The Government needs to get its housing in order

The focus may have drifted away from housing, but there were still more than 6,000 adults and 2,452 children in emergency accommodation at the end of November, writes Elaine Loughlin

The Fianna Fáil party spent almost a decade in opposition calling for action on housing and homelessness, so its much publicised plan to make homes more affordable must deliver. File photo Eamonn Farrell/RollingNews.ie

Housing was the first issue raised with the Taoiseach in the Dáil this year. After years of inaction by successive governments, it's now a predictable topic often trotted out at Leaders' Questions.

But for the thousands of children who call a hotel room home, for those crippled by rent who have long given up on the hope of owning their own property, and for those waiting for many years on the social housing list, this is still very much an urgent crisis.

While his predecessors were under a constant spotlight, Darragh O’Brien managed to hide in the wings as the Covid-19 pandemic took centre stage.

But the current Housing Minister, perhaps more than any of his predecessors, cannot afford to fail.

As the Covid pandemic consumed much of the Government's time last year, the focus drifted away from housing, but there were still more than 6,000 adults and 2,452 children in emergency accommodation at the end of November.

While ambitious targets have been set for house building, the Construction Industry Federation (CIF) estimates that 5,000 homes were not being built during the last lockdown and output had dropped by 10% at a cost of €3bn to the industry and the economy.

It was perhaps this that prompted the Government to allow social housing developments to continue through the current level 5 lockdown.

The Fianna Fáil party spent almost a decade in opposition calling for action on housing and homelessness, so its much publicised plan to make homes more affordable must deliver.

But this three-legged stool of a Government has already let deadlines slip as Sinn Féin president Mary Lou McDonald was only too eager to highlight on the first day of the Dáil's return from its Christmas break last Tuesday.

Housing Minister Darragh O'Brien, perhaps more than any of his predecessors, cannot afford to fail. 

"Many young people have given up any hope of ever owning their own homes," she told the Dáil. 

"Gone is Fianna Fáil's promise to deliver affordable homes for less than €250,000. Gone is its promise to deliver 10,000 affordable houses to buy every year.

"Instead, the Government will saddle working people with large debts so that they can buy unaffordable homes."

She pointed to Fianna Fáil's election manifesto, published last year, which promised to deliver 50,000 affordable homes over five years if in government.

When drafted into the Department of Housing, Mr O'Brien had initially promised to have a scheme to make homes accessible to young couples and first-time buyers in place by September. The deadline was extended ahead of the Budget, but Ms McDonald said this date came and went with no affordable housing announcement.

The shared equity scheme was finally brought to Cabinet in the last week before the Dáil recess, however, it was immediately dubbed "an early Christmas gift for developers" by Sinn Féin who claimed it will simply drive property prices up.

Under the scheme, which has yet to reach the floor of the Dáil, the Government will offer equity loans of up to 30% on new-build homes under €400,000.

However, as more details emerge, delays in the roll-out of the scheme are only secondary to the actual make-up of the €75m shared equity plan.

As the nuts and bolts of the project were being hammered out ahead of Budget 2021, senior civil servants repeatedly warned the Government that its shared equity “affordable” home plan would increase house prices.

Robert Watt, the then most senior official in the Department of Public Expenditure and Reform wrote in one email: "In the context of an affordable scheme, there is little evidence to suggest an absence of mortgage finance. If there is a lack of supply it is not because of a lack of 'effective demand'. The property industry wants an equity scheme because it will increase prices."

Ms McDonald has claimed the plan was "drafted for the Government by the construction industry".

Now it has emerged that the Government is consulting with the banks on the scheme's funding.

It is understood that the nation's banks would match the Government's €75m initial funding of the scheme.

Discussions are said to be stalled due to a request from banks that the interest on the Government's equity be more aligned to the mortgage market and not as low as 1.5%, as promised by Mr O'Brien.

There are now fears that the banks, if involved, would expect and demand a higher entry level interest rate of up to 3% with periodic increases leading to a final interest rate of up to 6% in year 25.

A similar interest change was in place with the last shared ownership scheme run from 2003 to 2010, but an independent review of carried out by junior minister Jan O'Sullivan was highly critical of the practice.

The opposition claim direct bank involvement in the Shared Equity Loan Scheme would breach Central Bank lending rules and would put borrowers at even greater risk.

Assistance is required to help hundreds of thousands of people who currently cannot get their foot on the first rung of the property ladder. 

However, the Government must ensure that any scheme does not put them in an even more precarious position.