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Don't ignore your health concerns. Our expert team is ready to help. Now, earlier this week, I spoke to Housing Minister Dara O'Brien, who outlined his new affordable housing plan, which would see the state take a stake worth up to 30 percent in a home. But is this plan a viable solution to the housing crisis? And if not, what alternative measures can be undertaken to resolve the ongoing crisis? Well, to talk about all of this, I'm joined by architect Mel Reynolds, former environment editor of the Irish Times, Frank MacDonald, and Hugh Brenan, CEO of Auckland Housing Alliance.

Good morning and welcome to you both. So let's just get your take, first of all, on the minister's scheme. Mel, what do you think?

Good morning. Yeah, the scheme is this is a stranger and it looks like it's very much modelled on the shared ownership scheme that's been in the UK for some years. And it's quite small, like 75 million. Just doing some of the maths here before it came on won't get you that far in terms of numbers. The, you know, 30 percent equity share. If it's 100000 a house, it'll do 750 homes or if it's 2000 houses like the minister has suggested, it'll be thirty seven and a half thousand.

So it's it's not huge and seems very tentative. The sort of failures of this in the UK have been highlighted by analysis over there. I think the House of Commons Public Accounts Committee did a report in 2019 and they said that somewhere in the region of 50 or 60 percent of those who avail of the loan didn't need it.

And the answer is America has put no income ceiling on on this particular scheme. All right. We'll come back to you on other topics. Frank MacDonald, does it make sense to you?

Good morning. I don't think so, because subsidies like that effectively prop up higher house prices. And I think they'd reinforce the upward trend we're seeing now in spite of the pandemic. But, you know, whatever it costs taxpayers, the money would be much better spent on actually building social and affordable housing. And the same goes indeed for the first home buyers Grant.

Yeah, it turns out in a Freedom of Information request that was given to Sinn Fein today on a Brender housing spokesperson, that senior officials lobbied against this, saying that it would push up the price of houses.

Well, exactly, I mean, you know, this is this is the kind of stuff that is proposed by the Construction Industry Federation, the CIA, and and because of where it comes from in here, it is suspect because the CIA really acts in the interests of house builders and property developers, not in the interests of prospective homeowners or renters. So, you know, I think that, you know, it's always surprising to me that when a government or a minister takes on board an idea coming from from that vested interest.

All right. And Hugh, what do you make of the scheme? Yeah, good morning. Pass. And I'm, you know, in agreement to a certain extent with both Mel and Frank. It just depends on how it's going to be managed. And if, for example, you have a private developer building and if an individual can go to that private developer and say buy a house for 400000 when they only have means for at 280000, and if the local authority take the share in that house from the private developer, that certainly can only push up prices.

And I wouldn't be in favor of that at all. If, however, what happens is and what is happening in some of the other local authority areas is that the local authorities themselves devise a affordable housing scheme and they will take an equity share in the House based on the market price. So we hope to be involved in a couple of those where we will actually sell the houses for X and then the local authority will will take a share in that.

That won't necessarily and push up houses in the in the private market. It's still, for me is absolutely not my preferred way to go with all simply because you you're not selling a house that is really at an affordable price. I mean, the person is paying essentially the market price or maybe slightly under the market price with the local authority model. But they they they pay their first mortgage upfront and then they have the equity share to be paid back over time.

It's either sold, they are paid back when the house is sold or it's never run for 40 years, but it has to be paid back within four years.

In in in simple terms, this analysis suggests it's just a way around the central bank rules. It's deferred borrowing.

Well, that's that's that's what it looks like. Absolutely. You know, that's what it looks like. I mean, you could you could have just gone to the to the central bank and say, look, and what we want to do now is we want to use five times the income instead of three and a half. And we want to extend the loans for for 40 years. And Central Bank would have said no. And I may be the minority, but I actually approve of the central bank's macro prudential rules.

I think that they are they they they work well, in my opinion. And and they and they shouldn't be changed. But yeah, you're right. That's that's the effect. Yeah.

So it means you can afford it today, but if your circumstances don't change in five years time, when you're expected then to fund this amount outstanding to the tune of one and a half percent, you might find yourself in trouble at that point, not being able to pick up the slack that now becomes you become liable for what?

Sorry, you have to go on. I'm not. Yeah, not only not only that, but if, for example, we end up with another crash and if, for example, that house that you bought for 400000 and and and and you're forced to sell us and you still have to pay back a proportion of that to the local authority. So say, for example, in our case, let's say, for example, they they they they they buy the house and let's say their initial mortgage is two hundred and eighty thousand.

And let's just say for argument's sake, that the the everything crashes and and they only get two hundred eighty thousand for the house, so they pay back their mortgage and that's it. But they're still left with this other lump of 100000 to be paid like, you know, which is a huge burden to put on people. So, you know, I can understand, you know, how this came about, because I know that there was pressure from the from the construction industry to er to do this.

