Oireachtas Joint and Select Committees
Tuesday, 30 June 2015
Committee on Environment, Culture and the Gaeltacht: Select Sub-Committee on the Environment, Community and Local Government
Urban Regeneration and Housing Bill 2015: Committee Stage
This meeting has been convened for the purpose of the consideration of Committee Stage of the Urban Regeneration and Housing Bill 2015. The meeting will continue, if necessary, until 9.30 p.m. Is that agreed? Agreed.
The aim of this Bill is to prevent land in areas in which housing is required, or areas that are in need of renewal, from lying idle or remaining vacant, to establish a register of vacant sites in those areas, to provide for a vacant sites levy, to amend the Derelict Sites Act 1990, to amend Parts II, III and V of the Planning and Development Act 2000 and to provide for related matters.
I welcome the Minister of State at the Department of the Environment, Community and Local Government, Deputy Paudie Coffey.
I move amendment No. 1:
In page 6, lines 29 and 30, to delete “other than land owned by a housing authority”.
Section 4 sets out the land to which the vacant site levy will apply, and an amendment is required to the application provided in the published Bill. It currently provides that the levy shall apply to residential land or regeneration land other than land owned by a housing authority.
Amendment No. 1 provides that this latter exemption will now no longer apply to such land by the removal of the text “other than land owned by a housing authority”. This means that all residential or regeneration land, regardless of ownership, be it public or private, will be subject to the levy if it meets the criteria for a vacant site as provided for in section 5. This will ensure that all owners of vacant sites will be treated equally. For example, local authorities will have the same responsibilities under this legislation as private land owners. Accordingly, it will also encourage local authorities that may be in possession of suitable sites for the provision of housing to develop those sites.
In this regard, I have considered the comments and contributions of Deputies. Deputy Mulherin felt quite strongly about this on Second Stage debate. This amendment will allow for the application of the vacant site levy in a fair and equitable manner to all owners of vacant sites, either public or private.
The amendment is nonsensical. The myth is that local authorities are sitting on huge tracts of land they do not want to develop, as opposed to not having the means to develop. The unused sites I have come across are not owned by local authorities or by housing associations. I can think of one housing association that has a site that is unused and there are still cattle grazing on it. It is not the end of the world and it is not a derelict site. If there is a problem with a site owned by the local authority, if a local authority member, a community group or a Member of the Houses contacts the local authority, he or she will get a resolution to that straight away. It is not fair to lump public bodies, which are already under serious pressure in terms of housing, which are dealing with homeless people walking through their doors every day of the week and which have huge pressure on their resources, in with developers who are sitting on pots of land waiting for it to go up in value. If local authorities have land, they want to, and they do, use it.
I am open to persuasion on this but I cannot get my head around it. The levy would be applied by, and paid to, the local authority, so it would have to go through a regime to do that. Local authorities do not have huge independent means for the development of these sites. Could the Minister of State envisage a situation in which the local authority is forced to develop one particular site in a county, as opposed to in a location where there is a greater housing need? If that is the case, I am not sure how forcing its hand in that way is a good idea. It may well also force local authorities to sell on sites at less than the potential market value at a better time. I can see problems with it.
I welcome this amendment. I spoke on this on Second Stage and I outlined my reasons but for the benefit of the committee, I will reiterate my views. It is assumed that the vacant site levy will get at developers hoarding land. That is all very well where there is a housing need, as we know there is. However, this will impact on ordinary people who may have a site that is under-utilised. In some cases, they may not be able to get a loan to do it up, or there may not be a market for the particular property, because a shortage of housing is not a problem in every part of the country. In my constituency, the local authority has long-term voids that are almost derelict.
I agree with one sentiment expressed by previous speakers. In some cases, the local authorities do not have money but equally there are ordinary individuals, private property owners, who have inherited properties. It might be an old family home belonging to parents in the centre of town. They might not have money to do it up and the market that prevails may mean they cannot sell it. Why should they be penalised when the local authority will not be penalised?
The one great benefit of this will be that it will bring a certain sobriety to an overzealous county manager who has plans for housing or regeneration and might decide to slap vacant site levies on private property owners without the same measure applying to the local authority itself. What is sauce for the goose is sauce for the gander. There must be more sympathy for the ordinary individual who might be put in an unforeseen and unintentional predicament. The sentiment of providing more housing and developing under-utilised land is good but there are people who could be caught out by this.
This measure will bring more sobriety to any deliberations by a council which might think it can shove a major responsibility onto private property owners without considering the ramifications for that property owner. It will consider it if it has to face the same ramifications. The issue of local authorities not having the means to develop sites is an issue but it is also one which a private person might face, so this measure is welcome. My only question is about who will levy the council. The council has its own budget, so to whom will it pay the levy and how will that be implemented?
I thank the Deputies for their contributions. We might pose the question as to why we have the vacant site levy at all. This Bill is targeted at incentivising urban regeneration and the provision of housing in core areas of our cities and towns. We must start where infrastructure already exists. We all know cities and towns in this country that have sites in their centres which have public services on the footpaths outside them and which have been lying vacant for many years while pressure is coming on the suburbs of those same towns and cities for development. Pressure is being put on the taxpayer to provide infrastructure and services when we should be focused on regenerating and redeveloping the cores of our cities and towns.
In general, this Bill is adopting a carrot and stick approach. This is the stick element of it, where we are proposing, given due process, to introduce a vacant site levy to stimulate the development of these sites and to bring them back into beneficial use. Nobody could disagree with that rationale in the first instance. How do we go about it? Why are we now applying it to public bodies and local authorities as well as private bodies? If we look honestly at the property registers of many cities and towns, public bodies own substantial tracts of land there. With that ownership comes responsibilities. If a person who is proud of their community looks at a site, it should not matter to him or her who owns the site once it is put into use for the benefit of the citizens of that community. Local authorities have a responsibility, like everyone else, in this regard. For those reasons, they are being included.
At the very least, the proposal that a vacant site, whether publicly or privately owned, will be designated as vacant will stimulate debate in the local authority chamber where the elected members are being given a new power to identify and designate such sites according to the needs of their areas. Ultimately, the local authority will decide but it will be difficult for any local authority to target any particular site while neglecting sites in its ownership. It will incentivise the development of those sites. For that reason, we propose the amendment and I hope we will get support for it.
I have one question as the other questions I wanted to ask have already been answered. I agree that there are local authorities which have huge land banks but with money being so scarce in local authorities at present, how does the Minister of State propose to impose fines on these authorities?
I assume the local authority cannot levy itself. Who will levy the local authority?
I know we have an opportunity to submit amendments up until tomorrow. On Second Stage I raised a question on the considerable number of development sites that NAMA controls. I wish to ensure that any property under the care and control of NAMA is treated in the same way as if NAMA owned the property. We know that in many instances developers are restricted in what they can do. NAMA is part of the key to addressing the housing shortage, and it can play a major role. NAMA controls property and it should be working with developers and funding them to that end.
NAMA has been in existence for seven years and does not really have much to show in terms of addressing the housing shortage. What was envisaged by Government, in view of the report commissioned by the Department of Finance which showed that we need to build 30,000 houses per annum, was that NAMA would address that need. NAMA is clapping itself on the back after announcing that 4,500 houses would be built in the greater Dublin area by 2016, with the possibility of an additional 20,000 houses around the country in the next five years or so. This is a drop in the ocean when one considers the housing need. It is important that NAMA comes within the definition of "owner" and that it is clarified that NAMA will be held liable when vacant site charges are placed on properties.
I am not against the vacant site levy. It is a good idea, if it is applied correctly. Under the provisions of amendment No. 1, however, the local authority will be levying itself. It is placing an administrative burden on one department to levy another department. I understand it is a reserved function, so one could have a situation in which councillors decide that a particular area can be brought into play and a site might be sold rather than developed because the local authority does not have the funding. That is what concerns me about this amendment. I think there is a certain nonsensical aspect to a local authority levying itself.
I support this amendment. I think it is a good idea. However, I forgot to say in my Second Stage contribution that I have concerns about its practicality. Will the Minister respond in that regard? Are we depending on the local elected members to impose strictures on the staff of the council to ensure they do a deal on the vacant sites for which they are responsible? As has been indicated, vacant derelict sites can be controlled by councils, and councils can often be slow to ensure they are occupied.
It is nonsensical to expect the local authority to levy itself. Let us be clear: where a housing authority has land, it will want to use it. There is all this palaver about devolving powers to local authorities, but in this Bill we are cutting a stick and handing it to them to beat themselves with it. The money to pay the levy will not drop out of the sky; it will come from rates in the administrative area of the local authority. That is the last thing people in the community will want. They will want a solution. The 949 local councillors will respond to pressure from the people to bring the land into use. Local councillors, regardless of political persuasion, are very responsive to local pressure and local needs
There are good things in the Bill, but some aspects of Part 5 needs to be revised. The site levy is a good idea. I brought forward a derelict sites Bill last year because of the urgent need to address the issue, but this Bill is taking the wrong direction. There is no compelling case for it. It is Big Brother handing a stick to a weak local authority. Rather than trying to strengthen and empower the local authority, the Government is giving it a stick with which to beat itself. It is the ratepayers in the area who will pay for the beating. I think that is terrible.
