It has been a noisy week for Irish housing news, with many differing opinions circulating on social, and indeed traditional, media.

Last week, Housing Minister Darragh O’Brien TD welcomed Cabinet approval for the publication of the Affordable Housing Bill 2021. This Bill will be the first standalone legislation dedicated to the provision of affordable housing in Ireland. In addition to providing for state-built affordable homes and Ireland’s first Cost Rental housing model, the Bill proposed a shared-equity scheme for homes delivered by the private sector. The latter is intended to operate by expanding Part V to a set 20 per cent in every Local Authority area, providing for a 10 per cent minimum requirement for social homes and a further 10 per cent requirement for affordable homes. The Government’s commitment to put affordability at the heart of Ireland’s housing system is laudable, however, whether or not this is the mechanism to achieve this remains to be seen.

The proposal for the new Affordable Purchase Shared-Equity scheme will involve the State supporting qualifying first time buyers to purchase homes in private developments by taking an equity stake of up to 20 per cent in newly built homes – subject to price caps, which vary across the regions. Apparently controls will be put into place to prevent any inflationary effect. Last week we explored some of the ‘Housing Lessons Learned from Global Markets’, which questioned the wisdom and overall effectiveness of State intervention to address a whole range of housing market issues. You can read this article in full here:

https://www.castlehavenfinance.com/news/2021/5/7/housing-lessons-learned-from-global-markets

The Bill has received criticism from across the political aisles, which is inevitable. Interestingly, the industry also appears to be divided on the likely effectiveness of the initiatives proposed. Notwithstanding the general criticism of market intervention by the State, the high level information available at this stage about the shared-equity scheme would seem to suggest that it could indeed help to address the lack of affordable housing. Unfortunately, this important national conversation has been reduced to political sound bites and anti-market rhetoric, which is unhelpful for everyone involved. The reality of the prevailing chronic shortage of housing is that Ireland needs every housing solution provider, and more. The needs of the people are too nuanced for a ‘one size fits all’ approach. Frankly, Ireland’s regime of housing delivery – both public and private – is underdeveloped and immature. But our vision need not be.

There needs to be an acknowledgement of the facts, namely, at this time the State is not in a position to build new homes cheaper than acquiring the same from the private sector. This may well change in the future. The two housing Bills (including the Land Development Agency’s statutory powers) currently being considered by the Government are, on the whole, likely to have a positive impact on housing affordability.

Should it matter whether these initiatives fall under the category of ‘supply-side’ or ‘demand-side’ solutions?