Oireachtas Joint and Select Committees
Tuesday, 10 May 2016
Committee on Housing and Homelessness
Law Society of Ireland
Good afternoon. Before we commence formally I remind members to switch off their mobile phones. I wish to draw witnesses' attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Their statements to the committee will be published on the committee website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I welcome the two members of the Law Society of Ireland, Ms Clare Naughton of the society's human rights committee and Mr. Patrick Sweetman of the society's conveyancing committee, who will make presentations and take questions afterwards. Their submissions, as I said, will be published on the website. While members of the Law Society, the views being expressed by the two witnesses are their own rather than those of the Law Society. They are their personal views. I invite them to make an opening statement and we will then take questions.
Mr. Patrick Sweetman:
I thank the Chairman, who got my disclaimer in before me. We are both here in a personal capacity because the Law Society is not a policy-making forum and does not create policies. Any views we express are very much our own views. I will address the question of compulsory acquisition, which the committee has had some debate about earlier on. The committee will be glad to hear I will not give it a dissertation on the law on compulsory acquisition because we would all be asleep in minutes. However, in the context of the previous discussion, I should preface my remarks by saying that I agree with the conclusions earlier on. There is no bar on using compulsory acquisition to acquire land for housing. The question, and my approach when looking at this issue, is whether it is a sensible approach. Is it value for money? Is it a cost-effective way of proceeding? I come to the conclusion that it is not. One can use the process which is a lengthy one. Mr. Honohan said earlier on that one could make the order now and only have to pay for it in two years' time. That is true. However, one pays interest in the meantime and at quite a high rate. Therefore, from an economic point of view, it is not something that is very attractive.
The process can be lengthy and open to challenge. It involves two teams of experts that will argue for the value of land on the basis of its current open market value. One then has an arbitrator who has to make that decision on foot of legislation that goes back almost 100 years. The process tends to lead to a higher open market value than one might otherwise think, if one were negotiating on the open market. In fact, I will touch on the Kenny report because it was suggested I might do so. It recognises, if one looks at the compulsory purchase order, CPO, procedures, that the outcomes are likely to lead to higher values than if one were to purchase property on the open market. On the basis that it is lengthy, technical, one has all the professional fees and the outcome will probably be greater than what one would get if one went to buy property privately, it does not seem a very attractive option. I will come back to that.
If one looks at the Kenny report, it actually dates back to 1974. The terms of reference date to 1971 and the report was issued in 1974. One might say it is a little out of date at this stage. If people want me to dwell on it, I am happy to do so in questions. However, I do not propose to dwell on it in this opening submission. There are many misconceptions around the Kenny report. The thinking around the Kenny report is that one could use a CPO to acquire development land at its current use value and that the windfall uplift that would fall to a landowner whose land happened to be zoned would, therefore, go to the benefit of the State rather than the individual. In fact, that is not what the Kenny report says at all. What the Kenny report concentrates on is what it calls betterment, that is, if the local authority provides services and those services enhance the value of the land, then in that situation the land owner should not get the benefit of it but that benefit should, through a fairly complicated procedure involving a High Court judge, go to the public good.
Interestingly, the Kenny report actually looked at the question of whether zoning should be a ground for compensation and whether one should discard or discount zoning and the windfall it might give and said one could not do that on constitutional grounds.
Of course the committee that produced the Kenny report was chaired by Mr. Justice Kenny, an eminent judge who would have been very up on constitutional issues.
Why do people talk about compulsory purchase orders in the context of housing and homelessness? A fairly well-established myth or principle in political terms is that developers hoard land and in this way they inflate the value of development land because they do not release it to the market. I am not even going to touch on the truth or otherwise of that because I believe it is irrelevant now. That is because NAMA has all of the land that might have been with developers in the past. Even to the extent that it might have been true in the past, I am compelled to argue that it is not true now. Therefore, the argument about CPOs in that context is really not relevant.
Let us consider the current situation. There is a good deal of residential zoned land. Some developers still hold some of it, obviously. Those financial institutions which were not participating institutions under the NAMA Act still hold some of it, although a good deal of that land has been sold off at this stage. NAMA still retains a fair amount of it. Private equity funds - they are referred to around here as vulture funds, but I use the term private equity funds - have acquired quite a lot of it. However, they are all willing sellers. All of those backers of people are willing sellers. The idea that some authority would go along and decide to take the land of these groups by compulsory purchase is difficult to credit. The only rational explanation for doing that would be on the basis that the authority would get it cheaper. If some authority asked these funds to sell land, they would say "Yes". Normally, private equity funds want to turn profit on the assets they acquire within a three-year to five-year timescale. Therefore, if a fund is available to acquire land, there should be no difficulty in simply buying it through negotiation.
The CPO procedure is normally more appropriate where there is a specific piece of land of strategic relevance. The example I offer relates to motorways. In such cases the developers have to buy the land. They cannot have someone who holds a particular piece of land and who would stop the entire development going ahead because they hold a critical piece. In those situations, developers use a CPO to acquire the land.
CPOs can have relevance in the context of local authorities and acquiring strategic land as well, but they are going to pay for it. The reality is that if a local authority uses a CPO, it will be paying somewhere ahead of the current market value of that land. There is a danger for a local authority if it were to announce that it was looking at using the CPO process to acquire lands. What that would actually do, perversely, is stop or constrain the market in development land. This is because the relevant people may decide to hold on until they see the CPO process in case they get a better price. That would actually push any trading in development land out for a couple of years. Therefore, I would be wary about taking that route.
