Housing
Issue 18: Social housing

Ibec recommends

In their recent joint statement on Brexit, President Hollande, Chancellor Merkel and Premier Renzi noted that Europe must strengthen in areas where both economic and social priorities overlap. In Ireland there is no one policy which provides a better opportunity to address both objectives in tandem than that of housing. Within this context, the State should seek derogation from the European Commission in order to borrow €1 billion outside the fiscal rules for the purpose of social housing. This borrowing would be backed by existing social housing assets as outlined in issue 18.


How Ireland will benefit

Securing this derogation would be a crucial step to allow for a structural reform of how we deliver housing in Ireland. Importantly, it would be more beneficial in the long-run both economically and socially but also fiscally. How we currently deliver housing has not served the State or its citizens well. This derogation would provide an opportunity for a structural break in Irish social housing provision which is not possible within the constraints of the current fiscal rules.



Issue 19: Reform delivery of social housing

Ibec recommends

Housing associations and third-sector bodies are currently a relatively small provider of social housing as a proportion of overall supply. Much of this is due to a number of capacity constraints related to the disparate number of these bodies and their small individual size. Less than 6% of the approved housing bodies have income streams of more than €1 million and only two have net assets (including housing stock) of more than €10 million.

Currently there are private sector funds which have the potential to benefit the sector. This private funding to off-books public sector or voluntary sector funding should assume a much greater role in the provision of social housing in Ireland; as is the case in much of mainland Europe (including France, Germany, Netherlands and Sweden). However, there are a number of important issues which must be overcome:


  • The current provision is fractured with a lack of scale – as a comparator. Table 1 shows the number of housing bodies, the total number of units they manage and their average number of units across a number of other EU countries.
  • Most of the Irish housing associations are managers rather than builders with weak institutional structures and governance.
  • There are serious capacity and skills constraints when it comes to using private funding and housing delivery.


How Ireland will benefit

It is time to look at different models of social housing provision. This requires a renewed approach which involves transferring existing social housing stock out of local authorities and into a central provider of social housing which can work with housing associations and avail of external finance and expertise. This body could help build scale that would be attractive to institutional investors and/or a Government backed body to help guide funding to them. In the longer term, if operated on a commercial basis, it could take funding of social housing in the main off the Government’s balance sheet completely. In recent years funding provisions came from the proceeds from cyclical upturns in revenues. These funding streams will be limited in the future with the consequent need to structure social housing provision in a manner which can access sources of external finance in an acyclical manner.



Issue 20: VAT on student accommodation

Ibec recommends

VAT currently cannot be claimed back for student accommodation projects because it would not be possible to pass the cost on to students and is instead treated as a cost of development. Other countries, such as Australia, have tackled the problem of increasing private sector rents through targeted reform of the tax base of the student accommodation sector. Government should introduce a time limited (3 year) reduced 9% rate of VAT for student housing in Budget 2017.


How Ireland will benefit

Introducing a time-limited 9% VAT rate on these developments for the period of three years will assist in closing the supply-demand gap in student housing. This would also have the dual benefit of having little attached cost (due to the current low scale of construction in the sector) and being targeted at urban areas where pressure on housing and rents are greatest.


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