Some 40,000 affordable homes are promised, but the people at whom they are aimed are confused about the system, writes Kate Holmquist.
For the smug middle classes, the very thought of one of their own turning to the local authority for housing would have caused apoplexy only a few years ago. But with the average home now costing seven times the average industrial wage and adult children coming with begging bowls looking for deposits, the 50- to 65-year-old age group have clued in to the biggest giveaway in the history of the State. Instead of remortgaging their own homes, they're telling their kids to apply for affordable housing.
Fiona Dolan, a PA with Price Waterhouse Coopers, may have grown up with four siblings in a huge house on Leinster Road in Rathmines, Dublin, but she realised she could never repeat her parents' good fortune by buying a home on the private market. She could afford a mortgage of €160,000 - considerably less than the average of €220,000.
Eight months ago, her mother asked her: "Are you feeling lucky? There's an affordable homes lottery draw coming up." Like most people, Dolan didn't know what affordable housing was. She learned that it's not social housing, which is provided by local authorities for people who can't get a mortgage. Affordable housing is for employed people with good credit whose incomes are too small to afford a mortgage in the current market. So the State does deals with developers that result in whopping discounts of 30-50 per cent on brand new homes in developments where the neighbours, perhaps to their chagrin, will have paid full price.
Dolan got lucky when she applied for 12 properties in a Dublin City Council affordable housing lottery - she is now the proud owner of a new Cosgrave-built two-bedroom apartment near Parnell Square. It cost her €250,000 - including a parking space - which is about a €100,000 discount on the full price. She has trimmed her mortgage down to an affordable €160,000 by entering into a part-purchase and part-rental scheme that will allow her to buy the council out in later years. If she sells before the mortgage is paid off, the council will claw back a portion of the value. After 20 years, she'll own the property outright and will benefit from the equity.
"I know many people in my situation who never considered affordable housing, perhaps because people don't understand it," says Dolan.
It's a good news story and one that the Government hasn't been shy about publicising. The National Development Plan (NDP), announced on Tuesday, includes 40,000 affordable homes, and the previous week 70 new affordables for Killiney and 1,000 for Lucan were announced.
It's understood that shortly there will be a further announcement of at least 500 apartments in various locations in Dublin city that the State has purchased outright under the Affordable Housing Initiative in order to cater for some of the 7,200 people on the Dublin City Council "panel" for affordable housing lottery draws.
A word about that "panel": the figure of 7,200 is misleading, as only about half of those people are realistically eligible because they could actually earn enough to get a mortgage.
Dublin City Council uses "self- verification", which means that it is up to the applicant to decide if they can actually afford an affordable house.
The council does ask to see a payslip, but apart from that it seeks no evidence that the applicant has actually gone about securing a mortgage. In some schemes, half the lottery winners haven't actually got the house in the end because they weren't financially viable. So the council draws twice as many names as it needs, then contacts them one by one until it fills every place. For people on the panel who have mortgages ready to go, the delays are frustrating.
But supply is only part of the problem. Affordable housing has been developed so fast by so many different providers that it's mostly those who know how to "play the system" who have taken advantage of it so far. "I am concerned that houses are going to people who know how to play the system. In some local authorities huge numbers of housing staff have affordable housing . . . If the staff know the rules, then the public should know the rules," says John O'Connor of the Affordable Homes Partnership (AHP), a state agency that was set up 18 months ago to make the provision of affordable housing transparent and more efficient in the Greater Dublin Area.
Foreign nationals also have an edge on getting affordable housing because their own information networks are so efficient. "In some local authorities, such as South Dublin and Fingal county councils, the proportion of foreign nationals in affordable housing schemes can be 30 to 40 per cent," says O'Connor.
Foreign nationals don't seem to see a stigma around local authority housing, the way many indigenous Irish do.
"There is a stigma and we have to address it," says O'Connor. "My long-term view would be to take affordable housing away from the local authorities and have a central applications agency."
In a new housing development in Ongar, near Ongar Village outside Blanchardstown, foreign nationals have bought up a large proportion of the affordable housing because they were well-informed, says O'Connor.
Foreign nationals have snapped up 1,200sq ft houses at a price of €315,000 each, a discount of €100,000 off the full value. But, apparently, indigenous Irish are reluctant to apply because they don't want to live with foreign nationals. "If you wanted one of these houses tomorrow, you could get one. It's near a village and a train station is due to be built there shortly," says O'Connor.
Apart from the stigma, confusion about how the system works has to be addressed if everyone is to have a fair chance, he adds. Fiona Dolan says that the AHP website and Dublin City Council couldn't have been more helpful, but not everyone finds it so easy. Some of the local authority websites are difficult to navigate if you're interested in affordable housing.
O'Connor says: "I don't mind saying that the system, as it stands, is confusing. There shouldn't be different rules according to different local authorities. Different providers have different income requirements. I believe that we need flexibility so if someone can get a mortgage but is cut out because of house prices they should be targeted for affordable housing. I want to see clarity, simplicity, fairness and an equitable system where all applicants are treated the same."
Many local authorities operate on a first-come, first-served basis and the public often doesn't understand that when an ad for affordable housing is published in these areas, it's important to apply early, well before the deadline. Those in the know get houses by virtue of getting there first. "A huge number of undesirable housing developments have come about on the back of tax incentives. These include sub-quality houses and useless blocks of apartments in country villages," says Jim Power, chief economist with Friends First.
There are 100,000 families that can't afford houses, while 300,000 useless houses and apartments sit empty, according to Prof PJ Drudy, of TCD, author of Out of Reach: Inequalities in the Housing System. "It's time we started thinking of houses as homes rather than commodities," he says.
