Objective assessment of the economics of social housing

Disillusioned democrat

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There are already threads on "homelessness" which have become very pantomime-like and very emotional given the obvious misery homelessness causes, but there's an aspect of the housing crisis that needs serious focus because I think it's in this detail that the answer to our housing crisis lies.

From another thread an esteemed poster here has identified that the state could build homes for not much less than €130k.

http://www.politics.ie/forum/current-affairs/261145-fine-gael-dont-care-about-homelessness-14.html#post11729733

At a reasonable rate for government borrowing of 3% these houses would cost €325 a month in interest and €542 in principal repayment, but ultimately would be developing state assets.

In contrast, though - our government favours rent supplements, allowances and housing assistance programmes, emergency accommodation all funneling tax payers money into the private sector and with no hope of every creating an "asset" for the state, so this situation will just continue ad infinitum.

Rent supplements of €1300 are possible in Dublin and 3 and 4 star hotels are bulging with 3000 families in Dublin in emergency accommodation.

I've done a bit of searching but can't find any actual costs for RS, HAP and RAS in 2017, or for emergency accommodation so the great unknown for me at the moment - and maybe someone here can help me - is whether there's a genuine case for the government's strategy to rent from the private sector or whether they should be building for the future.

The population is set to increase and the trend appears to be for more growth in and around the low to middle income bands as opposed to higher earners, so the need for affordable housing is likely to grow, not fall over time.

Simply put it's about the long term economic value of rent vs. buy as the population grows.
 


Congalltee

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There are a few hitches with Social housing:
- politicians like housing lists, ie getting credit for bumping people up them.
- Social mix is the best model but people resent paying €300k for the house their neighbour get on the Social
- the rentier class have been in power since the Act of Union, there’s no sign of them letting go
- landlords think it’s acceptable for someone else to pay their mortgage and leave some for their pension
- nimbyism seems to target large private developments and small traveller ones
- there is a crisis in housing supply of high end homes for multi national employees, hence the repeated but baffling calls for high rises (when high density beside transport should be the priority)
- there is a dereliction eipidemic in Dublin, which is odd then there is undersupply, so the market is being distorted so those who made poor property purchases get bailed out first. Onwards and upwards, but leave the crap to the corpo.
 
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mr_anderson

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There will forever be a housing 'crisis' so long as you make everyone eligible for a free gaff.
An 18 year old girl who drops out of school with no job has few prospects in life.
But the moment she gets pregnant she's entitled to free accommodation and massive state support equivalent to a worker on €50,000+.

And of course the father is nowhere to be seen.

You subsidise behaviour you want and tax behaviour you don't.

With such a massive incentive to clog up the housing list, this 'crisis' will be perpetual.
 

Disillusioned democrat

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There are a few hitches with Social housing:
- politicians like housing lists, ie getting credit for bumping people up them.
- Social mix is the best model but people resent paying €300k for the house their neighbour get on the Social
- the rentier class have been in power since the Act of Union, there’s no sign of them letting go
- landlords think it’s acceptable for someone else to pay their mortgage and leave some for their pension
- nimbyism seems to target large private developments and small traveller ones
- there is a crisis in housing supply of high end homes for multi national employees, hence the repeated but baffling calls for high rises (when high density beside transport should be the priority)
- there is a dereliction eipidemic in Dublin, which is odd then there is undersupply, so the market is being distorted so those who made poor property purchases get bailed out first. Onwards and upwards, but leave the crap to the corpo.
Some good points there, but realistically they should strengthen the argument for an independent and objective assessment as opposed to weaken it.

The Part V model sees the "state" buying homes at €400k - almost 3 times the price they could build them for and last time I looked this was a republic not an aristocracy, so the renting class have no right to an income stream for life.

If the economics point at building 10s of 1000s of social homes then this is what they should do and address the issues along the way - right now we're coasting in an information vacuum - "trusting" the government to do the right thing by way of the tax payers and current and future citizens who will need housing.
 

Disillusioned democrat

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There will forever be a housing 'crisis' so long as you make everyone eligible for a free gaff.
An 18 year old girl who drops out of school with no job has few prospects in life.
But the moment she gets pregnant she's entitled to free accommodation and massive state support equivalent to a worker on €50,000+.

And of couse the father is nowhere to be seen.

You subsidise behaviour you want and tax behaviour you don't.

With such a massive incentive to clog up the housing list, this 'crisis' will be perpetual.
100% agree - as do most posters here I believe - but it doesn't mean social housing doesn't work - it just means we need to allocate the state's assets more wisely. RS, CA and FIS are all incentives to have more kids than you can reasonably expect to support without state assistance.
 

Congalltee

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Some good points there, but realistically they should strengthen the argument for an independent and objective assessment as opposed to weaken it.

