Challenging times for Habitat for Humanity in Western Europe -- Habitat for Humanity Int'l 1

Challenging times for Habitat for Humanity in Western Europe

By Christine Healy


There is a huge need for affordable housing in the UK and Ireland, with many low-income families’ dreams of owning a simple, decent house slipping out of their reach.

Habitat offices in London and Dublin have been faced with the increasing problem of availability and cost of land. The challenge is to ensure that we can continue providing affordable homeownership for people in need of housing.

Since the beginning of the Celtic Tiger[1] the housing market in Ireland has been booming. According to figures released in February 2006 by the Central Statistics Office, Ireland is now the country with the greatest housing demand in Europe. Though this is positive news for the Irish economy, lower income families are left behind as house prices spiral out of control.

Since 2001, the housing output in Ireland has increased by 50 percent. This is unique in Europe and across the world, but the number of people on government housing waiting lists continues to rise. Similar to London, affordable housing schemes created by the government cater to the middle class, who have recently been referred to as the “new poor,” unable to get onto the first step of the property ladder.

HFH Ireland is only able to build due to the donation of land from local government. The aim of this partnership is to get low-income families who can afford the no-profit mortgage taken off the local government housing list and into homeownership.

Challenges and solutions for HFH Ireland and Southwark HFH

Land supply and costs

In Dublin, we rely on local governments to donate land to us. Without this we would be unable to build. We will also have to look at building in other areas of Ireland where land is more abundant and cheap even though the greatest need is in Dublin. Our colleagues at Southwark HFH in London are facing a similar problem. In order to purchase a plot of land, they have used long-standing contacts in the local council, which owns a vast portion of the local land. The land is being sold at a market price that was agreed upon two years ago and held for HFH so that the organization does not have to bid at auction for the land. Southwark HFH believes that without the council’s considerable support it would not be able to afford the land, and any future land purchase will require similar levels of support.

According to Gareth Hepworth of Southwark HFH, “Land is one of the scarcest resources in London and since our founding in 1996 land prices have soared. In 1996 a plot suitable for a three-bedroom unit cost £15,000 (US$27,000). Today a similar plot would cost £100,000 (US$180,000), assuming that a similar plot could be found.”

Site costs are also unrealistically high, accounting for about 42.5 percent of a house nationwide according to economist Jerome Casey in a 2003 report. Currently both the Irish Council for Social Housing and private house builders are reporting that city house sites cost up to 50 percent of the house price. Irish figures are grossly out of line with the rest of the developed world. In the United States, the land accounts for 20 percent of the total cost of a house. The figure for Denmark is similar, while in Portugal the land factor drops to 15 percent.[2]

Construction costs

Cost of materials, which has increased by 5 percent over the past 10 years, is also a challenge for organizations in the UK and Ireland.

Cost of construction management staff is also very high with some managers earning up to €100,000 (US$126,000). HFH Ireland has benefited greatly by bringing in construction volunteers through the International Volunteer Program to work alongside the Irish construction staff. They bring with them expertise in working on Habitat sites in the United States, knowledge of the ethos of Habitat and the ability to work with unskilled volunteers.

Possible solutions

Traditionally Habitat for Humanity has played the role of developer, builder, selected the families and provided the loan. Due to the labor-intensive fund raising required to build a small number of homes, alternative methods have been investigated. By providing the no-profit mortgage, Habitat for Humanity will not receive the capital invested until the full mortgage is repaid, causing the problem of the continual intensive fund raising for little return.

The strategy that could see HFH Ireland being more sustainable is to seek a financial institution to partner with HFH to provide the mortgage directly to the homeowner. HFH Ireland’s financial partner, EBS, has committed to providing approximately 90 mortgages over the next five years valued at €11 million. This means an immediate capital return for HFH Ireland and facilitates further building to commence immediately.

Similar to HFH Ireland, Southwark HFH has to ensure that on completion enough funds are realized to allow for a new project to start. The organization has developed a shared equity model where homeowners will only purchase a share of the property using a commercial mortgage.

The vital issue for both London and Dublin is to ensure that future projects are financially viable, enabling self-sustainability and guaranteeing a future for the organization in the provision of affordable housing.


  • Artificial restriction on land supply puts Ireland and the UK at the bottom of the property league in the developed world. Irish urbanization at 4 percent is among Europe’s lowest.
  • The average price of a house in Dublin and outside Dublin in February 2006 was €378,822 (US$476,500) and €245,925 (US$309,407) respectively.
  • The average price of a UK house in February was between £184,924 and £268,000 (US$340,000-US$493,800).
  • Irish house prices are rising at 1 percent every month.
  • Last year a 2.05 acre site in south Dublin was purchased for €171.5 million (US$220 million).
  • A site big enough to build a 100 square meter house in Dublin recently sold for over €550,000 (US$702,000).

Christine Healy is program development officer for HFH Ireland.


[1] An economic boom in Ireland that began in the late 1990s.
[2] Central Statistics Office, Ireland