Private sector delivering more than seven in 10 new social homes, department figures show

More than two-thirds of the social housing units delivered in the first nine months of last year were procured directly from private developers, underscoring the State’s reliance on the private sector to deliver housing.

Figures obtained from the Department of Housing show that 2,706 new-build social homes were delivered up to the end of September last year.

Of these, 1,946 units (72 per cent) were acquired by way of so-called turnkey purchases – where the local authority or approved housing body (AHB) enters into a forward-purchasing arrangement with a private developer – or through the Part V rule, which stipulates developers must set aside a certain portion of their developments for social housing.

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Turnkeys represented 54 per cent (1,452) of the total while Part Vs represented 18 per cent (294).

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Twenty-eight per cent (760 homes) were delivered directly by local authorities via the Social Housing Capital Investment Programme or by approved housing bodies through the Capital Advance Leasing Facility.

The figures were provided by Minister for Housing Darragh O’Brien in response to a parliamentary question from Sinn Féin’s Eoin Ó Broin.

Mr Ó Broin said: “Turnkeys in and of themselves are not a problem but the heavy overreliance on private developers to deliver social housing is very risky.”

The core problem was the level of red tape imposed on local authorities doing their own developments, he said.

“Until the Government fixes that red tape, there will be a perverse incentive to continue overrelying on private developers,” Mr Ó Broin said. “And at a time when commencements are falling, that’s a high-risk strategy.”

[ Relying on private sector to build houses a ‘vulnerability’, officials say ]

Reliance on the private sector to deliver housing was highlighted as a “vulnerability” in a briefing document prepared by the Department of Public Expenditure and Reform for its new Minister, Paschal Donohoe, when he took up the role last month.

The document highlighted structural issues such as planning and construction costs as a “challenge” to delivery of Government targets.

It estimated that up to 6,500 social homes would be delivered in 2022 (the end-year figures have not been released yet), down from a target of 8,000. But even this figure may be at risk with just 2,706 delivered in the first nine months of 2022.

With new housing commencements falling, department officials raised concern that housing targets would continue to come under pressure. There was a 14 per cent year-on-year decline in new housing units commenced in the third quarter of 2022, which industry officials and analysts linked to the rapid acceleration in build costs.

In his response to Mr Ó Broin, Mr O’Brien said: “Housing for All is the Government’s plan to increase the supply of housing to an average of 33,000 per year over the next decade.

“This includes the delivery of 90,000 social homes by 2030. Housing for All is supported by an investment package of over €4 billion per annum, through an overall combination of €12 billion in direct exchequer funding, €3.5 billion in funding through the Land Development Agency and €5 billion funding through the Housing Finance Agency,” he said.