The reason a local authority has a vacant site in the first place is that it is not in a position to develop it. The major problem is gaining access to capital to develop the site. It owns the site. With the numbers on the housing list increasing, the pressure is on public representatives to ensure the sites are developed.
I am aware that investors are willing to develop local authority land and lease back the resulting properties back to the local authority. One thing that is causing a problem is that a local authority can only enter into a lease-back arrangement for a maximum of 20 years. The legislation needs to be amended to increase this to 30 years. I think it would act as an incentive for investors to come in to develop some of the local authority sites and lease them back to the local authority over a period of time. It would address the problem by building houses rather than putting a levy and an administrative burden on local authorities.
My point follows on from Deputy Naughten's point. This amendment might make sense if the Government gave us a commitment and a cast-iron guarantee that the capital will be provided by the Government when the local authorities come up with plans to develop sites that are suitable for social housing where there is a social housing need.
This pertains to something that I am very uncertain about in terms of the Government's whole approach to the social housing crisis. The Government states that the money is available but it is up to the local authorities to provide the housing. Is the money really there for the local authorities? I can think of several sites owned by my local authority which are earmarked for social housing, but we have been told by the local authority that it does not have the money to develop the sites. If the Minister of State is saying that all the local authorities have to do is to come up with a plan to put social housing on those sites and the Minster will give them the money, I might support this.
In the absence of such a provision, this is a mechanism to force the privatisation of local authority land. The only way the local authority will be able to come up with plans that it can finance, if the Government does not guarantee the local authority the money, is by handing the land over to private developers, who will take it and lease it back to the council at a further cost to the taxpayer and to the State, and this will ultimately result in a loss of public housing that might have been owned by the State. If this were the case, I would be resolutely opposed to the Bill. I am asking the Minister whether he is guaranteeing money for local authorities that come forward with plans for land that they currently own. I would be very happy but surprised if that were true.
Deputies asked how local authorities would levy themselves. Local authorities already apply rates to themselves. That is a known fact under our current rating system and, therefore, any liabilities that would result from a designation are identified and shown on the local authority books. It is my hope - this is the reason we are bringing in this legislation - that we would not get to that stage, because a strict set of criteria is set down and there is due process before any vacant site is designated. Again, it affords the owner, whether public or private, the opportunity to set out clearly to the local authority what he or she intends to do to bring that site back to beneficial use.
If we are to learn from the past, we have to move away from urban sprawl, greenfield sites and a shortage of infrastructure. The same Deputies who are complaining here now were the first Deputies to come to me with complaints about unfinished estates, protocols for unfinished estates, lack of infrastructure and half-finished infrastructure. I am saying clearly that the intent of this Bill is to exploit and sweat existing public infrastructure that has already been paid for by the taxpayer. We want to focus minds on local authorities, which are the authorities that will designate ultimately. We are giving them that power. They are also the same local authorities that prioritise their housing proposals.
Deputy Boyd Barrett asked a good question regarding local authorities that come forward with proposals for social housing on a vacant site. I will give him an example of that in Fingal. The Deputy said no capital funding was being provided. The capital funding being provided to Fingal, for example, for the provision of housing has increased from €6 million to €81 million this year. Whether it is Fingal or any other local authority, if a local authority comes forward with proposals to regenerate a site and provide social housing where public infrastructure already exists, if it is being prioritised by the local authority, it is logical to me that we in the Department of the Environment, Community and Local Government should prioritise it as well. Also, the figures stack up because the infrastructure is already paid for. We do not have to go to enormous lengths and expense to install new public sewers, water facilities, electricity and so on.
This is about urban regeneration and refocusing development back to the core of our towns and cities. We may not like all that is in the Bill, but it is an attempt to focus the minds of local authorities and their members, who have a strong responsibility, on this issue. I believe that all public bodies, even if they are owners of sites, have a responsibility also. They need to make plans for those sites just as everybody else does.
The amendment stands. I hope I have explained the rationale behind it. There are strict criteria, there is due process and there is an appeals system. It is not something that can be struck down overnight. People will have sufficient time to set out their plans for sites, but these sites need to be brought back into beneficial use if we are to have sustainable development and planning in our cities and towns.
I move amendment No. 2:
In page 6, to delete line 34.
The thinking behind the amendment is that the provision in this respect should not be so confined The Minister of State is right about the assets in our towns and city centres. If we are to develop our facilities in towns and villages, and perhaps take some of the pressure off in terms of urban-generated housing in the countryside, they have to be attractive places to live. This provision in the subsection is limited in that it confines the site to areas where there is a housing need.
Amendment No. 5 removes the requirement for the site to consist of regeneration land or to have an adverse effect on the amenities or character of an area in order to be eligible for a levy. There may well be other circumstances such as the under-use of buildings that are lying vacant. There could be several other scenarios in which this could be meaningfully applied and where the argument could equally be made in regard to bringing more vibrant uses to a town, village or city. The intention of the amendments is to widen out the measure so that it is not so limited.
The Minister of State has provided that the site must be situated in an area where there is a need for housing. I made the point in the Chamber that land banking is one of the biggest problems in the industry, and we need to deal with it. There are too many provisions in the Bill that allow developers to get out of this. If someone has bought land for development and deems that there is no need for housing there at the time, I would point to the two categories we have in Ireland - namely, land banking and shadow land banking - and this one falls into the shadow land banking category. It is land that did not cost as much as land that we would regard as being part of a land bank, and that will sell for a lower price, but fellows are hoarding it until, they estimate, the time comes when there is a need for housing on that land. The Government should be catching those land hoarders in the net as well, even though the land might not be suitable for development currently. There might not be a need for housing there right now, but the developer or investor bought it for a good reason. That is what shadow land banking is. All sites bought for development need to be caught in the Minister's site levy.
It is important that we remember that we are proposing to put a sanction on somebody who owns property. The reason is that we have a housing shortage, and we want to address that. I have expressed my concerns about the issue of regeneration outside the context of the need for housing and the pressure that exists which requires us to take emergency action, but we have not had the full conversation on this. Many people have one-off units in areas of towns that are derelict. I will cite a case for the Minister of State. An older retired woman came to see me. The woman, who is on a non-contributory pension, has an old premises that she used to live in but that she had to leave. It was half commercial, half residential. It is an old building and she has priced what it would take to do up that building, which is €250,000. There is an old stone facade on it. The property is not worth that. We have to be careful that we are addressing a problem here and that we are not going overboard. This retired woman will not get a loan. There is no market there because there are several more properties up the street.
The story is not the same in every town and city, and I acknowledge the problem with housing and the needs in that regard, but in situations in which the market does not allow people to borrow or perhaps even sell in any reasonable fashion, we need to exercise more hesitancy in slapping vacant site levies on them. We have the Derelict Sites Act if an issue arises regarding the facade of a building or the visual amenity, but these are the realities for ordinary people. They are not developers or land holders and they would sell it. I have cited that case, and I know other properties in respect of which people have not told me their stories but I would be reasonably familiar with the situation. We have to protect such people. That is why the provision is included. It is not designed to get somebody who is a land hoarder out of the trap. We know land has been developed in the past that should not have been developed, which is an issue to do with development plans and how the development took place. Now we have areas of the country with empty houses. That is the irony. There are empty houses in my own town - new houses that are empty.
It is not a case of one size fits all. There are people who will be put in dire straits as a result of this. We should not cry over local authorities, who have much deeper pockets than the lady to whom I refer, who is on the non-contributory old age pension and would be caught out by an over-zealous plan. It is welcome that we confine it in this regard. I have reservations about the regeneration, but in some ways we have to leave that to councillors.
It will be tempered by the fact that anything we do here will also affect the local authority and its pockets.
I will address Deputy Mulherin's concerns first. There are several strict criteria that must be adhered to for any designation to happen. This will be in the control of the local authority. One of the criteria is that a project must be economically viable. I assure the Deputy that no penal imposition will happen as a result of this Bill, as there are enough checks and balances within the Bill to address the issue and give councillors the flexibility to understand if there are economic viability issues. I know it is a different section to what we are discussing but I draw the Deputy's attention to section 14(b), dealing with determination of zero market value, which states, "the site is situated on contaminated lands and the estimated costs of remedial works necessary in order to use or develop the site exceed the market value of the site itself". There are checks and balances to protect the people mentioned by the Deputy. In short, we are targeting high-potential sites in highly serviced areas with much demand for housing. There are strict criteria and strong processes before a site would be designated. There is due process and time for owners of sites to provide reasons a site should or should not be developed.
