Oireachtas Joint and Select Committees
Thursday, 2 June 2016
Committee on Housing and Homelessness
Minister for the Environment, Community and Local Government
I wish to draw the attention of witnesses 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.
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 Minister to the committee this morning and thank him for attending. I also thank him for his submission which has been circulated to members. His opening statement has been submitted to the committee and it will be published on the committee's website after the meeting. At the outset, he will be aware that this committee has a short life. It was established at the end of April and is due to report in a couple of weeks' time. It is appropriate that we should engage with the Minister because the issue we are addressing requires a co-operative and collaborative approach. We are hoping therefore that the recommendations that will emanate from this committee will be evidence-based. We also hope the Minister will be able to lend impetus to those recommendations by implementing them.
We look forward to the Minister's presentation, following which colleagues will have a number of questions. I thank the Minister again for his attendance before the committee.
I thank the Chairman for his remarks. I wish to read an introductory statement into the record, after which I would like to take questions and deal with some of the areas the committee wants to focus on. My statement is pretty general. From my perspective, in terms of the interaction with this committee, I would like to listen as much as contribute. However, I will be as upfront and open as I can be in answering any questions that members may have concerning our thinking or approach to date.
I have already met directly some members of the committee from different political parties to try to explain the approach we are taking towards housing which I regard as a national emergency, particularly in some of our larger urban centres.
We can go into some detail later on regarding our thinking to date and when we will launch a formal response to that in the context of the action plan for housing, which will be launched later this summer.
I thank the committee for inviting me to address it today and I look forward to the discussion. I will introduce the Department's officials accompanying me. They are Ms Bairbre Nic Aongusa, assistant secretary; Ms Maria Graham, assistant secretary; Mr. Niall Cussen, principal planning adviser; Mr. Barry Quinlan, principal officer; and Mr. Brian Kenny, who has a specific focus on homelessness. I commend the committee on its work to date. In a very short period of time, the committee has consulted with a vast number of key stakeholders and experts in housing and homelessness and I look forward to its report in due course.
Housing is a priority for this Government. I was appointed as Minister with specific responsibility for housing, planning and local government to focus intensively on the challenge of tackling the housing crisis. I have recently been joined by the Minister of State with responsibility for housing and urban renewal, Deputy Damien English. We have been tasked with preparing an action plan for housing within the Government's first 100 days working with our Government colleagues and key stakeholders. Importantly, the action plan will build on the work already carried out or under way and will draw on the important work carried out by this committee. The plan will include actions to expedite and boost supply of all types of housing, particularly social housing, in the immediate, medium and long term with a long-term view.
While it is important to boost housing supply for everyone, the action plan will focus in particular on those experiencing most difficulty in accessing housing and rental markets. The Minister of State and I have initiated some early intensive engagements with people who have been working in the housing and homelessness areas for many years to discuss the broad approach and housing action plan and to develop a common understanding of the housing situation at present. I am firmly of the view that the position can only be described as an emergency, particularly in our key urban centres of Dublin and Cork. It is impossible not to be affected by the experiences of families and children in long-term emergency accommodation. My resolve is very strong in terms of finding a way to positively affect the plight of many families that are currently in totally inappropriate accommodation. This needs to change but we need an infrastructure change and an approach change to make that happen.
Today presents an excellent and timely opportunity for an informed discussion about the diagnosis of the key challenges, particularly in housing supply, and the actions required to be taken urgently. In terms of my approach, I want to prepare a plan to which Members of the Oireachtas and key housing stakeholders can subscribe. I believe that if we work together in a way that can tackle emergency conditions, we can and will turn around the situation focusing on actions we can take in the short and medium term. I can promise that members will not find me overly party political on this issue. If people have sensible suggestions, we will listen and try to respond. We are not going to agree on everything so let us not pretend we will but I do think we can agree on a lot that can move the process forward. We will take the recommendations that come from this committee very seriously and assess them. All the decisions we take will be outcome-focused. My only interest here is to try to get a property and housing market moving, to try to make sure we have an ambitious social housing programme that we can deliver and to look at the multitude of sectors that are impacting negatively on the housing market with a view to trying to bring about better outcomes.
Housing lasts for generations and takes a long time to put in place, which is why our current difficulties go back to how construction and the house-building sectors collapsed during the downturn and have really struggled to recover since. The way the residential sector operated with the banking and lending sectors in the past led to many of our problems and we cannot go back there.
Once the economy collapsed, Ireland simply stopped building houses, private and social, for the best part of the past ten years, apart from finishing some schemes and one-off housing. This lack of supply of housing in the right locations is a critical factor underpinning the current crisis. Just over 12,600 housing units were completed last year, almost half of which were individual one-off houses. Many of the remaining number werethe result of completing unfinished housing estates. Approximately 25,000 housing units per annum must be constructed to meet the need and it must be ensured that these are in the right locations and are the right type to meet our evolving household formation and demographic patterns. My view is we need to go well beyond 25,000 units for a period if we can. It is accepted by most that a country with Ireland's population needs to build 25,000 housing units of the right size and in the right locations annually but because of the dramatic deficit of the past decade, we need to go well beyond 25,000 if we can get there and we need to sustain that for a five to ten-year period to address the deficit of the past ten years before we can create a more normalised housing market.
Furthermore, many of the active sites in the Dublin area are delivering housing at prices which are not affordable for the majority of first-time buyers. Approximately 40% of people in the market for a mortgage cannot get finance for a house priced in excess of €300,000. No house is being built in Dublin for less than €300,000, which means that no houses are being built for 40% of the house buying market. That is only one of many structural problems in the housing market that needs to be corrected. It is not easy to correct given the cost of building a house and, in particular, the financial arrangements many builders and developers have entered into in terms of site costs and so on. Perhaps that is something we can discuss later.
If ordinary people are spending more of their income on rents and mortgages, that leaves less for many other demands of life. This is affecting the economy but, most important, their quality of life. It also puts many working families in a more perilous financial position and, for some, at risk of homelessness. If the current supply trends are allowed to continue and key decisions are not taken quickly, it could take another ten years for the market to right itself and for supply to meet our needs. Such a scenario and the related impact on people's incomes and lives is socially and economically unacceptable. That is why this is such a priority for Government. The housing situation is affecting every sector of society and putting at risk our hard-won gains in employment, recovery of competitiveness and the attractiveness of Ireland as a place to work and live. Even in the context of attracting foreign direct investment, housing is becoming one of the barriers to companies setting up and creating new workforces because of the inability to access affordable high quality homes.
With regard to solutions, it is important to recognise that we are not starting from scratch. I am on record acknowledging the work of my predecessor, Deputy Alan Kelly, particularly in the area of social housing and homelessness and I am happy to do so again. Much has been done, particularly in putting in place a €3.8 billion social housing strategy and actions on homelessness, rent certainty and private housing viability but there is a lot more to do. I will recap the key actions that have been taken. Part V has been reformed to make delivery of social housing possible and wider developments viable. Development contributions have been retrospectively lowered and a rebate scheme for housing at more affordable prices in Dublin and Cork has been put in place. A vacant site levy has been introduced, although there will be a delay in it taking effect. We can discuss later why that is necessary from a legal perspective.
New rent measures were put in place and apartment guidelines were reissued. There is some confusion about that and it would be helpful to clarify why we have made decisions in that area later on.
NAMA has outlined its programme to fund the development of 20,000 new homes and a €500 million active capital NTMA development finance package was also put in place. I am placing details of these measures on the record to outline and recognise the building blocks that have been put in place. However, the Government recognises that further actions are required to increase housing construction and create a functioning housing market. Many think that a total focus on public housing programmes will solve the situation. While I agree that we need to do a lot more on the social housing side and quickly, I do not think anyone really believes that only social housing needs to be built. We need to have a mix and a dramatic increase in the number of houses being built and supplied in the social housing and private sectors. We must also focus on other parts of housing, including doing all we can to keep people in their homes and ensuring that the rental and private housing construction markets function properly and deal with the backlog of a decade of under-supply so that people do not get squeezed into homelessness and onto social housing waiting lists when they can be accommodated through the private housing market.
The Government knows we have to get housing right and it is for that reason that I sought this portfolio. I am working very closely with Cabinet colleagues under a special Cabinet committee chaired by the Taoiseach that meets weekly. We have already met twice and we are meeting again this afternoon. The committee has met every week since the Government was formed and that will continue until we have the right action plan in place for housing. What we have focused on so far is how to more quickly tackle the issue of those living in emergency accommodation by expanding and expediting solutions. The programme of rapid delivery housing provision is being implemented to mitigate the acute issues associated with homelessness. It is my ambition to accelerate and expand the rapid delivery programme significantly.
