BA (Hons) in HRM Strategy &amp Practise

BA (Hons) in HRM Strategy &amp Practise.

 

Economic and Social Policy

Lecture 11: The Housing Sector ? Overview

References:

Department of Housing, Planning, Community and Local Government (2016) Action Plan for Housing ? Rebuilding Ireland, Dublin

Housing Agency, (2015), National Statement of Housing Supply and Demand 2014 and Outlook for 2015-17, Dublin

Housing Agency, (2016), Housing for Older People ? Thinking Ahead, Dublin
(Research Report by Am?rach Research, Ronan Lyons, Lorcan Sirr and Innovation Delivery, Commissioned by the Ireland Smart Ageing Exchange & the Housing Agency)

Some useful data and information sources:
Central Statistics Office
Residential Tenancies Board (RTB)
Property Price Register
Banking and Payments Federation, Ireland
Housing Agency
Society of Chartered Surveyors
Daft.ie
MyHome.ie

1. Introduction

? Housing is very much in the news again

? It was a contributor to the banking crash in 2008 as prices rose, borrowers overextended themselves and banks over-lent

? It was (and is still ?) an important and challenging public policy issue as the level of mortgage arrears and negative equity increased

? Now it?s back in the news due to

o Rising prices

? Affordability

o Rising rents

o A supply shortage

o A growing problem of homelessness
2. Economic and Social Dimension

? Housing policy/market has both economic and social dimensions
o Economic
? important sector in terms of jobs
? can be important source of taxation for government
? need for supporting environmental infrastructure => water, waste, transport => cost to state
? developer contributions
? residential prices (purchase and rent) impact wage levels and in turn competitiveness
? use of available funds
? supply side ? developers, builders
? demand side ? buyers, investors
? part of the wider investment market (e.g. buy-to-let)
? often a pension asset
? opportunity for significant capital gain
? very significant expenditure by individuals
? long term commitment if purchasing
? issue of affordability
? capital
? current

o Social
? need for accommodation
? purchase
? private rented
? social rented
? need for proper standards
? issue of safety e.g. fire safety
? location => commuting times => impact on families
? provision of supporting social infrastructure => education, health, leisure
? desire for home ownership
? but growth of private rented sector
? security of tenure is key issue
? re-emergence of issue of homelessness, especially in cities
? serious social issue

3. Supply dynamics

? Lags in supply

? Relationship with planning and zoning policies

? Price elasticity of supply is low in short run

? This means prices can rise very quickly if demand increases

? Danger of cyclicality in industry and repeated imbalances of supply and demand

? Mix of units required => houses vs apartments, sizes,

? Capacity of building industry

4. Demand dynamics

? Demographics

o including headship rates

? Availability of finance

o bank lending policy

o Central Bank policy (current mortgage lending restrictions)

? Cost of finance

? Incomes

? Job security

? Price expectation is key factor

5. Current situation

? Recovering economy

o increased demand

? Rising house prices (see table at end of lecture notes)

o Note: CSO Index is most appropriate as it is mix-adjusted, based on transactions. MyHome.ie also has mix-adjusted barometer, but based on asking prices.

? Rising rents (see table at end of lecture notes)

o recent decision by Government to limit rent increases to every two years

o good or bad idea ?

? Affordability now an issue

? Mortgage arrears remains a problem

? Limited supply

o was 93,000 at peak

o 12,700 approx. 2015

? Supply/demand imbalance

? Central Bank lending restrictions (maximum LTV 80%/90%, maximum LTI 3.5 times,) have curbed demand somewhat

6. Supply Requirement and future policy

? Despite some slowdown in demand, supply needs to be increased

? Housing Agency estimated that 21,000 units per annum were required up to 2017, double the current level. More recent estimate suggest it could be as high as 42,000 p.a. up to 2018 (DKM/CIF October 2016)

