Approaches to Promoting Supply of Affordable Rental Housing John O’Connor Chief Executive 16 th June 2015 Generation Rent: The Future of the Private Rented Sector in Ireland

Overview The Rental Market in Ireland Housing Supply Requirements Objectives of Affordable Rental Exploring the Context for Ireland 2

The Rental Market in Ireland 29% of households in rental sector in 2011 –19% private rental (up from 11% in 2002) –10% social rental 35% of tenants within the private rental market are in receipt of Rent Supplement or other State support Majority of property owned by individuals Very little institutional investment 3

The Rental Market in Ireland Rents increasing –Particularly in Dublin, surrounding areas, and in other cities Availability –In areas of increasing rent there is a shortage of new supply 4

Housing Supply Required Nationally Estimated 16,000 per annum required as a minimum requirement Dublin Region 7,500 homes per annum needed Cork City & Suburbs 1,000 homes per annum needed 5

Planning for un-met and Emerging Needs and Values 75% of all households will be for 3 people or less  25% will be 1 person  31% will 2 person  19% will be 3 person 6 In the UK, 34% of households consist of one person and in the US it's 27%

Affordable Rental 7

Rental - Affordable – Market Housing Housing cost Income Median income household Minimum income Local ‘market’ rent Operating costs Moderate income Social Rental Affordable Rental Market Rental Affordable cost at 35% of income Source: AHI

The challenge of affordable housing in Ireland 9 Flexible economic climate –Rapid response to changing conditions –Housing responds much more slowly Impact of EU policy –Ireland is 1¼% of Eurozone population Emphasis on homeownership –Rental is essential for effective economic flexibility –Workforce housing Dublin as the economic/ demographic hub –40% of Ireland’s population lives in Greater Dublin Housing supply never responds as fast as policymakers would like –Ergo housing must always be a government policy focus

Who Pays? “Affordable housing always costs money.” Funding options: –Subsidies: Cash / preferential loan –Land –Tax Incentives –Planning Intervention measure e.g. Part V, inclusionary zoning –Guarantees

Considerations for Affordable Rental Cost – subsidising larger segment of the population Level of investment by the State Scale – what number is required to achieve the benefits? Potential cost increases because of the nature of the market Setting of rent level 11

30% of Median Income – Household (National) Median Income = €32,030 –€9,609 per annum –€801 per month Moderate Income = 120% of Median Moderate Income = €38,436 –€11,531 per annum –€961 per month 12

What Next? 13

Further our understanding of affordable rental to support decision making process in Ireland How does affordable rental work in practice in other countries? What level of scale is required? What level of benefit can the State expect to gain via direct and indirect subsidy? What would investors be looking for to make the Irish housing sector more attractive? Exploring the Context for Ireland 14

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