Why is Dublin City Council (DCC) off-loading precious public land, for a fraction of its value, to a private developer?
The move is particularly questionable when you see the prominence of private developers building unaffordable build-to-rent high-rise throughout the capital.
Even worse, if the housing market stalls or prices fall, the project could collapse, as happened when similar deals with private developers to build on public land fell apart during the 2008 crash.
Why is state land not just being built on by councils to provide exclusively social and affordable housing? The Minister for Housing states he is committed to public affordable homes on state land.
Yet the Oscar Traynor site, a huge plot of 43 Acres (17.4Ha) of public land, with potential for 2,600 homes, owned by Dublin City Council, is being sold to property developer Glenveagh. The site's value on the Vacant Properties Register is €44m. If developed to its full potential housing density, its value exceeds €70m according to a valuation from an expert architect, but it is being transferred for just €14m.
How is that value for money?
A majority of elected Dublin City Councillors voted against a deal with Glenveagh last November as it involved 50% of units being sold privately by the developer.
They directed officials to develop a new plan for 40% social housing, 40% cost rental and 20% affordable purchase, with Dublin City Council to lead the design and delivery of a sustainable, "integrated and family-friendly" development, contracting private builders for construction.
However, council officials revealed a new version of the rejected deal with Glenveagh to sell more units for social and cost rental housing. Councillors have to vote to transfer the land to Glenveagh.
The experience of a similar deal in O Devaney Gardens should be a warning.
DCC made an agreement with Bartra Capital for 768 homes in 2019. But Bartra increased the number of units on the site by over a third, to 1,047, including 14-storey apartment blocks.
Developers make higher returns by pushing up the density of units. Just 15% will be three beds, indicating a lack of homes for families.
The project has been delayed by two years with further delays likely, so the private developer model is not as fast as is claimed. Will Oscar Traynor be any different?
A higher density on Oscar Traynor could mean 2,610 dwellings. With 853 sold to DCC, it leaves a potential 1,757 units for the developer to sell, resulting in a transfer of €78.3m in site value to Glenveagh.
The state will buy the additional social and cost rental units off Glenveagh at full market cost, which will push cost rents even higher, and be poor value for money. If the state can build a home for much less than the private market, why is it handing its land over to a private developer to then charge the state full market price for housing the state could be building itself at a much lower rate? The mind boggles.
Analysis by architect Mel Reynolds suggests it will cost €60,000 per unit more in this property developer model, than if the state developed directly and contracted a builder.
That’s an additional €58m for the 853 units. The state could double the number of public affordable homes on the site if it did itself. Paying a higher cost for private finance is illogical at a time when the state can borrow so cheaply.
A financial audit by the Department of Public Expenditure is surely required before the deal proceeds.
The private units to be built by Glenveagh are likely to be sold off as build-to-rent to investment funds, given the level of forward purchasing by funds in the Irish property market.
While the suggested rents of €1,300 for a one-bed apartment, and €1,500 for a two-bed, are affordable only for the top 30% of households. For 40% of households, their income means an affordable rent must be €800 euro a month or less. For 70% of households, an affordable rent would have to be €1,300 or less.
There is no guarantee of delivery in this deal. Once the land is transferred to Glenveagh, the state loses its influence.
It is inherently risky, dependent on rising house prices and rents. It is speculative development turning public land into a lucrative financial commodity for private investors. Why is the state facilitating the value in our public land to be extracted for further gain for wealthy property developers and funds?
We are in this crisis because the state handed housing over to the market. The overly close relationship between the state and property developers appears to be history repeating itself, and we saw where that left us in 2008.
Why does the state keep repeating the same policy and expecting a different outcome?
The Minister for Housing should intervene to direct Dublin City Council officials to retain the site and deliver public and affordable homes. Dublin City Council’s claim it will take five years to develop itself is unacceptable. Why not in two or three years?
At the moment, the state is leaving itself to be held hostage by prices and capacity determined by the private market.
The state must get back into delivering housing to rapidly build up a capacity of development, construction delivery, workers and skills to guarantee affordable and quality delivery.
A state home building company should be set up to do this. If the tens of thousands of social and affordable homes in Housing For All are to be delivered like the Oscar Traynor deal, we’re facing an even worse housing crisis than we imagined.