We are also looking at accelerating the delivery of the social housing strategy. Under the Social Housing Strategy 2020, targets have been set for each local authority up to 2017. Importantly, local authorities and approved housing bodies have a strong pipeline of construction, turnkey and acquisition projects which will deliver some 3,900 homes with an approved budget cost of some €680 million. It is my ambition that the delivery of these homes will be accelerated and that the targets will be exceeded, separately increasing the overall output of private housing to meet the 25,000 units acknowledged as the likely annual supply need. In the programme for Government, the ambition is to get to 25,000 housing units by 2020. Our job is to try to get there a lot sooner than that. To achieve this, we are examining further potential barriers in terms of service, land, funding, financing and delivery mechanisms. We are also looking at ensuring that most of the additional houses and apartments are affordable and meet the needs of all sectors of society whether that is students or older persons and an increasing portion of one to two person households. Most Deputies who work at trying to access social housing for their constituents will know that people who are on housing lists on their own or as a couple face huge disadvantage because there simply is not sufficient housing stock with one or two-bedroom accommodation. Three-bedroom semi-detached houses are used to respond to the needs of families, which leaves a lot of people on housing lists for years without any realistic aspiration of getting the result they need.
We are also looking to replace the boom-bust cycle of construction on housing supply through better management of land supply and development processes. To do this, I am preparing a delivery and supply focused housing action plan. Importantly, the plan is being developed with colleagues on the Cabinet committee and will draw on the report of this committee, which, I understand, should be ready my mid-June.
At a previous meeting of this committee my predecessor said that he favoured a Minister for housing with a broader range of powers in the areas of finance, expenditure, social protection and so on. The Cabinet sub-committee comprises the Ministers for Finance, Public Expenditure and Reform, and Social Protection and is chaired by the Taoiseach. The plan is being jointly informed and developed through the weekly Cabinet sub-committee and the senior officials group linked to it. Rather than one Cabinet Minister being given all of the powers, there is a contribution from multiple Departments and Ministers. Time will tell whether that works - whether or not we will get the buy-in we need from other Ministries. Thus far there has been an appetite across Government to ensure that we do something substantial in terms of the response needed to the housing crisis.
In regard to the immediate supply boost needed, the focus of the initial actions in the plan is to boost supply. I have asked the local authorities and NAMA for concrete proposals to boost supply in the short term on land they control or influence for all types of housing, including social housing and housing for the wider private market. In essence, we have asked local authorities to come back with emergency action plans which, I hope, we will have by the end of this week. If we have to wait until the following week for them that will not be the end of the world but we are putting local authorities under pressure to come back with ambitious plans in terms of what they can do locally with the areas and land banks they control, working with developers, NAMA and within SDZs or various other frameworks in which they operate. We will publish those plans as part of the overall action plan for housing so that people can see what local authorities have come to the table with. I think that is important. We will then help those local authorities deliver on the potential of those plans. This will involve contributions from me, my Department and, I am sure, other Departments in terms of freeing up land, removing barriers and streamlining processes and providing finance and other vehicles, some of which we may have time to talk about later.
The Taoiseach and I met with local authority chief executives on 12 May to discuss, among other things, the housing situation and, in particular, boosting supply and the future delivery and implementation of the targets set for the local authorities under the social housing strategy. The meeting provided an opportunity for a useful exchange of views and I reaffirmed my commitment and that of my Department to supporting local authorities' efforts to deliver on the ambitious targets they have been set. I also acknowledged the efforts that have been made by local authorities working in conjunction with approved housing bodies to deliver on the social housing strategy since its publication in November 2014. I outlined my ambition that the delivery of homes under each of the social housing programmes be accelerated. In that regard, I have asked all local authority chief executives for their ideas and proposals to expedite delivery of social housing. We have already received some of those responses.
In making proposals I have asked NAMA and the local authorities to consider how best to work with builders and the construction sector. For its part the Government has committed to making funding available for social housing and for infrastructure to facilitate the development of all types of housing. The Government is also committed to examining all aspects of the viability equation, particularly input costs, to help ensure that housing is intrinsically affordable to bring on stream whether for buyers or providers. We are looking at all aspects of the house delivery process from land availability to financing, planning and procurement to ensure that an appropriate balance is struck in increasing supply on the one hand while on the other hand avoiding another property boom.
I want to see proper planning such that not only are houses built but residential places of which people can be proud are created. I want to see strategic thinking and action in terms of the installation of infrastructure and amenities prior to or as places are developed. We need to learn lessons from the recent property and debt-fuelled economic crash. Given the gravity of the situation, we are happy to think radically and prepared to do whatever it takes to mend the housing system in Ireland, obviously within certain parameters.
Once the Government takes action, it will be very important that the delivery agents and construction sector respond. I will seek assurances that if we deliver, they will too. In a practical sense, that means if we are going to do something with taxation or streamlining planning systems, moving and changing processes in order to make things happen, we expect the private sector to respond accordingly. Without that assurance, we will not do it, frankly.
We are hard at work drafting the action plan and my approach is to consult broadly. I met a large number of key stakeholders already and my door is always open to anybody with good suggestions on how to boost supply. The action plan will be published over the summer within the first 100 days of the Government, and its implementation will have begun at that stage. One of the problems around the 100 day target is that it lands right in the middle of August. For obvious reasons, that poses a problem because many people are not focused on work in the middle of August. I suspect some of the people at this table will be but many others will not be. In reality, we will end up publishing our plan at the end of August and moving into September with a really proactive and aggressive work programme to implement it and ensure it works. That is the likely timing at this stage. It will lead to it being launched immediately after the 100 days are up and then selling it. We could launch it at the end of July before everybody heads off on holidays but that is not the kind of momentum we want the project to generate.
The report of this committee will form a key input and I encourage people not only to contribute to a report that could be useful for us but also to follow that with meetings with me or key officials here so we can get under the skin of some of the recommendations made by the committee. We may not be able to take some of them on board and I have not seen all the recommendations but my only objective is to get better outcomes in terms of house delivery and responding to people's dire need for State assistance, whether they are homeless now, at risk of homelessness or on a social housing list, relying on the State to deliver for them.
I could go into all sorts of reasons we are where we are today with a dramatic deficit of supply in housing and all the pressure it puts on people but to be honest, my focus is on where we go from here and the contribution I can make, along with the great team in my new Department. We want to achieve a dramatic change in circumstances around the housing market as quickly as we can. That is why we will listen to the committee and try to take on board the ideas we feel can work, engaging with it in as transparent and open a way as possible.
Thank you for the opening statement. Before going to colleagues, from the committee's perspective we are very pleased to hear that the recommendations coming from this committee will be dealt with in a meaningful way. The committee has put much work into meeting 40-odd different witnesses with much expertise in different areas. I hope the recommendations from the committee will be evidence-based, practical and meaningful so the Minister can work with them. That is the context in which the committee has been doing its work.
I thank the Minister for the presentation. Like the Chairman, I welcome the fact that the Minister is giving a commitment to work on a cross-party and independent basis, as it is really important. The proof is going to be in the content of the action plan. Certainly, for our party, the two key elements will be the extent to which the plan departs from what we are clearly of the view were the failings of Government policy until this point; and the action it takes to increase supply, in particular, of social housing.
One of the difficulties I have with the presentation is that there still seems to be a lack of full understanding as to the crisis at the social housing end of the sector. Many of the organisations that have come to us, particularly those that represent people who are at risk of or in homelessness, have said those are people for whom the market is not going to provide solutions. It is that social housing sector, broadly defined, that is key. For example, when we look at the Minister's comments on the diagnosis, it is not just a result of the collapse of the property market at the start of the recession. For more than a decade and a half before that the State was withdrawing from serious provision of social housing. The reason we can say that is that during the whole period from the early to mid-1990s, the number of people in housing need, whether they were claiming rent supplement or other social supports, was dramatically increasing, as were social housing waiting lists. Even when the State was building more houses than it had ever done before, the level of housing need as defined by the Department's measures was increasing.
I am also concerned that the Minister is still overly reliant on the private sector and a low level of investment, as per Social Housing 2020. Expenditure of €3.8 billion over six years is not a significant level of direct Government investment. Even if it leverages outside investment, it is still relatively low in historical terms and it cannot be said enough that 80% of units as envisaged under that plan are private sector-owned units subsidised by the State, so they are market units, not social units, however we define them. Until we see a departure from that over-reliance on the private sector, we are going to have the same problem.
I will make my questions very brief. There are many things for the Minister to consider in the run-up to developing a plan. Our party strongly argues that he needs to increase significantly the supply of social housing but also to broaden the definition of who is covered under social housing in order that we have not just differential rent social housing but also cost-rental and affordable purchase for lower-income families. If he moves in that direction towards housing directly supplied by the State, he would have a much better impact on the crisis and stabilisation of the housing system.
We also need to increase and change the model of funding social housing and, crucially, tackle procurement. I am a little surprised that the Minister keeps talking about planning as the key problem causing the delay. I am not saying there are not problems in the planning system, but the greatest delay in the provision of public housing and social housing is the lengthy approval of the procurement process between the Minister's Department, the Department of Public Expenditure and Reform and the local authorities. Unless that is reduced, we are going to have the same problems.
The third issue, which the Housing Agency continually talks about, is managing the existing stock. It has given us a report stating that there are 230,000 vacant units. We know those are 2011 figures and that when the census comes out, it will show a significantly reduced number of vacant units around the State. That is not contested.
