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Column Hey Leo, we can't afford a €320K house

Maybe it’s hard for Leo to understand what it like for people earning modest incomes, writes Eoin Ó Broin.

TWO WEEKS AGO An Taoiseach Leo Varadkar stood in front of some new build houses in Hansfield, Fingal. Some were social, others private. To the joy of his 107,000 followers he tweeted an upbeat video clip welcoming these much needed social and affordable homes.

The new council homes are indeed welcome. Though given that Fingal County Council has 7,840 households on their waiting list, Leo will have to do a bit better than a mere 100 houses to make a dent in the social housing crisis in his own constituency.

Unfortunately, if Leo’s tweet provoked any of his followers to check out the private houses, they were in for a shock. The three and four bedroom properties that the Taoiseach described as “affordable” are selling for between €320,000 and €390,000.

It would take years to save

To buy one of these houses you would need a gross household salary of between €82,000 and €100,000; a deposit of between €32,000 and €35,000; and a loan of between €288,000 and €351,000.

Now I don’t know about you, but there aren’t too many young couples who earn this kind of cash when thinking of buying their first home. Given the cost of rents it would take years for a young teacher or nurse or electrician or accountant to save this kind of deposit.

Maybe it’s hard for Leo to understand what it like for people earning modest incomes. The guy earns €190,000 and is surrounded by ministers on €160,000 and advisors on €100,000. Yet he keeps telling us that he is the champion of those who get up early in the morning to go to work. That he wants to build a Republic of Opportunity and make work pay.

Affordable housing for working people?

So surely in Leo’s Republic affordable housing for working people is part of the plan. During Leaders Questions on Wednesday 8 November I asked the Taoiseach what his definition of affordable housing was and how many affordable units he hoped to deliver in 2018.

In reply he said: “I cannot give the Deputy a numerical definition of affordable housing. Obviously it depends on the individual. I certainly believe that somebody who earns the average income in the State should be able to get a mortgage and purchase a home. Without giving the Deputy a numerical definition I cannot answer the second part of the Deputy’s question.”

So Leo doesn’t have a definition of affordable housing and doesn’t have any targets for next year. But don’t worry, he still thinks you should be able to rent or buy your own home.

The problem is without a definition you can’t have any targets and without targets you won’t get any houses.

A raft of schemes

When pressed Leo and his Minister for “Hovs, Povs and Hinos” Eoghan Murphy will tell you that they have a raft of schemes to help private developers deliver affordable homes. Indeed Fine Gael plan to give €1.1bn over three years to get the private sector increase supply.

The problem is that none of the schemes – Help to Buy, Local Infrastructure Fund, Home Building Fund – have any guarantee of affordability. The Help to Buy scheme is primarily benefiting those with incomes above €90,000 and a 15% deposit. Minister Murphy has said that the Local Infrastructure Fund will help deliver homes at €320,000 in Dublin.

Home Build Finance Ireland, although not up and running yet, will simply provide loans to developers who will more than likely do what they are doing now, build overpriced homes for high earners.

Meanwhile on the rental front the latest rent price index confirms what many of feared. The overhyped Rent Pressure Zones have done nothing to control the spiralling cost of renting. Instead they have created a two tier rental market dividing existing and new tenancies, while at the same time increasing upward pressure on those areas left out of the 4% cap.

Why is the government approach not working?

Because the idea that you incentivise the private sector to meet affordable housing demand through subsidies, tax breaks and low cost loans just doesn’t work.

The solution lies in directly funding local authorities and community led housing cooperatives to develop real affordable homes. In Ballymun, Ó Cualann Cohousing Alliance in partnership with Dublin City Council are building and selling two and three bedroom houses at prices of between €170,000 and €225,000.

This model can be rolled out across the state enabling councils and Approved Housing Bodies to offer affordable rental and purchase homes for those earning between €45,000 and €75,000.

All that is required is for government to set up a scheme, allocate the funds and the councils and housing bodies will do the rest. If Leo is serious about giving working people on modest incomes the opportunity to live in an affordable home he would stop subsidising private developers and invest in public and not-for-profit affordable housing.

 Eoin Ó Broin is a Sinn Fein TD for Dublin Mid-West.

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