Presented by Michael Taft, Research Officer at Unite the Union, at the Housing Emergency Conference at Liberty Hall on October 3rd, hosted by Housing Action Now.

1. Beyond the Public-Private Divide
MichaelTaft
Unite the Union

2.  The current model of 100 percent local authority provision
of social housing is no longer capable of meeting the new
challenges – not only because of the fiscal restraints and
competing demands from other sectors
 Future social housing provision will need to accommodate
low and average income households – something which
the private rental sector will struggle with, especially as
transnational landlords and up-market accommodation is
squeezing so many out.
 This requires a new public sector-led model to adequately
house a larger section of society and ensure that rents do
not become a burden on the productive economy.

3.  Three main principles for a new model:
a) It is not-for-profit (cost rental)
b) It blurs the distinction between the ‘social’ and
the ‘private’ so that the not-for-profit housing
leads and eventually dominates the entire
rental sector (unitary market)
c) It reduces the impact on public finances (off-
the-books)
 This will, in the first instance, require new
housing providers.

4.  While the voluntary sector will play an important role, new
providers will be needed generate housing at scale. This calls for
the creation of public housing associations (similar to municipal
housing associations in European continental countries.).
 These new associations would be part of the public sector but
commercially independent – similar to public enterprise.
Therefore, they would not be part of the General Government
sector;, their activities would not impact on public finances or
contribute to the deficit.
 They would house people on the waiting list but would be
commercially free to develop accommodation for people who now
seek out accommodation in the private rental sector.
 [A public enterprise company or housing trust could be set up to carry out a similar
task but public housing associations are essentially the same thing] .

5. Social Housing as a % of Housing Stock: 2013
% ofTotal Stock % of Rental Stock
Netherlands 33 75
Austria 22 56
France 17 44
England 17 49
Finland 16 53
Ireland 9 32
Source: NESC

6.  These new housing providers would be based on a cost-
rental basis.
 The public housing association would only charges rents
sufficient to cover:
 Borrowing costs for land acquisition & construction
 management, maintenance & refurbishment
 taxes
 a sinking fund to cover future capital costs, long-term debt
repayments contingencies.
 This removes the profit/speculative element out of this
form of rental housing provision.

7. Rental Cost Model: Costs per month (30 year mortgage)
Expenditure Revenue
Capital Grant (State):
20%
Differential Rent
(average)
€230
Finance (Borrowing):
80% at @ 3%
€603 Costs minus
Differential Rent
(State Payment)
€673
Management,
Maintenance and
Refurbishment
€300
TOTAL €903 TOTAL €903
Source: NESC (Sinking Fund Provision not included)

8.  The state will still be a major funder under this model – between
20 and 30 percent of investment. However, to move social
housing investment off-balance sheet, the remainder will come
from non-state sources. To maximise investment at the lowest
cost a Financial Aggregator (e.g. Housing Finance Agency) will be
established
 This agency would ‘aggregate’ finance from different sources and
lend on to the housing associations.Technically in the public
sector but commercially independent.The Aggregator would
accumulate funding from a number of sources:
 European Investment Bank and other EU funding institutions
 A new Irish Housing Bond (e.g. for long-term pension investment)
 Domestic and international financial agencies / Credit Unions
 Strategic Investment Fund (and an Infrastructural Bank as
proposed by NERI)

9.  The long-term goal is the creation of a unitary rental
market: the provision of rental accommodation – whether
non-profit or for-profit – in one market In this single
market, public and private providers compete with one
another.
 This transforms social housing from a residual sector –
social housing for the poor – into one where the
distinction between ‘public’ and ‘private’ is blurred. In this
market, social housing provides for those unable to afford
market rents, but also for those on low to low/middle
income households.
 This would require three important and inter-related
policy initiatives

10.  First, regularising tenant subsidies or allowances
across sectors. The Housing Assistance Payment is a
start whereby differential rent schemes operate in the
social and private housing sectors.
 Such subsidies would not be based on employment
status but linked to income. Therefore, it is capable of
being accessed by a wider section of the population.
 The key point is that the same subsidy would be available
to all tenants regardless of the sector.