However, I believe certain things can be done and if the committee will indulge me I will go through some options. There are two alternatives. Either the State, through the local authorities or otherwise, provides all of housing or there is a mix between the State and private developers providing solutions. In the private sector, the funding is actually in place. Committee members will have seen newspaper reports of hundreds of millions being raised in the London market and elsewhere for the purposes of providing residential property in Ireland. Far more could be raised if people were persuaded that it was a good investment. What is not here at the moment is the market. The market is not here at the moment for a number of reasons. It is not here because, to a large extent, it is not feasible to build at the moment for many developers. It is not feasible for them to build because people cannot afford to buy. People cannot afford to buy because first, the price is too high, second, because of Central Bank restrictions and, third, they simply do not have the wherewithal to put together deposits even outside of those restrictions.
In fact, a site fine, which is relevant in the context of a CPO, is not the determining factor in the price, because a site fine will be determined by what a given property trades at. If I buy a piece of development land, I will look at what it would cost to build a house on it, the costs of putting the infrastructure in place and the cost of development contributions. Then, I will price what I am prepared to pay for the piece of land on the basis of all of that when I calculate what it is that I would be able to sell the land for. The way to free up the market is to make it profitable for the private sector to provide the housing.
This can be done in several ways. I understand the Central Bank issue and the separation of powers and if it is felt inviolate that the Oireachtas cannot use the Central Bank, then it needs to find other ways of dealing with it. Home ownership is far too serious a social issue for the country to allow it be the hostage to fiscal responsibility. The Central Bank has other tools as well. There should be a national discussion on home ownership. It is the first and most important determining factor in breaking down existing class structures - it is the way for families to dramatically improve their financial circumstances. It allows them to support children in third level education and to look after themselves for nursing home care or somewhere to live when they retire. Ultimately, if people cannot buy houses and all houses are rented or are local authority housing, there is a huge pension time bomb. This is never recognised in the debates on economic and fiscal responsibility: if people do not buy their houses, those who rent all their lives will have to be looked after in their old age and their pensions will have to facilitate their having a house. Whereas if somebody buys a house now, or under the many local authority purchase schemes, such as the recently announced Dublin City Council tenant purchase scheme where people own the houses, while they will need a pension in old age, they will not need a house as well. That is never factored into this question. We should have a national discussion on home ownership, as a very important policy and one which, if it is encouraged through the proper Government incentives, would be transformative. It would also have the knock-on effect that in times of financial difficulty, there would be a new source of taxation because people who have homes will have an asset that can be taxed.
Ms Clare Naughton:
The Law Society invited me to come here but I am expressing my own views on this matter. I am a solicitor working in community law and mediation, primarily in the area of social housing law. Most of my clients would either be trying to access social housing support or deal with evictions.
The legislation is structured in such a way that now a person applies for social housing support rather than for local authority housing. That is one sea-change that has happened since the Housing Act 1966. It came in with the Housing Act 2009. An applicant for social housing support is a household, usually one or more persons who, in the opinion of the council, have a reasonable requirement to live together. The application process is the means by which the local authority assesses the eligibility for social housing support, identifies the person’s need and makes the allocation.
There are a few issues we see when dealing with people in our service in the context of accessing the housing list. I am not dealing with the homeless or emergency list but with the social housing support list. I deal mainly with Dublin City Council and in my experience it operates two separate lists: the emergency list and the housing list.
That is my experience of the local authorities through Dublin City Council.
I expect that the primary concern of this committee has to be the current emergency. Some of the measures I raise would, however, prevent future homelessness and assist applicants for social housing support. The first issue I would like to address which I did not raise in the presentation is the difficulty in accessing legal aid. It is a huge issue. We try to deal with the gaps in the legal aid system which is structured in such a way that a person cannot access legal aid in a dispute relating to a right or interest in land. Quite often the Legal Aid Board determines that an issue concerning access to social housing support or an eviction from a local authority home is the subject of such a dispute. That means that there is a huge number of people who do not have the resources to fund legal representation and are not accessing such representation.
There have certainly been recent attempts to deal with some of these barriers, one of which is the scheme available within the county courts where the Legal Aid Board has private solicitors to assist people in cases involving mortgage repossessions. However, in general, if it is a local authority issue, the person concerned will not have access to legal representation as a matter of course. He or she may qualify under an exclusion, namely, where they are subject to fraud, subject to undue influence or that they are subject to "an infirmity of mind or age". On the last condition, the legislation is archaic, but I imagine it means somebody with a capacity issue or who is older. In general, a family accessing our services will not receive legal aid.
When a person applies for social housing support, the first test involves the eligibility criteria. One of the difficulties with the criteria is that while the housing Acts do not require an applicant for social housing support to prove his or her nationality, local authorities are relying on a circular from the Department of the Environment, Community and Local Government - obviously, this will now be the responsibility of the Department of Housing, Planning and Local Government - which asks them to consider the nationality of an applicant. The regulations are extremely complicated and concern the free movement of persons. Quite often my experience is that the regulations are misinterpreted and people are refused access to basic social housing support, as well as to the homeless priority application process owing to their nationality.
