The prospect of a local authority paying a private developer almost €800,000 for social housing units on a site that used to be in Nama is a stunning illustration of how divorced from reality housing policy has become. The homes are in a scheme being developed by shopping centre investor Hammerson in Dundrum, Co Dublin.
They are being offered at cost to Dún Laoghaire-Rathdown County Council in line with so-called Part V rules that have been in place one way or another since 2000.
Under the rules, private developers must hold back a share of most housing developments for social housing – the current rule is 10pc.
“Cost” might imply a bargain price, but in each case it is dictated by how high-spec the development happens to be and nothing at all to do with the most efficient price good-quality homes can be delivered at.
The result in a relatively fancy area such as Dundrum is that Hammerson is offering fancy homes tailored to wealthy buyers because that is what it is building. They will be let to qualifying tenants at prices necessarily divorced from the cost of delivery.
Local authorities do not have to buy, but in reality Part V has been the cornerstone of social housing provision since before the crash. A crappy foundation it has proved to be.
The original motivation for the idea was a pretty widespread aversion to large-scale provision of public housing.
That seems mad now, but council estates had gained a dreadful reputation in many quarters during the long and miserable recessions of the 1980s and 1990s. Crime, drug dependency and deprivation came to be seen as the result of over-concentrations of social housing tenants rather than a result of under-resourcing of communities.
The alternative was a heavy emphasis on mixed tenure in privately initiated developments. That was one thing in the boom, when lots of homes were being built, but has proved a disaster since, adding too few homes too inefficiently to meet the need for social housing.
That is bad for the tenants who miss out when homes are not built. It is bad for taxpayers who buy dear units in private schemes instead of funding efficient public housing on public land.
It is also bad for first-time buyers who in reality end up having to pony up more to make up the margins developers lose on the 10pc of units delivered at cost to councils.
It is past time to ditch Part V and get on with building public housing based on social housing needs, not based on the market niches where developers happen to be targeting schemes.