But I, I don't think it's been fully thought out, to be honest. All right.

Well, we know that there's a shortage of supply, so why they would need to ramp up demand is another question. Let's talk to you about social housing and the idea being andare O'Brien himself said that they don't want to go back to the old days where the state, through local authorities and so on, built massive housing estates, you know, blocks of flats in the Dublin area, for example, but housing estates in Canberra, Drimmer and so on in order to house the populace.

Is that where we should be going? Oh, absolutely.

There's no question about it. We know that there's. In a number of reports now between the the department deeper, there are IGS department in May 2018, did a report on rent supplement versus local authorities building direct. They reckoned at that stage it was twice the cost in areas of high demand, like Dolen, to enter into rent assistance rather than to build directly on their own land. And the more recently the society charges, surveyors in Ireland came out with a report on housing costs and they reckoned it was around 140 to 160000 euros per dwelling, cheaper for local authorities to enter into these similar arrangements where they effectively develop on their own land.

So no question, in terms of value for money, it's a complete no brainer to build on their own land and they have an abundance of it. The unfortunate thing is that all the numbers are going in the opposite direction. We know that the total number of actual local authority direct bills in 2019 was a little over a thousand dwellings. And in Dublin County, Dublin for the local authorities is 228. So the total nationwide of output was lower than the year before, lower than 2018.

And the output of the four Dublin local authorities combined is less than what was built in 2017, believe it or not, in 2017.

So we're going in the wrong direction.

So their numbers and despite all the rhetoric, they're good. They're going absolutely in the wrong direction. Yes. Yeah.

Yeah. Now, what what builders can do is, of course, they can do the building and local authorities can't. So they employ builders.

Frank, what do you think it is about local authorities that they don't really want to get their hands dirty in this area anymore?

Well, they've they effectively got out of direct building off of on a large scale of housing in the 1980s under that kind of McFlynn was minister for the environment way back when and under the kind of whole Carteris idea of of of of leaving leaving people to buy houses rather than rent homes from a local authority. And a lot of the housing stock that the local authorities had built in places like Marina and Rimland and Crumlin and Kimmage and and so on were sold off at bargain basement prices to to the previous tenants.

But frankly, it's not simply it's not high and it's not simply, you know, the idea of bricks and mortar. It's also to do with social stability. Home ownership seems to bring with it as social stability. People mind their own houses better than they mind the local authorities houses.

But the broader picture really is that the government's Rebuilding Ireland program, which which was launched with some fanfare several years ago, has really been a failure because year after year it's missed its targets for the number of houses to be built, whether social affordable are private sector houses, and the bulk of the money that should be invested in social housing has instead been spent on public subsidies to private landlords. And that includes something. Over a quarter of a billion euro a year is spent on housing assistance payments for essentially high priced accommodation.

That's that's pretty well insecure, you know, rented from private landlords. And, you know, like when I go back to when I was in my 20s and indeed when you were in your 20s, both of us bought houses in Harrell's cross, you know, and could easily afford to do so. I think you bought a house on your first house, was on No Control or Kimmage Road famously.

And I was around the corner in Kazimir Road. And, you know, at the age of 25, I managed to buy a four bedroom Edwardian house, an editor's house on the streets on a standard salary with a mortgage from the ABS. And and, you know, now I live in an apartment and have a bar where I've been living for the last 25 years. And it's about 124 square metres, which is large for by any standards for an apartment.

And it's all paid for. So all of us who are in our 60s or 70s now are in a privileged position compared to the younger generation. I think really fundamentally what we have done is the older generation really has totally betrayed the younger generation when it comes to housing, because not only are younger people in their 20s and 30s locked into paying high rents, you know, 1500 or 2000 a month for one or two bedroom apartment, they can't actually save the money for a deposit, never mind for fund a mortgage.

The whole system really is stacked against them.

In terms, though, of at the council's building, you know, we saw the row recently with the Dublin City Council where, you know, they voted against a particular scheme and the cost of that scheme seemed remarkably high because I brought. To the attention of the minister the other morning, Abscessed, living in 2018, delivered homes with an average price of just under 178 thousand in Talla.

So it's doable at a price. During the construction, inflation has raged to much higher in the last couple of years.

Who is it possible for local authorities with the proper mechanisms to build social housing affordably? Of course it is.

And and there is no reason why they shouldn't use the likes of this living and and get this living to do it, because this living are builders and contractors and all they want to do is to build and to leave a good product behind them. You know, they've built a reputation on that and and they will continue to build out those kind of rates. But if the local authority and bring them on board and do it on our local authority land, you know, if they are not the developers and they don't want to be the developers, if they're not looking at getting the land and selling the houses afterwards, if they build for the local authority and then the local authority have an arrangement to either provide social or or affordable and even some private on on on the site.

