Dr. Robert Sweeney:

So there are difficulties with HAP. One of the difficulties is that with most accommodation in the rental markets, the cost of that accommodation exceeds the rental limits or the amount of rent that the local authority is willing to pay. This has fluctuated from year to year. In 2020, according to the Simon Community only 5% of rental accommodation as advertised on daft.iewas within the rent limits of HAP. That is it was within the limit that the local authority was willing to pay, and that is 2020. This improved dramatically in the latest round as rents in Dublin, particularly, fell and I presume that is what was causing it. So, 38% of rental accommodation that was advertised fell within the rent limits of HAP. One could still be critical of that and say that almost two thirds of the accommodation that is out there is outside the rent limits of HAP.

Another problem is that the rent limits have not been revised since 2017. So the legislation is 2017 but the actual rent limit is, I think, from the second quarter of 2016. What happens is that the tenants pay their share to the local authority and the local authority pays most of it to the private landlord. Sorry, the local authority pays most of the rent and it pays that to the private landlord and also the tenant pays a contribution to the local authority. What actually happens as well is that there are these tenant top-ups whereby the tenant actually pays an extra amount to the private landlord because his or her contributions are insufficient to cover the rent. That is also a problem. That is a figure from the Department of Public Expenditure and Reform. Threshold, based on a survey, said that it might actually be higher and be closer to half of tenants now paying top-ups to private landlords.

Unsurprisingly, it is very difficult for HAP tenants to actually source accommodation. We have, obviously, a big supply shortage in housing and also the rental sector. So it is really a landlords' market and they do not really want to go to the hassle and risk of taking on a HAP tenant. HAP tenants are competing with other tenants who have more means to pay higher rents. If it is a choice between a regular tenant and a HAP tenant, the landlord is only going to choose one person and that is the non-HAP tenant.

There is a lack of stability as well. The tenancy can be terminated for a variety of reasons and then it is up to the tenant to find somewhere else. That is in contrast because if one is in social housing there is much greater stability. Even with RAS there is greater stability because it is the local authority which has responsibility for finding accommodation for the tenant. As I am sure we will discuss, it is more expensive. Whether one uses HAP, RAS or rent supplement, it is a lot more expensive to the State over the long term, especially to pay the rent of these tenants rather than to build social housing. As I mentioned, the advantage of HAP and similar schemes is that it is able to facilitate their needs in a quick manner. It takes time to build up one's housing stock but, as is widely recognised, it is expensive.

My last point is that the slide looks at trends in public housing expenditure and the mix between capital expenditure and current expenditure. What we saw in the depths of the financial crisis, in 2012, 2013 and 2014 and a year here and there, was that there was not a massive increase in current spending but a massive increase in the share of public housing expenditure that was accounted for by current expenditure. In 2013, for instance, current expenditure was over double capital expenditure. That has improved in recent years. In 2019, current expenditure accounted for, I guess, about 40% of total housing expenditure so capital expenditure was actually greater, basically. That is different from what we had in 2005 and 2006 where current expenditure was less than half of capital expenditure. Obviously it is much more efficient, from a public finance perspective, if one invests in social housing, which is what capital expenditure is, rather than pay all of these transfers which, essentially, go into the pockets of private landlords.

So there are good things and bad things. What I would like to see, and I think what most people want to see, is for the share of public housing expenditure, accounted for by capital expenditure, to continue to rise in recent years.