City desk

Now's Not the Time to Sell Off Social Housing, Say Councillors

It’s a terrible idea to sell off local-authority housing right now, Dublin city councillors argued on Monday night at their housing committee meeting.

They voted to write to Environment Minister Alan Kelly and tell him so, seeking a temporary opt-out from the tenant purchase scheme the Labour minister announced last month.

It’s not that they’re completely against tenant purchase schemes, said Sinn Fein councillor Daithi Doolan, chair of the housing committee.

But now, with a lengthy housing list and limited social housing being built, is not a good time to bring one in, he said. “We’ll resist as best we can.”

The New Scheme

Under Kelly’s scheme, which comes into effect in January, some local-authority tenants will be given the option to buy their council homes. In the coming weeks, tenants are expected to be told if they are eligible.

Not all of them will be. The scheme comes with certain provisos, including that the tenant must have a minimum income of at least €15,000 and must have paid any outstanding water charges to Irish Water.

If they are eligible to buy the place they’re living in, they’ll get it at a discount from the market price. Earn more than €30,000 and they’ll get 40 percent off, earn from €20,001 to €29,999 and it’s 50 percent off, and earn between €15,000 and €20,000 and they’ll get 60 percent off.

While there have been a number of tenant-purchase schemes in the past, there are key differences with this new one, says Labour Senator Aideen Hayden, who is also chairperson of the housing charity Threshold. In particular, there’s a “charge” on the home.

It works like this, she said: if you are eligible for a discount of 40 percent, then you would pay 60 percent, and the local authority holds on to a 40-percent stake in your home.

This 40-percent stake starts to drain away after five years. But if the tenant sells the house less than five years after they bought it, they will have to pay back the full value of that charge to the council.

The logic for this is to be found in how purchase schemes have operated in the past.

The “Charge”

For proponents of tenant-purchase schemes, they’re a way to create sustainable communities.

There is evidence that schemes worked to stabilise areas where there were large tracts of social housing that had been built in the second-half of the twentieth century, such as Darndale, Blanchardstown or Tallaght.

“The argument would be made by some working in the field that the tenant purchase scheme was a good way of stabilising some of these estates that might have been regarded as very troublesome areas,” said Hayden. The idea is that you have a stake in your community when you own your home.

In this view, even if people have long-term security of tenure, as they do in social housing, it isn’t the same as legal ownership, in terms of shaping attitudes. (Then again, there are other ways you can get people involved in their communities, and long-term renters can be active local citizens.)

But if the goal is creating home-owners who will help create stable communities, you want people to stay put in their homes, and stick by those communities. But during the Celtic Tiger years, the tenant purchase schemes often didn’t work like that, Hayden said.

During those boom years, local-authority tenants were buying properties they had only been in for 12 months, selling them, and making significant profits, she said. “That was effectively the state, supporting, I guess what could be called speculation.”

Hence the “charge” in the new tenant purchase scheme coming in January. It’s meant to keep people from selling their homes on.

The Discount

Despite this important change from previous tenant purchase schemes, some are still sceptical.

The discount is the biggest issue and what needs to be scrapped, says Simon Brooke, head of policy at Clúid Housing Association, which provides social housing.

“I have no issue with people buying their own homes and I have no issue with the principle of tenant purchase,” says Brooke. It’s depleting social housing stock that he’s most worried about, and he believes selling off the current stock at a discount will accelerate that.

The money the council gets from selling social housing to tenants should be used to buy or build more social housing, Hayden argues.

And John Whelan, of the Department of Environemnt press office, suggested on Tuesday that that was the plan. The local authority will “be in a position to reinvest the proceeds from the sale of the house into other social housing solutions,” he said.

But, as Brooke sees it, because of the discounts the council will be giving on the houses it sells, the money it gets just won’t be enough to replenish the social housing stock it will be losing. If the council sells 10 houses to tenants at a 50 percent discount, it will only make enough to buy five houses. “So there’s a net loss of social housing,” says Brooke.

Hayden suggests, however, that there won’t necessarily be a net loss of social housing under this new tenant-purchase scheme, despite the discounts. That’s because, she says, the model for financing new social housing has changed.

In the past, she says, the government handed over a lump sum and funded the social housing: kind of like paying cash up front for a house. Now, instead, it will be leveraging the money, Hayden said, like putting down a little cash as a down payment, and borrowing for the rest.

“You would be using the money you get from a social housing unit to lever[age] the money to produce more social housing,” she says. (If you can abide by all the borrowing rules, that is.)

The Social-Housing Stock

So will this tenant purchase scheme lengthen the impossibly long social housing waiting list?

At Monday’s Dublin City Council housing committee meeting, most councillors voiced consternation at the introduction of the new scheme, at this moment, when the social-housing list in the city stands (as of October) at 21,909 applicants.

But not everyone sees the connection. One of the few voices to speak up in favour of the tenant purchase scheme was United Left councillor Pat Dunne. “There’s a misconception that if you sell a house that it’s gone; the same family’s going to live in it,” he said.

