For the first time in modern history, more than half a million households in Ireland are living in rented accommodation and this number is steadily increasing. Of these 545,000 rental arrangements, more than 54 percent households are in receipt of some form of housing assistance support from the State, this number is also increasing. Clearly this is not sustainable into the future.
Last weekend, at the Dublin Economics Workshop in Wexford, the head of economics at the Kemmy School of Business at University of Limerick, Dr Anthony Leddin, called out the failure of the ‘Rebuilding Ireland Action Plan for Housing and Homelessness 2016-2021’. He further labelled the plan as “not financially sustainable”, citing that it had cost almost €10 billion but had categorically failed to resolve the housing crisis. He is not wrong. The initial aim of that plan back in 2016 was to eliminate homelessness in Ireland by 2021. As most people will be aware, homelessness figures rose to record high levels in 2021/2022. By that most basic metric, the plan has indeed been a failure. When the current rental crisis and persistent undersupply of all types and tenures of housing is added to the mix, it becomes difficult to identify €10 billion worth of value to the State, the people or to the industry. Of the promised 25,000 new dwellings annually over the period of the plan, the average number of new homes delivered was about 17,000, increasing to a high of 20,514 in 2020. The social housing figures are effectively misleading as the 148,037 social housing units created only included 28,171 new builds, which means the State has been subsuming private housing supply to the detriment of homebuyers and the private rental market. Money is clearly being spent but it is not addressing the key areas, specifically, it is not providing or enabling new housing supply at scale.
So what is the solution?
According to Dr. Leddin, local authorities should get construction firms to tackle the housing crisis. This sounds interesting but what exactly might that look like? The economist has proposed that the Government set up 31 separate State-owned construction companies, one for each local authority. The aim of this would be to replace the State’s existing wasteful – and, frankly, unsuccessful – approach to housebuilding, which Dr. Leddin says is costing the State billions of euro without creating any new State assets. On paper that might seem like a clean solution, however, in practice 31 State-owned and managed construction companies would more likely compound the inefficiencies and slow the delivery of new housing further. But, there is merit in exploring how the State might work better with privately-owned homebuilders to speed up the delivery of vital new homes.
From our own perspective, we know that Lotus Investment Group homebuilder clients are delivering critical new housing for the State through local authorities and through approved housing bodies directly, but it is an onerous task. To speed up the delivery of new housing across all local authorities, the process will need to be streamlined for fewer delays and greater efficiency. Also, the risk needs to be shared more evenly between the State and its private homebuilders. As a starting point, longer term public procurement would allow homebuilders to invest in their teams and their supply chain.
We would be interested to hear your views on this.
Lotus Investment Group