We are opposing the amendment. The criteria in section 5 set out the principles and policies underpinning the terms "residential" and "regeneration land". The proposed amendments remove essential elements of the criteria to be applied in determining what is and what is not a vacant site. Without such criteria, there is no justification for designating which sites in residential and regeneration land should be targeted for the application of the levy. These are important justifications underpinning the vacant site levy measure aimed at incentivising the development of high-potential vacant sites in central urban areas for housing and regeneration purposes. The legislation would lack teeth without these criteria. The purpose of the criteria outlined in the Bill in this regard is to focus on the appropriate range of sites to be potentially subject to the levy, with a view to strengthening the public interest and common good justification of the levy.
The assets mentioned by the Minister of State, including public transport or a clinic, for example, will be in areas that would probably be doing all right. I accept Deputy Mulherin's point that it is not a one size fits all approach. The local authorities will have the responsibility to designate, and that is not something that will be imposed. I am quite sure people around the country will take different views, depending on the circumstances. A place like Dún Laoghaire and my area could be worlds apart from places in the west of Ireland. If we are going to have towns functioning in a vibrant way, with no unused buildings that could be brought into viable use, we need to examine the areas that may be falling into dereliction because somebody is hoarding property, perhaps even ahead of areas that are already very derelict.
There is a counter-argument. If I bought a site zoned for development, it might not be economically viable to develop it or I might not be able to get the finance to do it. I would be facing the prospect of paying a 3% levy on it and I would have to weigh up my options, which are to pay the levy or get rid of the land. If I am not forced to make that decision, I could quite happily be a land banker and pay no tax on it.
I was just speaking in opposition to the proposed amendment. Section 14, which takes in whether a market exists and if the works required would make a site unviable, is very important. We must have these qualifications to safeguard, as much as we can, the sort of person I described earlier.
I will make a very clear distinction between what is categorised as a derelict site and a vacant site. As we all know, there are shortcomings with the Derelict Sites Act and people may get frustrated within communities because of them. Essentially, if there is window dressing in the form of paint or nice boarding on a site, the issue can be seen as resolved. The criteria in this Bill go much further in a strengthened process to ensure a vacant site is one of high potential. A key criterion to be aware of is that a site can only be designated where there is a deficit of housing in a particular area. Where there is surplus housing or adequate provision in an area, this Bill would not allow a site in the area to be designated. Section 6 deals with the register of vacant sites and section 6(4)(d) refers to "whether the number of habitable houses available for purchase or rent was less than 5% of the total number of houses in the area.". It is only where there is much pressure for housing that a site can be deemed vacant. This cannot happen willy-nilly all over the country in towns and villages, and these strict criteria must be met. These criteria give the Bill its teeth, and by interfering with that we would lessen its impact and its ability to deliver more housing, which is what we are all trying to achieve.
I commend the Government on this as I thought I would have a better chance of putting in 0.08 ha than 0.05 ha. I made the point in the Chamber that there are so many infill sites in large towns and cities in the country and some are very valuable. This is definitely a good move and I will support the Government's intention to change the value to 0.05 ha.
I do not want to hold up the show but I indicated that I wished to speak on the last amendment. It should not depend on whether there is a housing need in the area as there may be other needs in a location.
The Government amendment is good, as there are many small sites that are unused and which cause problems. I agree with the Minister in that we must differentiate between derelict and unused sites, as there is a clear difference. The derelict sites legislation must be strengthened. It is a good amendment and I will support it over Deputy Murphy's, which stipulates a bigger area. It is a good move by the Government and it takes into consideration the real position on the ground in many towns, particularly in the centres, which can have many small sites. They are important and problems can be caused if they are unused.
I move amendment No. 6:
In page 7, line 10, to delete "0.1 hectares" and substitute "0.05 hectares".
I thank the Deputies for their contributions, the support for the amendment and for withdrawing their own amendments.
Deputy Wallace is not the only Deputy with a background in construction. A few more of us have that also. The Government listens as do I. Deputy Wallace made a rational argument on Second Stage for a lesser plot size for sites and I agreed with the argument he made. Subsequently, the Government brought forward an amendment to reduce it to 0.5 hectares on the plot size. This is about targeting what we have been speaking about. We know that sites in our towns and cities are causing urban blight and problems. Sometimes there are ownership issues. There is a variety of reasons that they are not being developed and we need to get to the crux of them. The Bill will provide local authorities with the power to focus on these sites and regenerate them. As such, I welcome the support for the amendment.
I am a bit confused as to Deputy Stanley's position. He referred with regard to the last amendment to "other needs". I am not sure what other needs he is speaking about. We are trying to address the housing need and urban regeneration where there is a high demand for housing and a deficit of housing. Strict criteria are there to address that. As such, I am not sure what he means by "other needs". He may want to explain.
The question is about where there is a need for a public body to provide a local primary care centre, for example. The point was well made by Deputy Mulherin that many facilities and housing were pushed out to the edge of towns and we need to get them back in. We agree fully with the Government on this. The Minister of State referred to sweating these important sites. It might not be the best term and I would probably prefer the word "consolidate". We should be aiming to consolidate town cores. While I do not want people living on top of each other, one sees that the heart of every town one drives through is derelict. They are coming apart and the centre is not holding. We need to look at this seriously. While a great deal of what is being proposed is good in the general scheme of things, it could be about bringing in a primary care centre or other important facility.
I have not tabled an amendment to the section, but I suggest the following for consideration given the possibility that I might put something in on Report Stage. I refer to section 5(2). When we are talking about the definitions of "site" and "home" on page 7, we are excluding what are described as "homes". Obviously, there is a very good reason to do that in most cases. One does not want to be lashing levies on people who might have a house or what is defined as a "home" empty for a period for understandable and legitimate reasons. However, there is an issue of which I am aware, albeit I have to do a bit more research. In fact, the Minister of State may be in a position to enlighten us. I understand that in London and other European cities if a house is empty for a very prolonged period without good reason, there are laws which provide that those sites can either be taken by local authorities or that levies will apply to them. One might not be able to take them here, but levies might be possible. I would like to hear the Minister of State on this. While one would obviously have to be careful and there would have to be a great deal of consideration as to how it might be done, it is wrong if there are built houses just sitting there for long period, whether they are in public or private ownership, when there are people in need of places to live. We need to consider whether a provision should be included in the Bill to address that issue. It may be that we could look at how the issue is dealt with in other jurisdictions, particularly in Europe, where legislation is in place to ensure that empty properties are used for housing for people who need it.
I am happy to clarify for the Deputy that the definition of "home" in the section he refers to refers to a dwelling where a person ordinarily resides or lives. Essentially, he is right that we do not want to target a home where somebody is living. The Deputy made some points regarding other jurisdictions where there are vacant houses in which no one is living. I know where he is coming from and that he wants to get them back into use. However, in the Irish situation, we would be in danger of contravening Article 43 of the Constitution which refers to property rights and the right of people to own property. I am not sure that we could introduce here provisions applying in other jurisdictions without a change in the Constitution. We would be happy to clarify it for the Deputy, but I think that is the position.
Arguably, if there was a constitutional impediment, that could equally apply to the levy. If the levy can apply to land, I do not see why it cannot apply to vacant properties. It may be something we need to look at. I have not thought it out fully or put down an amendment, but it is something we should look at and consider. I am certainly going to do so. If there is any way to have a measure to push buildings and houses which are not being used back into use for those who need them, we should consider including it in the Bill.
I would be very interested in a note from the Minister of State on this subject, but my understanding is that there is a facility whereby a local authority can take over a dwelling where the owner cannot be identified. I have asked that a particular dwelling be taken over because we cannot find the owner of it. From a conversation I had with Deputy Emmet Stagg on a previous occasion, I understand that the library on Main Street, Maynooth, was acquired that way because they could not find the owner. Deputy Murphy might know about that.
Unfortunately, Article 43 tends to be interpreted according to the first part of the provision. In fact, there is a second part of it that refers to the common good. It is not in the common good if there are a lot of vacant properties around the place while there are people without homes. It is interesting to note that one of the locations where this is done is the USA where foreclosures have left a great deal of dereliction. Use it or lose it was the rule and public authorities were able to take over those houses. It is not something one might find in eastern Europe; it is actually in places one might not expect to find it. It is how they have dealt with some of the dereliction in the USA.
There is no doubt that it is an interesting debate and discussion. I have already outlined the situation with regard to the Constitution. Deputy Catherine Murphy makes a good point regarding the common good at which the Bill, in essence, is targeted. It is aimed at the common good of providing houses where there is a high demand and where services exist. Deputy Dowds referred to the CPO measure under the Derelict Sites Act. If something is a blight on the landscape and goes on the register and there is due process, the local authority can CPO the site. This Bill is not about taking property from people or grabbing land.
It is a targeted approach with a studied and deep analysis of urban areas by a local authority in a measured, fair and balanced fashion. It will give due process to the owners of sites and the time for them to outline their plans for them. If, at the end of all of this they cannot meet the criteria, then the local authority has the power to designate it as a vacant site and apply the levy.
We will take it one step at a time. This provision is more than useful and it needs to be given a chance to see how it works. I hope it will bring benefits for regeneration and the provision of housing in our urban centres.