? Mix of owner-occupation and investor demand

? Private rented sector will continue to grow => investor demand

o up from 10% of dwellings in 2006 to 20% in 2011 (Not available yet for 2016 Census)

o but still remains a short-term tenure type for most renters

o only 17% intend renting long-term

o this is different to tradition in many European countries where long-term renting is a well-established tenure type

? Increased need for social housing

o but reduction in social housing budget of two-thirds from 2008 ? 2014

? Homelessness

o Difficult to quantify but growing problem

? Vacant site levy

o annual rate of 3% of market value of site => not until 2019

o aimed at ?forcing? more efficient use of economic resource

? Revision to Part V of Planning and Development Act 2000

o cash in lieu option discontinued

o social housing element now at 20% of units

7. Budget 2016

A number of initiatives were taken in Budget 2016 in relation to the housing sector

? Incentive for FTB?s, tax rebate of 5% up to ?20,000
o Up to ?400,000 (with extention to ?600,000)
o New build only
o Is it inflationary ? is it in effect a builder?s grant ?

? Rent-a-room tax incentives increased => impact on rental market

8. Housing for the Elderly
Housing Agency Research Report published October 2106 (see reference above)
Key questions:
? 1 What are the current and future housing requirements and aspirations of Ireland?s older citizens and how do they differ from the broader population?

? 2. What models of supported housing / independent living with care might best address these requirements and aspirations?

? 3. What policy structures are required to meet these needs and wants in a financially and demographically sustainable way?

? 4. What are the likely policy implementation blockages and how might these be overcome?

? 5. What would be the broader economic and social impact of a well-planned national Supported Housing Initiative?

Key Findings:
? Many older people want to age in place.
?
? But the link may be stronger to the community rather than the actual house. More than 50% of older people when surveyed said that staying in their local community was the key reason for staying in their current home.
?
? At the same time, more than 20% said that the type of house they lived in negatively impacted ?a lot? on their ease of living. This would show an opportunity for more ?age appropriate? housing within existing communities, of living in the same area but in a different home.
?
? The report demonstrates the importance of greater public awareness of planning ahead and avoiding having to make critical decisions following a crisis.
?
? The supply of an appropriate mix of accommodation in communities is key to providing greater choice and independence to older people.

? More needs to be done to achieve this ? building smaller ?age-friendly? accommodation in mixed communities.

? There is potentially a market for up to 100,000 step-down homes in Ireland, which represents ?25bn worth of unmet need.

? If provided, these new homes would also free-up housing equivalent to at least six years supply for first-time buyers.

? Being able to adapt and change our homes to make them more appropriate to our needs as we age (for example, to widen doorways, accessible bathrooms and toilets, extra storage) will have clear benefits in extending people?s independence.

? This is also a relatively untapped market for the construction industry.

? More people are now renting their home long-term, and this trend is likely to continue. The implications of this need to be considered in more detail, particularly: how does the rental sector need to respond to this change (in terms of supply, design, cost, security of tenure, for example) and what will be the implications for the financing of long-term care.

? Following on from the above, State schemes such as the Fair Deal Scheme are designed and budgeted by the state around the premise that some of its costs will be recoverable through the housing asset of the person receiving care.

? Older people are also now increasingly comfortable with technology and it is becoming more user-friendly ? its potential to extend independence requires on-going development and testing.

