A new book weighs up the history and impact of selling off Ireland’s social homes to tenants

Councils across Ireland sell about 350 homes to social tenants each year, at a discount of 40 percent to 60 percent of homes’ market value. 

In the generations since independence, the Irish state has sold off around two-thirds of all social housing that was built up to 2000.  

That would appear to be a major ingredient in the current affordable housing crisis.  

Social Democrats TD and housing spokesperson Rory Hearne flagged the issue last year, saying that a shortage of social housing is a root cause of homelessness. 

“Obviously it's a very fraught issue,” says Aideen Hayden, author of the new book A Pathway to Homeownership: The Role of Tenant Purchase in Ireland.

Still, she comes down mostly in favour of the schemes, saying that they allowed working-class people in Ireland to achieve high levels of home ownership compared to other countries. 

“The difference that tenant purchase made to Irish society was enormous,” says Hayden, who was chair of Threshold, the national housing charity, for more than two decades.

In her book, Hayden traces the tenant-purchase scheme to its foundation in the land agitations of the 18o0s and the ensuing Land Acts, when large aristocratic estates were broken up, and small farmers got the opportunity to buy the land at a discount.

Soon after that, rural labourers living in rented cottages called for a similar scheme, says Hayden. “It emerged from the same stable of nationalism and the historical fight around the land of Ireland for the people of Ireland.”

After independence, the government introduced a scheme in the 1930s for those “landless labourers” in rural areas to buy their cottages, says Hayden, who has lectured at University College Dublin’s School of Social Work, Social Justice and Social Policy. 

“Following on from that, the argument was made in Leinster House on a regular basis: ‘Well, what about the tenants in urban Ireland?’” she says. 

In the 1950s, the first tenant-purchase scheme launched in cities. It was replaced by a more generous scheme in 1973, she says. 

“By that stage, all the council houses in rural Ireland had already been sold,” she says. “That was certainly instrumental in the fact that we have less social housing than we could have had.”

She continues to support tenant-purchase schemes though, she says, and would like to see them expanded to include shared-equity schemes for private renters. 

But it is crucial that the social homes that are sold are replaced with new social homes, says Hayden. 

Tenant purchase today

These days, the tenant-purchase scheme is restricted for all kinds of reasons, says Hayden. Much new social housing is owned by housing charities, which don’t sell off their housing stock to tenants in the way councils have done. 

Homes built and sold to the council under “Part V” legislation – when 10 percent of homes in a private development are turned into social homes – cannot be sold under tenant-purchase schemes. 

Nor can homes specifically for disabled people or Traveller-specific homes be sold via tenant purchase, she says. 

There is a scheme for tenants to purchase apartments in theory, she says, but it is so complicated that it is rarely used.

Still, around 350 social tenants each year can get a foot up onto the property ladder, using an incremental purchase scheme launched in 2016.

This is significantly different to previous schemes, which attracted criticism because some people sold homes on quickly at a big profit, she says.

Since 2016, councils keep an equity share in the property, equivalent to the discount of 40 percent to 60 percent and, after five years, it starts to transfer 2 percent of the equity back to the buyer each year. 

The homeowner can sell up early and split the proceeds with the council but it will take them 20 years to 30 years to own the full house. 

“It remedies a lot of the issues with the old scheme,” says Hayden. “People are rewarded for staying.”

Weighing it up

In the book, Hayden weighs up the benefits and challenges of tenant-purchase schemes. 

“Tenant purchase helped to achieve high levels of home ownership, which is also very good for society overall,” she says. 

Most people in Ireland, including social housing tenants, aspire to homeownership – and until recently, most people thought they could achieve it, she says. 

“One of the things that tenant purchase did deliver, if you look at unskilled workers, semi-skilled and manual classes, we had a very high percentage of homeownership among those classes,” she says. 

In other words, it gave working-class people an opportunity to become homeowners. That is now declining, as homeownership levels are falling. 

“Is that good for society?” she says. “There are a lot of arguments to say that it isn’t.”

“There is an issue for our society if only people on the highest incomes are able to own their own homes,” Hayden says. “I do think home ownership is very important, in giving people a stake in their society.”

On the flip-side, selling off social housing means there are fewer social homes, she says. 

Between 1997 and 2006, 43,218 new homes were added to council housing stock. During the same period 17,197 units were sold to tenants, wrote Mick Byrne, a lecturer at UCD’s School of Social Policy, Social Work and Social Justice. 

Between 2011 and 2014, council’s added 2,364 homes to their stock, and sold off 2,233 homes to tenants, Byrne wrote. 

Says Hayden: “The only way you can justify tenant purchase is if you do replace them.”

High construction costs at the moment make that a challenge, though, she says.

There are benefits to being a social tenant, rather than a renter in the private market, says Hayden, who was previously the chair of the housing advice charity, Threshold.

Social tenants pay a rent fixed according to their income, have considerable security of tenure, and their children can inherit the tenancy. Some have the right to buy the home.

So, “there are issues with fairness, one group of tenants has these incredible rights”, she says. 

She would like to see a shared-equity scheme to help private rental tenants to purchase homes too, when the landlord is selling, she says. 

“A shared-equity product might work for them. Private renters have been excluded and left out in the cold for decades,” she says.

Looking at extending the shared equity scheme to second-hand homes is in the programme for government, but policy experts have raised concerns about the inflationary impacts of that. 

The last government also said that it intended to bring in a right of first refusal for sitting tenants when a home is sold, but that bill lapsed.

In Wales, local authorities have a list of eligible householders and sell affordable housing through a shared-equity scheme, she says. “The property is always being sold at less than full market value. Affordability should be locked in for perpetuity.”

A desire for policies encouraging home ownership isn’t irrational because high-levels of home ownership helps to create a more equal society, says Hayden. 

“We’re a fairly egalitarian society,” she says. “I don’t think we are a country that tolerates extremes of wealth.”

Many renters in the private market are terrified about the future, she says. “We’re heading down a very bad road. It’s going to cost the state an absolute fortune to accommodate them in retirement.”