I move amendment No. 8:
In page 7, line 18, to delete “1 January 2017” and substitute “1 January 2016”.
These amendments deal with the register of vacant sites. The dates for the completion of this have been pushed out into the future, however. Given the urgency of actually getting this up and running, I do not understand why the timeline has been pushed out as far as it has been. Each of these amendments proposes to bring forward the dates for the setting up of the register, giving notice of inclusion on it and when the levy should be paid. My amendment No. 17 proposes the date for when the levy should be paid should be 2018 rather than 2019, as suggested in the Bill.
These amendments are good. One of the major weaknesses in the Derelict Sites Act 1990 is the amount of time it takes for its provisions to kick in. Deputy Michelle Mulherin made a good point earlier about a pensioner who owns a derelict site and does not have the means to develop it. There is a clause to cater for that.
However, some owners with the means can drag it out, leading the local authorities around in circles. I have been engaged with the Derelict Sites Act over the years and it has been the bane of my life at times. I do not want to see the same dragging out over time occur with this legislation. To allow until January 2017 to establish a register or 2018 to given written notice or 2019 for the payment of arrears is just too long. We have to tighten these up because some developers will drag it out forever and a day, making the legislation ineffectual.
These amendments are self-explanatory. The wheels of bureaucracy move slowly. However, the timelines for registering and the levy should be brought forward by one year. The onus should be put on the owner of a site to register rather than the local authority having to seek out the owner. The same principle was used with the local property tax. I cannot understand why it cannot be used for sites. I can guarantee local authorities will struggle to find all vacant sites. Accordingly, the onus should be on the owners to register.
I am opposing amendments Nos. 8 and 14 to 17, inclusive, whose collective purpose is to bring the implementation of the vacant site levy forward by one year.
While in certain circumstances the Constitution allows the State to delimit the property rights of individuals in the interest of the common good, such restrictions on landowners’ property rights must be reasonable and proportionate to the ends that the legislation seeks to achieve. In particular, measures such as the vacant site levy must be introduced in line with the principles of fair procedures and administration. In this regard, the Bill provides the timeframe for key actions by the planning authority in the implementation of the levy.
Adequate time needs to be given for lead-in for such legislation and for due process. Realistically, the local authorities need time to study their respective urban areas. It should be noted once this Bill is passed, they can commence with identifying candidate sites. That in itself will send a strong signal to the owners of these sites that they need to get their houses in order and need to start preparing plans. There are already positive signs of what is in the pipeline. For the first quarter of this year, planning applications are up 30% on last year. We need to see more of that, preferably in our towns and cities and urban sites. We need to exploit the public services that already exist. Deputy Catherine Murphy explained this about transport, public sewerage and water systems, broadband and so forth. We have sites that can be brought back into beneficial use. The whole thrust of the vacant site levy is to stimulate that.
In the environment Bill which will debated later this week, it is proposed a landlord will be given 20 days to re-register new tenants for the purposes of water bills while the owner of a vacant site will get a year and a half to register it. That does not sound fair to me. The Government should revise its timelines in this section.
I move amendment No. 9:
In page 7, to delete lines 27 to 38.
Most local authorities will have to prepare a register on housing need. Essentially, this amendment seeks to remove the requirement for a planning authority to determine a housing need for the purposes of preparing this register. It may well be the case where a local authority has not prepared a housing need, it could drag this out longer. This amendment aims to change this.
Setting aside the duration of 12 months issue and focusing on the matter that the majority of the site has to be vacant, if I had a development site that would come under this levy, I would make sure it was not vacant and put something on it. What is a vacant site? If I put a car park on more than half a site, does that mean it is no longer vacant? It is a dangerous path to go down. If I buy a development site with the intention of putting housing on it at some point but put it to an alternative use in the meantime, that does not escape the fact that I am land-banking and should be paying tax on it.
I am opposing amendment No. 9, which proposes to remove section 6(4), which provides the specific criteria to be used by a planning authority, or An Bord Pleanála on appeal, in determining whether there is a need for housing in an area, with reference to the following: housing strategy and the core strategy of the planning authority; house prices and the costs of renting houses in the area; the number of households qualified for social housing support that have specified the area as an area of choice, and any changes to that number since the adoption of the development plan; and whether the number of houses available for purchase or rent in the area is less that 5% of the total number of houses in the area. These are the criteria that give teeth to the whole Bill. It would be a mistake to delete them.
In any process, Deputies will agree, we should have an appeals mechanism. Otherwise, we are opening ourselves up to the risk of legal challenge. This section in the Bill is intended to further elaborate and strengthen the definition of a vacant site consisting of residential land in section 5. It provides clarity and justification for the identification of vacant sites and the provision of housing on such sites in areas where there is a housing need. The removal of this provision, as proposed in this amendment, would diminish the legislation.
I move amendment No. 10:
In page 8, between lines 24 and 25, to insert the following:“7. (1) Owners of sites greater than 0.08 hectares that are vacant or idle have a responsibility to register their interests with the local authority before 1 January 2016 or face a fine of 3 per cent of the site market value for the year 2016.”.
This amendment introduces a deadline date, 1 January 2016, for owners of vacant sites to register their interest. There would be fines for any failure to do so. That is the intention of the amendment.
I am opposing amendment No. 10, which places a duty on the owner of a vacant site to register with the local authority by 1 January 2016 or face a fine. Deputy Wallace also mentioned this earlier. Such a proposal would be in contravention of the principle of fair procedures and administration for such measures, which I have already referred to. The provisions of the Bill were drafted taking account of these principles, particularly the timeframes and procedures involved, to ensure that they are fair and proportionate.
The Bill provides that the planning authority is responsible for administering the levy provisions in their functional areas by establishing and maintaining the vacant site register and identifying vacant sites consisting of residential or regeneration land on the basis of the criteria outlined in sections 5 and 6, and applying the levy charge as appropriate. It could not be expected, nor is it likely, that individual site owners would be able to undertake the consideration of their own sites and determine whether or not they are vacant in accordance with the criteria set out in the Bill. It is the planning authority, or An Bord Pleanála on appeal, that is in the best position to make this determination.
On that basis, we oppose amendment No. 10.
I am opposing amendments Nos. 11, 12 and 13 because, collectively, these amendments remove the provisions in section 9(2), (3) and (4) which outline the mechanism open to a site owner to appeal to An Bord Pleanála the entry of his or her site on the register. It is important in a measure such as this that clear and fair appeals mechanisms are in place. In this case, the proposed amendment removes, in summary, the following provisions: the burden of proof on the owner to show that the site was not vacant; the power of the board to determine that a site is not vacant and direct that it be removed from the register; and that the entry of a site on the register will not take place until an appeal is determined. These are fundamental provisions of the appeals process against the entry of a site on the register. It elaborates on how the appeal mechanism will work in practice, and without them it would not function.
The question is when the different measures will kick in. This has the potential to pull it out like an accordion; it will prolong the process and make the legislation difficult to implement. The amendments that have been made are worthy of inclusion. There is a weakness in section 9 of the legislation as it stands and it needs to be amended.
I disagree with that. Buying development land with hard cash is unusual. It does not really happen. Most sites that are bought for land-banking will be mortgaged. This legislation gives them a way out by saying they only have to pay half of the levy if there is a 50% mortgage on it, or three quarters if 75% of it is mortgaged. That is a ridiculous idea. All this stuff is mortgaged to the hilt. No one in their right mind would buy a site with cash.
I move amendment No. 20:
In page 16, line 20, to delete “the residential land on which the site is situated” and substitute “residential land in the vicinity of the site”.
Section 23 outlines how the proceeds of the vacant site levy are to be used by the planning authority. It ring-fences the proceeds to be solely used for the provision of housing on the residential land on which the vacant site is situated or for the development and renewal of the regeneration land on which the site is situated.
Amendments Nos. 20 and 21 provide for an amendment to subsections (1)(a) and (1)(b) to provide greater clarity on how the planning authority may use the proceeds of the levy. The current wording of the provision stipulates that the levy proceeds may only be used on the vacant site on which the levy is being applied. On further consideration and rereading of the provision, this would be an overly restrictive and impractical approach for a local authority. Accordingly, the amendments revise the wording of these subsections to provide that the proceeds may be used for the provision of housing on residential land in the vicinity of the site or the development and renewal of regeneration land in the vicinity of the site. This gives the planning authority wider scope in the use of the levy proceeds, thereby providing greater benefit to the overall local area in which vacant sites are located. These amendments are a necessary revision to the text of the Bill so as to enable the planning authority to use the levy proceeds in a more appropriate and beneficial way.
This relates to the Government's plan to reduce the obligation on the developer from 20% of any development to 10%, which is a central aspect of the legislation. Undoubtedly, the Government will claim that a level of 20% is an inhibitor and discourages developers from developing and that reducing it to 10% could incentivise builders to start developments. It probably captures the Government's argument to state that it is better to have 10% of something than 20% of nothing. I have probably stolen the Minister of State's lines.