Since living and other contract contracts are smaller, contractors will do this all day, every day, and it will reinvigorate the construction industry, but it'll reinvigorate the smaller contractors. And that's what we really need to do. And I would love to see local authorities even dividing up some of their sites and bringing on board a number of smaller contractors. They will deliver those houses. They will deliver them at that kind of figure that you're talking about. The living can do it can do is they'll deliver a top quality product and you will be able then to provide affordable housing for people without having all of these really unnecessary schemes that are really only going to push up the price of of housing.

Now, some people point to eco living as a way of getting a lot of accommodation up very quickly. And most of it, of course, where all of it is for rental rather than for a purchase.

But your take on living, you know, there is a place, obviously, for single occupancy apartments for the student body and so on for a certain time in your life, maybe.

But the minister has said no to living, even though there, you know, are some underway, you know, somewhere in the region, about 5000 people living units that either have planning permission or going through the system or our existing change use applications that got permission. So this is a significant number of them out there. In terms of the actual space standards, I know there's a lot of debate about it. I would sort of be a bit more devil's advocate and say, OK, well, if you take on board some of the promoters positions on this to say they're giving, it's a variety, it's an issues, etc.

, say absolutely fine and say, OK, let's accept what we have here.

And if they're effectively many bedsits and and but the unintended consequence of this use really in the broader context is the inflation of land and the preclusion of residential building on these sites. So the way to mitigate against that simply is to introduce a rent cap and say, OK, in every location specific say, for example, it's done on a per bed space way and say if a scheme, a qualifying scheme has permission, say, and only if the local rent there is 2400 for four bed space to bed apartment, a single bed space living unit should be 2400.

Divided by four is 600 euros per month. And that's a rent cap on. What you do is you very simply introduce rent caps in area. So that straightaway eliminates the inflationary the unintended consequence of inflationary effects and see how many of those schemes would end up being built.

I mean, I'm looking Frank McDonald this morning, a report from about Bartra Capital who have lodged an appeal against Dublin City Council because they had insisted on the omission of 18 bed spaces from its 111 bed space plan for 98 Marion Road. And one of their arguments was there'll be less demand for communal kitchens by residents because employers like Facebook provide meals in the workplace.

Well, come on. I mean, you know, all sorts of arguments are being advanced by planning consultants and others to justify all sorts of shocking schemes. And and by the way, it's not true that O'Brien has banned living. He has he's basically attempting to curtail it to the supposed niche market that is going to cater for supposedly designed to cater for. So, you know, but I mean, we have to recognise that living is essentially a substandard form of housing because all you get to call your own, in effect, and it's for rent, of course, is an normal sweet bedroom, you know, of of.

12 to 16 square meters with shared kitchen and dining facilities and maybe the amenities like a gym on site and so on, and Owen Murphy, the former minister for housing and planning, famously described on news talk show, living as being like trendy boutique hotels. But there's been a rush of good living developments, as Mel has pointed out, since it became clear that Terraplane was going to do something about it because he had described the whole idea as bonkers.

But there's another model which is now taking over, which is built to rent, where whole blocks are being forward, sold by developers to institutional investors, often from abroad, based on high rents. Because essentially what's happening is that Dublin and other cities in Ireland are being commodified for international capital investment with the government's complicity. And the real estate investment trusts involved apparently pay hardly any tax, if any, on their profits. And if you were to take, for example, to the former College of Technology site on Kevin Citris, it's going to have 299 bill to rent apartments, which consists consist of 130 single bedroom units, 130 studios and only 39 two bedroom apartments.

And, you know, this is a complete antithesis of what's Dublin City Council adopted 10 years ago, excellent design standards that required a mix of apartments in every development, you know, one, two and three bed units, big enough for families and so on. But not long after these standards were adopted, the then minister in charge of housing and planning, Alan Kelly, who is now the leader of the Labor Party, started the whole process of dumbing down the design standards again at the behest of the CIA, which had argued that the standards were too high and that it made housing schemes unviable.

And yet more damage was done by Simon Coveney when he decided on a whim, apparently after listening to some developer moaning about putting forward the case on the radio to allow developers to bypass local authorities entirely and go directly to on board FINOLA for any so-called strategic housing development with more than 100 units or or 200 in the case of Stuart.

And by the way, locally here, locally here, Frank, there are two developments going ahead. And you can hear the clatter of the rock breaking from 7:00 in the morning until 7:00 in the evening with no regard whatsoever to the local.

Yes, no, none whatsoever. But I mean, but I think Owen Murphy did more damage than Coveney did by by further dumbing down the urban design standards to facilitate bill to rent and qualifying schemes. And and, you know, such that, you know, developers don't even have to provide any private open space, such as balconies that you could sit out on for for any of the units. And you think of how that would work if you if you were working from home with, you know, a laptop on the kitchen table or even in your bedroom.

