I thank the committee for the invitation to attend at this committee meeting on affordable housing, an issue that is very close to our hearts.
Ó Cualann Cohousing Alliance CLG is a co-operative housing organisation with approved housing body, AHB, status. We are a not-for-profit company limited by guarantee and a registered charity. Ó Cualann is governed by a voluntary board of directors-trustees. Our motto is, Building Communities, Not Just Houses, and our mission is to provide co-operative, integrated homes at affordable prices in mixed income, sustainable communities with support from local authorities and other willing landowners and in which owner-members live side by side with social and private tenant members, all sharing common amenities. Fully integrated means a community comprised of people of mixed income, age, mobility, needs and ethnicity living together as neighbours. Co-operative means a venture or enterprise set up and run for the mutual benefit of all its members, namely, the residents of a particular development. Affordable - the important bit - means a rent or mortgage which can be afforded by households and represents a maximum outlay of 32% of net income. People argue that it should be as low as 30% or as high as 35%, but we say around 32%. Housing needs have to be taken into consideration. People always have utility bills to pay and maintenance will be required if they own a property.
Ó Cualann is currently the only AHB in Ireland offering affordable homes for owner occupiers and one of few intending to offer homes for affordable rent, in collaboration with Túath Housing. We have a collaboration agreement with Túath Housing under which the latter will manage both the social houses and the affordable rental in developments we both work on. Our inaugural project, in Poppintree, Ballymun, which has just been completed, comprises 49 well designed and high-spec, A2 rated, two, three and four bedroom homes, with an average price for the three bedroom homes of €170,000. With all the benefits of living in a co-operative community, our initial project is heavily oversubscribed. We currently have 1,300 people on a waiting list for a house in north Dublin. Given that we are a small co-operative body, that is a crazy number. Such is the interest in and demand for affordable housing that the Ó Cualann model has garnered widespread attention from prospective purchasers, local authorities, funders, philanthropic organisations, political parties, elected representatives, Ministers, academics and media commentators.
To date, we have attracted more than €200,000 in philanthropic funding to help us build our capacity in order that we can replicate and scale our model. We are in line to receive additional philanthropic funding over the next three years to continue this scaling process in line with our strategic plan. AIB has also committed to funding our schemes. It has referenced the Ó Cualann model in public utterances, including in its regular housing reports and at various Dáil committees. We have also raised €1.5 million in short-term finance through loan notes, which has been quite an innovative means of fundraising. Private individuals, companies and a charitable trust are now investing in Ó Cualann because they want to see their money used to create a social impact in Ireland and get a reasonable return. Holders of loan notes have chosen to accept varying rates of return on their unsecured loans ranging from 0.5% to 4% per annum, for periods of 18 months or three years.
Our model is de-risked because Ó Cualann pre-sells all units on a phase by phase basis before construction commences. We use a design-build contract, with a strict no variation or maximum fixed price clause, which means there are no nasty surprises for us during or at the end of the contract. The contractor buys out the risk of any variation in our pre-contract negotiations.
The process of building the community, which is really important to us, starts as soon as we are given the go-ahead for a scheme and is carried out during the section 183 process. We hold several meetings and a common charter is prepared by the residents before they move in. We will start our second development in Ballymun in two weeks. The selling price of an average three bedroom house will be in the region of €219,000. Members might wonder why the first scheme cost €170,000 and the next costs €219,000. The difference is due in part to inflation, but also higher development costs for us in the second scheme. This has been caused by the need to remove 5,000 cu. m of soil, which increases the price. However, €219,000 is an affordable price, according to the criteria we mentioned earlier.
We agree eligibility criteria with the local authorities. Houses are allocated on a first come, first served basis as applicants meet the eligibility criteria, and by appointing an allocation committee where demand exceeds supply at the end of the process, which always happens. Our ideal mix is 60% owner occupiers, 20% social rental and 20% affordable rental, but this must be in agreement with the local authorities, which ultimately determine the mix.
The main obstacle to replication of the model is land. If land is available, the AHB sector can do the rest. We can provide the private finance and build the sustainable communities. We ask that the Government takes a broad view when looking to achieve value for money in the disposal of land.
Some 95% of our members will never buy on the open market. When they buy from us approximately €50,000 from each sale goes back to the Exchequer through VAT and other taxes. That is a windfall gain for the Exchequer. In addition, 60% of our members had been renting at an average rent of €1,500 per month whereas their mortgages cost only €850 per month on average. This leaves discretionary disposable income available for spending in the local area. There are 2,000 plots available in Ballymun. If all of those were used for the affordable model, it would increase income in Ballymun alone by €13 million per year. An economist checked and approved that figure for us and it is significant in Ballymun. It could provide the additional services we need to get the shopping centre up and running again.
I will conclude on that point as I do not wish to speak for too long. I draw members' attention to a table in the statement I submitted which shows gross income, net income and the maximum affordable mortgage of 30% or rent of 32% a person should pay as well as the various houses he or she could afford on an income set at the limits provided. A person earning around €45,000 will find it very difficult to buy a house but he or she can still get a house in one of our schemes with the Rebuilding Ireland loan and with the help-to-buy scheme. If members can get their heads around it, we are arguing for what is a variable subsidy. A person earning only €45,000 will need a full subsidy, whereas someone earning €75,000 or €80,000 - we argue in favour of extending the limits to €90,000 - would need a much smaller subsidy. The difference between the subsidies could be returned to the local authorities to pay for land because that is one of the big issues we encounter.