The positive long-term effect of introducing Cost Rental Housing in Ireland should not be underestimated. While it is not a quick fix for the Irish rental market in terms of affordability it will achieve that aim over time. As the number of cost rental homes on the market increases over the next 4 decades, the affordability of the complete residential rental market will tend towards cost rental prices
This is an interesting scheme, thanks for setting it out. However, I'm a little disappointed the author hasn't addressed the existing affordable purchase scheme at all. Given there is already an affordable purchase scheme in place, how would this scheme be preferable? I can see how the lease conditions might build in future affordability much more than an LA equity stake, but otherwise, would this be more affordable up front than the existing scheme, or would delivery be easier? While it's always valuable to share new policy ideas like this, I feel that the existing affordable purchase scheme is escaping some of the critique it could be getting, and it would be valuable to read a little more about its weaknesses.
Thanks Killion, good points. I don't know the answer but I know some people consider that the equity stake is essentially a loan, which (a) further indebts the borrower (which may be an issue as there were quite high levels of arrears in previous affordable home purchase schemes back in the 2000s; and (b) could inflate demand. The big benefit of a cost purchase model would be that it is not demand side at all, purely supply side. Homeowner supports are typically demand side. To be honest, I haven't looked into the homeowner supports as much as I should. Hopefully it's something I can dig into in future.
Hi Killian, Alex Pigot here. The affordable loan scheme (As per Affordable Housing Act) has two huge drawbacks:
Firstly, the home is not really that affordable as the purchaser will in the end have to pay the full price of the house (plus whatever uplift in the market price of the house in the future).
And secondly once the government/local authority has been repaid the loan (and perhaps make a profit as house prices have increased during the loan period) the home is now a commercial asset to be traded to the highest bidder and is therefore no longer an affordable home. So, our affordable homes housing stock is reduced.
The scheme I have put forward ensures the home is affordable more or less in perpetuity, as the leasehold terms require the owner when he/she sells to only ask for the rebuild cost of the home at the time of sale (unless the leaseholder waives that condition of course).
This is an interesting scheme, thanks for setting it out. However, I'm a little disappointed the author hasn't addressed the existing affordable purchase scheme at all. Given there is already an affordable purchase scheme in place, how would this scheme be preferable? I can see how the lease conditions might build in future affordability much more than an LA equity stake, but otherwise, would this be more affordable up front than the existing scheme, or would delivery be easier? While it's always valuable to share new policy ideas like this, I feel that the existing affordable purchase scheme is escaping some of the critique it could be getting, and it would be valuable to read a little more about its weaknesses.
Thanks Killion, good points. I don't know the answer but I know some people consider that the equity stake is essentially a loan, which (a) further indebts the borrower (which may be an issue as there were quite high levels of arrears in previous affordable home purchase schemes back in the 2000s; and (b) could inflate demand. The big benefit of a cost purchase model would be that it is not demand side at all, purely supply side. Homeowner supports are typically demand side. To be honest, I haven't looked into the homeowner supports as much as I should. Hopefully it's something I can dig into in future.
Hi Killian, Alex Pigot here. The affordable loan scheme (As per Affordable Housing Act) has two huge drawbacks:
Firstly, the home is not really that affordable as the purchaser will in the end have to pay the full price of the house (plus whatever uplift in the market price of the house in the future).
And secondly once the government/local authority has been repaid the loan (and perhaps make a profit as house prices have increased during the loan period) the home is now a commercial asset to be traded to the highest bidder and is therefore no longer an affordable home. So, our affordable homes housing stock is reduced.
The scheme I have put forward ensures the home is affordable more or less in perpetuity, as the leasehold terms require the owner when he/she sells to only ask for the rebuild cost of the home at the time of sale (unless the leaseholder waives that condition of course).
Hope this helps. Kind regards, Alex.