A second major concern, particularly in the context of the crisis, is the difficulty for those in mortgage arrears who want to surrender their homes. Generally, if a home has not been dealt with by the courts, the household is deemed to have alternative accommodation available. There have been a number of attempts to address this anomaly in legislation. The first was a statutory instrument in 2011 which stated that if a homeowner in arrears could prove that his or her mortgage was unsustainable, he or she should be able to access the social housing support list. The difficulty with this is that the appendix to the code of conduct on mortgage arrears includes a definition of "not co-operating" which is extremely broad. Quite often we find that mortgages are not being deemed unsustainable and instead people are being deemed not to have co-operated. This poses a major problem. It is not possible to deal with the application for social housing support until after the property has been dealt with.
There was a further attempt to solve the problem in the 2014 legislation. The Housing (Miscellaneous Provisions) Act 2014 contains an amendment to allow families or households in these circumstances to access limited social housing support, namely, through the housing assistance payment, HAP, and rental availability agreements, the statutory format of the RAS. These supports are, however, heavily reliant on the private rental market and not a real solution for the moment.
There are alternative options available for people in these circumstances. However, I imagine the first solution would be a personal insolvency arrangement. If this would apply, it would generally be in a situation where the personal insolvency practitioner, PIP, should be trying to keep the family within the home. It is really not an answer to the problem. Another option would be to await a court order for repossession. Once there is a determination on the property, the person concerned is allowed to access the social housing support list.
It will then allow the person to access the social housing support list, but at that point, because the property is no longer within his or her possession, it is an emergency situation and he or she falls within the net of homelessness.
A further area with which we see problems are separating couples. This is all set out in legislation. If a final decision or court order regarding the family home has not been made, this can pose a barrier to the person who is leaving the family home and the arrangement to apply for social housing support. People accessing social housing support may be reliant on legal aid, and the Legal Aid Board is heavily oversubscribed and experiencing extensive delays. Quite often, family law proceedings can be delayed. If a property is not dealt with, the person cannot apply for social housing support and the greater range of services available.
The 2014 Act tries in some ways to address this problem in that, as I already mentioned, it allows local authorities to approve a household for certain types of social housing support. Those types of social housing support are the housing assistance payment, HAP, rental availability agreements or the rental accommodation scheme, RAS. They are not viable options in the current climate.
A potential solution to these barriers is a reconsideration of the definition of "homelessness". If local authorities were required not only to assess the eligibility of persons who are homeless but also to consider the eligibility of persons who are at risk of homelessness, that could be a way to overcome this barrier. Homeless organisations have written about that.
Assuming a person has met the eligibility criteria, which also involves other requirements such as financial income, his or her need for social housing support is then addressed. We regularly come across issues around separated parents. A separated parent who is heavily involved in his or her child's life and wants to co-parent him or her will have difficulty accessing accommodation of a suitable size for a family. Some local authorities have no difficulty addressing this problem, but others do.
A father of three teenage daughters, for example, may be approved for an allocation of a one-bedroom unit, which is not a viable option in terms of the make-up of the family. A local authority may deem that the children are already adequately housed and, therefore, will not allocate such a father a two-bedroom unit. A father may wish to have his children stay overnight with him for two, three or four nights a week, as the arrangement may be, but he cannot do so because he does not have suitable accommodation.
The determination of whether a person is entitled to a one-bedroom or two-bedroom allocation is much more significant now that we are moving into HAP because the scheme is administered by local authorities. If a local authority has determined that a person is entitled to a one-bedroom allocation, that is what he or she will get and how he or she will have to house his or her family. There are potential equal status issues. The decisions of local authorities on the administration of the housing stock are policy issues, but the implications are legal and it is for that reason I have addressed them.
A major concern and something I frequently see in community law mediation are issues around medical priority. Local authorities are given guidance on what they should consider in allocating medical priorities, that is, people who have a particular need, such as new accommodation or a change in their accommodation due to their medical situation. However, the only guidance they are given concerns cases where the management of the course of the illness can only be greatly improved by a change in housing.
I have dealt with a number of situations around this issue. My concern is that the decision on medical priority is generally made by a medical practitioner, which is very helpful and important, but such a person is not usually a staff member within the local authority. The service is quite often contracted out. Depending on the local authority concerned, more than one medical practitioner may perform the role.
There are no assessment criteria or guidelines from local authorities or the Department, and none have been prescribed in law. While some local authorities operate an ad hocreview process, there is no statutory appeals mechanisms. No information is provided to an applicant on why his or her application for medical priority has been refused.
To put that in context, I apply for medical priority and I send in my medical reports. I am told I do not qualify because the management of the course of my illness cannot be greatly improved by a change in housing. However, I am not told on what basis that decision has been made. I could make that application to a different medical practitioner within the local authority who may have a different view. I could decide to appeal. I may be, and usually would be, given an appeal by the local authority. That would be dealt with by the same medical officer or a more senior one who has a contract with the local authority but I would not be told why my original application was refused. I would not be told whether I had not given enough medical evidence or whether it did not see how my situation could be improved. That is a huge anomaly in the legislation. It is a complete lack of fair procedure. There is an inequality of arms because I cannot deal with the issue at hand. There are also potential equal status issues.
On the one hand, all of this is really important. It may, and hopefully will, resolve the crisis that we are in. However, unless these issues are addressed, they will become future problems for people dealing with the process.
Thank you very much for your presentation. There are two separate issues and ranges of questions. Bearing in mind the time constraints, I ask members to keep questions direct and specific to either of the witnesses. We will just have one round.
