The key to resolving current issues, including affordable housing, in the housing market is increasing supply. This is why the Government is committed to increasing the supply of all types of housing including social, affordable and private. Institutional investors represent one aspect of the housing market and have a role to play in increasing overall supply. Whilst the role of institutional investors has grown, particularly in the urban apartment market segment, it remains relatively minor in terms of the overall residential sector as a whole.
In overall terms, the key elements of the Government’s approach to addressing the issues in our housing sector are set out in the Rebuilding Ireland Action Plan for Housing and Homelessness, and Project Ireland 2040, which set out a comprehensive set of measures designed to restore the housing market to a sustainable equilibrium.
A generally accepted convention is that housing is deemed affordable where households, particularly low or moderate income households, are paying not much more than one third of their disposable income in meeting their accommodation needs. In order to support households that have difficulty in accessing affordable housing, a multi-stranded, targeted approach is being pursued in the areas of the country most affected. The measures are targeted at low to middle income households.
Some of the actions taken by Government include the trebling, to €310 million, the funding available for key facilitating infrastructure on local authority sites. This fund supports the provision of homes to purchase or rent, under the Serviced Sites Fund (SSF). This fund will facilitate the development of c. 6,200 homes that will be made available to purchasers or renters at rates which have significant discounts on market prices. To date, funding of €127 million has been allocated in support of 35 projects in 13 local authority areas. This funding will support the delivery of almost 3,200 homes for purchase. Under the provisions of Part 5 of the Housing (Miscellaneous Provisions) Act 2009, the homes that will be made available for purchase will be targeted at first time buyers.
Government is also committed to rolling out a new Cost Rental model. Under Cost Rental, rents cover the cost of delivering, managing, and maintaining the homes only. I recently launched a development in Enniskerry Road, Dublin which is one of two ‘pathfinder’ pilot projects for Cost Rental (along with the St. Michael’s Estate site in Inchicore). Enniskerry Road will see the first units delivered with homes due to be completed for tenants in 2021. Tenants will pay €1,200 per month to live in the two bedroom apartments. With the resulting rents significantly below market levels, this will provide households on moderate incomes with access to a more affordable and stable form of rental tenure than would otherwise have been the case.
In terms of advancing the Cost Rental agenda, I have convened a working group within my Department, in conjunction with the Land Development Agency, the Housing Agency, and other bodies. This group is developing the policy framework for the broader Cost Rental model, to provide for a sustainable financing structure and to allow us commence delivery of units at the scale. Their work is being assisted by a research project that is being undertaken by the European Investment Bank on our behalf.
The new Land Development Agency will also contribute significantly to the delivery of affordable housing and has access to a tranche of State lands, which it is estimated could provide up to 10,000 homes. This would include 40% of the delivery being for social and affordable homes to purchase or rent.
These initiatives complement other Government actions which help first-time buyers to buy a home, such as the Help to Buy Scheme and the Rebuilding Ireland Home Loan. While the State is playing its part in facilitating the additional supply of affordable housing, institutional investors also have a role to play in a more sustainable, long-term property system by providing much needed rental accommodation. However, as Rebuilding Ireland makes clear, professional landlord investment can only be one aspect of a multi-pronged response to addressing current issues in the housing market.