However, it will still be possibly even half that. Rather than an exclusive focus on the supply of private housing, better management of and investment in that vacant stock is a much quicker route to providing those units, whether for the social or private sector, along with tackling issues around mortgage distress and rent. I know some of these issues do not fall under the Minister's Department, but for him to take a strong stand on these issues, especially the likes of rent certainty, could help.
We had a very powerful presentation from the SONAS group on the links between domestic violence and homelessness. Yesterday, several members of the committee again attended a very powerful presentation by 20 individuals and families who are in homeless facilities facilitated by Focus Ireland. In trying to tackle the broad range of issues that has been outlined, we also need to ensure we properly fund those services and ensure they meet the needs of the people who are in homeless services, some of whom have been in homeless services for long periods for reasons such as domestic violence, mortgage arrears, rent costs and so on. I advise the Minister to meet the people we met yesterday. I am sure Focus Ireland will facilitate it. What they will say about their experience of homeless services is very different from what many people who do not deal with homeless services think. Listening to those people before preparing an action plan would be very helpful.
The key message from our party is that unless the stock of social housing is increasing through purchase, refurbishment and new builds, we are not going to tackle the most acute end of housing need. That is not to say we do not need private sector solutions elsewhere in the housing market, but because it is the Minister's responsibility, that should be his primary focus.
I thank the Deputy. Deputy Ó Broin referred to procurement and the relationship between the Minister's Department and local authorities.
While the Minister might want to comment on it, we will deal with that issue in more technical detail when we meet representatives of the local authorities and departmental staff this afternoon. The Minister need not go into that too much. He can refer to it but it will be dealt with in some detail this afternoon.
To be honest, and this may be unusual for a Fine Gael Minister to say in response to a Sinn Féin Deputy, but I do not disagree with a lot of what Deputy Ó Broin has said. We do need to significantly increase the provision of social housing. That has started and is happening now. Approximately 5,000 vacant social housing units were brought back into use in the past two years. Last year alone, approximately 2,700 voids were brought back into use. The percentage of social housing voids in Dublin is now down to 1%. A big effort has been made in that area and there have also been significant improvements in Cork and Galway in that regard. This year we are expecting to return another 1,500 units to use.
Undoubtedly, the reliance on the private sector alone to meet a social housing need through supported rent schemes and other supports has resulted in core social housing stock numbers falling. That is a problem and one which we want to address. The core numbers of social housing available to local authorities and approved housing bodies must be increased and we want to work with them to do that. That said, the private sector has an important role to play in making that happen because what we do not want to do is embark on a massive social housing build programme that is not providing accommodation for integrated communities. The kind of social housing provision that I would like to see us deliver would be integrated within private and affordable developments so that we will have integrated, mixed communities as opposed to having social housing in one location and solely private housing in other locations in towns and cities. There needs to be a significant increase in the number of publicly-owned, appropriately managed social housing units and that is starting to happen but I want to see those units integrated within private sector developments. We are starting to see very proactive planning with that in mind. Obviously, there will be some direct-build social housing estates and some approved housing bodies will purchase turnkey solutions of 30 to 50 units that can be put to very good use. However, we must make sure we do not repeat the mistakes that were made decades ago where we had huge swathes of urban centres that were solely social housing. That would be a big mistake but, to be fair, nobody is asking for that.
In terms of delays around procurement and approvals, my Department has worked hard to try to shorten the length of time it takes to get approval. A year ago there was a nine-stage approval process but now we have a four-stage process. One of the things we will be working on with the local authorities is shortening the timeframe from when a project is being mooted and designed to when it gets approved. That will mean the Department sending delivery teams - comprising architects, quantity surveyors, engineers, designers and so forth - to local authorities so that we can sign off on designs earlier rather than having back-and-forth e-mail contact around agreeing costings, designs, density and all of the other aspects relating to social housing projects.
There are 3,500 social houses at stage 1 approval at present.
We need to get all of those projects through stage 4 as quickly as possible so that we can build them. The Department officials and County and City Management Association, CCMA, will appear before the committee this afternoon to provide more detail on how those processes will work. Essentially, the way I view it is that we should take a project management approach towards these individual projects with local authorities. We will send out teams of people so that during a two or three day period they can iron out many of the problems that may have taken months in the past in terms of a back and forth communication trying to sign-off or agreement on design or costings or whatever. In regard to the point raised by the Deputy, just because I have not mentioned it in my initial statements is not to suggest we are not focusing on it.
On the procurement side, one thing we could do more of is to have central agreed and approved lists of contractors which local authorities can use. For example, on the rapid build projects, by mid-summer the office of Government procurement will have an approved list of contractors that local authorities can access and from which they can take a contractor rather than having to go through a three or four month procurement process within their local authority. I understand that some of the larger local authorities already have approved lists in place. For example, Cork County Council and some of the Dublin councils already have approved lists that allow them make decisions more quickly in terms of procurement. We want to see them using those lists to ensure there are not unnecessary delays around the procurement process.
On the issue of vacant housing, I have met the Housing Agency. It is strong on the potential of the opportunity for the State to acquire large numbers of unoccupied vacant houses. I have asked it to do a detailed piece of work on their location, who owns them, how they can be accessed, under what process they could be financed and if it can be done off-balance sheet. We are looking at the potential there. The figure of 230,000 vacant properties which is the 2011 figure is high. I believe we will have a more accurate figure from the CSO census towards the end of June. Even if the number is half that figure, it is still more than 100,000 vacant properties. A decent proportion of those have to be in areas that could be used for potential social housing. Obviously, if we can buy property through acquisition that is not being used it is a much quicker process than building and we should use that opportunity. However, we have to look at the cost and how we might be able to finance it in the context of what is possible at budget time in terms of the famous fiscal space.
To give the committee a sense of the opportunity, there is enough planning permission in Dublin for 27,000 houses today and enough zoned land around Dublin for 88,000 houses today. About half require some intervention in terms of infrastructure but most of it is localised and not very high cost infrastructure. There are 4,400 housing units under construction on building sites in Dublin - that is, 4,400 of the 27,000 with full planning permission out of the 88,000 in terms of zoned land. Clearly, there is significant potential to dramatically ramp-up housing provision in and around Dublin with the right interventions around planning, infrastructure and creating viability in terms of developers to make things happen. That is what we are focusing on. I could provide the figures for other cities but Dublin is where the big numbers are. Clearly, there is a need to release the zoned land and the planning permissions that are currently in place, whether it is through NAMA or private developments, social housing or local authorities - or in reality a combination of all of them.
In regard to domestic violence and homelessness, there are a number of issues which go beyond my Department's direct remit but in respect of which we have a responsibility to co-ordinate. For example, I am somewhat alarmed at the number of children or adolescents who may have been in State care and who find themselves homeless after they leave it. The number of people who are sleeping rough in Dublin and who have serious mental health and addiction problems is not a surprise or news to me or anyone else who talks to those who are homeless or who understand homelessness. However, for the State to respond in a co-ordinated fashion - to get a more effective and targeted outcome for the needs of people, some of whom have real needs that are unmet at present - requires serious consideration in how we help the voluntary and charity sectors and how we provide supports through the HSE and other State-owned agencies and bodies. I assure the Deputy that I have spoken to quite a number of people who are homeless and to many of the organisations that are trying to provide supports for them. We have a pretty good overview, although one can always learn more about the complexities of people's lives and how they find themselves in extraordinarily difficult situations. Our job is to try to put a more co-ordinated response in place in order to achieve better outcomes for people. There will be some who will say that if one were to look at the percentage of people per head of population who are sleeping rough in Dublin versus other European capitals, then one would realise that Dublin is doing very well. That is the kind of commentary we reject out of hand because it is totally unhelpful in the context of the contribution that is required to deal with rough sleeping and homelessness in Dublin. I look forward to the committee's recommendations on how we might improve the situation.
I thank the Minister. Deputy Ó Broin raised a particular point. I know the Minister does not have responsibility for all the areas associated with homelessness, but it is hugely important that the issues which affect those people on the margins, be it children or whoever, are adequately reflected through the Cabinet sub-committee. I reiterate that all of us around this table are meeting people who are either homeless or who are at risk of homelessness. Members who visited Focus Ireland yesterday met a collective group of individuals who were articulate in their presentations and who explained clearly the risk of homelessness and how they fell into homelessness. Members heard from those who are living a life of homelessness and how they are coming through it. The presentation was one of the strongest that members of the committee will have heard. If the Minister ever has the opportunity to meet such a group, I believe he would find it beneficial. In advance of attending the presentation I would have thought - like most colleagues - that we know what homelessness is all about since we have all met people who are homeless. However, the presentations by the individuals themselves were moving and inspiring and the visit was a worthwhile exercise.
I thank the Minister and his staff for attending. I thank them in anticipation of the new space we are in with the ongoing consultative process of recent weeks. I hope and expect that when the Minister's strategy and policy is produced towards the end of July, it will be cognisant of the recommendations of this committee.
As we all know, for the past number of years there has undoubtedly been a housing crisis. In the past 12 to 18 months, this has been an extraordinary emergency. I would contend that conventional methods and processes that may have worked in the past have, unfortunately, not worked in recent years, are not working now and will not work in the near future. These methods and processes, while initially put in place with the best of intentions and in the best interests of all concerned, are not cognisant of the situation we face. I am conscious that when I refer to the conventional planning process, this is guided by county development plans that are sporadic in nature. Some authorities are in the midst such plans, while others are in review. The plans are completely disjointed across the State on a county-by-county basis.