I thank Mr. Sweetman and Ms Naughton for their presentations. Regarding the CPOs, much of the discussion we have been having is less to do with land and more to do with the compulsory purchase of vacant units that are not on the market or the use of CPOs to buy packages of mortgages that have been sold on to funds, or whatever we call them, at a discount. There is a question of whether a CPO could be used to purchase them at that discount price rather than at the market value. I am interested to hear Mr. Sweetman's thoughts on that.
Many of Mr. Sweetman's comments were based on a number of assumptions. For example, he had some pretty clear assumptions of the non-existence of land hoarding. Are there data on that or is it anecdotal and professional experience that leads him to say that?
I ask the same question about it being too expensive to build. This is a hot topic in this committee and it is not clear. I am certainly not aware of anybody presenting data, although the Society of Chartered Surveyors Ireland is releasing a report tomorrow. Is Mr. Sweetman aware of data on that issue? The Central Bank restrictions only kick in for first-time buyers for prices over €220,000. Are there data that shows the restrictions are causing difficulties?
We have a higher percentage of private home owners than almost all of our EU counterparts. Many of those other EU member states have ways of managing the impact of private rental accommodation on pensioners when they reach pension age without having a pensions time bomb. I wonder if Mr. Sweetman has factored that into his considerations and whether he has thoughts on it.
I am familiar with most of the issues Ms Naughton spoke about. They are probably issues for the new Oireachtas housing committee because they relate to more broad-ranging reviews. I think any of us who will be on that committee will raise them there.
I have two questions for Ms Naughton. Is she saying people who are habitual residence condition, HRC, compliant are being refused access to social housing lists on nationality grounds? That is in regard to her opening statement. If that is the case, that is very concerning. I know there are issues around people who are not HRC compliant but I am interested in that.
I come from South Dublin County Council, which allows housing applicants on to the two-bedroom list when they have part custody of a child. The ministerial guidance on this is very clear. Is this a case of the allocations policy of, for example, Dublin City Council needing to be changed by the councillors or is Ms Naughton suggesting that there needs to be much firmer legal guidance from the Department or from the Oireachtas centrally?
Mr. Patrick Sweetman:
I thank Deputy Ó Broin for listening so intently to what I was saying. I think he picked up everything. I will be brief in trying to respond to the points. The same comments apply to the discounted price with regard to vacant houses. CPOs can be used and vacant houses can be acquired but it would be far better to go to the owner of the building and negotiate a purchase than to use a CPO. They will be freely available if they are unproductive and sitting as vacant units because in most cases, there is no reason the person who currently owns them would not want to sell them and get a return.
Mr. Patrick Sweetman:
That is absolutely right. On the question of data on land hoarding, I hesitate to go back to the Kenny report of 1971, which was published in 1974. Even then, while there was a sense of land hoarding, there was no actual evidence of it. I have worked with developers for 35 years and have heard on many occasions about land hoarding but whenever I question a developer on the point the answer is that the issues are infrastructure and planning and there are good reasons land is not developed. A developer's job is to make a profit but it would be a brave developer who says he might make a good profit today but a better one tomorrow so decides to wait. My experience is that, if there is a profit to be made today, they will make a profit today.
On the question as to whether it was too expensive to build, it is really down to volume. There are people buying houses at €200,000, €250,000, €300,000 and €350,000 but in order to kickstart a resurgence in the industry one needs volume and greater numbers of people who can afford to buy the houses. One does not want to build 20 houses in a development but 200, although the Society of Chartered Surveyors will be better able to deal with that question.
I was asked whether there was any data evidence on whether the Central Bank restrictions prevent people from buying. I would put it down to common sense - not many people can afford a €60,000 deposit to buy a house except through the bank of mum and dad, and this just perpetuates the inequalities because the people with assets are the ones who can afford to buy a house while others, without that support from their parents, are not in such a position. I do not have any specific data but there are plenty of data on the subject. There are plenty of studies which I can get for the committee.
Other countries are struggling with the pension timebomb. We have looked at providing a pension fund for pensions and different countries are dealing with it in different ways. We have one of the largest proportions of home ownership and that is a very good thing but other countries have older populations and smaller populations of young people than we have. We are building up problems for ourselves in 40 years time.
Ms Clare Naughton:
In answer to the first question on HRC, the difficulty is in how it has been interpreted. Applicants for social housing support are often asked to prove they have 52 weeks of work but there may be other ways a person can qualify, such as where an adult child makes an application. Once it is addressed with the local authority, generally they will respond but the difficulty is with those people who do not have the skill set to address the issue. In my experience it is the way the regulations have been interpreted that is the problem.
The second question was on part custody. Many local authorities, particularly those in the greater Dublin area, can cope with responding to applications from separated parents or where there are co-parenting situations. South Dublin County Council certainly can but Dublin City Council does not seem to have this in its scheme of allocation. They will deal with it when it is put to them directly but I only deal with a small proportion of separated parents and the problem is with those who do not have somebody to argue their case.
I thank our guests for coming before us and for imparting their wisdom. I would agree in general with Mr. Sweetman that the intervention can often create the opposite effect to the one desired in some of these cases. I know from experience the way the process works. One of the points that has been made repeatedly is that developers cannot build because it is not profitable. In other words, they cannot make a profit. The critical factor is that the cost of the end product will be too high. The cost of the end product, the house, is one of the reasons the country was in the position it was in during recent years. What is the major contributory factor in that respect? Is that a legacy from the inflation which was created during the boom and with which we are now trying to come to terms? Does that have an ongoing impact on property prices or have we resiled from it? What is likely to happen?
