Mr. Noel Cahill:

The first lesson is that affordability should be an explicit objective for a body such as the Land Development Agency. The international cases show that supply of housing is not in itself a reliable or sustainable means of making housing affordable. Like other countries, Ireland must engineer affordability into the supply of housing. It must be a stated objective for the public institution.

Second, we think that cost rental must be a critical strategic priority for the Land Development Agency. It is a key tool which can bring affordability into our housing system. Public land should be used to create permanent housing affordability. The cost-rental model is characterised by modest supply-side support. It uses land and finance at favourable rates, to underpin affordability. Cost rental makes the affordability permanent by ensuring that rents cover costs and that the equity that accrues as loans are repaid creates a revolving fund, which is used to underpin further affordable housing.

The third lesson is that a body like the Land Development Agency needs effective compulsory purchase powers. A key insight from international experience is that working relationships that exist with private developers require that public bodies have available to them effective compulsory purchase powers. These are rarely used. However, the dynamic of the land market changes where there is a credible possibility of public purchase of urban development land at less than its full development value. Effective compulsory order, CPO, powers ensure that all actors take planning seriously.

The fourth lesson is that an additional way of achieving permanent affordability is that the Land Development Agency, rather than selling land outright, would lease it to others who could develop and own buildings on it. In areas where land costs are high, this approach means that the initial purchase price can be much lower than in a conventional purchase. Leasing can also be used to ensure that where land is provided for affordable rental accommodation that it is kept permanently affordable. The fifth lesson is that to enhance affordability on private land, NESC has also recommended that consideration be given to a requirement in Ireland for affordable housing on private land beyond the current Part V requirement for 10% social housing.

The sixth lesson is that one of the objectives of the LDA is to support the implementation of Project Ireland 2040. The search to buy affordable property often leads to dispersed development, notwithstanding the Project Ireland policy goal of compact development. An alternative to dispersal was set out in a recent NESC report on transport-orientated development, TOD, which seeks to maximise the provision of housing, employment, public services and leisure space in close proximity to frequent, high-quality transport services. The LDA could be a significant contributor to the achievement of this form of development.

We recognise there is a trade-off between the goals of making housing affordable and achieving a commercial return on land assets. However, a balance can be achieved between these objectives. For example, if land is leased on a long-term basis then the initial affordability is improved while value can be recovered over time. In some examples of high quality development we have looked at, such as in Freiburg in Germany, money is borrowed to invest in infrastructure and land development and then repaid through the sale of developed plots, in some cases to self-building co-operatives. This means the revenue from selling land is helping to expand the supply of development land. The land agency in Vienna is another example of how these objectives have been balanced. This agency was established in 1984 to provide land for subsidised housing. The land owned by the city council was transferred to the agency. Since then, it has operated on a self-funding basis in buying, developing and reselling land. It sells land to affordable housing providers at a price that it is sufficient to cover the costs of the agency in supplying the land but is low enough to underpin housing that is affordable. Typically in this case it is cost rental housing.

We view the Land Development Agency as a potentially positive institutional development. It should prioritise the use of land for housing that is permanently affordable, including cost rental accommodation for middle-income households.