100% loans ‘to blame for housing crisis’

THE introduction of 100% mortgages by banks and building societies has played an important role in creating the current housing crisis, a leading homeless campaigner has claimed.

The chairman of the Affordable Homes Partnership and former trade unionist Des Geraghty yesterday criticised financial institutions for fuelling inflationary house prices beyond “prudent levels” by making 100% mortgages available to young homeowners.

Mr Geraghty said such borrowers were also the most vulnerable to the risk of negative equity if there was any further downturn in the property market.

“It is important that every borrower provides a deposit towards the purchase of their home, otherwise they do not take a sufficient interest in the price,” said Mr Geraghty, who urged mortgage lenders to stop the practice of offering 100% mortgages to borrowers.

Speaking at the launch of the annual report of Focus Ireland, Mr Geraghty said the current downturn in the construction industry could create a unique opportunity to provide more housing for homeless people.

He also accused property developers of adopting a “very wrong-headed” attitude to the provision of Part V housing — the legislation that obliges builders of large housing schemes to provide local authorities with up to 20% of the site for affordable housing.

However, Mr Geraghty encouraged the sector to focus on concluding agreements to build more social and affordable homes because of the slowdown in other areas of the residential market.

Although the level of housing output will decline from its record figure of 90,000 units in 2006, Mr Geraghty said measures must be taken to ensure that at least 60,000 homes are built annually over the next few years.

He also pointed out the contradictory attitude adopted by some people who made charitable donations to homeless organisations and who yet objected to the provision of social housing in their own area.

Mr Geraghty said some sectors of society had tried to use scare tactics to fight plans to provide integrated housing schemes.

“There is no evidence of a decline in the value of houses where there is social and affordable housing,” he stressed.

Focus Ireland revealed that the number of homeless people in Ireland has almost doubled over the past 16 years, despite unprecedented economic prosperity. About 5,000 people are currently deemed homeless while more than 43,00 households are on local authority housing waiting lists.

Focus Ireland chief executive Declan Jones expressed concern that too many blockages remained in delivering social housing. These included the scarcity and cost of building land as well as the cost of housing and public opposition to such schemes.

“Real progress has been made in the area of homelessness in recent years but continued failure to meet housing provision will undo this progress and lead to an ever greater social housing crisis,” he warned.

Mr Jones urged the Government to speed up promised spending of €2 billion on capital investment under the NDP in order to provide 10,000 social housing units next year.