I agree with the Central Bank regarding its restrictions on loans because if those restrictions were lifted, we would return to where we were previously, we would have massive inflation overnight and we would be obliged to introduce benchmarking again in order to enable people to live. The simple fact of the matter is that the disposable income in a household is automatically affected by the level of mortgage required. The repayments relating to the latter can often be more than half of the level of disposable income in many instances.
I spent yesterday in the courts with various people who were under threat of having their houses repossessed. I believe that 90% of the people want to make their repayments and all they want is to be given time, understanding and some pathway whereby they can make the payments within the confines of their ability to pay and to do so continuously to best of that ability. There is another group, probably comprising 10% of people - I received an e-mail about this only a few minutes ago - who do not wish to pay at all and whose only ambition is to get a property that is considerably less expensive than that of their next door neighbour who has had to pay a mortgage in the normal way. To what extent is it possible to encourage lenders to show compassion and consideration to those who are making the effort? The situation, as the Chairman knows, is that householders are appearing in court in tears. They are desperate and know that they are between a rock and a hard place. We have to do something that recognises their particular plight.
I am not sure whether there is an issue with the hoarding of land. I am of the view that what is happening in this regard has something to do with the prices inherited from the boom, which do not seem to have decreased. I will relay to the committee something I was told and our guests may address it if they wish. A property valuer informed me that during the initial stages of National Asset Management Agency, NAMA, coming into operation, when properties were being bought at reduced prices - 46%, 48% or whatever the percentage was of the full price - those properties were actually only worth about 10% of the full price. The individual in question was in the business and I think he knew what he was doing.
On the question of voluntary surrender, Ms Naughton made an intervention. People are being encouraged to voluntarily surrender. However, what is involved is not voluntary surrender. They are given a list of options, none of which is acceptable. Again, this affects households with children. It is horrendous to see the effect it has on the families. Can we encourage the lending institutions again to be accommodating, given that they were accommodated compassionately by the Irish taxpayer, who will continue to accommodate them well into the future? I am not getting into the argument about burning bondholders or anything of that nature. I do not agree with such behaviour because it comes back to bite one. It is necessary to impress upon the lenders that they were accommodated by the Irish nation and that they should be in some way inclined to respond in a similar fashion.
Mr. Patrick Sweetman:
One or two of them do. I thank the Deputy for his questions. On the Central Bank, ultimately, I am just a private citizen and that is my personal, private view. Nobody wants to go back to the crisis or the difficulties we have had. The Central Bank has other tools at its disposal as to how it might control the market.
I would like to see, in the decisions it makes on financial stability, that it factors in the long-term as well as the short-term view, but I never see that this is done. That is my net point. The long-term cost of preventing people being able to buy a house might be as a result of a much more significant issue than is currently factored in.
There are other measures available. Touching on another point the Deputy makes about costs being too high, and this is a private citizen's comment on the Government take, the proportion often mentioned is that the Government takes one third of the cost of the price of the house. If it reduced that by half and three times as many houses were built, on pure mathematics that would be a gain and no cost, so it is something that needs to be examined.
On the question as to why the costs have not come down, extraordinarily, building costs apparently have not come down even though the market is fundamentally different from what it was previously. I cannot explain that. That might be one for the representatives of the chartered surveyors tomorrow.
The final point I will make is on servicing a mortgage as opposed to paying a rent. What I often hear is that it is cheaper to get a mortgage than to pay a rent.
I thank Mr. Sweetman and Ms Naughton. What is Mr. Sweetman's view on repossessions? Home owners who are dealing with both local authorities and banks and who have fallen on hard times in terms of work because of the financial situation and who might be making a contribution of only half of what they should be making in terms of repayments are still brought to court for repossession. They are fighting against that repossession order, something which I have done for a number of my constituents. What is Mr. Sweetman's view on how their position could be strengthened to allow them pay what they can afford to pay on that basis? Although the arrears are accruing, surely that is not good enough a reason not to give them space to deal with that and see how they can improve their situation, rather than having a repossession order granted against them with the result that they are sent them back to the local authority, about which Ms Naughton spoke, which then does not have any asset to give them. What is Mr. Sweetman's view on how that can be dealt with because what is happening currently does not make any sense in terms of the courts and so on?
I agree with Mr. Honohan's position on acquiring land by way of CPO. I represent Kildare North where the local authority has quite a number of land banks. It may not have enough to deal with all the social or starter housing required but it has enough to get local authority housing construction started, which has not happened for years. Currently, local area plans and county development plans are being developed but there is a problem getting land zoned for people willing to go out tomorrow morning with a digger and build houses, if they get through the planning system, because the lands that are zoned have been left aside for 25 years accruing capital. If we do not intend to CPO them, what is the best way in Mr. Sweetman's view of trying to deal with that legally in terms of the people sitting on those land banks who are preventing other people having land zoned that will help to solve the problem?
In terms of what can be done, the second bullet point is very relevant. There is a need for the private sector and local authorities to come together in this regard. We are not reinventing the wheel. We just need to stop talking about it and do something. I have never heard so much talk but with nothing being done, and we still have people sleeping on footpaths.