The Part V model sees the "state" buying homes at €400k - almost 3 times the price they could build them for and last time I looked this was a republic not an aristocracy, so the renting class have no right to an income stream for life.

If the economics point at building 10s of 1000s of social homes then this is what they should do and address the issues along the way - right now we're coasting in an information vacuum - "trusting" the government to do the right thing by way of the tax payers and current and future citizens who will need housing.
Sorry, I strayed off on a few tangents unrelated to an objective and frank assessment of social housing. The first thing which is required is an audit of local authority housing stock on three fronts:
- are units being used to full capacity?
- are all those occupying them still entitled to it?
- should local authorities be pro-active in splitting up communities where there is crime, series litigators and generational failure to advance socially? (Eg move families outside of the canals, or even out of the local authority area?)
 

Volatire

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There will forever be a housing 'crisis' so long as you make everyone eligible for a free gaff.
An 18 year old girl who drops out of school with no job has few prospects in life.
But the moment she gets pregnant she's entitled to free accommodation and massive state support equivalent to a worker on €50,000+.

And of course the father is nowhere to be seen.

You subsidise behaviour you want and tax behaviour you don't.

With such a massive incentive to clog up the housing list, this 'crisis' will be perpetual.
"Social" housing is a leftie euphenism for free houses, i.e. houses paid for by someone else.

The more free stuff you give away the greater the demand for free stuff. The fake "homelessness" crisis is created by the prospect of a free house giveaway.

If government announced that social housing was to be made illegal, the fake homelessness crisis would evaporate overnight.

While they are at it, government should withdraw all rental supports. Simply allow people to move to areas they can afford to live in, instead of paying them to live in an area they cannot afford.

Burn it all down.
 

Fr Peter McWhinger

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Sorry, I strayed off on a few tangents unrelated to an objective and frank assessment of social housing. The first thing which is required is an audit of local authority housing stock on three fronts:
- are units being used to full capacity?
- are all those occupying them still entitled to it?
- should local authorities be pro-active in splitting up communities where there is crime, series litigators and generational failure to advance socially? (Eg move families outside of the canals, or even out of the local authority area?)
Strangers share housing in the Private Sector, so there is no reason Public Housing should not be shared.
 

Disillusioned democrat

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Sorry, I strayed off on a few tangents unrelated to an objective and frank assessment of social housing. The first thing which is required is an audit of local authority housing stock on three fronts:
- are units being used to full capacity?
- are all those occupying them still entitled to it?
- should local authorities be pro-active in splitting up communities where there is crime, series litigators and generational failure to advance socially? (Eg move families outside of the canals, or even out of the local authority area?)
I think one of the worst abuses of social homes currently is that families are forced into emergency accommodation in hotels while older couples, widows and widowers are rattling around in the 3 and 4 bedroom social homes they moved into decades ago.

I think the impact of "hotel" living on people with no dependents would be far less negative than people with one or more kids in tow, but also the cost to the state should be less.

One of the key problems with social housing in Ireland is the sense of permanence it has been allowed to develop - forever homes are not compatible with state funded social housing.
 

Disillusioned democrat

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Does anyone know where the 2017 actual spend on rent supplements, rent allowance and housing assistance figures are to be found?
 

Uganda

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I think one of the worst abuses of social homes currently is that families are forced into emergency accommodation in hotels while older couples, widows and widowers are rattling around in the 3 and 4 bedroom social homes they moved into decades ago.

I think the impact of "hotel" living on people with no dependents would be far less negative than people with one or more kids in tow, but also the cost to the state should be less.

One of the key problems with social housing in Ireland is the sense of permanence it has been allowed to develop - forever homes are not compatible with state funded social housing.
The same point could be made about older people occupying their own 3/4 bedroom houses. Many of them should trade down - it frees up a family home, & releases some equity for them.

However, there is a significant militating factor against that. If they have a house worth, say €750,000, and trade down to one worth say,€300,000 they have €450,000 in the bank.

But if they have to go into a nursing home, they have to pay 7.5% of €450,000 (€33,750) pa for as long as they have the cash (about 13 years). They also have to pay 7.5% of €300,000 (€22,500) for 3 years. so after 13 years in a nursing home they will have paid €517,500 to the nursing home.

If they dont trade down they only have to pay €168,750. (Excluding 80% of their income in both cases)

so why would any sane person trade down?
 

Fr Peter McWhinger

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SamsonS

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Does anyone know where the 2017 actual spend on rent supplements, rent allowance and housing assistance figures are to be found?
Overall social housing provision | Department of Housing, Planning and Local Government

HAP money I cannot see on it.
but RentaL Accomodation Scheme in 2016 had a spend of 131m for 20,300 tenancies, about 6,500 per tenancy.


On HAP, the 2016 stats, gives tencancies set up in each area, each quarter, and the average monthly rent, but not the overall spend.
 
