Why buy a council flat? Council buyouts to flop.

I don’t understand why a person would want to pay for something they could get for near free or where the charge for said thing is difficult to enforce. You see this every day when people park illegally or don’t put money in the meter, there are clamper’s out there but they don’t catch the vast majority of offenders.

That is why I see two articles in the Irish time that seem to contradict the likelihood of the each other.

Article 1: Council flat purchase scheme to start in 2012
Article 2: Tenants owe city council €21m in rent arrears

In the first one we are told that Dublin City Council (in particular) are close to bringing out a ‘tenant purchase scheme’ via the 2009 Housing Act for people who live in flats. The scheme has a few things that may hamper it…

For a start 65% of the tenants need to agree to having the flats put up for sale and 30% must then follow through and purchase, if this doesn’t happen within 3 years the scheme lapses for that complex and everybody remains as local authorities.

The only incentive might be to almost give the properties away. In one respect (for long term tenants) this is justified because they were locked out of being able to buy their properties in the past, in another respect it’s just a large wealth transfer for which nothing was received.

Local authority loans are on average 33% in arrears – and that figure has likely gotten worse. Does it make sense to bring more people into a market that is already a slaughterhouse? Athlone town council for instance has an arrears rate of 65%.

Dublin City Council social housing tenants (as opposed to Shared Ownership & Affordable Housing) have arrears in 25% of their tenancies and are owed more than €21,000,000 in unpaid rent. The average time in arrears is almost one year (50 weeks). With 40% of those in long term arrears unwilling to co-operate with new repayment agreements, there is a near zero rate of outright evictions.

So why on earth would anybody want to buy their own flat? The people I know that live in flats by and large don’t want to live there forever, and in one respect many council owned flats occupy some of the best real estate in the city – so prices may well be unaffordable unless there is a give away.

If people can afford to buy a house then why are they not moving on from social housing to make room for the 100,000 people who are on the waiting list? This is also unfair because it bestows a benefit on those who are occupants based upon the year they were born in rather than upon current need.

This at the same time as we see property taxes coming in, where waivers are already in place for local authority tenants, purchasing means you’ll end up paying more even if only by virtue of not getting your property tax waiver any more.

Personally, I think it would be great to see higher levels of ownership in social housing, flats in particular. Having spent the last decade in the inner city I believe that one ongoing aspect of policy that dis-empowers city dwellers in flats is that they don’t have a sense of ownership on their homes because they can’t buy them even if they want to.

However, in the current vista there is no reason to believe that this scheme aimed at the 12,000 flats in DCC ownership will see a sizeable uptake unless there is a large financial incentive to do so and that means giving up a large portion of state wealth in many prime real estate areas.

Leave a Comment

Awesome! You've decided to leave a comment. Please keep in mind that comments are moderated.