My next question is to Ms Naughton. The housing assistance payment, the rental accommodation scheme and rent supplement are not ideal but they are better than nothing and without those supports many more people would be in a very difficult situation. They provide a temporary home, although it is very temporary. What is Ms Naughton's view on overcoming the barrier with regard to people who are separated but who do not have joint custody of their child or children? As she said, if they have joint custody they will be accommodated but those who do not have joint custody who may want to stay overnight cannot do that because the local authority will not allow them pay rent for accommodation in those circumstances. In most cases the father of the child or children never gets to spend any time with them except during daylight hours.
Moreover, couples who have had repossession orders granted against them cannot get on the local authority social housing list to get supports to rent a property for their family. Although they are out of the property in question, their names are attached to it because it has not gone through the courts completely and they are not detached from that deed. This prevents and blocks them from getting on the social housing list. In Ms Naughton's view, what is the best way to deal with this issue? Is it through affidavit or is it through a change?
Mr. Patrick Sweetman:
One question for me was on repossessions. While it is not specifically my area, I agree absolutely it makes no economic sense to go through the entire process and then put someone out on the street who must then be housed again. The dilemma is to have a procedure which distinguishes between those who cannot pay and those who will not pay. The former should be accommodated in every conceivable way and there may be issues such as attachment of earnings or social welfare payments or both or otherwise of whatever amount a court deems could be paid. Those who will not pay obviously must be dealt with.
As to what can be done regarding the landbanks, the first thing would be to make it more profitable or indeed profitable to bring such land to market. The second thing would be to remove some inhibitors. The committee heard earlier about planning and there are some serious inhibitors within the planning process that could be streamlined such as, for example, if An Bord Pleanála had a statutory guideline within which it must make decisions. I understand it is prioritising housing planning applications and a statutory timeframe within which it is obliged to make a decision would be a major move towards bringing through land for residential development.
Ms Clare Naughton:
On the first issue in respect of rent supplement, the housing assistance payment, HAP, scheme and the rental accommodation scheme, RAS, they would be solutions were the property available. If they were solutions, we would not have so many people living in hotels and hostels and, consequently, they are not solutions at present. Obviously, these again are my views and not those of the Law Society, but it is a policy issue and it is a financial issue. The answer is yes, they would be fantastic options if they worked.
As for the second issue regarding the parental position, if one considers the allocation schemes of the various authorities within the greater Dublin area, many of them allow for a second bedroom allocation. They may allow for an allocation for two bedrooms in the case of a separated parent. However, my experience with Dublin City Council, for example, is it only allows for one bedroom and an applicant must then try to get somebody to argue the position as to why the applicant should be entitled to a second bedroom, even though the applicant may have four children. I apologise but can Deputy O’Rourke remind me of what was his last question?
The last question pertains to a scenario in which repossession has been granted against a couple and because the name is still attached to the deed, it must go through a lengthy legal process that prohibits the couple from getting onto a local authority list to get assistance of the kind about which Ms Naughton spoke.
In response to Ms Naughton - Deputy Durkan can correct me - in my constituency the position is that to avail of HAP or RAS, one must be on the social housing list. One barrier to getting on a social housing list, although I try to work around it with affidavits or whatever, is if a person is attached to a deed that is being repossessed and is going through a lengthy process. Consequently, that is a problem.
Ms Clare Naughton:
The 2014 Act, I believe it might be section 49 of that Act, has a provision which allows for local authorities to discount the property in this situation in which it has not yet been dealt with. I have the definition to hand and if I may, I will read it out. It refers to where the local "authority is unable to establish for the time being whether alternative accommodation is available to a household that would meet the household’s housing need" and consequently this is the position that must be argued. I argue this legislation is in place to deal with people in this scenario. There are one or two conditions associated with it in that I believe they must keep the local authority informed of any change in circumstance regarding the property and if the property becomes unavailable or available for whatever reason, there again is an obligation to go back to the local authority. I cannot remember the specific wording but that provision is in the legislation of 2014 and I imagine the local authority should be following it. As to whether the local authority interprets this to be a scenario that should benefit, I imagine it should be and if it is not, there is a greater gap in the legislation than I already thought.
On Mr. Sweetman's contribution, one of the reasons that we suggested this session was to look at legislation, including emergency legislation, that might be required to stop people from becoming homeless and to sort out the housing emergency. The issue of CPOs is an important one on which this committee needs to get views. In his presentation, Mr. Sweetman gave the impression that he did not like CPOs because they were cumbersome and unviable.
First, with regard to land, it is not always the case that local authorities have enough land zoned that they can build on. It certainly is not the case in my local authority, where the information is compiled. In Dublin west - which, based on the figures, probably has the biggest housing crisis in the country - there is one patch of land that the local authority has left zoned. The land, extending to 15 acres, is all in one location. Of course, it happens to be the most deprived area. We cannot solve the housing crisis unless we are able to get privately owned land in Dublin west and in Dublin 15. The local authority has a lot of industrially zoned land, on which it has a deal with IDA Ireland. Some of it would not be suitable for housing because it would be in the middle of an industrial estate; other portions of it may be.