We have had regional development plans and spatial strategies, none of which was designed to meet the emergency that now exists and none of which should form the bedrock or the foundation for resolving this issue that we face. This is the case both in the public sector, in the provision of public and social housing, and in the case of private development.
Many would contend that, during the course of our deliberations, the Part VIII process has also been shown to be flawed. I would contend that it appears An Bord Pleanála is at present not adequately resourced with funds or manpower to deal with the sort of level of applications that is, should be and will be necessary to address this issue. In my constituency, Bord na Móna, in a most important project, had sought permission in respect of co-fuelling. This had been contested previously by An Taisce and was judicially reviewed. I am conscious of the importance of that application to the region in which I reside and the 600 jobs that emanate from it. Yesterday, for a second time, an extension of time was sought in respect of the making of a decision on that issue. I am conscious of the effect that has on a region or the forward planning of the company involved. However, this is only one instance of the obvious flaws and delays that are evident and need to be addressed quickly.
The delivery of residential units, from conception to design, planning, procurement and construction, is way too long and costly. It is way too long in the public and private sectors. The Minister stated that the process within the Department and local authorities from conception to handover of keys has been reduced from eight stages to four. I believe that was done over a year ago, but it is today still every bit as slow and cumbersome as it was some years ago. In the area of costs, the cost of funds, VAT, development charges, site costs and the costs associated with certification, compliance and regulations are all combining to make it difficult. We have yet to get an absolute handle on the cost of construction when one considers everything involved.
Conventional methods of funding are also outdated and, in the real world, banks are not lending to developers at the rate at which they need to. In the real world, the fiscal rules such as they are at present bar this State and the Government from providing the extraordinary amount of funding necessary to provide the extraordinary number of units required. We have to think outside the box and find new means and methods. We heard from representatives of NAMA recently. One of its success stories has been the National Asset Residential Properties Service, NARPS, initiative. This is a special purpose vehicle that can purchase and lease units for periods of time. This Government must seriously consider, in this emergency, putting in place a special purpose vehicle or housing authority that can learn from NARPS. That authority can seek funding from the likes of the NTMA, as we heard during the week. It can also, as it should do, receive funding from the credit unions, which are anxious to get into this game. They are anxious to play their part and role and to achieve a better return than that being achieved at present for having it in the pillar banks, which are not lending it on to others when it is required.
The authority then can lend, fund, build and enter joint ventures to provide units for local authorities, approved housing bodies and colleges. Colleges are also sucking up a lot of the residential properties in the centres in which they are located. During the course of recent weeks, Maynooth in particular stood out. Almost the whole of Kildare is taken up with students seeking accommodation to get to and from NUI Maynooth. Whether they receive funding from this authority or become an approved housing body, they have a role to play. On-campus sites are available to them and must be forthcoming.
That authority can also bring forward emergency alterations to legislation. We had emergency sittings to deal with banking crises. We can have emergency sittings to deal with this crisis.
That authority must look at the methods of planning and funding models relating to local authorities. Its terms of reference could relate to some Part VIII-type planning for a window, whether a two-year or three-year period, to allow this matter to be dealt with and to allow such an authority to do what we want it to do, namely, get on with the job of driving the development, construction and provision of residential units to deal with this crisis. It could also seek to provide incentives for local authorities or the private sector in respect of the compulsory purchase order powers. This offers an opportunity to revitalise towns and villages. The person from the NTMA referred to the funding that has already been provided under the capital development programme and funds to local authorities in respect of larger towns. As many members have said in recent weeks, this crisis or emergency extends beyond the large urban centres, as crucial and pivotal as they no doubt are and despite the focus here. However, in the town I come from and the villages with which I am familiar there is an equivalent crisis. Up to 50% of the representations in our clinics throughout the country in recent years have been taken up with people seeking housing.
This should be seen as an opportunity to revitalise, re-energise and give life back to those towns and villages. There are many buildings which are tied up, whether for reasons of conveyancing, title, family disputes or lack of funding. There must be improvements to the CPO powers to initiate development to address this. It should also be seen as an opportunity not only to rebuild and re-energise our communities but to build new communities and learn from the mistakes of the past and during the boom years, when we had sprawl in towns and villages in the greater Dublin area and beyond. We are chasing our tails when it comes to the provision of services in education, recreation, transport and infrastructure. The Minister referred to the infrastructure deficit in certain areas. This is an opportunity to create new sustainable communities in the greater Dublin area and other places. Pilot schemes could be initiated to reward options that address infrastructural deficit and bring new means and methods of transport and accessibility in the context of known population trends and parameters. We could then provide the services that are needed in that context.
We have talked about energy and sustainability and the responsibilities of those in the construction sector in light of our obligations in respect of climate change and so forth. Real opportunities can come out of a crisis and they should be explored. All of this should be driven by an authority that has the potential to raise extraordinary amounts of funding. The conventional methods - as good as they were - employed in the 1930s and 1970s will not work in this crisis. I hope and expect that we will continue to explore the possibilities that exist in the context of what I have said in the hope that the Minister would bring such proposals forward. I have in mind a special purpose vehicle to drive the provision of residential units to address the crisis and the emergency. We should bear in mind everything we have seen in recent years, despite the best of intentions of those who sought to deliver them. For example, the 2020 strategy relates to the provision of housing and the figure of 25,000 units by 2020 was mentioned. However, we are aware of the number of houses constructed by local authorities in recent years despite the commitments made. With all due respect, the Minister is going to have to think outside the box and come up with new initiatives and concepts and a new process. As good as they were, the methods used in the past are not suitable for the present. I hope the Minister will address the matters to which I refer by the end of July.
I thank Deputy Cowen. He raised many points and I suppose some of them represent an overview of the situation. The Deputy raised one issue in particular, namely, that relating to finance. Perhaps the Minister might give a little thought to his views on it. The committee has certainly spent some time discussing it with representatives from the Department of Finance and the NTMA and has examined the National Asset Residential Property Services Limited, NARPS, model.
I suppose the question from the Minister's point of view is whether there is an opportunity to have a similar model to provide funding for either approved housing bodies or local authorities, but very much on the NAMA-NARPS model. Could the Minister please explore the point a little further?
What Deputy Cowen said about the need for a new approach is spot on. That is why we need a new action plan. I am not sure whether we should set up a national authority for housing. We could spend a lot of time trying to construct a new governance model or we could focus instead on taking a project-management approach within the Department and driving a results-based approach with local authorities of setting targets and meeting them. I will examine what Deputy Cowen proposed but at the moment our approach is very much trying to use the existing infrastructure in local authorities in order to empower both councils and chief executives to demand of them what they need to get results and then to try to help them to deliver. Perhaps we could add to that by creating a new housing authority but there is a possibility that it would distract. I am not sure but I am happy to explore the concept. Deputy Cowen should not forget that we have a Housing Agency and a Housing Finance Agency and lots of local authorities, which in the past had the capacity to manage housing stock and build out new housing stock reasonably well, although in many cases some of that skill set has been lost, but we are gearing up local authorities to be able to do that more effectively again. We have approved an increase in staffing appointments to local authorities to ensure they are able to respond. We have been doing the same within the Department. A total of 420 extra people have been sanctioned for appointment to local authorities, in particular in this area, and there may well be more.
We are going to be more demanding of An Bord Pleanála, but to be fair, in order for it to deliver, we must give it resources to help it respond. If we are going to be demanding An Bord Pleanála must have the capacity to turn around decisions faster and it will need more people and resources to do that. If that is necessary I suspect we will do it. I have already had an initial conversation with the chair of An Bord Pleanála in that regard.
I have spoken to some committee members about my thinking on Part VIII. We want to keep councillors involved in the decision-making process but we also want to try to get decisions made quicker, in particular on social housing projects. We cannot have a situation whereby we have communities deciding they will block social housing projects in their areas because they do not want them for whatever reason. If we are serious about integrating communities, whereby one has social housing mixed with private housing in a way that is appropriate and creates diverse, vibrant communities then we must find a way of making it happen. Sometimes that is not popular in some areas and, again, we must find a system that can make it happen. I would not like to over-exaggerate the role of Part VIII in terms of preventing things from happening.
Planning is part of the issue but there is planning for 27,000 houses in Dublin, which means the planning system has delivered in a way that can allow house building to start.
In terms of the NARPS model, which is a good model, NAMA has essentially created a model which is off-balance sheet that allows it to purchase or make properties available for long-term lease to approved housing bodies. That is a successful model which we can replicate. Perhaps we could do that through the Ireland Strategic Investment Fund, ISIF, in co-ordination with the Housing Agency to be able to make more stock available to local authorities but in particular to approved housing bodies, which have shown they are able to work such a structure effectively in recent years.
I am sorry to interrupt the Minister but a vote has just been called in the Dáil so I suggest we suspend until the voting is finished and then we will resume immediately after that. I thank members. I apologise to the Minister.
