Publication
Solidarity Housing: Financial Aspects of a Solution
Online version
Scope of the analysis
This paper develops the financial case for the Solidarity Housing model. It begins with 2016 homelessness and housing-need figures, then compares Housing Assistance Payment, private construction, approved housing bodies and direct public construction. All costs, borrowing assumptions and fiscal references belong to 2016.
The authors argue that private subsidies and emergency accommodation create continuing expenditure without producing enough permanent public housing. They propose widening public provision so that rental income from a mixed-income tenant base can support construction, finance, management and maintenance.
The proposed model
Within each development, half the homes would be rented to households earning below €35,000 and half to households earning above that amount. The indicative rent formula is 15 per cent of income up to €35,000, plus 30 per cent of income above it.
Two principles support the model. Differential rents make the charge affordable relative to income. Cross-subsidisation uses the higher rents paid by better-off households to support lower-income households. The paper argues that this is possible only when public housing serves a wider portion of the population.
Construction and finance
The paper separates basic construction costs from private development costs such as land acquisition, sales, marketing, finance and profit. Citing a 2016 Society of Chartered Surveyors Ireland study, it records construction and site works as 45 per cent of the total price of a typical Dublin three-bedroom semi-detached house.
It then models public borrowing over 30 years at several interest rates. The Housing Finance Agency rate cited in the paper was 1.5 per cent for an off-balance-sheet arrangement. The analysis uses conservative alternatives as well, because borrowing costs and European fiscal treatment were uncertain.
Revenue and comparison
Worked tables estimate construction cost by bedroom count, average unit cost, finance and rental revenue. The paper compares programmes of 35,000 and 70,000 homes. Its conclusion is that rental income from a broad income mix could come close to paying the financing, oversight and maintenance costs within the model's assumptions.
The comparison also includes public spending on rent supplement and emergency accommodation. The authors argue that these payments subsidise private providers, while direct public construction creates a durable asset and gives the state control over quality and delivery.
Delivery body and fiscal rules
The preferred delivery route is a public housing corporation. Public land and state-backed capital would provide an asset base, while the state would retain controlling shares. The paper presents this structure as one possible way to build publicly within the European Union fiscal rules then in force.
Two appendices explain those fiscal rules and consider alternative housing bodies. The overall finding is that cross-subsidy, lower-cost public borrowing and direct construction make a universal public model more sustainable than narrowly targeted housing combined with private subsidies.
Download the publication
The PDF is 16 pages and 0.30 MB.