Calls for establishment of new state company to supply rental housing
The Nevin Economic Research Institute has called for the establishment of a new semi-State housing company to supply the market with more affordable rental accommodation. In its latest quarterly outlook, the Institute said the collapse in building output since the crash had resulted in chronic housing shortages, resulting in spiralling prices and rents. It also said the Government’s policy to date of relying on the private sector to meet demand had “not worked”.
The institute has proposed the establishment of a new semi-state company that would borrow money long-term at low rates. It would use this money to commission the construction of around 50,000 new homes over five years and the purchase of an additional 20,000 vacant dwellings. Tenants would be charged rents commensurate with the finance and construction costs of the properties, which is how similar housing agencies in Europe operate.
Total capital investment required would be around €12 billion, said the Institute, with the initial €3 billion coming from the State via Strategic Banking Corporation of Ireland (SBCI), which would then be used to leverage a further €9 billion.
By claiming “a very significant place” in the market, the new housing company could help exert downward pressure on rent increases and at the same time, contribute to higher supply, it said.
In its report, the institute said the outlook for the Irish economy remained positive, noting domestic demand, the bulk of which comes from consumption and investment, would drive growth in 2017 and 2018. It forecast growth in gross domestic product (GDP) would be 3.8% this year and 3% next year, which was roughly in line other agency forecasts.