I do not. There is a link between this amendment and some of the others that I have tabled. My problem with it is that there is too much reliance on the private sector generally in the Government's approach to dealing with the housing crisis. This Bill is the working out of that logic, in that it asserts that the only way we will get the social and affordable housing that we need is by constantly incentivising, getting down on our knees and begging private developers to provide it for us. I do not agree with this approach. It will not deliver the volume of social and affordable housing that we need.
My concerns in this regard are increased by the fact that the Government is going to provide a further large get-out clause on the 10%, in that developers can lease property back to local authorities, which is a matter that subsequent amendments will address. The combined effect of these two provisions is to let developers off the hook completely, leaving local authorities with nothing. They will not get 20% or even 10%, but 10% leased back, which means that they will get nothing. I do not agree with the logic behind these provisions.
Naturally, we are not going to get a large amount of social housing unless the State builds it. If the State ring-fenced 10% of property as social and affordable housing and there was zero chance of a developer getting out of that obligation, I would agree with the 10% level. Currently, one cannot get financing from a bank if one owns a site but has to cough up 20% of it.
Part V was a failure because we let it be so. Ghettoisation has continued unabated because we have allowed it to happen. If the Government cut the level from 20% to 10%, I would agree so long as no site could escape the social and affordable housing requirement. Last summer, Kennedy Wilson received planning permission for more than 160 units at Clancy Barracks. It told the council that it did not believe that the development was suitable for social housing. It paid €850,000 instead of providing property. At 10%, that would have been 16 units. The Government is doing away with allowing people to buy out of the obligation, but it will still allow them to debate how to sort out Part V. Developers will have the opportunity to move the obligation off site and deliver the units elsewhere. Doing away with the cash payment is a good idea, but the Government should not allow the units to be moved off site. Be the site in Ballsbridge or Darndale, Part V must be applied. If the site was in Darndale, we would be discussing affordable housing. If it was in Ballsbridge, it should be social housing. I would live with the 10% level provided that it was written in stone and there was no opportunity for developers to get out of it.
I do not know whether my next point relates to this section, but the Government is changing a rule. There was a time when a builder had X weeks to revert to a planning section and sort out Part V. As the Minister of State knows, though, sites were being commenced without Part V having been sorted. That the Government is changing this situation is a plus, as builders will not be allowed to start until Part V has been sorted. If the Government wrote the 10% figure in stone and made it part of the planning conditions, there would be no need for a debate after permission had been granted and the builder could not start until he or she had agreed to fulfil these conditions. There would be no need for a further meeting. It would do away with this problem.
One of the positive aspects of Part V is the social mix. This will be important.
Due to the lack of supply, there is a need to build public housing on a large scale, as I do not see how we will provide houses if we do not build them.
I completely agree that a get out clause will always be problematic. Developers are always looking to find a way out of their obligation to provide social and affordable housing. It tends to be in areas such as the Ailesbury Road area that they will seek to do that.
Some local authorities agreed prices in advance of the obligations under Part V commencing while others agreed prices afterwards. The State got very badly burned when the price was agreed in a rising market. That aspect has to be fully nailed down because it gives rise to a very costly problem and reduces the number of units the local authority will get.
I do not propose to accept amendment No. 23. We cannot meet the housing demand by direct build only, as put forward by Deputy Boyd Barrett. I can guarantee that should he be appointed Minister in the morning, and with the best of intentions which I know he has, he would not deliver the number of houses we need to meet the current demand with direct build on local authority lands. We are already greenlighting and approving shovel ready projects that local authorities are proposing but there is a time lag in delivering on them. We must take a multifaceted approach to delivering housing. In the first instance, we have turned around many vacant houses, by providing extra funding to local authorities. We were rightly criticised for allowing these houses to remain vacant. In the past year, we have brought back into beneficial use more than 2,300 houses that were lying vacant and boarded up. Families are now in those houses. We have also provided additional funding this year for an additional 1,000 vacant houses in our existing stock to be brought into use. This has been our priority. We have also, as Deputies know, allocated funds for the first phase of direct build of local authority houses and there will be a second phase announced in the coming month or so. We will also be announcing additional funds for the approved housing bodies. These are for new capital build projects that are in the pipeline.
I do not believe in throwing the baby out with the bath water. By saying there is an over-reliance on the private sector providing houses, we are doing a disservice to the people on the housing list because we need the private sector to provide houses to meet the demand. That is not an ideological position but the reality of the position we find ourselves in. We are using all resources and all abilities to deliver houses. Part V is an important element of that delivery in the private sector.
I can understand the reasons Deputies oppose reducing the obligation from 20% to 10%. As was stated, 20% of zero is zero. There has been very little construction and we need to ask why that is the case. There is a question mark on the economic viability of building again because, to be quite candid, it is cheaper to buy houses than to build them in some areas. Deputy Wallace knows that as do I and Deputy Boyd Barrett. Until the market normalises to some degree and until we address viability, we will not get the type of housing construction that we want.
We must try to incentivise construction by assisting the economic viability of building. We have agreed to reduce the 20% obligation to 10% but it is not all one way traffic for the developer. We have removed, as some Deputies have said, the flexibility that existed in the past to pay cash in lieu of houses. We want housing units and that has been clearly stated in this Bill. We have gone a step further. We are strengthening the process because we are front-loading the agreement and the negotiation on Part V. As Deputy Wallace has said, there now can be no commencement notice unless that agreement is in place as part of the planning conditions. We are strengthening the Part V process to ensure that we deliver more units for the people who need them. This is a critical element of the social housing strategy. It is a multifaceted approach and this is just one element of it. We need to see housing units being developed and construction projects starting. We believe the Government's approach is reasonable and will assist in that area. We will oppose the amendment on that basis.
I agree with reducing the obligation from 20% to 10%, provided it is written in stone and it is impossible to get out of the obligation. The Minister of State said that if Deputy Boyd Barrett were appointed Minister with responsibility for housing, he would not be able to build all the houses-----
If Deputy Wallace has concerns around the provisions on the 10% and if he is telling me there are ways out of providing it, let us hear it rather than just saying it without coming up with a substantial argument behind it.
I did not invent it but perhaps I have misinterpreted the Bill. I hope I have but I will raise my interpretation of it on Report Stage. The Minister of State said that if Deputy Boyd Barrett was Minister with responsibility for housing, he would not be building all these houses. The Minister of State is dead right but there is a good reason for it. The Government would not give him the money to do it.
The Minister of State will not even let me talk now.
It beggars belief that the EU does not allow states to borrow money off the books at the 1.7% interest rate to invest in infrastructure because it is a no-brainer. We are pushed into the hands of PPPs where the money costs about 15%. That is just lunacy. I think the Government would have more of an appetite for building more State housing on land that is available if one were allowed to borrow money to invest in infrastructure at a market rate rather than being pushed into the hands of PPPs.
I am genuinely tempted by the idea that 10% of something is better than 20% of nothing, given the dire situation we are in. I put this amendment forward out of genuine concern and desire to have a serious debate on the issue. I remain open to hearing the arguments but I wanted to put it down because this is a central component of the Bill and I will consider it as we go along. Essentially, I want to reserve the right to re-enter it on Report Stage, depending on what I hear in the discussions that I might have with people who are concerned about this issue between now and then.
On the question of how much can we directly deliver, which, as the Minister of State indicated, is my favourite approach, I accept that some has to come from the private sector as well but we are not exploring fully the potential for direct build. I was at a briefing by TASC recently and it was pointed out that apparently - I cannot give the exact title, but I can get it - there is some provision for about €1 billion which one can get off balance sheet in the European Union for infrastructural projects where one can show it is infrastructural expenditure. Such expenditure will not be put on the balance sheet. I also believe from discussions we had on this subject with the Fiscal Advisory Council a week or two ago that a serious debate is opening up about structural deficits, what should be included in them and the degree to which capital expenditure should be included in them. There is much debate on what should be considered a structural deficit and there are different interpretations of it. However, there is a debate opening up in the European Union that endorses the view that capital expenditure of this sort should not be included in the structural deficit. We need to wade in big time behind that argument. It follows what Deputy Wallace has just said. This is a no-brainer. It is guaranteed saving of money that is currently being wasted on rent allowance and so on.
One needs upfront capital but in the long term, there is a guaranteed saving and benefit to the State. We need to strongly make that case and to proceed in that direction and be much more ambitious in doing so.
I will now deal with the provisions under Part V for social and affordable housing. There is a large site in my area, namely, the Dún Laoghaire golf club. As Deputy Murphy said, prior to the boom, some developers were burned by the Part V provisions because they had done the deal and paid extortionate prices to meet their 20% obligation. However, should this Bill be enacted, the developer who was bailed out by NAMA, and is probably still in NAMA, will be required to deliver 10% of the land for social and affordable housing in the second phase of this development. I consider that completely unacceptable, particularly when the developer was bailed out by NAMA.