Source: Residential Property Price Index, CSO, latest available

Source: The RTB Rent Index, Quarter 2 2016, ESRI, latest available

Criteria Weight Proposal 1 Proposal 2 Proposal 3 Proposal 4 Proposal 5
% Score Weighted Score % Score Weighted Score % Score Weighted Score % Score Weighted Score % Score Weighted Score
A 14% 80 11.2 30 4.2 90 12.6 20 2.8 90 12.6
B 7% 90 6.3 80 5.6 80 5.6 40 2.8 100 7.0
C 8% 70 5.6 90 7.2 65 5.2 50 4.0 75 6.0
D 13% 75 9.8 90 11.7 30 3.9 60 7.8 80 10.4
E 5% 40 2.0 80 4.0 80 4.0 30 1.5 75 3.8
F 17% 35 6.0 65 11.1 90 15.3 35 6.0 45 7.7
G 3% 60 1.8 80 2.4 40 1.2 75 2.3 85 2.6
H 15% 50 7.5 65 9.8 70 10.5 25 3.8 75 11.3
I 10% 20 2.0 40 4.0 80 8.0 20 2.0 35 3.5
J 8% 40 3.2 70 5.6 65 5.2 40 3.2 60 4.8
—— —— —— —— —— ——
Total 100% 55.3 65.5 71.5 36.1 69.5
Rank 4 3 1 5 2

Contents
FOREWORD BY AN TAOISEACH …………………………………………………………………… 5
FOREWORD BY THE MINISTER ………………………………………………………………………. 6
OVERVIEW OF THE ACTION PLAN ………………………………………………………………… 8
Why we need an Action Plan for Housing and Homelessness ………………………………………………….. 8
Core Objectives of the Plan ……………………………………………………………………………………………………….. 8
Key Action Areas ………………………………………………………………………………………………………………………..10
Five Key Pillars of the Plan …………………………………………………………………………………………………………..12
Pathfinders ………………………………………………………………………………………………………………………………….13
Conclusion ………………………………………………………………………………………………………………………………….16
CONTEXT FOR THIS ACTION PLAN FOR HOUSING AND HOMELESSNESS ………….19
Housing and Wider Public Policy ……………………………………………………………………………………………….19
Housing Challenges ……………………………………………………………………………………………………………………20
Housing Supply Requirements ……………………………………………………………………………………………………29
PILLAR 1: ADDRESS HOMELESSNESS ……………………………………………………………..33
Addressing homelessness …………………………………………………………………………………………………………..33
Homeless households …………………………………………………………………………………………………….34
Moving families out of hotels …………………………………………………………………………………………34
Rapid-Build housing………………………………………………………………………………………………………..35
Housing Assistance Payment for homeless households ………………………………………………..35
Supports for families with children………………………………………………………………………………….35
Homeless individuals and Housing First ………………………………………………………………………….36
Emergency shelters ………………………………………………………………………………………………………..37
Homelessness prevention keeping people in their own homes ……………………………………………..38
Young people leaving State care …………………………………………………………………………………38
Preventing homelessness for other vulnerable groups …………………………………………………38
Tenancy sustainment ……………………………………………………………………………………………………..38
Rent Supplement/Housing Assistance Payment …………………………………………………………..38
Mortgage arrears …………………………………………………………………………………………………………..39
Mortgage Arrears Resolution Service …………………………………………………………………………….41
National information campaign ……………………………………………………………………………………41
Preparation of draft legisation……………………………………………………………………………………….41
Code of Conduct on Mortgage Arrears ……………………………………………………………………….41
Mortgage to Rent …………………………………………………………………………………………………………..41

