Affordable housing is the cornerstone for building sustainable communities. It should be the priority of any government that has the long term interest of the society it serves at heart. Affordable housing provides stability for family units, improves opportunities for education and decent employment and reduces the risk of homelessness for those on low wages.
The failure of different administrations in the past two decades to address the shortage of adequate supply of affordable housing has resulted in pent up demand for affordable accommodation by young families who have little chance of getting their feet on the first rung of the property ladder. The problem has become even more acute in recent years as demand for rented property increased exponentially, driving landlords to demand higher rents for their properties.
The private property development sector has failed to invest in affordable housing probably because it did not promise to give them the kind of return they expected, especially since they had other options where to invest their money. So it makes sense that the government should take the initiative to invest directly in the development of affordable housing as part of its social investment strategy. The announcement that the Housing Authority will be investing in a €20 million project to build 118 affordable housing units is indeed welcome.
The financing of this project is built on commercial criteria with social support. The Housing Authority will borrow money in the market to build the houses and then benefit from a steady flow of income from rents paid by tenants who qualify for this type of housing. Since it is a not-for-profit venture, there will be risks of shortfalls in projections as costs and income may not always be balanced. This risk is acceptable as tackling the social problem of a scarcity of affordable housing exacts a higher price on society.
The Housing Authority has defined reasonable criteria for qualification for affordable housing. One definition of affordable housing is that total housing costs that include rent and utilities do not exceed 30 per cent of a household’s income. The five-yearly means-testing process should reduce the risk of social aid dependence and motivate people to improve their chances of moving up the social ladder.
Affordable housing projects should now be extended as the demand for such accommodation exceeds by far the small supply that will be provided by this first project. Other projects could include enhanced rent subsidy schemes that would help individual families to rent a property from private landlords. One hopes that such projects will be more successful when the property market cools down from its present overheating levels.
One risk that needs to be addressed in a comprehensive strategy for affordable housing is not to encourage the creation of ghettos in specific areas where the government decides to concentrate affordable housing accommodation. A sustainable community is one where families with various income levels live in harmony. While it is inevitable that some top-end properties will be clustered in specific prime areas, every effort should be made to avoid the stigma that may be attached to people who live in areas of the country that have been designated as affordable of social housing areas.
It is undoubtedly the right time to promote more social cohesion by investment in affordable housing.