Social Housing Failure While State Bankrolls Private Landlords

It is generally held that almost 10,000 social housing units need to be built each year until 2012 to cope with the numbers currently on local authority waiting lists (see NESC Report 112 Housing in Ireland: Performance and Policy).  6,500 units were produced in 2005 and this figure represents an increase of just 400 on the previous year.  Also, according to Threshold, only 2,800 affordable homes were built last year - a small fraction of the over 80,000 completions in 2005.  These fact should be borne in mind when considering the report in the Irish Examiner this morning that Social Affairs Minister Seamus Brennan is considering introducing means-tested mortgage supports to help low-earners buy their own homes in the private property market.  The Minister seemingly has asked his officials to investigate ways of helping limited-income families to get a foothold on the property ladder outside of the social and affordable housing schemes run by the Department of the Environment.

This would obviously be a modest enough, means-tested scheme, and officials of the Department of Social Affairs are expected to report back to the Minister within a few months.  The Examiner reports that Brennan’s comments come as he awaits publication of a report by the public expenditure watchdog, the Comptroller and Auditor General, on his department’s escalating spending on rent supplement for tenants renting from private landlords.  It seems that in the last five years, the number of tenants receiving rent supplement increased by 41% while the cost of supplementing their accommodation rocketed by 144%. There are now 60,176 tenants receiving supplements to help pay their rent, compared to 42,683 five years ago, while the cost of the scheme grew from €151 million to €368.5m over the same period.  The point is that the the rent supplement scheme has strayed far from its intended purpose as an emergency support for renters and that it benefits private landlords while doing nothing to fulfil the State’s responsibility to provide permanent social and affordable housing.

The Minister is quoted as saying:

One figure that always amazes me is that 40% of the private rented market is accounted for by tenants on rent supplement. The State is too dominant in the rental market. That’s not the answer. The answer is to provide permanent social housing for people and help people with mortgages.

He said his target was to reduce the number of rent supplement recipients to about 20,000 which was the estimated number who, at any given time, would need short-term help with their rent during periods of unemployment or illness.  This is a sensible policy and Seamus Brennan, not for the first time, does appear to show a commendable interest in trying to spearhead reform.  It makes no sense to line the pockets of private landlords while thousands languish for years on council waiting lists.  Bringing people out of rental accommodation and into social and affordable housing is much more likely to turn them into stakeholders in their local communities and also more likely to generate the social capital his boss keeps going on about.  It would also end a significant poverty and employment trap where some people on rent allowance are disincentivised to enter the labour market as those allowances often drop significantly, making for little extra purchasing power as a result of earning a wage.

Comments

[Jim]

We have a similar situation here in England, except the total housing benefit bill for private renters is a whopping £5.6 billion. Needless to say, diverting some of this into supply would be a more cost-effective way of meeting housing need, but building new social housing has been profoundly unfashionable in most Western countries for some time now (believe it or not, Ireland has a relatively good record in delivering new social housing of late).