The state should be focussed on building new houses, not buying existing houses

[Brendan Burgess]

A lot of the discussion seems to be about the state buying houses from landlords and renting them back to the private tenants as social housing tenants.

This makes no sense.

1) It does not increase the supply of houses, so does not affect the overall homelessness figures
2) It makes fewer houses available for private buyers to buy. If the state buys them, then the private buyer can't.
3) It pushes up the prices of housing making them even more unaffordable - a private buyer can't compete with the state's unlimited finances.
4) The private tenant jumps the housing list. There are far more needy social housing tenants on the list.

The state should be building large numbers of social housing outside the Rent Pressure Zones where land is available and it's cheaper to do so. Rather than pay €400k to buy a house in Dublin, it should be building two family homes outside Dublin.

Brendan

 

[NoRegretsCoyote]

Rather than pay €400k to buy a house in Dublin, it should be building two family homes outside Dublin.

Even with free land I don't think the state can build a housing unit for €200k anywhere right now Brendan.

The unspeakable truth is that to get a lot of new houses built you need high house prices.

 

[Purple]

I think it's appalling that the State is using the taxes of first time buyers to price them out of the market.

 

[Brendan Burgess]

Even with free land I don't think the state can build a housing unit for €200k anywhere right now Brendan.

OK, I am not familiar with house building costs.

But my point is that they should be building new houses in cheaper areas rather than buying houses in expensive areas.

Brendan

 

[Purple]

Even with free land I don't think the state can build a housing unit for €200k anywhere right now Brendan.

The unspeakable truth is that to get a lot of new houses built you need high house prices.

No, to get new houses built you need low building costs.
The State's cut of a house is around one third. Delays in planning also increase the cost of financing. The cost of the actual materials is not that big a factor. Due to the grossly inefficient way the construction sector works and price gouging by greedy tradesmen (if landlords charging the market rate are greedy then so are construction workers) the labour cost is way higher than it should be.

High house prices are a reflection of an international problem caused by a money printing (vastly more money looking for something to be invested in). The best way for the State to circumvent this problem is to build houses directly.
The State (not just the government) is inept and so is ignoring it's culpability and responsibility and in doing so is making the situation worse for working people seeking to buy their stake in the social contract.

 

[Sarenco]

Another issue with the tenant in situ scheme is that local authorities are going to end up owning units scattered across multiple schemes. That’s going to be very challenging to manage/maintain.

 

[azerty]

In terms of basic maintenance, I don't know what is the plan either. Do the local authority have efficient maintenance teams to deal with issues in different areas around?
Sorry same idea

 

[Purple]

OK, I am not familiar with house building costs.

But my point is that they should be building new houses in cheaper areas rather than buying houses in expensive areas.

Brendan

This article estimates a cost of €2350 per square meter inclusive of VAT. That's around €2050 before VAT. That's a build cost of just under €250k for a 120 square meter (1300 square foot) house. I don't think it's unreasonable to expect economies of scale if there are hundreds or even thousands of them built at the same time. Therefore a build cost of €200k doesn't sound unreasonable to me.

 

[Protocol]

OK, I am not familiar with house building costs.

2020 data, greater Dublin, 114 sqm house

"hard" construction costs = 179k, that includes site development

Soft costs = 192.5k, of which

land = 60,823
Finance = 16,716
Profit = 42,671
VAT = 44,165

 

[Brendan Burgess]

Another issue with the tenant in situ scheme is that local authorities are going to end up owning units scattered across multiple schemes. That’s going to be very challenging to manage/maintain.

And what would be perfectly acceptable to you or to me would not meet local authority standards. So they will have to spend many thousands upgrading one off houses.

Brendan

 

[Purple]

2020 data, greater Dublin, 114 sqm house

"hard" construction costs = 179k, that includes site development

Soft costs = 192.5k, of which

land = 60,823
Finance = 16,716
Profit = 42,671
VAT = 44,165

So more than half the cost can be avoided if the State builds directly.
They can then charge an average rent for a scheme based on recovering the build cost, going up or down depending on the income of the tenants, and go again. If the tenant doesn't pay for 3 months give them 24 hours notice and evict them.

 

[Purple]

And what would be perfectly acceptable to you or to me would not meet local authority standards. So they will have to spend many thousands upgrading one off houses.

Brendan

Change the local authority standards. It would cost well over €150k to bring the house I rent to local authority standards due to structural issues. That would be a monumental waste of public money.

