Every political party in Ireland, indeed every politician, seems to believe in affordable housing. In most parts of the country, their wish has been granted: people on everyday incomes can afford accommodation. But the situation in Dublin and in a few other urban areas has become impossible.

In the central areas and inner suburbs of the capital, it is no longer realistic for anybody on a modest income to afford rent, even on a shared basis. The virus is spreading to the more distant suburbs in recent months and rental costs are double what is required in provincial towns, treble the cost in rural areas.

I bumped into an old friend on Saturday last whose son, in his mid-20s, is a musician and has yet to secure a steady income. He has, to his father’s regret, given up trying to live in Dublin and has decamped for west Cork, unable to afford his current rent in what used to be an unfashionable part of the city. It needs to be understood that the affordability crisis is almost entirely a Dublin problem. Yet, most elements of Government policy are national rather than geographically targeted, as if the intensity of the housing affordability crisis was the same everywhere.

An exception is the rent control scheme, which caps rent increases for a period in areas deemed to be experiencing severe pressure. But this scheme is a finger-in-the-dyke: there is no point in pretending that the supply/demand imbalance is addressed by price control, without expanding supply in the right areas.

Even this measure has been misunderstood – the Labour party has just called for it to be extended countrywide, to include areas of the country where affordability is not a problem. Why bother?

The politicians are also focused on the first-time buyer, as if the problem could somehow be tackled by making accommodation affordable for this very small group of people. If insufficient supply is forthcoming it barely matters that first-time buyers get preference in its allocation. Annual new supply in the Dublin area has recently been running at a few thousand units per annum. There are over 500,000 residential units in Dublin city and county and all of them are too costly to buy or to rent.

Since the year 2000, there has been a requirement that developers make a portion of any newly built scheme available for social and affordable housing. Since 2015, this requirement has amounted to the transfer to local authorities of 10% of the units in any development (of nine units or more) at a discounted price. The discount has to be big enough to offset the ‘‘planning gain’’, which can be ascribed to the transferred units, which can be sizeable in the Dublin area. The value of land increases dramatically in Dublin once planning permission has been granted. But the scheme applies throughout the country and can hardly create many bargains for local authorities in areas where the planning gain is minor.

New developments

Dublin is different. For a new development of say 100 units priced at €400,000 each, the price to the local authority might be only €300,000. The developer must make up the million foregone on the 10 units by charging more for the 90 units remaining. In effect, the provision of extra social housing is being financed by an unlegislated tax on the buyers of the private units. For this example, the private purchasers are paying about €11,000 extra per unit to fund the €100,000 discount for the local authority.

If the Government wishes to expand the stock of social housing there will be a cost and the revenue must come from somewhere. Under the Part V scheme, the revenue source is a hidden tax on private purchasers in a Dublin market where everybody, including the Government, seems to agree that prices are already unaffordable. There are plenty of other impositions, including development levies imposed countrywide by local authorities which are adding another €10,000 per unit or thereabouts in the capital. These were introduced to substitute for revenue lost when residential rates were abolished. With the return of residential property tax, new housing is a source of revenue again and it is not clear why development levies have been retained.

A further irony is that the Government has recently revived the tenant purchase arrangements under which the stock of social housing, already deemed inadequate by politicians of all parties, will be further depleted through discounted sales. Particularly in areas where housing is already expensive, notably Dublin, it is very attractive for tenants to avail of this bargain offer, since the discounts can be as much as 50%. The efforts to expand social housing stock will be frustrated by ignoring the potentially large hole in the bucket created by the reintroduction of tenant purchase.