One of the other reasons we selected this as a topic was the question of vulture funds. I note that Mr. Sweetman does not like the use of the word, but it must be said that he has a connection and an interest in that he is a lead partner in the commercial property department at Matheson, which has connections with these vulture funds. Matheson has 125 US companies registered at its address on Sir John Rogerson's Quay and it gives tax minimisation advice to international clients, some of which are vulture funds. The chair of Matheson is the sole shareholder in European Property Fund. I was out this morning with residents from my area who are threatened with eviction by European Property Fund. I am merely stating that Mr. Sweetman may have an interest.
I wanted to take up Mr. Sweetman's idea that home ownership is this great equaliser of the classes. In fact, it is the opposite. Home ownership has become the way one climbs above people and a way for people to be blocked out. In Dublin, the ratio of those who own their homes and those who rent is 50:50, simply because of unaffordability. Of course, just because people buy their houses, it does not mean they are suddenly not working class.
Mr. Sweetman mentioned the pension time bomb. I would read it the opposite way to Mr. Sweetman, because one of the big spurs in the buy-to-let trend was the fact that building workers and others who were self-employed bought houses for their pensions. Now look at where these people are. They have these second or third houses that they bought because they were told to buy them, but they do not want to be landlords and the whole endeavour has fallen belly-up. Would it not be better to introduce proper pensions? Also, would Mr. Sweetman agree with the idea that people could have in their old age a publicly owned house, probably smaller than what they had previously, or even, in the case of some people as they get older, sheltered housing?
On the idea that private housing protects people, 30 or 40-year mortgages are now the norm, and many must remain working longer. Teachers are now working until all ages.
Lastly, not all the sellers are willing. Many are not willing to sell. With regard to the vulture funds, I am trying to encourage the Government or the local authority to buy Tyrrelstown to keep people in their homes. That is the only way I see for those people to avoid becoming homeless, particularly in our area. However, the talks have not gone well.
Therefore, the issue of compulsory purchase comes into play.
I have two questions for Ms Naughton. With regard to medical priority, patients come to my surgery quite often looking for medical evidence regarding either moving from a house, because the one they are in is in poor condition, damp or affecting their health, or the effect on themselves or their children. I give medical evidence in that regard. Is it passed on to the medical officer employed by the council for verification, checking or additional assessment?
The second question concerns nationality. Is Ms Naugton saying that an individual who is not an Irish national does not have the same right or status in obtaining a house?
I thank the delegates for their presentations. I, too, wish to refer to medical applications, particularly when they come across the delegates' desks. Many of the applicants I come across are ineligible. One cannot even read some of the applications, to be honest. With the greatest of respect to general practitioners, I do not believe letters from general practitioners have any input into the granting of medical priority. If somebody is attending a doctor or consultant, one of the main issues is the length of time it takes to get a medical report, or a medical assessment of children with ADHD. That takes so long.
Mr. Sweetman spoke about local authorities, those who pay and those who just will not pay. This can be said also in respect of local authority housing. Mr. Dick Brady from Dublin City Council was before us three weeks ago. We learned that the amount of money owed in rent arrears to Dublin City Council amounts to millions of euro. This is a real issue that should be examined by the councils right across the country. Housing is being provided for people who just do not want to pay. There are people in arrears for other reasons, but there are many who just do not want to pay.
We can talk until the cows come home, as they say, but unless there is action and we have the land to build on, there will be no progress. As a member of the Government side, I note that a lot of money has been provided in my local area for building and buying houses, but we need a more urgent approach. That is why this committee has been set up.
What are the delegates' views, if any, on local authority housing and on local authorities building all housing for everybody? I really believe that the chance of a local authority tenant, public tenant or a member of a young couple in private accommodation who is working his or her back off ever owning his or her own property is slim. What does Mr. Sweetman feel about local authorities building and providing a rent-to-buy mortgage option for young couples, be they employed or unemployed? It is important and it is the way to go.
There were a number of references to land hoarding and the question of whether land is being held or not. Mr. Sweetman's reply was very much on incentivisation and the freeing up of land for the market. Others might believe there should be a carrot-and-stick approach, whereby the stick side might be the taxation of land hoarding. Quite clearly, within the resources available there are only certain incentives that can be given. To address what is needed in the public good, is there another side that should be examined? Should it be dealt with in parallel, such that there would be a carrot and stick where the hoarding of land, particularly in areas where services are available and when we are facing a national emergency, would be addressed? Do we have to have the other side of the equation? Mr. Sweetman might address all those questions together.
Mr. Patrick Sweetman:
A fair number of points were made. With regard to Deputy Coppinger's point, I did not actually make any suggestion that local authorities had enough lands. Somebody else made that suggestion. What I was saying was that for local authorities to access the additional lands they require, it would be far cheaper, much more efficient and much quicker for them to buy them on the open market rather than using a CPO procedure, which would be slower and ultimately much more expensive.
I did not quite address Deputy O'Rourke's question on whether one could use a CPO to acquire land at a discounted price. That is probably the essence of what he was asking.
There has been discussion previously concerning constitutional issues and what is the actual constitutional position. We heard it earlier again today with reference to the Kenny report. Many other commentators have always suggested that if one is seeking to take in land at less than the current open market value, that is a constitutional issue. I cannot really put that one much further.
As regards the Chairman's comment on a carrot-and-stick approach, there is the vacant land tax which has just been brought in for people hoarding land or holding on to land and not bringing it forward to the market. That has been dealt with but on the question of limited resources, I would argue that in terms of pure maths or sums, by bringing in incentives which would encourage more building and encourage more people to be able to acquire property, that will pay for itself. Economically, it will be a much better way of going about it.