Clearly, the NDP's 40,000 affordable homes are desperately needed. "The biggest issue is whether this is achievable, because it would take a huge amount of hard work. As it stands, the system could not deliver these 40,000 houses because the system has to be re-organised," O'Connor says. As well as taking responsibility for affordable housing away from local authorities, he wants to see a fast-tracking system introduced for builders who include affordable housing in mixed schemes. This approach has worked well in Massachusetts in the US, where the affordable housing system is seen as an international beacon of good practice.
Currently, it can take five to seven years for a new housing development to come to fruition, but that could be shortened to a year or two. For some families, the waiting time could mean never being able to afford even an affordable home. Cllr Chris O'Leary of the Green Party in Cork tells of a couple, both aged 46, who have been waiting four years for a home. They've been approved for a mortgage, but with house prices rising faster than their incomes, and taking their age into account, they are worried they may no longer qualify by the time an affordable home comes up.
After a three-year wait for an affordable home in Dublin city, Michael and Rukhsana Ingle (both 32) are frustrated with the city council's lottery system, which means that someone who has been waiting for six months may get a home before someone waiting for three years. Every time the Ingles have applied, their number hasn't come up. In the last Dublin City Council lottery, 206 homes were awarded among a pool of about 3,000 eligible applicants, which put the odds of winning at 15 to one.
And bizarrely, Dublin City Council uses self-verification of eligibility for a mortgage, so that of the 7,200 people on the affordable housing panel only about 3,000 can likely get a sufficient mortgage.
The lottery aspect of it is fine if you're a winner, but if not, says Ingle: "One person gets a discount of €150,000, keeps it for 20 years and gets to keep the profit. While the other person gets no home and no money." The Ingles have their hearts set on an apartment in Longboat Quay, in the Docklands, where 11,000 new homes are being built, one fifth of them social and affordable. (So far, the social housing will be concentrated in one building, with the affordable housing in buildings mixed with full-price apartments.) But getting information about what is happening in the Docklands isn't easy. The Dublin Docklands Authority and Dublin City Council kept passing this journalist back and forth between each other for answers to my questions, even though the Dublin Docklands Authority brochure clearly states that further information is available from Dublin City Council. The AHP cleared this up - while the Docklands authority is building the scheme, the council is running the lottery for places.
The Ingles are anxious to know when Longboat Quay will be put up for lottery, and, according to the Dublin Docklands Authority, mid-2007 is now the date. The launch has been delayed over arguments about how much equity the affordable housing owners should be allowed to retain, should they choose to sell their affordable homes once their mortgages are paid off.
While prices are yet to be finalised, there will be discounts of 30 to 50 per cent on apartments worth in the region of €550,000, so interest is keen.
One view being bandied about in the Department of Environment, it is understood, is that after paying off a 20-year mortgage, the owner should keep the entire equity, as with current affordable housing schemes. However, the AHP and the Dublin Docklands Authority would like to see a substantial portion of the equity - perhaps 30-50 per cent - being returned to the Dublin Docklands Authority and "recycled" to provide further affordable housing. "We are not in the business of giving people presents," says O'Connor. "We need to be recycling equity back into the system in order to create further housing."
Taking some of the rezoning profit away from landowners and developers is another issue. The AHP is recommending that when land is rezoned for housing, the benefit of the added value should be shared between landowners, getting 40 per cent, and the public purse, which would receive 60 per cent.
This ethos is a world away from the quick-buck property deals of the not-so-distant past.
Judging by the presence of other political parties at the Green Party's well-attended conference this week, there can be little doubt that the current housing famine, in which houses sit empty while families seek homes, will be a top issue in the general election and that candidates are keen to get a handle on it.
Politicians could, however, be part of the problem. Nay-sayers who object to new developments in principle or as vote-getting exercises are holding back the development of affordable housing, asserts builder Bernard McNamara, whose McNamara Construction is building the Docklands developments. Regarded by Green TD Ciarán Cuffe as "one of the good guys", McNamara has an ambitious plan to establish a private foundation, independently run, which would build affordable housing on hundreds of acres of land he owns, but he has been frustrated by a reluctance by local authorities to take up his ideas. His overall plan to build 3,000 affordable homes embraces Castleknock, Sutton, Kildare, Blackrock, Lucan, Blanchardstown and Templeogue among other areas, but to make it happen he has to negotiate with local authorities and this can take five years. He says: "In my humble opinion, the only way to expand affordable housing is to build, and as quickly as possible."
Cuffe says that politicians are going to have to be "more open-minded" about high-density housing and moving it fast through council chambers. As economist Jim Power puts it, something is going to have to radically change, because as things are "my two kids won't be able to afford to buy a house".
Now that the middle classes are up in arms, perhaps something really will be done to solve a problem that has beleaguered the poor for generations.
Affordable housing: the numbers
16,260 people on waiting lists for affordable housing, including Dublin City, 7,000; Dún Laoghaire-Rathdown, 900; Fingal, 600; South Dublin, 700; Galway city and county, 1,220; Cork city and county, 4,200; Co Kildare, 900; Co Meath, 720.
9,896 affordable homes provided between 2003 and 2006.
500 affordable apartments purchased by the State are to be offered in Dublin shortly.
Docklands: 56 affordable units, including 41 two- and three-bedroom apartments in Longboat Quay, will be allocated in mid-2007, with 30 more becoming available at the end of the year or at the beginning of 2008.
300,000 unoccupied houses and apartments built under tax incentive schemes.
100,000 individuals and families in need of homes who can't afford to buy.
40,000 additional affordable housing units proposed under the new National Development Plan.
Sources: Affordable Housing Partnership; Department of Environment; Dublin Docklands Authority; Professor PJ Drudy, Trinity College Dublin.
