In April 1933, a commission of inquiry into the sale of State-owned cottages and plots under the Labourers’ Acts reported that “it is scarcely necessary to argue the advantages of ownership … In the security which it gives, better citizenship is developed.” The commission’s findings ultimately resulted in the Labourers’ Act of 1936 that formalised a process for rural tenants to buy their council housing, and was only extended to urban areas in the Housing Act of 1966.
Encouraged by government, Irish councils were happy to sell off their housing (seeing it as a maintenance cost-cutting measure), as were politicians (seeing it as a vote-buying measure). At Fianna Fáil’s 1988 ardfheis, Pádraig Flynn announced he would sell off another 40,000 of the State’s stock of 120,000 council houses, in “the most attractive house purchase scheme ever”. More than 18,000 council houses were sold the following year. By the mid-1990s two-thirds of the 360,000 council houses built since 1922 had been sold at significant discounts to their tenants.
Tenant purchase of council housing continues to this day with discounts of up to 60 per cent for low-income purchasers. Since 2016, councils put an “incremental charge” of 2 per cent per year on houses they sell if they are re-sold, equal to the discount the tenant received. It reduces by 2 per cent each year until no charge remains, usually 20 to 30 years.
In 2023, local authorities directly built about 1,317 houses out of the total social housing new-build output of 8,110. All councils except Offaly sold a total of 476 existing council houses, or 36 per cent of their direct-build output. Since 2017, councils have added 18,889 houses from various sources to their stock (now 150,224 dwellings) but have sold almost 4,000 or one-fifth of the quantity they have added. Each year many councils also buy thousands of second-hand houses to supplement their supply. Often former council houses, the State now pays twice for the same house.
There are plenty of reasons why tenant purchase is a good idea and the policy has created many secure and stable households and communities across the country. But is the continued discounted sale of council housing to its tenants a risk to the State’s ability to tackle to the social housing waiting list of 58,824 households? Housing experts Dr Aideen Hayden and Prof Michelle Norris of UCD recommended suspending the scheme in their 2018 report, The Future of Council Housing, and this year the Housing Commission also recommended ending discounted tenant purchase.
With more than half of all new social housing now market dependent, the State is vulnerable to lower tax receipts (possibly Trump-dependent), rising interest rates, price falls, supply fluctuations and ‘hard landings’
Should tenant purchase stop then, or are there other options? Could councils sell their housing but only at replacement cost, or replacement cost less a discount per year of rent paid? Maybe councils could retain ownership of part of houses they sell – for example, the land – so they can limit the future re-sale of ex-council stock to those in need. This could be to purchasers on incomes of €36,000-€90,000, the households really struggling to access home ownership.
The sale of social housing is a risk elsewhere too. For the last seven years, councils have accounted for just 32 per cent of all social housing output. The balance has been delivered by approved housing bodies (AHB), nine times out of 10 using turnkey acquisition (buying new housing from developers before construction or when built), which was more than 4,000 units in 2023. Councils and AHBs are acquiring so many new apartments for social housing from developers who say they can’t afford to build them for private clients, the State is effectively propping the sector up to the tune of a children’s hospital, or nearly €2 billion, a year.
AHBs now control more than 61,500 houses, or about €8.3 billion of housing stock with €7 billion debt, a highly leveraged, high-speed, high-risk expansion from €2.8 billion worth of stock in 2021, and all on the State balance sheet. At this level of borrowing (84 per cent average, with some undoubtedly more leveraged), a small fall in property values would see many AHBs owing more money than they have in assets; negative equity, in other words.
This surge in social housing output through turnkeys could also be temporary as it suits developers cutting their losses in a falling private market.
The six largest bodies control 85 per cent of the AHB portfolio, but this AHB portfolio is not part of the State’s housing stock. And although not-for-profit entities, once an AHB repays its government loan, ownership of the housing transfers to them at which time they too could sell their housing to help pay for ongoing maintenance of their remaining stock or charge higher rents. The sold stock could quickly become high-priced market housing rather than the low-cost housing originally intended.
The State doesn’t give grants to AHBs as happens in other countries, only debt. It lends them 30 per cent of their funding needs (they borrow the rest, sometimes from another State body, the Housing Finance Agency) compared with 100 per cent of council housing (which is entirely paid for upfront), and has therefore been happy to rely on AHBs for delivering social housing. However, it should be remembered that only local authorities bear a statutory responsibility for the provision of social housing.
Stopping the sale of council housing is toxic for most politicians (only Labour tackled it in its election manifesto), but there are other options that would give the same benefit of secure and affordable homes in perpetuity. Putting the duty of delivering social housing back on councils is commensurately undesirable for policymakers as it would mean having to fund them properly to deliver at scale.
With more than half of all new social housing now market dependent, the State is vulnerable to lower tax receipts (possibly Trump-dependent), rising interest rates, price falls, supply fluctuations and “hard landings”. The State has insufficient control over its current plans (social housing by others and by turnkey) and won’t control what it can (funding councils appropriately; selling discounted social housing).
High costs, high borrowings, high risk, high exposure. It’s all very 2006, but this time for social housing.
Dr Lorcan Sirr is Senior Lecturer in housing at the Technological University Dublin
