My housing solution? A State Building Fund

This hasn’t happened overnight and has in fact been a key policy issue in the last three general elections… yet urgency and vision remain absent in the new Government’s plan to address the housing crisis.

Taoiseach Micheál Martin recently rolled back on a mooted move to wind down Rent Pressure Zones, conveying surprise at the public reaction to the original suggestion. It also seems that Government does not believe the ongoing costs of living issues still merit targeted payments. Everything must be going swimmingly well, so.

As we now know, house builds in 2024 were 10,000 below the statistics trotted out by incumbent government parties in the November election campaign. Batted away in the glow of election glory as ‘a genuine mistake’, that stroke doesn’t sit well with the thousands of young people aching to buy houses of their own but who already have eyes on Australia, Canada or the U.S, having benefited from coming up through our education system.

But the reality is the government comprises the parties – and individuals – that were voted in at election time, so they must now be given a chance to deliver. Housing will be a key benchmark, but the clock is already ticking.

The crux of the issue is the propensity of Fianna Fáil and Fine Gael in particular to stick with the same approach to policy and delivery for 15 years, knowing it has not been yielding anywhere near the number of units required to keep up with a growing population.

In 2024, some 30,000 units were built: figures now being bandied about by the CSO and the ESRI suggest the co

untry needs north of 60,000 to keep up to speed. Add in the 15,000 families living in homelessness – in B&Bs and hotels paid for by the state – and I believe that requirement to be closer to 70,000.

A seismic change is needed.

The Dáil Chamber is full of bluster about how this can be done. On one side of the political spectrum you have ideas around the incentivisation of developers to deliver, on the other, calls for a state construction company. Such missiles have been fired across all sides of Leinster House for years with little ground won. The solution, I believe, is somewhere in the middle of these two hitherto opposing philosophies.

A revenue trove has landed in the lap of the new government in the shape of the Apple money… €13billion, with interest, getting restless in an Escrow Account. The Tánaiste, as Taoiseach, said last September this would not be used on day-to-day government spending, which is exactly why some of it should be used on housing, which is not being delivered on a day to day basis to the extent needed.

It is unlikely there are enough tradespeople or new apprentices, yet, to form the basis of what would be needed to get the wheels of a large State Construction Company moving, so we need a creative solution that traverses both realities.

A State Building Fund that better facilitates developers in building houses and apartments – on the basis they can make more units more easily accessible to larger swathes of young buyers - is one area that should be examined.

Reducing the costs of construction, financing and land acquisition for developers (especially the smaller ones for whom these issues can be insurmountable) and tying those incentives into delivery of social, affordable and new Rent to Buy options for middle income earners could be a compromise supported by all who have a genuine interest in coming up with solutions.

As it stands, social housing units account for 10% of new estate builds. My suggestion is a further 10% be made available in all estates for affordable housing and another 30% be earmarked for Rent to Buy schemes that would open house purchasing to a much wider income bracket; the remaining 50% can be accessed by those with means to buy on the private market (obviously, with price gouging controls built in).

This would open up the market to a new generation and ensure a solid social mix across housing estates. Paying rent to the state each month towards a house you will eventually own would be a game-changer for so many. The only mystery at this point is why it hasn’t been done up to now?

The State can contribute to such an escalation of accessible options by designing a merit-based incentive scheme for developers that rewards on-time, within budget builds when constructed on state or LDA lands.

Cutting VAT rates on construction materials or rebating VAT payments when units are built within budget and on time – or where developers expand the ratios of social, affordable, rent to buys units in estates – would make units cheaper to build.

As it stands, and without real alternatives, we need those developing houses and apartments to keep doing what they are doing; so, we must make it easier for them to build but at the same time control the yield to house purchasers, particularly first-time buyers.

These developers are of course profit-driven, but are not the Devil incarnate either! Some regulation would be required to ensure their profit margins are agreed across all housing stock delivered, especially if they benefit from the suggested incentives.

The issues facing many young couples and singles attempting to buy homes also need to be examined and solved; the various processes currently in place, for all types of housing, are totally skewed against them:

Those that are renting cannot have their rental payments taken into account as an ability to repay a mortgage, which can be changed with the stroke of a pen. Some have deposits, but are still refused mortgages because their incomes are not sufficient.

Those on social housing lists can be waiting up to 10 years, and affordable schemes are snapped up, with demand outweighing supply

So, a blended solution of developers building for the state – but being incentivised to do so, while ensuring wider supply of an expanded range of housing options to hit different categories of buyers – is what is needed.

Until we can cobble together a State Construction Company, the use of even €2bn of the Apple money to develop and finance a State Incentivised Building Fund might be a way to finally get things moving in the right direction and towards the 70,000 units needed annually.