In that context, I might take Deputy Catherine Byrne's comment on building for everybody. The difficulty there is that there is a finite resource and if one is going to build for everybody, it would be an extraordinarily expensive process to try to do that. It would also be a real challenge trying to co-ordinate, through some central process, that 20,000 to 30,000 units were built by a single entity centrally every year. There would be real difficulties with that and the better way to go about it is the dual approach of local authorities being financed and encouraged to build and provide housing, and the private sector also playing its part.
I was going to take Deputy Coppinger's last point next, but I have lost it. I think the point was that not all are willing sellers. No, of course, not everybody is a willing seller. However, I would say that there are enough willing sellers if there was the resource. I am not conscious that any local authority or Government agency has actually sought to acquire any of these land banks, or has appointed agents with a view to acquiring them. They could of course have bought them at the same competitive rates had they wished to do so. We now have a crisis which must be addressed. They need to be resourced to do that and if the local authorities or State agency, whichever way it goes, are resourced to buy land, the land will be available.
Mr. Patrick Sweetman:
In the context of resolving a housing issue, the option of buying the house rather than having someone put out on the street is probably a much more cost-efficient way of going about it, absolutely. I would agree with Deputy Coppinger on the question of home ownership. In fact, I think she is making my point in a different way. It is the great equaliser and an opportunity for people. Instead of having people with two or three houses - or because they have one house can then afford to buy another house whether it be for their family or otherwise - if the family have bought their house, whether it be through a local authority or privately in the past, it gives them the resource to enable a family member to buy a house in the future because they have an asset which they can put towards doing that.
I stand over the comment that it is a great equaliser in allowing people to improve their financial circumstances dramatically. Earlier on, I mentioned the Dublin City Council tenant-purchase scheme being re-introduced. That is very much to be welcomed because it plays to that exact point.
Deputy Coppinger took issue with my question concerning vulture funds through private equity funds. That is just where I have come from. Yes, Deputy Coppinger is right, I was a partner with Matheson. I am not a partner now and am not practising as a solicitor now. However, I think the use of the phrase "vulture fund" is disparaging and I simply prefer to use "private equity fund".
Mr. Patrick Sweetman:
There was one other question on the pension time-bomb and where it will go in the future. I would like to see that there were sufficient numbers of people who could fend for themselves, which would then allow the limited State resources to be applied to those most in need. Therefore, one would allow some people or those who can afford it to fend for themselves - the more of them the better - which would then increase the State resources that are available to support those who actually need it, rather than having a blanket safety-net for everybody. I think that answers it.
Ms Clare Naughton:
Deputy Harty, or perhaps it was Deputy Durkan, asked about non-Irish nationals or Irish nationals. There is no restriction in housing legislation as to who can apply or what nationalities can apply for social housing. That restriction comes in under our EU obligations. Certainly, the difficulty arises in particular for people who cannot, those who may be HRC compliant and may be able to prove a connection with the country, but the way in which the questions are posed by the local authority means they cannot meet those questions. For example, the big question that comes up a lot is, "Can you show 52 weeks of work?". That does not apply to a child who has just come of age and is not in a position to show 52 weeks of work but who may have a good connection with the country. That would be an example.
With regard to the medical priority situation, the difficulty is that it varies from local authority to local authority. There is certainly in legislation a requirement - I am not sure if it is in the primary Act or the statutory instrument - for a consultant's report. From a positive point of view, I know that Dublin City Council does not necessarily require as high a level as a consultant's report. Apologies, I think the legislation looks for a report from a medical practitioner within the HSE. So, it varies from local authority to local authority. The legislation says something different to what the local authorities say. Even from that point of view, I cannot advise somebody without checking what they actually need to bring in or produce for the local authority. It is very unclear at the outset as to what they actually need. They have to either check their local authority to find out from it or check the legislation because both set down different requirements. Even with that, some local authorities will not be satisfied with just a GP report, but will want a report from a consultant, as Deputy Catherine Byrne mentioned. The difficulty can be, for example, that if one is waiting to see a urologist on a public appointment, one can be waiting a very long time. In order to prove one's medical condition, even a request for medical priority can take a long time and even with that there are difficulties at the next stage.
Can we cut to the chase on this issue about repossessions and the sale of loan books to unregulated third parties? What is Mr. Sweetman's opinion? Deputy Coppinger, correctly in my view, raised the issue as well. To give some degree of assurance to the people in their houses who are under threat, is it not desirable to assume that a regime can prevail whereby the purchaser of the loan books should be obliged to enter into negotiations along the lines that were originally entered into by the original lender? There is no need to go any further. I should mention that the Minister for Finance, Deputy Michael Noonan, said he preferred the benefit of any arrangement to go directly to the borrower or home owner rather than to those providing the buildings in question.
Mr. Patrick Sweetman:
Unfortunately, the answer is "Not". I am afraid I am going to have to decline to even try to tease that one out because it becomes a legal problem. It becomes an issue as to the extent to which the original loan transaction with the original bank is binding on the bank's successor in title and that depends on all the individual circumstances and I would not even attempt at a general, broad generalisation. However, the view the Deputy expresses is clearly a reasonable one.
I thank Ms Naughton and Mr. Sweetman for their presentations and their replies to the various questions here. They have been very helpful and informative to the committee. We will suspend the sitting until 2 p.m.