PILLAR 2: ACCELERATE SOCIAL HOUSING …………………………………………………….43
Increasing and Accelerating Social Housing Delivery ………………………………………………………………44
Our Programmes ………………………………………………………………………………………………………………………..46
Accelerated Roll-out of the Housing Assistance Payment (HAP) Scheme ………………………………48
New Delivery Mechanisms …………………………………………………………………………………………………………49
NTMA/Private Sector Housing Fund ……………………………………………………………………………….49
Housing Agency acquisitions …………………………………………………………………………………………50
Part V delivery ………………………………………………………………………………………………………………..50
Mixed-Tenure development on State lands and other lands ………………………………………50
Vacant Housing Repair and Leasing Initiative ………………………………………………………………51
Innovations to improve, support and accelerate delivery ……………………………………………………….51
Housing Delivery Office ………………………………………………………………………………………………….51
Housing Procurement Unit ……………………………………………………………………………………………..51
Accelerating social housing approval processes …………………………………………………………51
Streamlining Part 8 planning processes for LA and AHB housing projects …………………..52
Supporting Approved Housing Bodies to deliver ………………………………………………………….52
Housing for specific groups ………………………………………………………………………………………………………..53
Older people ………………………………………………………………………………………………………………….53
People with a disability…………………………………………………………………………………………………..54
Traveller specific accommodation ……………………………………………………………………………….55
Irish Refugee Protection Programme …………………………………………………………………………….55
PILLAR 3: BUILD MORE HOMES …………………………………………………………………….57
Land Supply Management ………………………………………………………………………………………………………..58
Supporting Infrastructure Investment …………………………………………………………………………………………59
Local Infrastructure Housing Activation Fund (LIHAF) …………………………………………………..60
NTMA funding of large infrastructure Supporting Housing Infrastructure Investment ..61
Planning Reforms ………………………………………………………………………………………………………………………..61
Streamlining planning processes for larger private housing developments ………………..62
Investment in re-using or converting urban commercial developments …………………….63
Wider Planning Reforms …………………………………………………………………………………………………63
National Planning Framework ……………………………………………………………………………………………………63
Costs of Delivering New Homes …………………………………………………………………………………………………64
Land costs ………………………………………………………………………………………………………………………65
Construction costs ………………………………………………………………………………………………………….65
Construction Sector Capacity and Skills ……………………………………………………………………………………66

