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State should be building houses and not buying existing ones

In its effort to help tenants by purchasing houses, Government blocks potential first-time buyers

At present, 90 per cent of retired people own their own homes. The Economic and Social Research Institute projects that, on current trends, only half of people who are currently aged between 25 and 34 will own their own homes when they retire. That means that the other 50 per cent will be renting either from the State or from private landlords. We are quickly turning ourselves from a nation of homeowners to a nation of renters.

This creates huge problems for the individuals themselves and for the State. The individuals face the uncertainty of high rents and lack of security of tenure. The State will end up with a huge bill subsidising unaffordable rents or providing social housing at enormous cost.

How has it come to this?

Politicians and housing commentators have been very critical of the so-called “cuckoo funds” for buying up whole housing estates and apartment blocks for the rental market. It is argued that these funds reduce the supply and push up the prices for first-time buyers. All too true. But the biggest fund of all is the State, through local authorities and approved housing bodies.


In 2021, the State bought or leased 4,845 existing houses. While some were second-hand houses, most were newly built by developers for sale to private purchasers – usually first-time buyers. But the State moved in and bought them instead. In the same year, the State built only 4,283 units.

When the State builds a new house, the overall supply of housing increases – one extra family gets a home and the housing crisis is eased a little.

But when the State buys or leases a house which already exists, the overall number of houses in existence does not change. The same number of homes exist the day after the State buys a house, as existed the day before. The same number of families have homes the day after, as had homes the day before. The purchase of an existing house does not ease the housing crisis one iota. Instead of spending billions each year buying up houses, the State should spend that money building new homes.

When taxpayers’ money is spent buying houses instead of on building them, it lessens the social housing problem but exacerbates the problem for first-time buyers, who struggle to get on the housing ladder. They are constrained by the lack of supply, by high prices, and by the Central Bank of Ireland’s mortgage lending limits.

These would-be buyers are either condemned to lifelong renting or else to buying in the commuter belts far away from their communities and where they work.

But no such constraints apply to the State when it comes to social housing. There seems to be endless cash to spend on buying up houses. Price is no object. They buy and lease homes for social housing in high-demand areas that would be completely out of reach for first-time buyers.

An illustration of this occurred last year when it emerged that Dún Laoghaire-Rathdown County Council would have to pay €788,741 each to secure three-bed apartments at the Hammerson scheme to redevelop the old Dundrum shopping centre, which has yet to receive the planning green light.

The same council has also leased an entire block of apartments from a developer at an annual rent of €24,000 each. Very few first-time buyers from Dún Laoghaire could afford to pay these prices. Instead, they buy or rent in Dundalk, Portlaoise or Wexford and spend more than two hours a day commuting to work.

It has been reported that Dublin City Council would have to pay Cairn Homes €683,000 each for three-bed apartments for social housing on the former RTÉ site at Montrose in Donnybrook. Cairn has put an indicative price tag of €39.14 million on the sale of 69 units in the scheme, which is subject to a planning appeal.

Why would local authorities buy the most expensive development land in the country and not where land is cheaper and where they could house far more families for the same money?

It is essential that the State gets value for money if it wants to maximise its output of new houses. Dún Laoghaire-Rathdown County Council should not consider spending €788,741 to provide one family with a luxury apartment when it could build three new homes for three families within commuting distance of the borough. Why do we think it’s okay for first-time buyers to live up to 100km from where they work, but not okay to ask social housing tenants to live there?

Why do we tolerate this lunacy? It’s because there is a multitude of organisations and lobby groups calling for more social housing but there is no one speaking on behalf of first-time buyers.

With the ending of the eviction ban, the Government could now be bounced into buying homes from landlords who wish to sell. Again, money that could be spent on building new homes would be wasted on buying existing ones. The tenant has won the lottery. They have jumped to the top of the housing list and now they have a lifetime tenancy at a low rent. There should be no objection to the State helping these tenants to buy the homes they are currently renting – but the State should not be buying these properties.

There is a conflict between first-time buyers and social housing. If the State buys up the homes meant for first-time buyers for social housing, then first-time buyers lose out.

The State should stop buying and leasing privately built houses for social housing. It should engage in a massive social housing building programme in areas where it is cheap to do so.

This is the only way to reverse the decline in home ownership and avoid turning the country into a nation of renters.

Brendan Burgess is the founder of the consumer forum