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Disillusioned democrat

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The same point could be made about older people occupying their own 3/4 bedroom houses. Many of them should trade down - it frees up a family home, & releases some equity for them.

However, there is a significant militating factor against that. If they have a house worth, say €750,000, and trade down to one worth say,€300,000 they have €450,000 in the bank.

But if they have to go into a nursing home, they have to pay 7.5% of €450,000 (€33,750) pa for as long as they have the cash (about 13 years). They also have to pay 7.5% of €300,000 (€22,500) for 3 years. so after 13 years in a nursing home they will have paid €517,500 to the nursing home.

If they dont trade down they only have to pay €168,750. (Excluding 80% of their income in both cases)

so why would any sane person trade down?
The Venn diagram of government connivance does seem to meet around prudent people finally falling into the state's clutches.

The civil or public servant who came up with the name for the "Fair Deal" scheme should get the "Most irony in naming a public scheme" award.

A bit like derelict houses, second homes, etc., ALL gesticulations by stakeholders at private homes are complete red herrings by the government....they are private homes - the government needs to solve it's own problems and NOT bemoan the housing crisis because some people have more than others....get building or demonstrate that renting from private landlords is more cost effective over 20 - 30 years.
 

Leandrai

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Does anyone know where the 2017 actual spend on rent supplements, rent allowance and housing assistance figures are to be found?
Just did a quick check to see if I still have it but in 2006 I did a breakdown and analysis of the comparative costs of the new RAS v house purchase for the disabled (also to be considered a pilot for other sectors such as the elderly and single parents who were not so stigmatised then) - based on the assumption they would be given a budget to choose their own suitable housing in the private market, partly in order to gently randomise the social housing, and the scheme would pay for itself and be in profit within 15 years, maybe considerably less (I just can't put the hand on it but I am sure it's around).

I handed it to Dick Roche who studied it for a few weeks and the only objection he could find was keeping it under control.

Said I:
"Set strict individual budget limits"

...and all the lights in his head came on at once...particularly when I mentioned the possibility of holding fire until the housing market, inevitably, crashed.

If he hadn't been demoted from cabinet in 2007 I believe he had every intention of pursuing it to the hilt.

I must try and find it...but I tested it inside and out on the disabled alone (which is higher priced housing) and IT WOULD WORK.

(Old age is a terrible thing, I am not sure I could put it together again, but someone else might)
 

Disillusioned democrat

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Overall social housing provision | Department of Housing, Planning and Local Government

HAP money I cannot see on it.
but RentaL Accomodation Scheme in 2016 had a spend of 131m for 20,300 tenancies, about 6,500 per tenancy.
Even that doesn't include the rent supplement - the RAS is different again!!!!

Without a full understanding of the overall cost of the state providing social housing via RS, RAS, HAP, and emergency accommodation it's possible to get the sense of a big black hole in the state's coffers that certain people are exceedingly happy about but that wouldn't hold up to any economic scrutiny.
 
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SamsonS

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Even that doesn't include the rent supplement - the RAS is different again!!!!

I get the sense of a big black hole in the state's coffers that certain people are exceedingly happy about but that wouldn't hold up to any economic scrutiny.
Found it!
I can't link it, but google "spending on HAP" . You'll find a Public Exp and Reform report on housing, go to page 12, it gives spending, capital an current from 2006.

Also gives a breakdown of how much each of the schemes costs, so in 2017 spend will be 1.46b, with 807m going on current expenditure.
Within that 807m, you have HAP at 153m, and the other schmes, in total coming in at 624m. Just for comparison, the 2006 figure was 395m and the 2011 figure was 632m.
 

Disillusioned democrat

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Found it!
I can't link it, but google "spending on HAP" . You'll find a Public Exp and Reform report on housing, go to page 12, it gives spending, capital an current from 2006.

Also gives a breakdown of how much each of the schemes costs, so in 2017 spend will be 1.46b, with 807m going on current expenditure.
Within that 807m, you have HAP at 153m, and the other schmes, in total coming in at 624m. Just for comparison, the 2006 figure was 395m and the 2011 figure was 632m.
That's a great document, thanks.

There seems to have been an incremental swing towards "current" expenditure since 2010 to the extent that there's more going on RS, RAS and HAP now than into building as expected.

These schemes now soaking up nearly a billion euro (€807m in 2017) and it'll top the €1bn based on the budget for 2018 (something like an additional €300m), bringing the spend to €1.1bn, nearly twice the capital spend.

One of the things I'm struggling with, though, is the actual capital budget - we know the state has build nearly no social homes, so where is the €654m going?

If it's going on part 5 purchases at €400k a home where they could build at €130k it doesn't represent good value IMHO.
 

SamsonS

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Actually that report is very informative if you get a chance to look at it.

Sorry, hadn't seen your response.
 


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