Dr. Rory Hearne:

My presentation is based on 20 years of academic research and community practitioner experience in the areas of social housing and economic policy. I hope it will provide some useful insights into how we can solve the continually worsening housing emergency. There is a real requirement to think deeply about our policies and critically about why we are in this crisis. Some of what I might say might be quite strong, but I ask the joint committee to reflect on it in the spirit in which it is contributed in this debate.

The new enhanced social housing leasing scheme and social housing PPPs are, in fact, handing social housing delivery over to the private market. It forms part of the approach taken in the new LDA and the Government's wider housing plan, Rebuilding Ireland. It involves the outsourcing and privatisation of social housing and is a key reason we are in this crisis. Rather than the State guaranteeing the supply of new social and affordable housing by funding sufficiently and overseeing the building of housing via local authorities, co-operatives and housing associations, it is turning to the private market. This is despite the private market's repeated failure to deliver social and affordable housing, as well as value for money. The only conclusion one can draw is that the Government, through the Housing Agency, has an ideological aversion to the State actually building social housing and being the developer but believes in the primacy and efficiency of the market.

PPPs and leasing are inherently risky approaches. They are marketised forms of delivery which tend to suffer from major delays or fail completely because they are dependent on whether the private sector decides to build, finance or become involved at all. It is down to the profitability and commercial viability assessments of private developers, investors and private finance. My research shows that they tend to be geared towards this, rather than maximising social housing provision, as well as providing value for money for the people.

We are entering a highly risky period in trying to access private finance in a deeply uncertain time with Brexit, President Trump, etc. What happens two or three years down the road with a PPP when a private developer decides it is no longer viable and pulls out? In such an approach one is handing over all control to a highly risky private market. We saw this with the latest PPP housing projects. Although they were announced three years ago, they are still not even at contract award stage. It is the same with the Dublin PPP lands initiative sites. They started over three years ago, but there is still no building. As a result, we have public lands lying idle in the midst of a crisis, while the State engages in a form of market speculation. If it built on the land four years ago, today it would have tens of thousands of extra social housing units. When the land is sold and transferred, it is gone.

The value for money aspect of the PPP and leasing projects is extremely dubious. The method of value for money analysis used by the public sector is not released, as it is deemed to be commercially sensitive. Accordingly, there is no evidence to show that the projects actually are value for money. The cost of providing social housing via the new leasing scheme is at 95% of market rent. In Dublin the average rent is €2,000 per month. With rising rents, over 25 years it will cost €600,000 per unit to price a house in this way. This is €420,000 per unit more expensive than building directly through a local authority or housing association. If one adds in the fact that the State has the asset at the end and conservatively values it at, say, €150,000, the total cost of delivering social housing via leasing is €750,000 per unit, which is four times more expensive. For every leased housing unit paid for over 25 years, one could build four local authority homes. For the cost of the 10,000 leased social housing units over the lifetime of Rebuilding Ireland, we could be building 40,000 permanent social housing units. The approach also locks the State into paying expensive rents in perpetuity. Entering lease agreements at a point of high rents is not good value for money. As rents fall, which they inevitably will at some point, the State will be left paying inflated rents.

The LDA is operating under the same failed principle. It is about incentivising and making it financially viable for the private sector to become involved using State land and subsidies to deliver social housing.

It is a massive transfer of wealth from the State and the people of this country to the private sector. We must ask what is the most efficient use of our national resources to meet people's social needs and rights. The current approaches do not use our land and finance in an effective way. They are, in fact, a form of corporate welfare whereby the State is providing billions of euro in hand-outs to the private commercial sector and wealthy real estate investment trusts. There is a deep contradiction in State housing policy which aims towards affordability and social housing provision but works towards incentivising, subsidising and rebooting the private property industry using PPPs and leasing within its corporate welfare approach. The current housing functions quite well for some, such as landlords, banks and investors, but it is badly failing the many locked out in "generation rent" and homelessness.

The social housing leasing scheme adds to the crisis and the lack of genuinely affordable supply. Leasing, like the housing assistance payment scheme, takes supply away from the housing system which could otherwise be used for rental or home purchase. Through these schemes, the State is taking from supply rather than adding to it. Why does the Government not build through the State and not-for-profit housing associations and co-operatives whereby one does not pay the additional cost of developer profit and expensive private finance and does not have the risk of the entire project being delayed and collapsing? My research on PPPs in 2008 evidenced that PPPs are 25-year projects which require significant legal contracts to manage. For example, in the case of schools some principals were consulting lengthy contracts to decide if the grass had been cut long enough or whose responsibility it was to fix a window. Who will be responsible for the maintenance of PPP and leasing schemes? With whom will the tenant be able to raise issues? Will the local authority penalise a private provider which is not doing what it ought? Of course, local authorities do not penalise such providers because of the relationship and contract which are in place. Another issue is that PPPs and private leasing require a significant institutional effort on the part of local authorities and the Department of Housing, Planning and Local Government. That effort would be better put into building public housing.

There is an alternative approach which offers better value for money and has a guaranteed approach of delivery, namely, true public housing built by local authorities, housing associations and co-operatives. We are in the midst of a major crisis. We need to radically shift to building 20,000 public affordable homes using those various forms. We have the land, finance and fiscal space to do so. Why are we pursuing models that do not work and have not proved value for money?