PILLAR 4: IMPROVE THE RENTAL SECTOR……………………………………………………….69
Rental Strategy …………………………………………………………………………………………………………………………..70
Early Legislative Actions ……………………………………………………………………………………………………………..71
Standards in Rental Accommodation ……………………………………………………………………………………….71
Role of the Residential Tenancies Board ……………………………………………………………………………………72
Encouragement of build-to-rent sector ……………………………………………………………………………………. 72
Affordable Rental ……………………………………………………………………………………………………………………….73
Student Accommodation ………………………………………………………………………………………………………….73
PILLAR 5: UTILISE EXISTING HOUSING ……………………………………………………………77
Social Housing Stock …………………………………………………………………………………………………………………..78
Better Management of Social Housing Stock ……………………………………………………………….78
Choice-Based Letting …………………………………………………………………………………………………….79
Review of Tenant (Incremental) Purchase Scheme …………………………………………………….79
Private Sector Housing Stock ……………………………………………………………………………………………………..80
Housing Agency Vacant Housing Purchasing Initiative ………………………………………………..80
Vacant Housing Repair and Leasing Initiative ………………………………………………………………80
Removing Regulatory Barriers to Re-Use ……………………………………………………………………….81
Urban Regeneration ………………………………………………………………………………………………………81
Living City Initiative …………………………………………………………………………………………………………82
Village and Rural Renewal …………………………………………………………………………………………….82
Unfinished Estates …………………………………………………………………………………………………………..83
GLOSSARY OF TERMS …………………………………………………………………………………84
APPENDIX 1: TABLE OF ACTIONS …………………………………………………………………86
APPENDIX 2: RESPONSE TO KEY RECOMMENDATIONS OF THE OIREACHTAS
COMMITTEE ON HOUSING AND HOMELESSNESS …………………….106
APPENDIX 3: SUMMARY OF PROPOSED LEGISLATIVE CHANGES …………………..111
APPENDIX 4: THE NATIONAL PLANNING FRAMEWORK (NPF) ………………………..113
5
Foreword by An Taoiseach
In forming the current Government, I was determined that the housing challenge was going
to be addressed fully and finally which is why it was positioned as a key objective in the
Programme for a Partnership Government.
The publication of this Action Plan on Housing and Homelessness, well within the timeframe of
100 days set out in the Government Programme, underpins our commitment to end the
housing shortage and to tackle homelessness.
Ireland has been here before in terms of needing to provide good quality housing to meet our
people?s needs. In the past, we showed ourselves to be capable of rising to the challenge
and I am committed to ensuring that we will do so again, in a manner that delivers strong,
sustainable communities.
This Plan sets out a clear roadmap to achieve the Government?s goals to significantly increase
and expedite the delivery of social housing units, boost private housing construction, improve
the rental market, and deliver on the commitment to see housing supply, in overall terms,
increase to some 25,000 new homes every year by 2020.
Ending rough sleeping and the use of unsuitable long-term emergency accommodation,
including hotels and B&Bs, for homeless families, are key priorities that take precedence within
the Plan.
The range of actions set out in the Plan is ambitious, both in the scale of investment of some
?5.5 billion in social housing and housing infrastructure, but also in its pursuit of appropriate
reform, acknowledging the need for new thinking if we are going to deliver the kind of housing
that people want, in the right places and in a manner that they can afford.
Just as the drafting of this Action Plan has been a collaborative process involving a wide range
of interests, so too will its implementation rely on all stakeholders, including Government
departments, local authorities, housing agencies, voluntary bodies, and the construction
sector, to achieve its ambitious goals.
In order to ensure its success, the key targets of this Action Plan will be subject to regular
Cabinet review. The Cabinet Committee on Housing, which I chair, will actively oversee its
implementation.
This is a cross-Government plan, which also stretches beyond into the local government and
voluntary sectors. I am committed to ensuring that it results in us achieving our critical national
ambition of ensuring that all of our people have access to quality and affordable housing,
either through their own endeavours or with the support of the State.
An Taoiseach,
Enda Kenny, T.D.
July 2016
6
Foreword by the Minister
I was appointed as Minister with specific responsibility for Housing, Planning, Community and
Local Government to focus intensively on the challenge of tackling the housing crisis.
The Government?s mission is to ensure that everyone can access a home, either on their own
or with State support. We are determined to deal with the dramatic under-supply of housing
and the problems it generates for families and communities.
I have described the problems faced by our people, particularly in our urban centres, as an
emergency situation. None of us can fail to be moved by the plight of people who are
homeless, especially families and children living in hotels, and people who are sleeping on our
streets.
These are particularly visible examples of our broken housing sector, but no less urgent are the
challenges faced by households who face the loss of the home they currently live in, or the
lives kept on hold as people struggle to access the housing and rental market.
Rebuilding Ireland, an Action Plan for Housing and Homelessness, comprises five pillars of
concerted actions right across Government ? addressing homelessness, accelerating social
housing, building more homes, improving the rental sector and utilising existing housing.
A key priority is addressing the unacceptable level of homeless families and long-term
homeless people in emergency accommodation, by providing rapid-delivery housing,
alongside measures to support those at risk of losing their homes.
A truly ambitious social housing programme of 47,000 units to 2021 will be delivered with
funding of ?5.35 billion.
We have also put in place a ?200m Infrastructure Fund to open up large sites where homes
are needed and where homes are now going to be built.
In addition, we have increased the levels of Rent Supplement and the Housing Assistance
Payment to give people, who need it most, more security to remain in their homes.
The output of private housing will increase, by enhancing the viability of construction, in order