I welcome the Minister and his staff. Some of the questions I had intended raising were raised earlier and the Minister answered them but on the issue of procurement, I want to give the Minister an example of a case with which I am familiar, and I am not engaging in parish pump politics. I come from Portlaw, County Waterford, and when I was a member of the council last May we were shown plans to develop 12 houses in Portlaw. Coolfin Woods is the name of the area, where 24 houses are already located. We were shown the plans last May. The council already owns the land and this is another section that will go in behind it. There are no objections. The previous Minister, Deputy Alan Kelly, sat in the meeting and said there was no issue around the funding. When I inquired about the matter again last week I was told it is going to tender in October. The money is available. The plans are drawn up. The council owns the land and there are no objections so why would this project at Coolfin Woods in Portlaw, County Waterford take that long to proceed? It is frustrating from the point of view that we have the highest number of people on the waiting lists in the county. Everything is in place to proceed, and it is an issue that must be seriously addressed.
I welcome the Minister's comment that he is engaging with the local authorities because the local authorities have a major role to play in this area.
I would like to hear the Minister's views on another issue that I have raised continually in the past two years. There is a major issue with overcrowding in local authority houses, and it is very difficult to get a transfer. In the past ten years, the local authorities stopped putting extensions onto houses where there is room to do that, except in cases where the medical circumstances required it. For example, I was dealing with a case of a woman and four children who were living in a two bedroom house, which she loved, for the past ten years. It was in very good condition. She did not want to move, but the council refused to add on another bedroom, which probably could be built for €25,000 or €30,000. That would mean this person would not be put onto a transfer list, which would make the waiting list even longer. That issue could be examined with a view to speeding up the process. I refer to the procurement aspect and the local authorities considering extending their current stock.
This committee has discussed the cost of a house on several occasions. The price of a house in the greater Dublin area is approximately €300,000; it is not quite that much in country areas. Either 36% or 38% of the cost of building a house goes back to the State.
Is there a way to reconsider this because 38% is a huge amount of money?
The Minister for Finance, Deputy Noonan, also has appeared before the committee when a possible reduction in the VAT rate from 13.5% to 9% was discussed. While the Minister stated he was open to discussing it, his preference would be for it to be passed on to the actual buyer and not simply to the builder. I wish to make another point on which I also seek the Minister's thoughts and with which not everyone present may be in agreement. We definitely must encourage developers back into the market because local authorities cannot deal with it all. We need the developers to be back building again and it is important that this happens. I have two children in third level education and the final point I wish to make pertains to accommodation for third level students. While Deputy Cowen raised this point briefly earlier, this is another issue because many young professionals are taking up third level accommodation and it is proving to be a real challenge.
I welcome that the Minister now acknowledges this is an emergency. It is a word I found it difficult to get the previous Government to say and that has not helped in preventing this tsunami of homelessness from developing. Before I ask the Minister about the housing targets and how he envisages that issue being resolved, does he agree with me that if this is an emergency, the first thing we need to stop is more people becoming homeless? People think this could not get any worse but it could. I was surprised that in his submission, the Minister did not mention preventing people from becoming homeless and the issue of the private rented sector. On page 27 of the programme for Government, it is stated there will be a review of the current regulatory regime for the private sector. Does this include serious consideration of the introduction of real rent controls? Members are aware there has been an increase in rent supplement and while I will not dwell on it, it is not enough and will not necessarily work. However, in the case of those who are struggling but who are not necessarily in receipt of rent supplement, rents must come down but at the least should be prevented from rising further. Does the Minister agree they must be linked to the consumer price index? This measure has been called for by all the homeless agencies that appeared before the committee in recent weeks, including Focus Ireland, Simon and so on. All the non-governmental organisations, NGOs, are calling for it and the Minister must indicate whether he is willing to do this.
Second, does the Minister support security of tenure for all tenants in Ireland to prevent people from becoming homeless, including those who have been told by an ordinary landlord that the property must be sold? This is now the most common method being used to evict somebody, often to jack up the rent rather than to sell the property. In some cases it is to sell the property because the prices are increasing. What will the Minister do in legislative terms, because I believe these two measures are two key items of emergency legislation that are needed?
On the Minister's general philosophy on resolving this housing emergency, I am somewhat disturbed that the Minister keeps invoking the term "housing market". He stated he would like to get back to a normalised housing market again and spoke of the housing market. When he appeared before this committee, Peter McVerry took issue with that, as do I, because we should not have a housing market; we should have a housing system. One reason we have come to this sorry pass is because we allowed housing to become a commodity for speculation rather than seeking to house people. On foot of his presentation today, I still am unclear as to what level of public housing the Minister favours because most of the reliance still appears to be in the private sector. For example, the Minister stated there is enough zoned land around Dublin. I have brought out this issue in questions to the National Asset Management Agency, NAMA, and to others. While NAMA in reality has enough land zoned as residential land to house everyone on the housing waiting list, it cannot do that because of its brief. However, if there already is enough land zoned, planning is not the problem. Does the Minister agree the private developers are holding off? They are hoarding land and are holding back on building until prices rise again.
It is as though they need to be enticed back into the market as if they were on strike and need to be given more of the concessions for which they are looking.
The document refers to a housing target of 25,000 units per year, but that will only deal with new population growth. It would not deal with everyone on housing waiting lists. What type of units would they be? What percentage does the Minister think should be public housing? If the figure is 10%, 20% or 30%, it would take 56, 38 and 18 years, respectively, to clear the housing lists. The housing crisis would never be resolved based on those figures. The Minister may want a higher percentage, but they are the figures he indicated in the presentation.
The document lists Part V, NAMA and the NTMA as being the things that the last Government did which the Minister backs. Last year, half of the houses that were built under Part V were one-off houses. We got very little from Part V. The Government reduced the percentage to 10%. Therefore, there will be even fewer units provided than was previously the case. NAMA has a target of 20,000 new houses, but 2,000 of those would be social housing based on the Part V rate of 10%.
The Minister referred to Activate Capital, representatives of which came before the committee recently. I am somewhat disturbed about the manner in which it is using Anglo Irish Bank and Maple 10 developers, which are receiving large subsidies from the fund. Former bankers are at the head of the fund. Nothing is emerging from the funding of €500 million from the taxpayer - the money came from the pensions reserve fund - which is intended to provide social housing. No more than 10%, as far as I can see, will be provided.
I refer to the fiscal rules, which have been a key subject of debate in the committee. The Ireland Strategic Investment Fund totals €5.4 billion. NAMA has about €2.4 billion left in its cash reserves. If a political decision was taken to change its brief and compel it to build social and affordable housing, we could resolve the housing crisis. I put this to the Minister when I met him and he said, quite rightly, that if NAMA's brief was changed the process would not be off-balance-sheet. This is the elusive model we have all sought.
Recently, three top civil servants came before the committee and I asked them to show me an off-balance sheet model that worked anywhere in Europe. There was a vague mention of something in France, which everybody here heard. It is now virtually impossible to do anything off-balance sheet if one wants to comply with EU rules, because they are constantly being redefined, such as PPPs and so on.
There are only two ways around this issue. Either we breach the rules in order to house people who need it and tell Europe we cannot abide by the rules because we have to house people, or we have to raise commensurate revenue to pay for the housing that we build. I would be very sceptical that could be done based on a cost rental model because very high rents would have to be charged, but I remain to be convinced. We need to have higher eligibility criteria for social housing. This would increase rental yields because tenants would pay higher rents based on the differential rent scheme as their income would be higher.
Could the Minister consider increasing the tax on wealth in this country? We have seen data on how the top 250 wealthiest people in the country increased their wealth by 3% last year. The Minister's presentation states that nobody is arguing that everything that is built should be public housing. I would argue that we need to redefine what public housing is. It seems to me that the term "social housing" has become a term of stigma and a problematic term because it suggests that people have social problems. They may not necessarily have social problems at all.
We need to define what we mean by public housing.
The Minister said we cannot go back to the mistakes of the past. Every time, we hear this, somebody invokes Ballymun or Knocknaheeny, but what about Crumlin and all the other housing estates built by local authorities in this country through the decades that are not huge areas of deprivation or problematic and in which many of us were reared? We are also stigmatising social housing by constantly invoking these examples. There are many good examples of public housing in this country. I am not referring to the Minister. This has been an issue in the meeting.
The Minister said he thinks public housing must be mixed in with private housing. This is a topic we need to consider. How much is the Minister talking about? If there are 30 public housing units in a private housing estate and another 40 here, to get 100,000 families off the waiting list, we would need to build one million houses. If 10% is going to be social or public housing, we cannot house 100,000 families. It must be more than that. I do not see anything wrong with local authority house building if we have proper facilities, green spaces, shops and properly planned schools. The particular problem was that in many estates, people were left bereft and isolated eight miles from their base. We would need 3,000 estates of 30 to 40 houses if we are going to then solve the housing waiting list. There must be a much bigger social proportion of social housing than 10% or 15%. The Minister needs to clarify what he thinks that would be.
