Special Report 65: Water Services and Affordable Housing Delivery - Affordable Housing Deliver Summary of Findings

Summary of Findings

The Department of the Environment, Heritage and Local Government is responsible for all aspects of housing policy including setting the regulatory framework and providing funds to local authorities. 

Affordable homes are homes subsidised by the State for eligible first time buyers who do not have the resources to buy on the open market.  The home is bought at a discount to the market price and it is a condition that the purchaser must occupy it.  If it is sold within 20 years, the vendor has to pay back a percentage of the sale price (called clawback) to the local authority.  This clawback reduces over time. 

The social partnership agreement Sustaining Progress 2003?2005 included a measure called the Affordable Housing Initiative (AHI).  As part of this measure, the government established the Affordable Homes Partnership (AHP) in 2005 to coordinate the delivery of affordable homes in the Greater Dublin Area.  The current social partnership agreement Towards 2016 sets a goal of 17,000 affordable homes to be delivered over the period 2007-2009.

The examination reviewed overall target achievement and the contribution of the AHP to the affordable homes drive. 

During the period 2005-2008, 85% of the affordable homes target was achieved.  The output increased by around 4,000 housing units in the period 2006-2008 by comparison with the previous three years.  The Department attributes 1,091 of this increase to the direct activities of the AHP.

The main features of the AHP?s contribution have been

  • an advisory and coordination remit initially for the greater Dublin area and since 2007, countrywide
  • it achieved discounts of 2% during 2006 and 2007 while securing fixed prices when the market was rising
  • it delivered 304 affordable homes under two land swap deals
  • it delivered 787 affordable homes through direct procurement. 

A ?Call for Lands? initiative to identify affordable home sites on land not zoned for building was not a success and revised arrangements for the coordination of infrastructural development proposed by the Department have effectively eliminated the role originally envisaged for AHP in this area.

Due to the current market conditions there has been a build-up in the stock of unsold affordable housing units held by local authorities from 2,200 at the end of 2007 to 3,700 in early 2009.  The Department has issued a circular to local authorities setting out guidance in relation to these units and advising on the range of options that might be pursued including using affordable units for other housing purposes.

The Housing (Miscellaneous Provisions) Bill, 2008 proposes changes that would replace the current clawback provisions with an arrangement under which the State would take an equity share in the property.  It is envisaged that this share would equate to the percentage discount on market value which the affordable home purchaser received.  If the homeowner buys out the government?s share, it is intended that the proceeds will be used to buy equity shares in new affordable housing units resulting in the subsidy being ?recycled?. 

Overall, the examination concluded that the AHP has been a flexible instrument that helped the Department adjust affordable housing policy in line with market conditions since 2005.  In the light of the changed housing market conditions and the proposed legislative adjustments it now appears necessary to review its rationale and potential future contribution once again.