At this point, things are on the floor in terms of the number of houses being constructed but let us remember that we will head upwards, although never to the mad levels of building 80,000 to 90,000 houses a year. When the market normalises, with the construction of between 30,000 to 50,000 houses per annum, and the hope is that the sector will head in that direction, I would hate to think that when more houses are being built, we will not get the necessary social and affordable housing to ensure we have a social mix.
I am puzzled as to why we are rowing back from 20% to 10% of the land that must be provided for social and affordable housing. There is a myth among the general public that local authorities were given up to 20% of the land zoned for residential use. I know that it was quite common for it to range from 17% to 18% but the local authorities had to buy the houses. In some cases, the developers and builders used low grade material in the social and affordable houses, with some of them leaving a lot to be desired. However, other developers built houses that ranged from okay to very good.
I am at a loss to understand the reason we are reducing it from 20% to 10%. There is a growing need for affordable housing, particularly in the cities and larger towns. The previous Government has been criticised, and it may have deserved criticism for some things, but the figures as set out show what was built under the social and affordable housing scheme each year. Many people who otherwise would not be able to buy a home were able to buy a home under this scheme. I think it is a retrograde step to halve it to 10%.
The provision in this Bill is that the development has to be a minimum of ten houses - in other words, the local authority will be able to buy one in ten whereas in the past, the local authority had the option to buy one house in five and often had the same option when four houses were built. I think the reduction to 10% is a retrograde step. I am at a loss to know the reason for this. Has the need for affordable evaporated?
I am aware there are parts of the country where one can buy a house cheaper than any local authority could provide a house, especially in more rural areas, where there is no demand for housing and the ghosts estates are lying idle. Even in County Laois, I can see parts of the county where it would be hard to give houses away but in other parts of the county, there is a high demand and prices are starting to outstrip what people who are earning reasonably good wages in steady jobs can borrow. We must look again at the provision of affordable housing and bring it up to 20% in the first instance
The Fianna Fáil Government did not deliver 1% of it.
If 10% of the land zoned for residential and-or residential and other uses is ring-fenced for social and affordable housing, there will be less pressure to deal with it. There was a major flaw in the old system. If a builder bought a site to build 50 units and paid €100,000 a unit, under the current Part V provisions, he had to provide 20% of the site for social and affordable housing and accept a payment for the site at the agricultural value of the land and a payment of his costs plus 15% for the house. Paying a builder €1,000 for a site that he had paid €100,000 for made the scheme unbankable for many developers. It did not work.
I do not know how the Minister of State proposes to handle the site value. However, for the system to work, a reasonable system has to be put in place to deal with the site value or it will be impossible for developers to deliver on it.
One of the issues I raised either at the pre-legislative stage or on Second Stage was the need for flexibility. Ten years ago, nobody could have foreseen the extent of the collapse in the economy and in the property sector. We are looking into the future and looking at this provision in a very fixed way. I looked for a sunset clause so there would be at the very least the prospect of a review. We do not know what things will be like in two or three years time. I do not think we should have to come back to amend the legislation. A review should be built into the legislation.
I am open to the argument but I am worried because once things head back in that direction, we may not be getting what we should be getting. We are also sacrificing the sort of balance, in terms of social mix, we should get. I want to signal a point that we will come to later. A very substantial get out clause is the lease back alternative. Deputy Wallace mentioned the cost of the land but the lease back arrangement is a significant get out clause.
I welcome the debate as it is important to debate this critical issue. Let me assure Deputies that we share their ambition to deliver as many houses as possible to address the housing need. We might not agree on how we will do it but the Minister for the Environment, Community and Local Government, Deputy Kelly and I are adamant that we focus our attention on trying to find ways to leverage more houses to meet the needs of society.
I acknowledge the genuine concerns of members but we have to come up with solutions on the best way that we can deliver houses as early as possible. The Part V provision is one way of doing that and we feel our approach is balanced, strengthens and ring-fences the 10% and ensures there is no payment of cash in lieu of houses, as was previously possible. We are making serious interventions to strengthen the Part V process to ensure that we get units and not cash or other alternatives.
Deputy Boyd Barrett remarked about funding of €1 billion being available off-balance sheet. I am not aware of that, but I am aware that the approved housing bodies, for which we want to see an enhanced role, have the capability and the capacity to raise funds off-balance sheet. We want to see them coming forward with proposals to the Department so that we can work with them and the local authorities to deliver more units. That is another mechanism of delivering housing distinct from Part V.
We are also considering alternative proposals as part of our social housing strategy. We want to find ways to leverage off-balance sheet funding to put it into capital projects. Ultimately, the delivery of a house from the concept through the planning, tendering and construction stages is an equation.
It is an equation, which must take into account the viability of a construction project. Unfortunately, the market has not normalised just yet because there are still properties for sale out there for prices far below what it would cost to build them. They are working through the system. Deputy Stanley raised the idea of local authorities purchasing them. We are approving local authorities to purchase houses directly where there is value for money and where there is a strong housing demand. They are being approved all over the country as we speak. However, we need to be careful that we are not soaking up all the houses that are available to young couples who require houses. There is a balance to be struck in how we approach that.
The Part V we are now proposing to the committee can deliver the units we require in a more advantageous way than the 20%, with its loose ends and all that went with it, achieved previously. We will be opposing this amendment on that basis. I will discuss the leasing and the other rental agreements in the next phase of discussion. I think we will be coming to those in the amendments.
I move amendment No. 24:
In page 20, between lines 5 and 6, to insert the following:
“33. Section 96 (inserted by section 3 of the Planning and Development (Amendment) Act 2002) of the Act of 2000 is deleted.”.
There has been a lot of talk about the housing programme and people understand when units are being delivered. They understand there is a permanency about those units being delivered, but they are not going to be long-leased. Some elements of the housing programme are about long-leasing existing properties in the private rental sector. The concern relates to some of the Part V requirement being satisfied by a long-leasing arrangement, as opposed to permanent ownership of the housing by the local authorities. At the moment local authorities are out looking to purchase homes for people. The problem is that we could end up doing exactly the same thing in 20 years time to replace houses that have been occupied by people under this scheme. That is a serious concern.
The Minister of State mentioned the housing associations. I know of some very good examples and some very poor examples of housing associations, but the bigger housing associations tend to be the better ones. When we had Dr. Michelle Norris in here talking to us about that, she said there was money available from the European Investment Bank for housing associations, but there was one proviso that she and others made, namely, that they are set up as charities and are precluded by law from undertaking a project that would ensure they ended up with a loss. They require some level of co-responsibility in terms of leveraging that fund from the investment bank. We cannot criticise or blame them if we do not give them the wherewithal to do that, and I have not seen any legislation to change that scenario since they were in here. We were told there was no shortage of money to be leveraged from the European Investment Bank, within reason, for that purpose. It is important that the Minister of State respond to that and say that is out there and they could do something. They can only do something if they are given the ability to do it by a change in the Government's approach to co-responsibility.
Deputies Wallace and Boyd Barrett have put forward some of these amendments in my name.
This committee may recall that when we did a report on housing we recommended that we would exempt developments consisting of an integrated scheme of retiring houses and houses with care from Part V requirements. In other words, firms, companies and voluntary housing agencies or groups around the country that embark on such projects are exempt from the 10% requirement because they face difficulties in acquiring sites and in providing this accommodation. They free up a great deal of housing because older people like to trade down and move into sheltered housing or housing that provides medical or care facilities. I am just giving notice that I will introduce this amendment on Report Stage. That would be one part of the amendment. The second part would be to clearly indicate or identify what we mean by "integrated retirement scheme", that they would be developments located within a range of communal services and where nursing or medical care would be provided. In that instance, we would be asking the Minister to drop the requirement for 10% to be social housing.
Some of my points have already been made. Whether it is one house in four or five or one in nine or ten will depend on whether the requirement is for 20% or 10% social housing. As I said already, if I were guaranteed that the 10% requirement was ring-fenced and could never be got out of by anybody, I would agree to the ability of the local authority to acquire one house in nine or ten being reduced to one house in four or five because one cannot take half of a house.
Second, I agree with Deputy Murphy. The ask of the housing bodies is very big. The Government is probably expecting a bit much from them.
My series of amendments covers a number of areas, but my major concern is the get-out clause, that is, that instead of the 10% to the local authority, there is a leasing option, if I understand this correctly, so that the developer, instead of the local authority or, for that matter, a voluntary housing body, ending up with the 10%, the developers can just agree to lease this property on a long-term basis to the council. We do not get permanent social housing, we get property that is being leased by the developer. In effect, this is a way out of even the 10% requirement. They get 90% at full-market profitability for themselves and then they can lease the other 10% at market rates. Given market rates at the moment, that is a recipe for sucking local authorities dry. The money continues to pour out from the public sector to the private sector, but we do not even get something permanent to call our own social housing. I consider this an unacceptable, major get-out clause, which could store up significant costs for the public and the taxpayer, where the public coffers get sucked dry. It would be like rent allowance, but on a massive scale, sucking the local authorities dry.
