AS I SEE IT
BY MARIANNE HERON
Last month the plug was pulled on Government contracts for building social homes due to value for money concerns. And the price involved? One million euro a unit – they couldn’t be serious! But they were: plans for 500 social homes in Dublin, Wicklow, Kildare and Sligo were paused due to the cost and plans for a total of 3,000 social homes which were to be delivered under a public/private partnership (PPP) scheme.
That six figure sum sent me off in a fantasy about escaping the second dearest country in Europe and buying a picture postcard home in an attractive part of France – say Brittany or the Dordogne for under €200,000 – before asking what was involved in that jaw-dropping figure.
It’s not only the cost of building a unit but for items like finance and management spread over a period of time. “It’s a bit like buying a house on a credit card,” explains Orla Hegarty, Assistant Professor, School of Architecture, Planning and Environmental Policy, UCD. ”These types of contracts were a mechanism to keep the spending off the government balance sheet as they don’t count as capital spending.
“The cost is not in bricks and mortar, but rather in the investor carrying risk of management, maintenance, high finance costs and profit. This is very poor value for money and unnecessary.
“In the UK the government has been buying back (called PFI in UK) these types of contracts because of high costs and other failures.”
The model has also been criticised by the European Court of Auditors for “widespread shortcomings and limited benefits”.
Aside from the impact of using a PPP scheme for delivery, the cost of building homes is still significantly higher here than just across the border in the North or the rest of the UK. The cost of a three-bed semi-detached home is 29% higher in Dublin than in Birmingham, a joint survey by the ESRI and Shared Island Unit found. Factors involved in the difference in price include higher building standards here, larger units and higher wages. The survey also found that planning delays could add an extra €20,000 to costs.
How was it then, that when Ireland was still relatively poor council or social houses were built in their thousands? For instance, between 1932 and 1948 Housing Architect for Dublin City Herbert Simms oversaw the building of apartments and cottage estates amounting to 17,000 social housing units. The difference then – apart from lower costs – was that social housing was the responsibility of local councils and the work was carried out by builders.
Now the picture has changed and between 70% and 80% of social housing is provided by the private sector where developers are contracted by the State or units are acquired from them while local authorities or housing bodies provide just 20% of such housing.
A million euro does seem inordinately expensive and is double the cost of social housing provided through PPP in 2020. The Department of Housing are now working with local authorities and others to look at an alternative to the PPP model for delivery of the 500 social homes. They are also reviewing future social housing projects to consider the best options for procurement and delivery.
Clearly using the public private partnership model doesn’t offer value for money, nor does delivery via developers – if that could be avoided. Consider it costs over €600,000 to buy a new three-bedroom home in Dublin from a developer. The point about developers is that they make their money on land they have acquired speculatively. Go the old fashion route that we would employ if building a home privately using an architect and builder and the cost could be a third or half that of a developer home depending on location.
“The best value for money is just to contract builders to build, as happens in schools, roads, hospitals and other government building projects,” says Orla Hegarty.
Maybe it’s time for a back to the future approach and to take a leaf from Herbert Simms’ book, and to build more of the local authority Affordable Purchase Homes in addition to the 3,100 approved to date.
It’s time to find more ways to remove that gap between building costs and affordability which is driving young people who want homes out of the country.