In respect of learning the lessons of the past, I do not have time to go into it but what were those lessons? I think the Minister is in danger of repeating some of them. Nine tax breaks for developers are listed in the programme for a partnership Government. Will the Minister implement those nine tax breaks? All the tax breaks provided in the past led to very wealthy people siphoning off all the wealth at the top. All the surveys show that. Even though it increased housing supply, it did not increase affordable housing so the Minister needs to stop constantly talking about increasing supply of all types of housing because it must be affordable housing. It seems that all the emphasis is still on getting the builders to build without any reference to what would be affordable.
Will the Minister give funds to local authorities? He says he wants them to draw up plans, but based on my experience, my local authority does not have the funds to build.
On one point of clarification, the Minister mentioned the off-balance sheet models. The NTMA indicated that the NAMA NARPS model could be replicated outside NAMA as an off-balance sheet project. I want to clarify that point. A range of issues were raised by Deputies Coppinger, Butler and Cowen.
There are quite a few questions there. In respect of local authority funding to build houses, about €1.6 billion was made available to local authorities for a three-year period so there is a significant amount of capital available for local authorities to build. About €124 million has been made available for Cork City Council, while about €80 million has been made available to Cork County Council over that three-year period. A significant amount of house building is not taking place nationally or in those particular areas. The money is there and it is being used for various different things, mainly around acquisitions of properties to add to the social housing stock, which is also necessary.
There needs to be an acceptance that there is a role for private sector developers to increase supply as well as local authorities. There is a belief that we should not look at tax breaks because somehow decisions that were made in the past around private developers and the margins they were making caused all sorts of knock-on problems and consequences. However, this does not mean that we should not look at ways in which we can ensure a private developer can make an acceptable margin and, therefore, progress developments.
Undoubtedly, the solution to increasing supply lies across a series of bodies, both public and private, building and delivering homes for people. I am not solely focusing on one area or the other. A significant priority will be given to supporting local authorities and AHBs to acquire and build homes.
Making simplistic calculations around Part V being the only mechanism to deliver and reduce waiting lists assumes that the people can never move off the waiting lists, which I do not accept. It also assumes that the only delivery mechanism is through private sector Part V provision at the bare minimum of 10%, which is not true either. There are many examples of developers who are currently considering doing deals with AHBs or local authorities, in some cases for 100% of the development. There is an idea that there should only be 10% but that is the minimum required. We need to ensure, under Part V, that every development in the country is required to have at least 10% social housing. However, many developments will go way beyond that. Some will be built by a private developer and the entire development may well be given over for an affordable housing scheme, rent-to-buy scheme, social housing or a mix of these. Somebody asked regarding the Irish Glass Bottle site, for example, which has the potential for 2,500 or 3,000 housing, whether only 10% of that would be devoted to social housing. Of course not; we hope to get way more than that in an appropriate mix. All Part V does is guarantee a minimum but, in the context of many developments, it will be in the developer's interest or the local authority's interest to go way beyond that. There will be opportunities to improve the cash-flow and financing arrangements of private developers by them doing deals early with AHBs or local authorities, which may allow them to get cash upfront to deliver the social housing element of a mixed development first, which, in turn, will help finance the private development subsequently. We need to examine the housing market in the context of public and private elements.
Deputy Coppinger made a point about trying to understand the quantities that will be provided under the social housing programme and she asked a fair question. There is an aspiration under the social housing strategy to provide 35,600 new units between now and 2020. According to the way that figure breaks down for the anticipated delivery, approximately 22,000 units will be new build. However, this figure is not cast in stone by a long shot. We are examining ways we can go considerably beyond it. The strategy was signed off in 2014 during a different period for financing, in particular, and the pressures Ireland was under regarding the on and off balance sheet argument. As we move into a different space financially, we may well find that we can be more ambitious than that. However, if 22,000 social houses can be built in the next five years, that would be significantly more than the number delivered for many years. We can, though, go beyond that. We have not finalised those figures but the Deputy asked for a sense of where is the social housing strategy and that is a fair reflection.
NAMA has the capacity to build a lot of houses, which it will, but we need to be careful we do not turn it into something that would create many more problems than currently exist. If NAMA can deliver 20,000 housing units and include a lot of social housing in that mix - and if it can do so off-balance sheet - this would be a good outcome. It is not restricted in the way that publicly financing local authority build is in terms of the fiscal rules so we need to be sensible in terms of what we demand of NAMA. I am quite demanding of it and have met its representatives a number of times. We want it to deliver in this area for us.
That is not necessarily true because, through the NARPS model, NAMA is already making houses available for approved housing bodies. The latter has nothing to do with its 10%. Let us not assume the worst all the time. I expect and hope that more than 10% of the NAMA-built properties will be available for social housing through various different mechanisms. Let us work out, development by development, how we can maximise the appropriate level of social housing as part of mixed developments.
In terms of the questions around rent controls, linking rent to the CPI, which Sinn Féin had a motion on this week, and security of tenure issues, if we had a more normalised balance between demand and supply we would need to look actively at how we can create a more European style rental market whereby an increased percentage of people would choose to rent for their lifetime, as is the norm in most European capitals. Many people who do not want to take the risk of taking out a mortgage choose to rent for their lifetime and they have security of tenure around that choice. Traditionally, people who are renting in this country are those who are in transition, who cannot afford a mortgage, who are choosing to rent for a temporary period or who are students. The ambition and aspiration in Ireland to own one's own home drives much of the activity in the housing and property market. We need to change that narrative. I am very conscious that, at a time when we need to dramatically increase supply, we need to be very careful with what we do or say around security of tenure, particularly having making decisions as recently as last November around two-year rent reviews and a series of other things that are designed to try to improve security of tenure for tenants. If we are going to come back and review that on a regular basis there is the potential to undermine the confidence and appetite for significant investment in the property market to increase supply. Trying to get that balance right is quite a delicate matter, particularly when we had such an imbalance in the position relating to supply versus demand in the property sector. We will look at it but I do not have a straight answer to that question yet. I am interested to see what the committee recommends in terms of trying to get that balance right and we will comment on it when its recommendation is made.
I will comment on some of the points raised by Deputy Butler. We will follow up on the Waterford project. It sounds as if there is a lack of urgency and that they are going through procedures when they are ready.
That is not good enough. Everybody needs to play their part now in responding with a sense of urgency. We should get on quickly with the straightforward projects that have no reason to be slowed down and no impediments or barriers.
I presume the committee will look at the issue of students in some detail. There is a significant opportunity for student accommodation to have quite a dramatic and positive impact on the private rental sector. Statistics from the recent HEA study indicate a deficit of about 25,000 in formal student accommodation. There is private and public student accommodation provision. Approximately 25,000 students are accommodated in the private rental sector. They are living in homes that could house families. We should consider creating a dramatic increase in the on-campus and near-to-campus student accommodation. The solutions to student accommodation lie in rapid-build technologies, modular units and so on. Student accommodation is quite different from a family home. Some of the solutions could be put in place much more quickly than conventional housing and could free up a significant number of places over a short space of time.
I have met representatives of the universities on the matter. It is not as straightforward as we thought it might be. Again it comes down to financing, procurement and, in some cases, planning. However, it is an area in which we can do a considerable amount.
The rate of VAT is ultimately a decision for the Minister for Finance. Obviously, we will be talking to him and he is an active participant in the Cabinet sub-committee on housing. It is really about balancing how we use the tax system and whether we get a bigger bang for our buck than spending on the capital side. There are also accounting rules that complicate this. Increasing capital spend can be accounted for over a four-year period. When reducing taxes or giving tax exemptions, it needs to be accounted for in full in the year it applies. There are some restrictions on tax reductions that do not provide the same flexibility as increased capital spend. We need to try to get a balanced understanding of how we can spend available resources as effectively as possible to get more houses built, more houses acquired, more vacant properties into use and so on.
Deputy Cowen made a point about smaller towns and villages playing a part in the broader housing strategy. That is important. The programme for Government places a big emphasis on what I believe is described as rural revival. If we are to build more than 100,000 houses over the next five years, we should use that opportunity to revive and revitalise many towns' and villages' main streets to promote communities and attractive living. However, the big pressure at the moment for numbers is in the big urban centres.
The Minister indicated that the ambition was to build the programme up to building 25,000 houses per annum or more if possible. He said this was the beginning. We can all clearly see that there is a supply side shortage at the moment. The challenge is to ensure that over the medium period the supply and demand more or less match. Are the Department's analysis and decision-making in terms of family units, demographics and so forth based on CSO information?
Based on what I know, the 25,000 figure is a Housing Agency figure.
It is also backed up by a number of economic think tanks in Ireland, including the ESRI. There are few people who would disagree that a country with a population of approximately 5 million and the type of demographics we have needs to build approximately 25,000 housing units per year. Most people would also accept that because of the deficit of the last decade, we need to go beyond the 25,000 target. I agree with Deputy Coppinger that the target of 25,000 housing units per year is not enough and that we need to go beyond it, if we can. Last year, only 12,600 housing units were built, half of which were once-off developments across rural Ireland and the other half of which were completion of unfinished apartment complexes and housing estates. Surpassing the 12,600 target this year will be a challenge. Currently, we are building less than half of what would be needed if we did not have a housing crisis.
