Professor Michelle Norris:

We have looked at the challenges local authorities face in managing stock effectively. The local authority sector is extremely efficient. There is a 99% collection rate of council housing rents in most local authority areas. The sector is run very efficiently. The point we are making is that it is very difficult to run it efficiently because of the funding model used. The funding model makes efficient management and maintenance very difficult. One of the big issues with it is that it is the same countrywide, whereas the issues faced in urban local authorities are very different from those faced in rural local authorities. Tenant purchase may be perfectly viable in a rural area where the council can easily buy replacement dwellings. They may decide that it is very appropriate because they can replace an older house that has been purchased by a tenant with a newer house that will cost less to manage and maintain. In Dublin, Cork and Galway and parts of the country such as Kinsale where demand and costs are very high the tenant purchase scheme is very difficult to operate because the dwellings are irreplaceable to the council. Governments in the 1960s, 1970s and 1980s spent a lot of money on council housing, but it was then sold off to tenants at a huge discount. The tenants individually benefited, but the State had to come along again in the 1990s, 2000s and now and fund replacement council housing. We are on a treadmill where there is a constant need for reinvestment because the profits are privatised and the costs socialised. Removing tenant purchase would remove that incentive.

With regard to models abroad, relatively few countries have council housing which is a legacy of our colonial past as part of the United Kingdom. Lots of countries have efficient social housing sectors. Austria is a very good example of a country of similar size that has managed to control house prices and rents, not necessarily by putting in place rent controls but by intervening in the market through increased social housing supply when the market is underproviding and to balance the market. It has done it through a model based on long-term affordable fixed-rate loans which are repaid through cost rents and subsidies for tenants where they need them. A benefit of cost rents is that even though the cost may be relatively high today, for example, the cost of providing an apartment in Dublin, it is eroded through inflation. The Austrian model includes a mix of dwellings, for some of which the costs are high, while for some they are lower. There is also a cross-subsidy built in. In time, if we do not sell off our dwellings, we can manage to provide social housing in a way that is relatively cheap for the State. If we do sell off our dwellings at a discount, each successive Government will need to reinvest. That is the point.