to double the completion level of additional homes in the next four years to deliver the 25,000
homes or more we need annually.
We will develop a strategy for a viable, sustainable and affordable rental sector, with early
legislative actions to protect tenants and landlords.
We will also ensure that available existing housing is used to the maximum degree possible.
Achieving these goals will rebuild Ireland in a way that affects every aspect of our lives. Good
housing anchors strong communities, a performing economy and an environment of quality.
7
This Plan will be driven by the Government in a way that will be visible, tangible and totally
focused around results on the ground ? more homes, at an affordable price, in the places
where they are needed and a reduction in the numbers of homeless people in hotels and
emergency accommodation.
The publication of this Plan is only the beginning and the implementation has already started.
I am establishing a special Housing Delivery Office within my Department which will play a key
role in the implementation of this Plan. There will also be a new Housing Procurement Unit in
the Housing Agency and the role of local authorities and Approved Housing Bodies will be
critical. So that the Plan?s delivery is grounded in reality, I am establishing a Stakeholder Forum
that will act as a vehicle for continuous feedback on the practical experience of
implementation.
This Plan fulfils the strong commitment made in the Programme for a Partnership Government
to deliver an action plan for housing in the first 100 days. Working with my colleague Damien
English T.D., Minister of State for Housing and Urban Renewal, its preparation has been
informed, in particular, by the Report of the Oireachtas Committee on Housing and
Homelessness published last month and by extensive engagement with key stakeholders. I
wish to record my appreciation to all those who shared their thoughts and ideas with my
Department and with me directly and I also wish to thank my Government colleagues for their
vital support in putting this Action Plan together.
Rebuilding Ireland is a far-reaching and ambitious programme. By actively and constructively
working together, we will accelerate supply and transform housing in a way that will affect
every community in Ireland. I am determined that visible evidence of this Plan?s effectiveness
will be seen across the country in the months and years ahead.
Simon Coveney, T.D.
Minister for Housing, Planning, Community and Local Government
July 2016
8
Overview of the Action Plan
Why we need an Action Plan for Housing and Homelessness
Housing is a basic human and social requirement.
Good housing anchors strong communities, a performing economy and an environment of
quality.
Since the economic collapse in 2008, very low levels of housing have been constructed,
especially in the main cities and urban areas where they have continued to be needed.
Our economy has recovered quickly and increasing population and employment mean that
a significant increase in new homes is needed for a growing and working economy, and to
address the significant level of social housing need.
Under-provision of housing, whether by insufficient construction of new housing or existing
housing not being used to its full potential, is one of the last significant legacies of the economic
downturn to be tackled. While it has been a major focus for Government over the past five
years, it is apparent now that the actions taken to date, while important steps in their own right,
have not delivered a response of the scale and speed required.
Construction 2020 A Strategy for a Renewed Construction Sector and the Social Housing
Strategy 2020, both of which were published in 2014, contain measures to address issues and
constraints in the construction and development sectors and in the provision of a range of
social housing outcomes, respectively. The packages of actions being delivered through these
Strategies are having a positive impact, but not at the pace necessary to meet current
pressures and pent-up demands.
Accelerating delivery of housing for the private, social and rented sectors is a key priority for
the Government. Ensuring sufficient stable and sustained provision of housing that is
affordable, in the right locations, meets peoples different needs and is of lasting quality is one
of the greatest challenges facing the country at present. The solutions to this challenge are
wide-ranging and require a number of immediate-, medium- and long-term actions to
increase delivery and address underlying structural issues that, up to now, have been obstacles
to creating a more stable and sustainable housing market.
The response to current housing challenges must be of sufficient scale to address both the
pent-up demand from years of under-supply of new housing and the projected needs over
the coming years.
While this Action Plan does not represent the first effort in recent years by the State to respond
to housing challenges, it represents a significant step forward in accelerating the delivery of
housing units in the right locations and to facilitate sustained provision into the long term.
Core Objectives of the Plan
The overarching aim of this Action Plan is to ramp up delivery of housing from its current undersupply
across all tenures to help individuals and families meet their housing needs, and to help
those who are currently housed to remain in their homes or be provided with appropriate
options of alternative accommodation, especially those families in emergency
accommodation.
This Plan sets ambitious targets to double the annual level of residential construction to 25,000
homes and deliver 47,000 units of social housing in the period to 2021, while at the same time
making the best use of the existing housing stock and laying the foundations for a more vibrant
9
and responsive private rented sector. Achieving the aim of accelerated delivery will
contribute to the following core objectives:
? Addressing the unacceptable level of households, particularly families, in emergency
accommodation;
? Moderating rental and purchase price inflation, particularly in urban areas;
? Addressing a growing affordabil

BA (Hons) in HRM Strategy &amp Practise

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