO of Túath.
Niamh Randall, who is head of advocacy for Respond, said the cost-rental model is already the norm in Europe and will bring Ireland in line with European housing policy.
This is a priority area of work for Respond as it is clear that some form of intermediate housing is needed for those who don’t qualify for social housing or mortgages and yet cannot afford market rents and are struggling to keep a roof over their heads.
“The introduction of cost-rental would also bring Ireland more into line with our European neighbours where people from all walks of life live in housing association developments side by side as there are many such initiatives across Europe,” Ms Randall said.
In terms of politics, the Green Party’s Eamon Ryan introduced a private members’ motion to the Dáil last March, calling for the provision of cost-rental public housing at two sites in Dublin.
He proposed using two publicly-owned sites at Cathal Brugha Barracks in Rathmines and Broadstone Bus Depot in Phibsboro, totalling 24 hectares, to build 3,000 cost-rental homes. The motion was opposed by the Government.
When it comes to building cost-rental housing, it is a concept that has received widespread support, but not urgency. “The difference of opinion concerns the sense of scale and urgency,” said Mr Ryan.
Solution 2: Mortgage-to-rent schemes
According to the Central Bank, there are 29,000 homes in long-term mortgage arrears of two years or more. The Central Bank has estimated that half of these could end up being repossessed.
In Rebuilding Ireland, the Government’s action plan for housing and homelessness, a concept called mortgage-to-rent was included, but it has not been utilised to deal with people in housing debt who face losing their home.
David Hall, the director of the Irish Mortgage Holders Organisation (IMHO) came together with several housing and financial experts to form iCare in September 2017, to introduce the scheme. By last Christmas, iCare had purchased its first 19 houses, keeping more than 50 people in their homes.
“Mortgage-to-rent is a Government scheme and it’s a great initiative but it has been badly executed, because it meant the Department of Housing and the banks coming together but who was excluded was the debtor. Then everyone dabbled in it but we decided to dedicate ourselves to it,” said Mr Hall.
“We set up iCare Housing, a charity and an approved housing body in September 2017. We are helping people who are in houses but with mortgage arrears and who are not eligible for social housing [an annual household income of below approximately €35,000].”
Mr Hall broke down how the scheme works.
“We convert their mortgages to them renting. They surrender the house to the bank/ vulture fund. iCare buys the house from the bank. The householder has their debt written off. They then become social housing tenants of iCare.
“We bought 19 houses in December, that’s 19 families staying in their homes. The alternative was that these people would have their houses repossessed because of low incomes. There are a further 622 houses approved for purchase by iCare Housing under the mortgage-to-rent scheme.”
He said the scheme sees banks and debtors working together for a fair solution that does not involve the courtroom.
It saves banks repossessing and we pre-agree to buy the house. There are three things that happen on the one day: the house is surrendered, we buy the house off the bank and then tenant signs a 25-year agreement with us.
Mr Hall said iCare funds the purchase of the properties and its working relationship with the banks.
“We are working with banks and vulture funds. The first 19 houses came from mortgages with the Bank of Ireland, AIB, Mars Capital and Start Mortgages.
“We borrowed money from AIB corporate finance. We got an initial lend of €15m. When we buy a house we get a 30% of purchase price from the minister for housing on a long-term (25-year) low fixed interest rate of 2%,” said Mr Hall.
In terms of the rental payments, both the local authorities and the individual tenant, after having being means-tested, pay the rent to iCare housing to cover the cost of the loan.
Solution 3: Innovative projects run by charities
There are 245,460 vacant dwellings in Ireland, according to Census 2016. Bringing these properties back into use is one way to tackle the housing crisis. The Peter McVerry Trust has focused heavily on “long-term vacant homes”, says Francis Doherty, its head of communications.
“We buy them or take them on social lease and turn them into social housing,” Mr Doherty told the Irish Examiner.
So far, the trust has dozens of projects all over Ireland, having gone from just three or four social housing units in 2008.
“We have nine apartments in Westmeath — shops that were built as part of an apartment complex but left vacant; so they were retail units, now we’ve turned them into apartments,” said Mr Doherty.
“We purchased two derelict buildings in Kildare and we are returning them to use.
“We hope that in one street in Kildare that we will acquire five derelict properties and turning those properties into eight to 10 social housing units.