The other one in this series of amendments relates to the idea that the price paid by the local authority for the 10% social housing should include a profit on the normal construction and development costs calculated at open market rates. I have a big problem with that. We are even including profit on the 10%.
They are making profit on the 90%. Is that not enough for them? We should get the 10% at cost price.
The big issue is leasing. It completely stands the original intention on its head. I agree with Deputy Wallace that the previous Part V was not everything it could have been. It was not wild and wonderful. There were flaws in the system. However, the leasing arrangement will cause many problems, including in estate management. If the number of rented houses in a development is too high, in particular if they are leased privately, then the chemistry is different than if one is renting from a local authority in the sense that the local authority owns the house, which leads to a sense of permanency. People see it as their house.
Last week I spoke about the fact that I live in an estate that has Part V housing, both affordable and social housing, mixed in with private housing. People on one side of me are council tenants and people on the other side own their house. There is no difference. It is all the one, in the sense that everyone looks after the house in the very same way. The housing mix can work when it is done right and social and affordable houses are dispersed properly. The problem with leasing is that one will get a glut of apartments or low-grade housing in one corner. When prices begin to rise again unscrupulous developers will shove social housing into one corner. Some day when the Minister of State is in Portlaoise I will show him some bad examples of where that has happened already. It will be possible to develop a low standard of apartment or houses of the minimum size and to lease them to local authorities that do not have any other way of getting housing and they will put people into them. That will create another ghetto situation.
In the long term the approach will provide very poor value. I accept that a balancing act is required and that all the housing that is required cannot be pulled out of the air tomorrow morning. Leasing for a long period will ensue and tenants will pay the differential rent. I understand there will be a gap in that regard. When a house is owned by a local authority the rent goes directly into its coffers. That adds up very well on the balance sheet in the local authorities with which I am familiar in terms of what comes in in rent and what is spent on maintenance and paying off the capital. It is a good investment in the long term which works out reasonably well for local authorities. At the end of ten, 20 or 30 years if a tenant decides to buy the property then the local authority will get another pot of money following the purchase. Such an approach is better in the long term and it creates better, more stable communities. There is an inherent problem with leasing. I read in the newspapers about what the Tories are doing in England. They are paying people in local authority houses in London to move out to private rented accommodation in the shires. Their intention is to sell off local authority housing. I accept that is not what the Government is doing but it is a slippery slope. An income stream is not being created for local authorities. A noose is being put around their necks. Local authorities will pick up the bill for the situation in years to come, as well as the communities where stability is lacking.
The Minister is not going in the right direction. The previous Part V arrangement dispersed social and affordable housing in the community and provided for permanency for local authority tenants and people buying their homes under the affordable housing schemes. Such an approach consolidated the community and it worked very well.
I thank the Deputies for their contributions. I accept the grouping of amendments covers a range of areas. I will try to address some of the issues raised.
Deputy Catherine Murphy inquired about how the European Investment Bank could assist and fund social housing. Some approved housing bodies already have the structures and capacity in place. They have proven they can raise funds via the European Investment Bank through the Housing Finance Agency. We have examples of that where some projects in this country have been funded for the first time this year through the European Investment Bank. It is our ambition to see many more follow that. Deputy Murphy is correct in one regard, namely, that we need some level of regulation of the approved housing bodies in order that they can prove they have the structure and capacity to raise funds in this way. In order to address the matter, the Government intends to introduce an approved housing body regulation Bill in the autumn. That will provide an opportunity to bring the stakeholders together and to hear all their views and to advance the cause and need for housing bodies in order that they can access funding to deliver more houses.
If I understood him correctly, Deputy Coonan inquired about exempting retirement housing schemes from Part V and other such schemes. It is not the intention at the moment to exempt them. That is not being considered at this stage. I could give the Deputy some more information on the plan in that regard if he so wishes.
On the concerns expressed about leasing and rental agreements, the intention is that leasing and rental agreements would give options to local authorities in negotiating Part V agreements. They offer a number of advantages which I will try to spell out for the committee. The overarching policy objectives set out in the Social Housing Strategy 2020 place a considerable emphasis on a tenure mix and the use of the private rental sector as a means of meeting the social housing needs of society. I have already explained that there is no one solution to the demand that exists. The private sector has a strong role to play in meeting the urgent demand we face at the moment. Therefore, the strategy envisages a stronger partnership approach between local authorities, approved housing bodies and the private sector, which the concept of long-term leasing supports. Furthermore, the strategy envisages a front-loading of capital investment in the early stages of implementation with a greater shift to current funding over the longer term. The intention is essentially to front-load funding into the early delivery of housing.
Local authorities do require flexible options for the delivery of social housing and to be able to respond to the local need and local context. This flexibility must be balanced with the need to ensure that as many permanent social housing units as possible are achieved with the financial resources that are available. To reassure Deputies, in order to achieve such a balance, it is my intention to issue a ministerial policy directive under section 29 of the Planning and Development Act 2000 directing local authorities to the effect that where capital funding is available they should enter Part V agreements for the acquisition of social housing units, as the Deputy stated, rather than entering into a leasing arrangement. Furthermore, where leases are being agreed they should be for a specified minimum period. That will ensure the potential of Part V to deliver completed social housing units into the ownership and social housing stock of local authorities is maximised. I hope Deputies will understand the intent of having flexibility for local authorities to negotiate in accordance with the resources available to them. The Deputy can rest assured that the directive we will issue will prioritise the acquisition of such units over leasing, but we must have a realistic approach and that where we can get more units in addition to direct acquisition we will use the leasing and long-term rental process to achieve those extra units. Essentially, we are not ruling out any mechanism that is available to us to secure more units. That should be welcomed in general.
In response to Deputy Boyd Barrett's contribution on amendment No. 28 and Part V, in terms of profit, we will not accept the amendment for the following reasons. It is accepted that there has been much difficulty with Part V agreements in the past. Deputies have already spoken about the complexity of the legislation, which has been reflected in the number of court actions taken in the past. We need to learn from that. The proposed amendments to Part V are an opportunity to provide some clarity in the operation of the legislation and could ultimately save millions of euro while reducing time spent on negotiations, the engagement of professionals such as quantity surveyors and legal advisers in court proceedings. We believe that by bringing certainty and streamlining the process, as proposed, we will eradicate much of the lost revenues and costs associated with difficult Part V negotiations in the past.
Section 33(1)(c) substitutes section 96(3)(d) of the principal Act and provides that where houses are to be transferred as part of an agreement, the price of the houses shall be calculated on the basis of the cost of the land and the costs which would be incurred by a planning authority had it retained an independent builder to undertake the work on its behalf.
The price an independent builder would command in the marketplace would ordinarily include provision for profits. Section 33(1)(c) should bring clarity on the costs to be considered as a basis for calculating the price of housing units to be transferred under Part V. The amendment takes account of relevant court judgments and practical difficulties reported in the operation of Part V. The inclusion of "profit" on these costs is consistent with the existing provision, and there is no change in the policy proposed. Court judgments do not appear to point to any deficiencies in this regard.
I will make two points on the negotiations that must take place. Many local authorities have lost some of the staff that would have been on temporary contracts and so on. When developers are coming in and negotiating, there is a particular skillset that is not always available at local authority level. The Minister might give us some assurances that there would be a beefing up of that expertise, particularly when it comes to negotiating rental agreements. I am not at all happy that the Part V mechanism will not be indefinitely in the ownership of the local authority; I do not want to give the wrong impression in that regard. However, should the Minister find a local authority in that position, where it is dealing with an experienced negotiator, and the construction industry is not short of an ability to lobby to ensure its own interests are properly served, it will be critically important in terms of the delivery mechanism that there is both expertise and an adequate number of staff to deal with that in an efficient way.
The Minister is saying that, in general, where the capital is available local authorities will be encouraged to acquire rather than lease, but that creates a major slippery slope. I suspect this provision will mean that the bulk of the 10% will end up being leased, and the Minister has not convinced me so far that this will not be the case.
On the profit issue, we know there has been a major problem in terms of negotiating about the price. I do not understand why it is not sufficient that they make profit on the 90%. It does not cost them anything but there is an obligation to give us cost price on the 10%. That is an entirely reasonable question to ask.
I raise a somewhat related matter so that I can raise it on Report Stage. Has the Minister thought about including a reference in the Bill to the local authorities having the money to buy existing property of individual units when it goes on the market? A case arose recently in my area where a landlord is having to sell and evict their tenant. However, the landlord does not want to evict the tenant and has asked the local authority to buy the house and allow the tenant to stay, and the local authority said it does not have the money. In those instances, and there may be quite a few of them - we know this is happening - there should be some way that we can tell the local authority to buy the house. This particular landlord is saying they will sell it to the local authority at a discount rate because they do not want to see this person on the street. That is an acquisition area where we could get permanent social housing and save people being made homeless if local authorities are given the approval and the money to do so.
