New Affordable Housing Model That Can Make the State Money

July 2, 2021
Makayla Santino

Adopting a system of affordable housing can be a strategic plan that will benefit both the state and local citizens. New affordable housing models have actually been predicted to make Ireland money over time and even increase the income of local communities by a few million euros each year. These ideas were proposed at a virtual conference presented by national housing charity, Threshold, and the Economic and Social Research Institute (ESRI).  

At the conference, experts deliberated about the future of Ireland’s housing industry. One of the experts that participated is Hugh Brennan who is currently the chief executive at Ó Cualann Cohousing Alliance. He proposed that it would be feasible to administer affordable housing priced at €250,000 for aspiring homeowners with a joint income of €60,000 per year. In doing so, the declining rate of home ownership can be mitigated and improved upon. Brennan further divulged that his company, Ó Cualann Cohousing Alliance, will have backing from the Dublin City Council when it comes to acquiring land and that development fees have been waived. 

In the company’s planning, it has set a margin of five percent above its overheads. The company will be able to pay its builders and designers the same wages as a private developer. This strategy has been working well for the company, so Brennan holds that it is doable on a broader scale as long as government subsidies are available. Without the subsidies, it would be extremely difficult for the strategy to be a success. 

Brennan continues by making it clear that the subsidies will go directly back to the state. The value-added tax (VAT) of the houses priced at €250,000 plus tax from PAYE and PRSI is greater than the expense of the land and the suspension of development fees. For these reasons, the plan is actually cost neutral and will even make the state money as time goes on.  

A major proponent of affordable housing programs is an increase in disposable income among the local population that will be spent within that community. Through research completed at the Ó Cualann Cohousing Alliance estimates predict that with every 1,000 affordable homes completed, the local income in the area will increase by about €6.5 million each year.

Many plans such as this one proposed by Brennan are gaining traction. Ireland has witnessed a significant decline in home ownership over the past few years. A main hindrance in people’s ability to buy a home is the skyrocketing home prices witnessed across the nation. If strategies such as Brennan’s are put into action, home ownership rates may begin to stabilize.

 

 

Reference:

Wilson, Jade. “Affordable Housing Model Could Earn State Money Over Time, Conference Hears.” The Irish Times, 2 July 2021, https://www.irishtimes.com/news/ireland/irish-news/affordable-housing-model-could-earn-state-money-over-time-conference-hears-1.4609157.

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