 

[RonnieShinbal88]

1) It does not increase the supply of houses, so does not affect the overall homelessness figures

It does affect the short term rental market and short term homelessness figures.

Major short term considerations if you are a politician with an election coming up.

There may also be other considerations and system costs to a short term shock to the rental market and homelessness, even though net supply is unaffected, so they could possibly argue it isn't all political.

 

[NoRegretsCoyote]

But my point is that they should be building new houses in cheaper areas rather than buying houses in expensive areas.

Yes and no. Cities exist because people working there are more productive.

Even the most expensive cities in the world need low-skilled workers who earn lower wages, and these people need somewhere to live.

A "to Hell or to Connaught" approach to social housing policy is not a good one.

 

[Peanuts20]

The only way for the state to fix the housing crisis is to build good old fashioned council estates and communities. Anything else is just nibbling at the edges. We did it before when we were a small impoverished country on the periphery of Europe. Take the VAT and tax take from those building costs and ringfence it to build more houses if needed.

I live in a county town. No shortage of land on the outskirts. Buy it, zone it, build decent quality homes on it, with nearby facilities to help foster a community and go from there. Offer people houses, if they don't or wont take them without a very very valid reason, remove them from the housing list and let them take their chances with the private sector

We will never resolve the homelessness crisis if we depend on private landlords. Never

 

[Brendan Burgess]

A "to Hell or to Connaught" approach to social housing policy is not a good one.

Agreed.

But build twice as many houses for the same cost outside the city is instead of half the houses in the most expensive area is a good approach.

Many (most?) First Time Buyers who are working in Dublin are buying outside Dublin because that is all they can afford.

Why should we house social housing tenants in better locations than private buyers?

Brendan

 

[Purple]

The only way for the state to fix the housing crisis is to build good old fashioned council estates and communities.

We don't have a housing crisis, we have a housing problem. Around 12000 people out of a population of over 5 million are registered as homeless and many of them are gaming the system. We have very low levels of homelessness by international standards.
Building "good" old fashioned council estates created ghettos and intergenerational problems. It's the last thing we should do.

Anything else is just nibbling at the edges. We did it before when we were a small impoverished country on the periphery of Europe.

Yes, it was a disastrous economic policy which contributed to decades of impoverishment, the country getting poorer in real terms for over 40 years and mass emigration. It was only when we moved investment to education and health, from build capital to human capital, that the country flourished.

I live in a county town. No shortage of land on the outskirts. Buy it, zone it, build decent quality homes on it, with nearby facilities to help foster a community and go from there. Offer people houses, if they don't or wont take them without a very very valid reason, remove them from the housing list and let them take their chances with the private sector

I agree.

We will never resolve the homelessness crisis if we depend on private landlords. Never

I agree and blaming them or thinking that they are the problem is a big part of the problem.

 

[MrEarl]

The situation is crazy, but yet has been tolerated for years, when it comes to the housing mess in Ireland:

- the state has land, some of which could be used to build houses on

- if the state builds the houses through direct labour (yes, I mean hire the people that are needed), then there's no builder or developer profit built in, so the houses cost less.

Once built, the houses could either be sold, or leased. If leased, they could be pooled and put into a long term investment vehicle, perhaps held by the ISIF, or sold to a third party investor, such as a pension fund. My own preference would be that the houses be sold, with capital released to either pay down our national debt, or to invest in infrastructure (not to fund payrises!)

 

[T McGibney]

- if the state builds the houses through direct labour (yes, I mean hire the people that are needed), then there's no builder or developer profit built in, so the houses cost less.

You can't successfully build a house by direct labour if you're a sucker. If you try, everyone you hire will rob you blind and cut corners so you're likely to be left with a defective money pit. The State has demonstrated time and again that it is the ultimate sucker.

 

[Purple]

The situation is crazy, but yet has been tolerated for years, when it comes to the housing mess in Ireland:

- the state has land, some of which could be used to build houses on

- if the state builds the houses through direct labour (yes, I mean hire the people that are needed), then there's no builder or developer profit built in, so the houses cost less.

Once built, the houses could either be sold, or leased. If leased, they could be pooled and put into a long term investment vehicle, perhaps held by the ISIF, or sold to a third party investor, such as a pension fund. My own preference would be that the houses be sold, with capital released to either pay down our national debt, or to invest in infrastructure (not to fund payrises!)

Great idea but the State is really good at wasting money and really bad at getting things done. Given the appalling track record of State employees at delivering health services and just about every other service and piece of infrastructure they are involved in what makes you think they'd be any good at building houses?