Report calls for establishment of a National Housing Authority to address housing crisis

A new report has called for the establishment of a new National Housing Authority to implement, direct and co-ordinate housing policy and strategy.

The author of the report, Tony Foley from DCU, said that given the current housing situation the primary focus of the Authority had to be on implementation.

“The housing market has long lacked official national coordination. The Housing Authority would provide this missing link and ensure that plans are acted on. For example the housing section of the Government document Construction 2020 states that ‘Ensuring every citizen has access to suitable housing is a key policy goal of Government’.

 

“Have we succeeded in this regard? Clearly not. By contrast the National Housing Authority would publish a national housing plan- with localised components – within six months of establishment with the aim of achieving substantial and measurable progress towards this aim” he said.

The report which is entitled ‘Policy Options for Supporting the Provision of Housing at Affordable Prices’ was commissioned by the Society of Chartered Surveyors Ireland (SCSI).

Mr Foley said the NHA would foster an integrated approach to our housing needs based on objective research and intelligence.

“Prior to the economic collapse the market produced too many houses relative to demand and in the wrong locations. For example in 2006 we built over 93,000 housing units. By 2013 we had gone to the other extreme, building just 8,000 units a year, less than half of the projected demand”

“There is widespread agreement on the policy moves required to address the housing issue. Several of them are hangovers from the Celtic Tiger era which are well past their sell by date. Others are measured responses to a much changed situation.

Seven of the key ones are;

  • New National Housing Authority with ‘mandate to deliver homes’
  • Universal planning standards
  • Reduced development levies
  • Tax incentives for providers of rented accommodation
  • VAT on new housing units to be reduced to 9% for 3 years
  • Planning process for housing developments to be streamlined
  • Government to commission a volume of new houses from the private construction sector

“The National Housing Authority would coordinate the implementation of these and other policies in a timely manner and ensure the creation of a stable and sustainable property market over the long term. The net cost of the measures identified in the report would be much lower than the gross costs because of the increased volume of construction and the associated tax revenue flows” Mr Foley concluded.

The President of the Society of Chartered Surveyors Ireland, Andrew Nugent said the current stressed housing situation would deteriorate further unless decisive action was taken on the supply side, particularly for lower priced units.

“Between 2007 and 2014 building costs increased by over 2% but Dublin prices decreased by 30% or €144K per house. Nationally the decline was 23% or €73K. That is the climate house builders are now operating in. For example we estimate the cost of an average newly built three bedroom house in north Dublin including profit margin to be €339K. But the actual price of new north Dublin three beds are about €280K.”

“Therefore it’s clear that building this house type is just not sustainable at present and while the prices might vary, this situation is being replicated all over the country. New housing at affordable price levels will not be built until it becomes economically viable for builders to do so and as a result the housing shortage will continue as will rising prices and rising rents” “In addition there’s broad agreement that smaller sized units will be a larger proportion of need than previously and that the need for social housing will be proportionately higher than previously.

“While politically it is seen as more attractive to award purchasers’ grants or tax concessions than to support developers or builders we would argue that a new approach or new deal is now clearly required and that that should happen under the auspices of the National Housing Authority” Nugent said.

The report also recommends that in light of the decline in the number of dwellings available for rental, the increasing popularity of renting and rising prices, the tax regime for providers of rented accommodation should be reformed to make the activity more attractive to investors. Despite the negative effects of some property tax incentives in the past, it says there is strong justification in certain areas for tax incentives to be introduced as part of Budget 2016. However it says these should be well designed and monitored.

Pending the establishment of the National Housing Authority the report recommends the Goverment should look to accelerate the rate of house construction. It says it could do this by speeding up the implementation of the new dwelling element of the Social Housing Strategy and by directly commissioning a volume of new houses from the private construction sector on land it already owns. These could then be sold to the owner/occupier or the Government could agreeing to underwrite sales in specific developments at the lower priced end of the market.

The full report is available at www.scsi.ie