Caroline McNally

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As negotiations around the formation of a government rumble on, the housing and homelessness crisis is deepening. Everyone is talking about rent increases, social housing waiting lists and emergency accommodation. These issues all, one way or another, have their roots in the lack of social housing.

During the election campaign, many left and progressive candidates argued strongly for a massive increase in investment in social housing. From a housing-policy perspective, it is absolutely necessary to make the case for greater investment.

However, advocates for more investment in social housing all too often ignore a key aspect of Irish housing policy: tenant purchase schemes.

Tenant purchase is a long-standing aspect of Irish housing policy and dates back to 1936. It is a scheme that allows tenants in social housing to purchase their homes. They can also avail of a discount, to reflect the rent they’ve been paying.

This means that the household in question goes from being a social tenant to being a homeowner, and the house itself goes from being a part of the social housing stock to part of the private, owner-occupancy sector.

The figures around tenant purchase, though seldom quoted, are truly concerning.

During the boom years, between 1997 and 2006, 43,218 new local authority units were added to the stock. During the same period 17,197 units were sold to tenants. In other words, over 43 percent of new output was lost through tenant purchase.

If we look at the years since the crash, the picture is even more disturbing.

Between 2011 and 2014, local authorities added 2,364 units to their stock. Over the same years, they sold 2,233 units. Tenant purchase sales were equal to 94 percent of new units. And this was in the middle of a chronic housing crisis.

Tenant purchase means that when it comes to investment in social housing, we are always running to stand still.

A particular problem with tenant purchase is that it involves a steep discount for the tenant.

After living in a dwelling for 10 years, tenants can avail of the maximum discount. This is usually supposed to be 30 percent of market value, but a new tenant purchase scheme introduced by Labour’s Alan Kelly last year provides for discounts of up to 60 percent.

Some commentators believe, however, that in practice the discount is much greater, because of conservative estimates of market value. Either way, the unit is sold for far below market value and therefore below the cost of replacing the unit.

While the tenant has indeed paid rent, social rents are quite low in Ireland and often cover only maintenance costs. This means that public investment in social housing is continuously depleted as we sell off stock at a discount.

A large part of investment in social housing in this country is thus actually an investment in
subsidised home ownership. Tenant purchase also plays a key role in considerations around how we finance social housing.

In countries where social housing is not sold to tenants, it eventually starts to produce a return and, moreover, can be used as equity to draw down private finance for investment in social housing. It is very hard to design a sustainable model of social-housing finance if the very thing we’re investing in is constantly sold off.

There are positives to tenant purchase.

It may well represent one of the most significant instances of transferring wealth to working-class people in Irish society. There are also arguments that tenant purchase helps to stabilize working-class communities by increasing tenure mix, in other words creating a mix of home owners and social tenants.

However, a large portion of those who acquire their homes through tenant purchase then sell them and move elsewhere. Between 1999 and 2015 (up to November), Dublin City Council had 10,254 applications to resell homes bought under tenant purchase, an average of 603 a year. It allowed the resale of 8,793 of them.

Tenant purchase is thus a great scheme for transferring wealth to working-class people in the form of home ownership. However, it is a terrible scheme from a social housing perspective and for the housing system as a whole.

Many in Irish society think that tenant purchase is fair and commendable. Indeed, many political parties campaigned to extend tenant purchase in future. For example, Fianna Fáil’s election manifesto promised a give-away bonanza with a new tenant purchase scheme for 150,000 tenants.

Meanwhile Labour’s Alan Kelly (the acting Minister for the Environment), announced plans last year, referred to above, for an extended tenant purchase scheme. (A plan that was subjected to a blistering critique in the Irish Times by Simon Brooke of Clúid Housing Association.)

The Workers’ Party was the only party I could find that takes a strong stance against tenant purchase. Sinn Féin’s housing policy notes that the scheme has “positive and negative aspects”, and commits to a stay on the scheme while the housing crisis continues, and to future reforms.