Yes, that would be my view. If we can reach the 25,000 target in terms of delivery in advance of 2020, it will be a huge achievement. If we can go beyond that target, we should aspire to do so.
In response to the question on the number of houses I would like to be built per year for the next ten years in a perfect scenario, I would like between 30,000 and 35,000 per year to be built. However, we are a long way off that. It will take us some time to get there. In the meantime, we need to focus on the people who need houses the most, including the homeless and those on the waiting lists. Therefore, the emphasis must be on social housing provision.
I welcome the Minister. I also welcome his commitment to the significant changes needed and, in that context, the fact that he is gathering around him a team of experts from inside and outside his Department.
We previously experienced a huge housing crisis in the 1970s. Are there staff in the Department who were involved in drafting the huge housing programme introduced when Mr. Tully was Minister? I acknowledge that that was a different time and that the issues were different but it was a very successful building programme. From my reading of the history books on the foundation of this State, according to Charles Townshend one of the most important things done at that time was the public building programme. There is history, tradition and the facts. The fact is that there is a huge under-class of people in this country who are in desperate conditions, including in Drogheda, Dundalk and so on.
The social housing strategy introduced in 2014 does not go far enough. I ask that the Minister examine the percentage build per county under that strategy. While in some counties the percentage is 40% to 50% of housing need, in other counties it is much lower. For example, the level of building in County Louth will equate to only approximately 25% of current need while, if my recollection is correct, in Tipperary it will be in excess of 50% of need. There is another weakness in the strategy in terms of the reliance on the private sector to provide 75% of social housing need in Dublin, Cork, Waterford and Galway. I welcome the proposed increases in that regard as mentioned by the Minister. I agree that if there is a deal to be done with the private sector in regard to the supply of housing it must be reciprocal. For example, the private sector could be offered significant tax breaks in return for long-term lease agreements with local authorities under the housing assistance payment, HAP, scheme. There must be a quid pro quo. We must make it attractive for the private sector to sign up to rather than avoid the HAP scheme.
That is happening in some cases.
The other point is about NAMA. Local authorities have let down NAMA in the greater Dublin area, as the agency offered the authorities thousands of houses for social housing and they refused them in Dublin. That is a fact.
To get back to the point, the representatives of NAMA stated very clearly that whereas some of those houses were in unfinished estates, they were being offered in a finished state. In other words, the agency would finish them. I am concerned that local authorities do not have the commitment to build what they need to. I acknowledge that the county managers or chief executive officers will be met regularly. There are major issues in this area. In the past, the National Building Agency designed for local authorities, put schemes together and the local authority built the structures. I do not know where that agency is now - perhaps it is in heaven - but it was a very good body, designing very fine housing that worked. As the Minister stated, it supplied expertise to the local authority.
There is also the question of encouraging private enterprise to get involved. I stated at earlier sessions that there is much money out there in pension funds, including in countries like Canada, ready to invest in long-term albeit not very high returns. What can we do to attract more of that money? If there is a guaranteed demand and we can give them the rents they need to meet the expenditure, significant progress could be made.
My next point concerns the build-to-lease programme. If we ask private developers to build to lease, I presume it would be off the Government balance sheet if a private contractor builds houses and leases them to the local authority, with tenants paying their rent. Is that a model that should be considered? The Minister is correct in wanting to build 35,000 units every year, but it will not happen unless we get other people into the market.
I welcome the Minister's point about planning reviews, but local authorities have infill sites and much land in bits and pieces in towns, cities and the countryside. State companies like CIE and Bord na Móna have landbanks and God knows where they are. I understand the Government is doing an inventory of these. When will that be to hand? We will have to use hard bargaining to ensure that if they are in the right place, those sites will come into public supply. I can give the example of Gormanstown Army camp in County Meath, which has approximately 200 acres. There was a proposal some years ago to take on 60 acres of that for housing but it never happened. There is land in places like Gormanstown, which has infrastructure like the motorway and railways. It has reasonable proximity to towns and good public transport. We must ensure all the land in public ownership in significantly located areas is released to supply our need.
I have a couple of other points.
I do too because, like yourself, I have sat here. I am the first Government party speaker and I am not going to be rushed in the final part of my question. I spoke about the build-to-lease programme, NAMA homes and landbanks and now I want to mention the planning review. That is key. We need to look again at fast-track planning. I do not know whether it makes sense. Somebody spoke about reforming Part VIII, but we must see whether we can fast-track the planning in whatever way it can be done.
The last point I would like to make is that Great Britain has a huge public housing supply. There are massive operations in the United Kingdom. What can we learn from the United Kingdom? What wealth of information is there that the Minister could access or get? Perhaps they might have experts on this issue, on rapidly building a significant number of houses. What knowledge is there? What research and information can we get to do this job? After the Second World War, they had a huge public housing construction programme. Maybe there are lessons we can take from that.
I thank the Deputy. There is only one speaker left, that is, Deputy Wallace. If the Minister does not have the exact response to some of Deputy O'Dowd's questions in respect of NAMA, there will be representatives of the four local authorities before the committee today who may have further details-----
On Deputy O'Dowd's last point, in The Guardianfor the last three or four weeks there have been articles on the major problem they are having with housing provision in the UK at the moment. It is a crisis that is coming close to our own. I get the impression that funding and how all this will be financed presents a huge stumbling block for the challenges that are out there at the moment. It is about the price of the money. Can we get money at around 1% rather than being driven into the hands of PPPs which are an outrageous price for the State?
The Minister said that sometimes we cannot do this because it will drive it off-balance sheet and it becomes problematic in terms of how the money is assessed, and so on. That is a huge obstacle we must overcome. As I have said before, it is clear that other states in Europe have bucked the rules when it suits them. For example, this year the French are going to break the fiscal rules to deal with what is called an emergency around security due to the ISIS attack. We have an emergency around housing and we should be looking for some leeway from the Europeans as well, just as the French have done. Austria, Lithuania, Spain and Italy have already indicated that they are also going to break the fiscal rules in 2016 and probably will not pay any great price for it.
Another issue around funding is that there is a lot of development that could take place in the country but the builder or developer - sometimes it is the same person - struggles to get access to funding. The banks are not lending in this area and are unlikely to start lending. The Government is unlikely to start telling private institutions what to do, even if we do happen to own AIB. Does the Minister not think the State is going to have to play a serious role in funding projects? He mentioned that deals can be done with local authorities around social and affordable housing and mixing it with private housing. I agree that would be great if he could make it happen, but there are some serious obstacles to making that happen.
I was speaking recently to a guy who wanted to build 30 units. He was prepared to do a 50:50 split between private and social housing and wanted to do a deal with the local authority in terms of accessing some upfront funding to go towards his eventual take from the project. However, the local authority did not feel that the project was doable in that manner. There are some challenges that need to be addressed in that area with the local authorities.
To return to my first point, NAMA representatives appeared before this committee and it was very interesting to listen to them. They made it very plain that they have a commercial mandate - 100% - and that the notion that they had a social mandate was a figment of our imaginations, despite the fact that it is mentioned in the legislation. They were unapologetic about the fact that they will do as they see fit to maximise the return on any commercial venture in which they engage. The Minister said that NAMA will probably deliver more than the 10% target for social housing. He also said that integration is key and agreed that affordability is a big challenge. However, the NAMA representatives admitted that the majority of the units the agency will build will not be affordable for those people who are struggling to find units now and into the future. The Minister said that the Department's action plan will focus, in particular, on those experiencing the most difficulty in accessing the housing and rental market at the moment but the majority of the 20,000 units that NAMA will build will not address the needs of that cohort. That is a fact.
The NAMA representatives were also unapologetic about the fact that they are engaging with vulture funds to develop huge tracts of commercial property, a process which will prove to be very lucrative. That is a commercial decision and I understand the logic behind it but the sad part is that it is happening at the expense of the residential market. It would be so much better if the State took a more hands-on approach to how NAMA operates. The Minister said that it drives it off-balance sheet if the Government reduces NAMA's commercial mandate. It would be disingenuous of me not to add that I have serious concerns about the fact that we are hanging so much of our hopes on an agency like NAMA to deliver 20,000 when only this week two of its former employees were arrested in Northern Ireland. That is going to have serious repercussions and will not go away. I am not so sure that NAMA is the organisation upon which we should depend to deliver so many units. The Government needs to examine this issue and determine whether it is right to go down that route. NAMA seems to be here for the long haul but there are many issues surrounding it that have not been addressed in recent years. The Minister said that we cannot be too demanding of NAMA but it would be wonderful if we could demand accountability and transparency in terms of how it has operated.
On the issue of carrots for the private sector, I do not live in cloud cuckoo land and realise that 70% of people will continue to use private housing in some form or other in the next ten to 20 years. However, I would argue that we have serious problems around how we deliver private housing as well. The affordability issue is directly linked to the fact that the market is dysfunctional and unregulated. The Minister said that he is considering introducing tax incentives to get private developers back into the market. Is he aware that investment or vulture funds are sitting on some really good sites in Ireland and are looking for incentives to start building?