And also because Murphy effectively abandoned restrictions on building heights, were getting high rise living schemes such as the horrendous proposal for the markets area that includes a 14 storey tower of co living units right up to the cities or fruit and vegetable markets.

And Hugh Brennan, what do you make of living? Does it have any place? Not not for me, but I'm afraid I I know there's a talk, you know, that's, you know, people working in the tech companies and that might appreciate it. Absolutely not for me and not now with covid and Pandemic's and doesn't imagine you know, I don't know how many people there are saying I should share a kitchen. I honestly think it's daft. The only place that I ever thought that it had any merit at all is like in a nursing home where the nurses are there and in working in the hospital next door and they come over and they share a kitchen and then they have their own rooms, you know, and and they're and they're there for a couple of years that that might work.

Other than that or the student accommodation which exists all around the city. Again, it's it's a rite of passage maybe for students going through this kind of experience. But it's not necessarily what you'd like for the rest of your life.

No, and it's certainly not what I might personally I feel. I certainly what I would like for my children, you know. So I mean, I know very, very little time for that kind of thing. Again, private developer led developments, you know, and that and Mel is right. It's just pushing up the value for the land, you know, and and that doesn't have a knock on effect in the local area.

It's much now we see the surge in house prices six percent. And, you know, there are those who say, well, that's only the asking price. The real price is different. But when you see an increase, it's it's compared like with like what it was last year, what it is now.

So the asking price was always the comparator. So I don't think we should go down that that route. Bottom line here, guys, is that the state has got to build more and more houses either to help people long term to purchase or rental forever, if that's the way people want it to be. That's the bottom line.

Yes. And you're absolutely right. And and both of those are possible. It doesn't have to be one or the other. I mean, and you can do cause rental schemes where the states will come in and they will provide some kind of a a subsidy. And we actually looked at one in Ballymun recently. We couldn't make it work if we had to have rents at 70 percent of the market rent or we could add 80 percent. So in other words, if we were given a subsidy, we then could have done it as 70 percent.

So it is possible for actually quite a small subsidy and for an affordable purchase for housing. It is cheaper to build housing than it is to build apartments, and that can definitely be done. And the long term benefit of having affordable housing in any area is absolutely huge for the area because people have extra disposable income to spend and they tend to spend the most most of that in their local area and local authorities and the state will benefit hugely in the long term if they just take a resume.

Yeah, Frank, Frank and Bill, I presume you both agree that at the state getting more involved in this, whether for rental or to help people in some way to ultimately become owners of their own property is the way to go?

Absolutely. I mean, you know, we have the bizarre situation at the moment where local authorities are actually paying through the nose to four or five, 400000 euro for social housing units in private sector to private sector developers when they could be investing that money directly in building social housing like they did in the past, or funding approved housing bodies like Oakland to do it. But, you know, I think really fundamentally and I don't want to sound like Donald Trump here, but the whole system has been rigged to suit the development lobby.

And we've got to get off that horse because it's not going anywhere. And, you know, the whole idea of building sustainable neighborhoods has gone out the door, you know, because they're shamelessly catering for what the markets, the developers want rather than the last words from from you, Mel.

Yeah, well, I think it's you know, the logic behind this is it's pretty straightforward. You were talking about the actual cost to build the actual cost in delivery, run down all in cost, including VARK fees, levies, cetera. Land costs, construction costs for to an apartment in 2019 was two hundred ninety four thousand euros, the same year we've seen delivery rates down, paying, leasing part five social units off developers. The price for that has doubled between 2017 and 2019 and the average price now is twenty four hundred euros a month.

So it's the same. The logic really is if you have a garden at the back and you have a site to build instead of building, and if you own that site effectively for free, you have access to 200000 euros to build ultra low interest rates. Instead of doing that, you'd walk out and you decide to run for two thousand a month, so it makes no sense here and I don't sense the political will. I think really it boils down to there's official resistance to the state.

Intervening in building an affordable housing is a strategic threat to the development sector. I mean, if you can imagine if if if Oakland set up an ad in the paper tomorrow for a thousand three bed houses in killed for sale for two hundred seventy thousand, they'd be sold out in an hour. But it'd be very hard for somebody next door to sell the same product for 470.

So all of the levers of power will be pulled to try and get away from a meaningful, affordable housing scheme that's been done on state land. And instead of that, we have a couple on 85000 can afford 300000. There's still 91000 short of the average price of a home in Dublin. And this is the state's responses here. Here's here's a second mortgage for ninety one thousand to buy that. So it's very we'll have to leave it there.

Mel, Mel Reynolds, Frank McDonald, Hugh Brennan, thank you very much for joining us.

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