However, most left-wing political parties stay away from the issue, as tenant purchase is extremely popular among the scheme’s potential beneficiaries, who are also a key constituency for the left.

Abolishing tenant purchase is a bit like increasing taxation. It’s fairly obvious we need to do it to have decent public services, but there is no short-term political gain in advocating for it.

This why we need a strong civil society and social movements that can shape housing policy beyond the narrow confines of electoral politics.

Mick Byrne

Dr Michael Byrne and Professor

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  1. I fundamentally and totally disagree with the analysis in this article and not for the first time hugely wonder at what on earth is taught on Social Policy courses

    1. This is one of the main causes behind the property crisis in London at the minute. It’s no way for Dublin to be followin.

      And unsurprisingly, your retort is devoid of any facts.

      1. The article is short on references and strong on bald assertions, e.g. “rents often only cover maintenance ” but later “an income stream is lost when houses are sold”. Which is it?

  2. Social housing belongs to the nation as a whole for the collective benefit of those who need it and should not be sold off by whatever party happens to be in power to gain votes by enriching individuals. The argument that such sales are a way to transfer wealth to the working class, while attractive at first glance, is spurious, since they do so at the expense of those who will need housing in the future. The number of units of social housing in Ireland is far below that required to meet present needs, let alone future requirements. The targets set for construction of social housing in Dublin for the three year period to 2017 have already been cut in half, not through lack of demand, but rather because of the city’s failure to meet the original goal, and in 2015 the city council barely managed to construct half the number of units stipulated even by the new targets, let alone the older ones. Removing social housing units from an already depleted supply of public housing because of a Thatcherite insistence that private ownership of property is always to be preferred is not simply foolish, it is a dereliction of the nation’s duty to provide for the needs of its citizens. The notion that the national stock of public or social housing belongs to the members of the government (whoever they might be in a given electoral term) and is theirs to do with as they please is a truly bizarre perversion of the terms “public”, “social” and “national”.

  3. My comment was based on 23 years work as a Councillor. It is based as ss someone who grew up in a DCC home that my parents bought, as someone who now lives in a previously DCC owned home in a DCC estate and as someone who is both a member of and a founder of several Voluntary Housing bodies. It is based on a solid delivery of new housing units during my time as a Councillor. Sure it is not based on a social studies course in a Third Level College. It is based on a belief that a mixed housing area is better for all to live in. It is based on the premise that any funds raised from the sale of such properties should be ring fenced to future social housing needs.

  4. To Dermot Lacey: My own comment was based on decades during which I saw multiple units of Dublin County Council social housing in my South Dublin neighbourhood sold off to tenants and subsequently sold on as the property market ballooned. All those houses are now completely out of reach for ordinary middle-class buyers, let alone for anyone whose income is remotely close to that of their original purchasers. You refer to a ‘solid delivery of new housing units during my time as a Councillor’. If that is the case, why are so many homeless families in Dublin still spending years on DCC waiting lists? You say that your comment ‘is based on the premise that any funds raised from the sale of such properties should be ring fenced to future social housing needs’. That certainly never happened in the past and there is no reason to believe that it will in the future, so basing social housing policy on that premise seems short-sighted at the very least.
    On any case, the fundamental flaw with the entire argument for the sale of social housing in a balloon market like Dublin’s is that private housing is now so expensive that the sale of social housing into the private housing market (even with a 20-year clawback) results the stratification of residents into two groups at either end of the income scale–those who live in rental social housing and do not yet qualify to buy it, and those wealthy enough to buy Dublin’s vastly overpriced private houses–with very few in between. You say that your comment ‘is based on a belief that a mixed housing area is better for all to live in’. That is a laudable goal indeed, but if you think that this is the reality in Dublin today or that the sale of units of DCC social housing into private hands is likely to achieve that goal, you are deceiving yourself.

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