I warn the Government that it will have to be careful as some of these people have no appetite for building but are actually planning on flipping property when it is more attractive to flip it. They are lobbying for incentives with a view to making their asset more valuable. I suggest that if any type of assistance is to be provided to attract the private developer back into the market it has to be formulated in such a way that a reward comes at the end when the units are delivered. I do not how that can be done but if it is done upfront, these guys will make a killing and go laughing their heads off. I am not suggesting for a moment that the issue is not complex and that it is easy to do these things - I know it is not - but there is a danger of driving up the value of the development land that is ready for building.
On the Part V issue of the 10%-----
Apartments are advertised this week on Watling Street, Cork Street, Middle Gardiner Street and Dolphins Barn. For example, on Middle Gardiner Street there are ten one-bed apartments and five two-bed apartments, a rent roll of €153,000, roughly €1,000 each. Hook and MacDonald advertise that the buyer will be able to achieve a rent roll of about €228,000, an increase of 50%. We can expect at least half of those people to get tossed out of those units because they will be unable to afford the new rent. We are looking at paying much more to produce units while these are ready-to-go units. Some of these units will become vacant and the people in them will be looking for new places. Is there any way in which the State can engage in buying such property? At the moment, these properties are occupied and should stay occupied, but if vulture funds buy them they will not stay occupied because landlords will increase the rent and make them unaffordable for these people and somebody else will move in and the former tenants will be looking for a place. The State should be looking at bargains. Deputy Fergus O'Dowd was giving out that local authorities are guilty as they did not take up all the NAMA options. It was unfortunate that the local authorities did not get a better pick of what NAMA was offering. It offered them the thrash but not a lot of very suitable units that the local authorities would have jumped at and that was unfortunate. NAMA cherry picked and sold off the lovely property to the investment funds and offered much poorer quality property in many cases to local authorities. If one analyses the property turned down by local authorities, one will find that more often than not there was a good reason for doing so.
Hopefully, the Deputy will get some answers then. I am aware that NAMA spent tens of millions of euro doing up properties to make them suitable for social housing. I do not have the exact figure but it was very significant.
We can have a long debate about the remit of NAMA. The NAMA vehicle was set up to take broken property-related loan books off the banking system and its remit was to try to minimise the financial exposure to the State. That is the remit it continues to work out, which is why it has - and it is unapologetic about it - a commercial remit to try to do that. It is predicting that by 2020 it can make a profit for the State of up to €2 billion.
Within that remit we are trying to work with NAMA to ensure the State gets the maximum dividend possible in terms of housing delivery in a timely manner, given the influence it has over loan books and the linked security of those loan books to landbanks and properties all over the place. We are trying to work with NAMA to maximise that dividend and we will continue to do that. However, to simply turn NAMA into a different entity would turn it into, essentially, a State agency which would bring its expenditure onto the books. That would cause all sorts of disruptive and negative impacts regarding what it would be allowed to spend. I am just saying that we need to be careful about that. I am not suggesting that NAMA does not have significant financial muscle, of course it does, but it is about how we use it and how clever we are in terms of managing budgets in a way that can deliver for us, without impacting on available spend.
I would like to see the State buying up properties - I have spoken to the Housing Agency and it has strong views on this as well - particularly vacant properties. I would like to see a purchase programme where the State looks for bargains in properties that may not be on the market but may be coming to the market in the next couple of years. I would like us to be proactively looking to acquire, particularly properties that are not occupied at the moment, to be able to increase the number of social housing units we have. This could involve talking to banks about the properties they have, whether they are properties linked to loans books or just in the private market generally. I absolutely believe that one of the ways to increase stock immediately is to simply acquire. The preference is to acquire vacant units where possible.
In regard to access to funding, theDeputy is correct in that there is no shortage of low-cost funding available at the moment. The problem is how does one spend it and through what vehicle? When a local authority borrows money and spends it the money gets added to the national debt. It is as simple as that. We have worked very hard in recent years to try to get our national debt levels down so caution is needed in how we finance what is clearly needed - an increase in the supply of housing units - and the mechanisms by which that is achieved. Deputy Cowen referred to the NARPS model which NAMA has been using and which is a very successful model. We are going to try to learn lessons from that and see if it can be replicated. There is also the Housing Finance Agency which is able to raise money at a very competitive cost. However, this money cannot simply be given to local authorities without there being a subsequent consequence in terms of public spending in any given year. Likewise, the credit unions want to be able to lend money to help solve the housing crisis, but again we need to make sure we can source money as cheaply as we can. The NTMA, as the Deputy is aware, can raise very significant amounts of money very cheaply, but that is not the problem. The problem is how does one spend the money in a way that does not undermine competition rules or require a commercial rate of return in order to avoid it being considered as national spend and to avoid State aid rules complications.
Deputy O'Dowd spoke of the lessons to be learned from the UK. I am going to Derry in the next few weeks where there is a very active social housing building programme. I am interested in really understanding how that programme works, seeing its successes and I presume some failures too.
Reference was made to a planning review. There are many active planning permissions out there. However, we need to be able to get decisions through the system quicker, particularly at An Bord Pleanála level.
It may be that more resources are required but we will not look at spending hundreds of millions of euro building houses to then have unnecessary delays because of the need for a half a dozen or a dozen people from a human resource point of view. If they are there, we need to ensure that we deal quickly with blockages that have solutions around human resources so that we have capacity to get things moving.
The point about land acquisitions is really important. State agencies and State-owned companies need to play their part in terms of supplying land banks to local authorities to build homes. Irish Rail is probably the best example.
Absolutely. For example, there are very strategic and large landbanks in Cork, in particular, as well as Limerick and Athlone. These landbanks are often in city centres and will never really be used for commercial rail in the future. Obviously, Irish Rail must get a commercial rate of return for an asset that it owns and is on its balance sheet. It cannot simply write it off without all sorts of accounting consequences. However, I am of the view that we can put in place mechanisms to allow for a payment for a transfer of land that can recognise the commercial value to Irish Rail of such strategic landbanks. There are other State-owned bodies and companies as well, but Irish Rail is probably the best example, particularly in the case of my own city. I suspect Gormanston is another example. I am not familiar with it but we will look at it.
On the build-to-lease side, the NAMA NARPS model is-----
It can be buy-to-lease or build-to lease. Absolutely, and perhaps we could expand that model. If one looks at the UK, there is a huge reliance on approved housing bodies there to build and manage large property portfolios of social housing and often also of specialised housing. Whether it is for the elderly or the disability sector, there are specialised providers of certain types of housing. We could do a lot more of that in Ireland, particularly if one looks at our demographics in respect of purpose-built housing for the elderly and the building of communities that would encourage single individuals who are senior citizens and who may be living in large family homes with the associated cost and security concerns. They may well want to move and allow the property to be occupied by a family, multiple tenants or whatever.
In terms of attracting funds, from my experience there are many offers from equity funds and others looking to put financing together, whether it is from the European Investment Bank, our own Housing Finance Agency, the Ireland Strategic Investment Fund, ISIF, or private funds. The issue, in fact, is finding a way to spend it. The point raised earlier by Deputy Wallace is true. The lending model for developers has totally changed. At present, the banks do not have the appetite to finance developments beyond approximately 60% of the finance costs, so the other 40% has to be made up with new financing models with which some developers are uncomfortable and which, in some cases, have been very expensive in terms of the financing options. That is prohibitive and we are looking at ways to help that situation.
There has not been much discussion on rent supplement and HAP. We are trying to encourage landlords, as well as tenants, into HAP and we are using the tax system to do that. Last November, as part of the package around rent certainty, the Minister for Finance introduced a tax measure whereby landlords can get 100% mortgage interest relief if they commit to having HAP or rent supplement tenants for up to three years. This is trying to tip the balance another way. Let us face the fact that some landlords have a view that discriminates against tenants relying on HAP or rent supplement, which is wrong. We need to try to address that balance and perception so that we do not disadvantage people in those circumstances.
In the context of one of the other questions asked earlier, we are making €1.5 billion or so available to local authorities for the social housing build-and-buy programme between 2015 and 2017.
Let us consider the impact we predict this resourcing can have on housing lists in local authorities. The average impact can be 25%. Therefore, by the end of 2017, if this money is spent and if the units are delivered on the back of it, housing lists can be reduced by 25% by the end of next year. In some counties the figure is higher and in others it is lower. In the case of Dublin City Council, for example, the figure is 21%. These figures are available if people want them.
The figure in Leitrim was 47% so there are other high figures as well.
I thank the committee. I would have preferred to have stayed for longer. I look forward to getting the committee's report when it is produced. If people want follow-up meetings on the report recommendations, we will happily oblige. If the committee needs any information from the Department in terms of statistics we have that the committee may need to finalise the report, please ask for it.
Thank you, Minister, and thanks to your officials for your attendance today. I was pleased to see that in your opening statement you used terms like "housing crisis" and "emergency situation". This is the manner in which the committee has been addressing the issues.
The committee's report will be available in approximately two weeks' time. Fortunately, this should feed in nicely to the development of the Department's action plan. We are encouraged to hear that the Department's action plan will pay due regard to some of the evidence-based recommendations that the committee hopes to make. I thank the Minister for his attendance. We will suspend the meeting until 2.45 p.m.