I thank Deputies Murphy, Boyd Barrett, Stanley and Coonan for their engagement on this amendment. I acknowledge that, in the past, there were very difficult negotiations and complex court cases. I agree with Deputy Murphy that, to be fair, local authorities have been denuded of many experienced staff in recent years. In terms of addressing that, where local authorities are making proposals they can stand over, we are allocating resources to both housing and planning departments. I can report to the Deputy that over 300 additional staff have been allocated throughout the country in recent months to the very departments she mentioned.
To support the local authorities and the staff, we will be issuing strong revised Part V guidelines on negotiating agreements. Also, this Bill, in its own right, will ensure that we have closer collaboration and co-ordination between housing departments and planning departments in local authorities because from a planning point of view this Bill demands that a housing assessment is done in an area before vacant sites, for example, are designated. There has to be close co-ordination, and that is the way it should be because the Deputy and I, and anyone who has been in public life, knows that sometimes housing departments did not make good decisions in terms of where they built houses. They did not look at sustainable planning, and we did not have that close co-operation that was needed. This Bill in itself will ensure that we have closer collaboration. I put the challenge to local authorities that their strategic policy committees, SPCs, which will have an enhanced role, the housing SPCs and the planning SPCs, should make a joint effort in terms of how they will respond to the housing and regeneration challenge we face. There are opportunities for local authorities in this Bill because it brings a new focus, resource and direction in terms of the way we will respond to the challenge we all agree exists.
I do not have much to add in terms of the profits scenario referred to by Deputy Boyd Barrett. I have outlined the position and it is on the record. We need to protect the options available to local authorities to ensure they deliver as many units as possible.
The Deputy asked if the Department is open to proposals for single units. We are already doing that. Where local authorities have identified single units and put them on their priority list, and if there is value for money in it and it meets their housing needs, they are being approved for that throughout the country. As the year goes on, we will be able to give the Deputy more detail on that by way of parliamentary questions and so on. We are open to that, but it must come from the local authority as a priority. Essentially, it is the housing authority that is responsible.
The Minister, Deputy Kelly, and I have an open mind on various mechanisms that can deliver houses, be they private or public, to meet the current need and this Bill is targeted at that in terms of the approach.
I refer to it being coupled with the earlier opt-out clause relating to development contributions being lowered, which can have an impact. I know of developers who have dozens of houses rented out on estates and they are now in a position to look for their development levies to be reduced, along with leasing out the houses to the local authorities in the future under Part V.
I move amendment No. 26:
In page 21, between lines 2 and 3, to insert the following:
“(c) in subsection (3)(c), by inserting after subparagraph (v) the following:“(vi) the extent of the prevailing and preferential need for physical houses instead of sites to address urgent housing shortages,”,”.
I move amendment No. 27:
In page 21, between lines 2 and 3, to insert the following:“(c) in subsection (3)(c), by inserting after subparagraph (v) the following:“(vi) the need to ensure a viable long term housing stock through the stipulation that transfers of houses under such an agreement shall be of an indefinite term,”,”.
This section adds to my anxiety, and that of other Deputies, about the consequences of the reduction in the requirement for social housing provision from 20% to 10%. I presume that, in order to accommodate that, the number of units will have to be reduced from nine to four. My fear is that it is a logical follow-on from the earlier state of affairs and it could become easier for developments to be built just at the threshold in order to get around it.
I will not be accepting the proposal to delete section 36. Section 36 provides that the exemption from the Part V provisions shall henceforth apply only to developments of nine units or fewer. Previously, the exemption from the provisions of Part V applied only to developments of four or fewer. This ensures, for example, that one social housing unit in a development of ten units - 10% of the total number of units - must be provided for social housing. Section 36 amends section 97 of the Principal Act to provide for greater exemption from the Part V provisions. This amendment aims to ensure that small or less dense housing developments are not excessively burdened. We all agree that more housing units need to be delivered.
I move amendment No. 32:
In page 22, after line 38, to insert the following:
“PART 6AMENDMENT OF HOUSING (MISCELLANEOUS PROVISIONS) ACT 2009
Amendment of section 31 of Housing (Miscellaneous Provisions) Act 2009
37. Section 31 of the Housing (Miscellaneous Provisions) Act 2009 is amended by substituting the following for subsection (1):"(1) This section applies to a dwelling provided under the Housing Acts 1966 to 2014 or Part V of the Planning and Development Act 2000—
(a) of which the housing authority is the owner,
(b) of which the housing authority is not the owner and which is provided under a contract or lease between the housing authority
and the owner of the dwelling, including a rental accommodation availability agreement, or
(c) in respect of which housing assistance is being provided under Part 4 of the Housing (Miscellaneous Provisions) Act 2014.".".
Amendment No. 32 substitutes a new subsection (1) for section 31(1) of the Housing (Miscellaneous Provisions) Act 2009 which relates to local authority rent schemes and charges. The amendment confirms that section 31 applies to dwellings that are the subject of financial support under the new housing assistance payment, otherwise known as the HAP scheme, as well as to dwellings owned by a housing authority and dwellings leased or contracted by a housing authority, including rental accommodation scheme dwellings.
Subsection 2 of section 31 already provides that a reference to rent in section 31 includes a reference to the rent contribution payable to a housing authority by a housing assistance payment beneficiary. Furthermore, under subsection (6)(a) of section 31, the Minister may prescribe the rent contribution payable by a HAP beneficiary during the limited transitional period for local authority rents that follows the introduction of rent charging under section 31. The amendment is proposed to remove any possible doubt that section 31 of the 2009 Act applies to dwellings in respect of which HAP is being provided.
Amendment No. 38 is a technical amendment, consequential on amendment No. 32, which amends the Long Title of the Bill.
I move amendment No. 33:
In page 22, after line 38, to insert the following:"37. The Minister shall, within twelve months of the coming into operation of this Part and at regular intervals not exceeding twelve months, cause a review of the appropriateness of the measures contained therein to be undertaken independently, and shall lay the findings of such review before each House of the Oireachtas.".
In this amendment I propose something to which I referred to earlier, namely, a sunset clause in which there would be an ongoing review of the provisions. If 12 months is too short I could accept that, but there needs to be an ongoing review because in two or three years' time we could see quite a difference. Who is to know? It will encourage people to engage at an earlier stage if there is a question over whether the 10% provision under Part V is permanent and whether there is a prospect of its increasing after four or five years. It would have a positive effect by ensuring that housing units are provided sooner.
I strongly agree with Deputy Murphy on this one. I believe Deputies sometimes put forward these review clauses just for the sake of tabling an amendment, so that they can say they said something about a Bill, but in this case there is a real argument for it because the housing market is completely fluid, volatile and subject to constant change. We have debated and disputed the arguments here but we do not know what is actually going to happen. The Minister of State could be right or he could be wrong, and that is a very good reason to review the provision on a regular basis. We need to get the result we want from this legislation and to look regularly at the changes to the percentage, from 10% to 20% or even to 15%, as has been suggested as a compromise. We cannot fail in the spectacular and disastrous way we failed in the past, with multiple, awful consequences. This amendment would force us to come back and review the provisions after a relatively short period.
I can understand where the Deputies are coming from, but I will not be accepting the amendment and I will try to explain why. I agree with Deputy Boyd Barrett that we cannot fail this time and we need to learn from the mistakes of the past. That is why we need to refocus our resources and our attention on urban regeneration, where the need is and where services are available. We are introducing legislative changes, including those in this Bill, to reform the planning sector for the better, so that we do not have urban sprawl and unsustainable development of greenfield sites. We are developing new planning legislation for the autumn so that we have a proper alignment of planning policies, from local to regional to national. We will be introducing a planning regulator and a lot of things to streamline the process and ensure we have sustainable planning in the future, so that we do not go back to the problems of the past.
In addition, and for the first time, the Housing Agency is conducting detailed research and analysis to inform public policy. We are not letting it happen ad hoc as happened in the past. We are utilising real data, demographics, populations, where the demand is to inform us as to where infrastructure should be prioritised in order that we do not fail as in the past. Many things are being done on those fronts.
Returning to Part V and the need for review, I agree those provisions should be kept under constant review. However, I do not believe there is a need for a sunset clause defined in the legislation. The amendments to Part V of the Planning and Development Act 2000, being introduced by the Bill, represent concrete Government action to implement the changes required on foot of the published findings of a comprehensive review that has already taken place involving an extensive public consultation process on the operation of Part V. We have already had a detailed review initiated by this Government, undertaken by the Housing Agency and informed by public consultation, which Deputies should welcome. I will not rule out similar reviews being conducted in the future. The points made by Deputies are well made. If further reviews are required they will take place. I wish to inform Deputies that my Department routinely collects, monitors and publishes data provided by local authorities in connection with Part V and will continue to review and evaluate its success and, if necessary, we can come back for further debate. However, it is not considered necessary at this stage to introduce a sunset clause to the legislation and, therefore, the amendment is not being accepted.
It is quite extraordinary how we can be told that issues do not come within the scope of the Bill and yet in the next few days, we will deal with the absolute converse where we will change the Title of legislation and rush it through. There is hypocrisy about what does and does not come within the scope of legislation. In some cases, that could be extremely frustrating.