Dr. John O'Connor:

We are pleased to be here this morning to assist the committee in its examination of the issues facing us in respect of affordable housing. I am accompanied by my colleague, Mr. Jim Baneham, head of housing delivery.

The agency’s vision is to promote the building of sustainable communities. Critical to this is that everyone is able to live in good quality and affordable housing. On affordability, the overall aim for our society is to have housing available that is affordable for households across a wide range of income groups. Housing for purchase and rental are the main elements of that. As a general rule, housing costs should be below one third of a household’s income. For lower income groups, they should be lower again.

There are households on very low incomes which require social housing or housing support to ensure their housing costs are affordable. Other households have sufficient income and finance to purchase or rent. There is then a group on low, medium and moderate incomes that may need some assistance to purchase or rent. I will focus on this group and we will focus on two areas in particular, namely, affordable purchase housing and cost rental housing.

On affordability and access, the first approach is to take measures to keep down the cost of renting or buying housing. The basic elements of this are keeping down construction, land and finance costs. A number of measures have been taken in recent years, for example, improving the planning system; introducing the vacant site levy; providing direct funding for infrastructure; introducing rental controls and rent pressure zones; and making development finance available.

With regard to affordable purchase, the main focus of the State over many decades has been on measures to assist home ownership. This includes various home loan provisions, mainly through local authorities, first-time buyers grants, tax relief on loan interest, affordable housing, shared ownership, and low cost sites schemes. There are three particular measures currently in place. The first is the help-to-buy scheme, which effectively provides a grant by way of a tax rebate of up to 5% of the purchase price of a new home costing up to €500,000. The maximum payment is €20,000 per property. The second is the Rebuilding Ireland home loan, which provides low cost fixed and variable interest rate home loans for certain income groups. The third is the tenant purchase scheme for local authority social housing tenants.

A new affordable purchase schemeis being commenced. This follows the commencement of Part 5 of the Housing (Miscellaneous Provisions) Act 2009. Under this scheme, local authorities can provide affordable housing. The aim is to use local authority and State lands and-or infrastructure funding to provide affordable housing. Importantly, the discount from market value is retained by the local authority as equity in the property. When this equity is repaid, the local authority can recycle this to provide more affordable housing. In addition, under the serviced sites fund,€350 million has been provided to pay for infrastructure to help local authorities deliver affordable housing for purchase or rent.

Cost rental is an issue we particularly want to highlight. The focus for affordable housing has been on home ownership. A key element of achieving affordable housing in many countries is the development of a cost rental sector which, over time, provides a significant amount of housing that is affordable to a wide range of households. The Housing Agency is currently supporting the Department of Housing, Planning and Local Government in the development of a cost rental or not-for-profit rental model. This form of rental is common in other European countries such as the Netherlands, Austria and Denmark. There are some points to note on cost rental. The main elements in ensuring cost rental achieves affordability over time are the use of low-cost land, long-term lower cost finance and funding and a not-for-profit approach. Thinking long term - 50 years plus - is key to making this work. It is a more sustainable model where assets and future rental income flows can be used to leverage further investment, building a cost rental sector.

Two cost rental pilot projects are being progressed, one in Dún Laoghaire on the Enniskerry Road and a second in St. Michael’s Estate in Inchicore. The Department is being supported by the European Investment Bank, EIB, to leverage its international experience and advisory and research capacity in the development of an appropriate cost rental model.

There is much more information we can provide on affordable housing. We are happy to answer any questions members may have or provide further details as required.