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Dublin: 3 °C Sunday 24 March, 2019
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Will a €226 million fund make housing more affordable?

It’s not really clear.

Image: Sam Boal

A €226 MILLION building activation scheme is about making housing more affordable, not building more affordable housing, the Department of Housing says.

The fund, announced last year, was designed to bring the cost of housing down in areas where infrastructure was needed.

Approvals for 34 projects across 15 local authorities under the Local Infrastructure Housing Activation Fund (LIHAF) will see investment of €226 million to facilitate 23,000 new homes by 2021, according to this week’s Rebuilding Ireland update.

The plan had originally been pitched as a way to lower the cost of building and the cost of housing and had originally been seen as a way to ensure affordable housing was built.

However, two circulars published by The Dublin Inquirer, show something of a softening of that stance.

The Department of Housing in September amended its criteria for applications to the fund to allow applications where 40% of the homes would not by priced under €300,000, as had been intended.

The Department said it had received feedback that this would not be possible in many areas. In April, Housing Minister Coveney said he had “received assurances” from developers on the subject of affordability.

But in a statement to TheJournal.ie, they say that the fund was designed to improve affordability.

The general requirement of improved ‘affordability’ was the focus of LIHAF.

However, Sinn Féin’s Eoin O’Broin says that isn’t good enough.

“LIHAF in principle is not a bad idea, but it has to guarantee affordability of housing. That’s not built into it.”

Council funding

1/9/2011 Ghost Housing Estates Source: Mark Stedman

The LIHAF fund allows local authorities to apply for funding aimed at delivering vital infrastructure to areas which would allow homes to be built there.

As part of the Government’s Housing Action Plan, €150 million was to be released by the Exchequer to finance these type of projects (with local authorities providing €50 million themselves).

While at least 10% will be used for social housing, figures on affordable housing are not clear.

A €15.9 million chunk of the funding has been granted to the Cherrywood development in south Dublin. Infrastructure projects are centred around the construction of the Druid’s Glen Road and bridge which will improve access to the area.
The Housing Department states that LIHAF funding will contribute to the provision of 2,000 units by 2021.

There are plans for an additional 6,000 also to be built in the area as part of SDZ masterplan.

Coveney told the Dáil that he wanted to see a dividend from that spending, but what “affordable” means is still unclear.

“We are putting in €15 million in and we want a dividend from that, in the context of affordability as well as getting houses built quickly.”

The Department of Housing says that the function of displaying affordability will lie with local authorities.

“We have asked Local Authorities to demonstrate additional affordability and the Local Authority and relevant developers are aware that the requirements will be that:-

“The local authority shall ensure that housing is delivered by relevant developers in a specified timeframe and to scale and with high levels of affordability either:-

(i) With a minimum 40% of homes delivered to be available at prices at least 10% below the average market cost of housing including under €300,000 in Dublin and comparative affordability outside of Dublin, as evidenced by an agreed “form of undertaking” by the relevant housing provider(s); or
(ii) With a demonstrated affordability dimension to housing provision on the site on the basis of a measurable cost reduction exercise that compares between a “before” and “after” LIHAF funding scenario as evidenced by an agreed “form of undertaking” by the relevant housing provider(s).

“The provision of the required 10% under Part V will be a factor in evidencing affordability but it must also extend to the rest of any relevant private housing on the site. This can be met by a reduction in the price of private housing in accordance with either (i) or (ii) depending on the relevant market.”

In the Cherrywood case, Coveney says he has sought assurances from Dun Laoghaire-Rathdown (DLR) Council about the site and affordability of the homes which are built by developer Hines. A spokesperson for Hines declined to comment on LIHAF, but a DLR spokesperson said the funding was “positive”.

“This grant funding will “unlock” and accelerate the delivery of much needed homes in the Dún Laoghaire-Rathdown area. The drawdown of funding is subject to signing a Grant Agreement between DLR and (the Department of Housing). A condition of the agreement is that housing is delivered by relevant developers in a specified timeframe and to scale and with a level of affordability. It is acknowledged that developers’ commitments to deliver affordability are a prerequisite. Discussions are on-going with the relevant parties and the DHPC&LG which will include the preparation of the supporting legal agreements.”

O’Broin says even this doesn’t make sense.

“Even 10% below the market isn’t affordable because the average asking price isn’t affordable for a lot of people.

“Central government should be stipulating the level of affordability needed to get funding.

“The Minister is now saying the negotiation is between the developer and local authority, but this is departmental funding.

The Minister says that if supply increases, price will go down – that is not true. From 2000-2009, we had unprecedented supply, but we also had massive prices. If you’re a developer, you’re aiming your houses at people who can get credit – wealthier people with large cash lump sums.
There has to be a public dividend for the taxpayer funding that is going to go into this. If we get 20,000 houses for over €400,000, where’s the dividend?

“You have to ask what the logic in spending that money was.”

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