11.  Second, the establishment of a rent regulation regime. In the
first instance, this might take the form of a rent freeze, to halt
spiralling rents. Once public housing associations expand
throughout the sector, a new regime could be established: a
sophisticated system of setting rents to local markets, quality
and size, with a reliable formula for rent increases.
 Third, the provision for private, for-profit providers to be
integrated into the cost-rental sector – with a guarantee of an
x percentage return (profit). This occurs in other countries
where commercial developers can avail of public loans and
subsidies; in exchange, they are subject to cost-rental control.

12.  Dublin City Council establishes a Public Housing Association
 DCC transfers land/stock (or leases at long-term discounted rates)
to the Association.
 A variety of stock transferred: vacant land, derelict buildings,
tenanted buildings.This would ensure a rent stream and an asset
base from the outset while starting the process of creating new
accommodation. Over time, more and more of the stock would be
transferred.
 The Aggregator would ‘lend-on’ to the Association for new
construction and refurbishment.
 The Public Housing Association charges rent at cost
 There may be a need for Exchequer to provide initial capital/equity
to the Association.

13.  We will need a new institutional landscape capable of planning,
driving, delivering, allocating, protecting and maintaining affordable
rental housing. Fortunately, those skills are present in the Housing
Agency, Housing Finance Agency, NTMA, the local authorities and
other bodies.
 We will need a new planning framework that emphasises higher
density and integration with infrastructure provision (transport,
education and health services, amenities, etc.)
 We will need a new form of Housing Benefit to facilitate this unitary
model that puts all tenants on an equal footing – in both the public
and private sector.
 We will need to discuss the role of tenant-purchases.
 We will need to find a mechanism to control the price of land with
possible provision for CPOs for development land / derelict buildings
remaining idle.

14.  The rolling out of public housing associations is a long-
term process. We still require substantial state investment
and direct provision of social housing by local authorities
given the 130,000 on the waiting list and the growing
homelessness crisis.
 The Government proposes to spend €4.2 billion over the
next six years to provide 35,000 social housing units with
75,000 to be taken up by the voluntary and private rental
sector. This seems excessively optimist, especially given
the current shortage of private rental accommodation.
 There are two sources that can help provide the financing
needed.

15.  The Government will be receiving at least €2 billion (and possibly
up to €6 billion) in repaid bank bail-out money from AIB and PTSB.
Currently, it intends to use this money to pay down debt. This is
unnecessary and wasteful. (debt is already falling faster than
required under EU fiscal rules).
 This money should be used as a special once-off social housing
programme. While this would have to be negotiated with the EU
Commission there are strong arguments: it doesn’t impact on the
structural deficit (just like the special payments made to banks);
and it could constitute an ‘emergency’ which is exempted from the
rules. In this respect, it would be helpful for the Oireachtas and
Local Authorities to formally declare a ‘housing emergency’.
 This could kick-start a substantial housing drive.

16.  If we are serious about treating housing as an emergency
(along with other demands on public expenditure such as
health, education, social protection and economic
investment), the tax-cuts agenda is more than just a
dangerous diversion.
 The Government intends to cut taxes by €750 million in
Budget 2016. If this were reduced to €250 million (a
minimalist demand), this could free up over €3 billion over
the next six years.
 On the basis of the Housing Strategy’s costings, this could
boost house building, acquiring, leasing by an additional
25,000.

17.  Whenever we hear that the ‘property’ market is
‘strengthening’ (house prices, rents, land prices) we should
shudder. High rents and house prices are a drain on the
productive economy.
 A new model can open up public housing to a large swathe
of the population now renting – estimated at 500,000.
 This housing can be provided at cost – not for profit.
 To give this process a kick-start we can increase spending
on housing but only if we get our priorities right.
 The future of housing is rental. The future is non-profit.
The future is affordability. This is one of the best policies
we can pursue to support a productive economy and a
prosperous society.