Whelan, of the Department of Environment press office, made the same point. The scheme “wouldn’t make any difference to the housing situation either way since the people that would be buying the house are already in the house as tenants,” he said in an email.

Senator Hayden says there are argument both ways.

If fewer had been sold in the past, the social housing stock would be more plentiful now, she said. “There’s a big argument there to say that if you’re trying to build up your social-housing stock, which we need at the moment, then you don’t sell what you have.”

But there is a flip-side to it too, she said. There might be cases when you aren’t going to get a house back anytime soon from the tenant renting it, she says, but if you sell it to that tenant, they’ll still have a home, and you can take the proceeds, leverage them, and build more homes.

Brooke of Clúid Housing Association says selling them is “short-termism of the worst kind.” If you sell them, you’ve lost them later down the line.

Mixed-Tenure vs. Mixed-Income

Selling some homes to their tenants and leaving some of their neighbours to continue renting, technically, creates mixed-tenure communities, something planners are often pushing for.

But Brooke, of Clúid Housing Association, also isn’t convinced that this necessarily has benefits in this case. What planners are really trying to achieve by promoting mixed-tenure communities, is mixed-income communities – and those are a good thing, says Brooke.

“If you have a community where there are people with a range of different incomes, then you have a more sustainable community because it means people on lower-income benefit from that, from better facilities, better transport, better shops and the rest of it,” he said.

But creating mixed-tenure communities through tenant purchase schemes doesn’t create communities where there are people with different incomes, because both the people renting and the people who have bought and become owners are low-income, he says.

Maintenance Costs

Selling social housing to tenants will mean fewer maintenance costs for the council to pay, which the Department of Environment cites as one of the benefits of the new tenant purchase scheme.

But this will just mean passing maintenance costs on to the new home-owners, who might not necessarily have the money to cover them. “If the boiler breaks down,” Brooke says, “and they have to find €3,000 to replace it, they’re not going to be able to.”

Lecturer in housing at Dublin Institute of Technology Lorcan Sirr agrees: “When tenants eventually do get to own their own home, they’re not used to having to fork out for anything.” Insuring the property, maintaining it, that all costs money.

“It can lead to more debt, or more poverty, or more challenges when people actually do get their own property,” he said. “Because suddenly they’re faced with their own bills.”

And it’s not just the new owners who could face maintenance-cost issues because of tenant-purchase schemes. It could, in a way, increase the maintenance burden for the council, rather than decreasing it.

That’s because it’s the better-off households who usually purchase, which can create management problems for local authorities, notes a report for the Centre for Housing Research from 2007.

“The remaining tenants are likely to be poor and, because local authority housing rents are linked to the incomes of tenants, more low-income tenants means less rental revenue to cover maintenance costs,” it says.

Like It or Not

Despite Dublin city councillors’ reservations about this new tenant-purchase scheme, it is unlikely that Minister Alan Kelly will let them out of implementing it.

After all, other councils might follow suit and the scheme might fall apart. However, it seems the Department of Environment is not yet even (officially) aware of the councillors’ reservations.

“We haven’t received any correspondence from the Housing SPC as of yet. We will of course look at it if and when it is received,” said Whelan of the Department of Environment press office on Tuesday.

Lois Kapila portrait
Lois Kapila

Lois Kapila is Dublin Inquirer's managing editor and general-assignment reporter. Want to share a comment or a tip with her? Send an email to her at info@dublininquirer.com.

 

Comments

  1. Log in to leave a comment.

  2. Dermot Lacey
    2 December at 17:11

    Simon Brook, for whom I have a lot of respect, along with a number of Councillors trots out the same old limited line against the sale of Council Housing. I believe they are wrong. As someone who grew up in a Council House that my Parents had the opportunity to buy and who now lives in a former Council house which the then tenants had the opportunity to purchase I see huge social value in the housing opportunities and the social mix that such sales schemes generate. In fact I have always been proud to say that I have only ever lived in a “Corpo” house – The Mansion House included.

    The notion that selling off these homes seriously limits housing availability is simply wrong. Most of them hardly ever become available as succession tenancy very often applies. Similarly the suggestion that we are selling off these houses when they cost so much to provide is a limited one. Many have long since been paid for. The key issue that should be argued for is that all funds raised from these sales Must be reinvested in Social Housing – that is a real cost effective way to increase supply.

    Housing policy must be about a lot more than quantity – though that, of course at present, is hugely important. It must also be about be about quality of environment and real social mix. Some years ago Dr Garret Fitzgerald introduced the disastrous surrender grant that denuded communities of go ahead and active community leaders. This sale of houses scheme does the opposite. It stabilises communities, give working class tenants a real stake and chance to own their own homes and in my view should be wholeheartedly welcomed.

    Where I do agree with Simon Brook is a) we need to increase supply b) it is unfair to exclude flats and apartments and c) that the new scheme is very good welcome news for many tenants. Good luck to them I say.

    Councillor Dermot Lacey 087-2646960

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