“Our most recent scheme is Castle Court near Dublin Castle. This was a partially-finished development, somebody had a portfolio they needed to sell off quickly. Empty homes can move a lot quicker.”
Castle Court provided 13 new social homes to homeless people on the public housing waiting list. Elsewhere, the trust is involved in bringing nearly 70 new social homes to the market through innovative means.
“We’re in discussion with someone in Limerick over some Georgian properties that might deliver over 20 units.
“We’re engaging with a charitable body in Louth over houses that were built in the 1700s that needs to be modernised and returned to use for apartments and studios.
“In total, we would have a pipeline of about 65 homes in Limerick, Louth, Westmeath, Dublin, and Kildare that we will deliver by re-using long-term empty homes,” said Mr Doherty.
The trust has also regenerated 18 social housing units on Dublin’s Townsend St belonging to Dublin
City Council, and built eight one-bedroom bungalows from scratch on a site owned by Fingal County Council.
In April, it will also provide 11 new social housing units in Drogheda after renovating spaces over shops.
Contrary to the stereotype, Mr Doherty points out that “there is no such thing as a free house”.
Everyone pays rent depending on their income. A young single person would pay €29.50 a week and then all their own bills and heat and food.
“It’s about supporting tenants to keep their homes and progress to integrate into their community through education, training, or employment,” said Mr Doherty.
Another homeless charity that has moved into providing social housing is Focus Ireland.
“We set up Focus Housing with a separate board. We now own, lease, and manage 1,200 homes. A few years ago we would only have had 600, now in the space of three or four years we have 1,200,” said Roughan McNamara from Focus.
“There was a decision made by our board a few years ago that we would play our part in delivering houses and to do so by working with the State,” he added.
One new scheme coming on stream is at John’s Lane West, near Dublin’s Merchants Quay. This will provide 32 homes with the first family and individual moving in next month. Focus built on what was a former services site and then hostel site for the charity. It uses various funding schemes to build the homes.
Solution 4: A mixed funding model
Funding and finance, interest rates and loans are not things we would usually associate with creativity. But in order to solve the housing crisis, charities and housing bodies have looked at innovative ways to pay for the building of homes. Focus teamed up with Setanta Premiership Sports, which is pledging €1m to deliver 40 homes through a specific funding model.
“It will cost €20,000 per average two-bed apartment,” said Roughan McNamara from Focus.
“We use any means of funding we can, such as mixed-funding and we are happy to get more corporates involved.
“They pledge the money and the money gets recycled. Once it’s all paid back through rent and once the costs are covered, the surplus then goes back into the next build.”
Mixed-funding, meaning social homes are financed by some State capital and some privately-raised money, is growing in Ireland.
Dónal McManus, CEO of the Irish Council for Social Housing, said: “It was introduced here in 1984. The housing associations would have received 90 to 95% State capital and they would have had to raise between 5% and 10%. Mixed-funding was used to a small degree.
“There is a small history of raising finance.”
Since 2010, the mixed-funding scheme changed, where housing associations receive 30% State capital and have to raise 70% private loans or other finance. Mr McManus said the mixed-funding model is typical in other EU countries, with results being positive.
“Using the mixed-funding model, social housing is less susceptible to the boom and bust cycle, as they’re not reliant on State capital expenditure,” said Mr McManus.
Housing body Túath, used this 30:70 funding model in 2018, to buy 23 apartments in the capital for €8,750,750. The agency got the 70% from its own reserves, but believes pension funds could be used to finance social housing.
“Túath believes that with historically low interest rates, money could be spent more effectively by channelling housing expenditure, raised via private finance and pension funds, through housing associations working in partnership with councils,” a spokeswoman told the Irish Examiner.
“Túath is actively working with other large housing associations to mirror the success seen elsewhere in Europe of large-scale investment in social housing from international pension funds, rather than vulture funds.”
Another way to fund housing is by partnering with big corporations with large workforces in Ireland, something that is not a new concept.
Mr McManus said: “Historically many companies in Ireland and abroad such as Guinness, Bórd na Móna, Philips in the Netherlands and Cadburys in the UK to name a few, play a significant role in social and affordable housing, either directly or in joint ventures with non-profit housing associations.
“There is certainly a strong case to be examined with large growing companies in what role they could play in housing delivery of housing for workers.”