Oireachtas Joint and Select Committees
Tuesday, 13 December 2022
Joint Oireachtas Committee on Housing, Planning and Local Government
Implementing Housing for All: Discussion (Resumed)
Steven Matthews (Wicklow, Green Party)
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Today, we are meeting a number of approved housing bodies, AHBs, to continue our meetings on implementing Housing for All. We are joined today, from Circle Voluntary Housing Association, by Mr. John Hannigan, Mr. Colin Creedon and Mr. Russell Grainge; from Clúid Housing, by Mr. Brian O’Gorman and Ms Fiona Cormican; from Respond by Mr. Declan Dunne and Ms Niamh Randall; and from Tuath Housing by Mr. Sean O’Connor, Ms Orla Cleary and Mr. Martin Loughran. I welcome all of the witnesses to our committee today. I thank them for their attendance and the submission of their opening statements and supporting documentation in advance. Those statements and briefings have been circulated to members. As a committee we have carried out a series of meetings with a number of local authorities from across the greater Dublin area, the four Dublin county councils, the four cities and early next year we also will meet one or two of the more rural local authorities to continue looking at historical delivery and proposed delivery over the course of Housing for All and up to 2026. Before we go to opening statements and members' questions, I will read the note on privilege.
I remind members of the constitutional requirement that members must be physically present within the confines of the place where the Parliament has chosen to sit, namely, Leinster House, in order to participate in public meetings. Those witnesses attending in the committee room are protected by absolute privilege in respect of their contributions to today's meeting. This means they have an absolute defence against any defamation action for anything they say at the meeting. Both members and witnesses are expected not to abuse the privilege they enjoy. It is my duty as Chair to ensure that this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
Members and witnesses 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 Houses or an official, either by name or in such a way as to make him or her identifiable.
The order I will take the opening statements in is as follows: Circle Voluntary Housing Association, Clúid Housing, Respond and Túath Housing. I call Mr. Hannigan to make the opening statement on behalf of Circle Voluntary Housing Association.
Mr. John Hannigan:
I thank the Chairman and members of the committee for the invitation to be here today. Circle Voluntary Housing Association is one of Ireland's largest approved housing bodies. We manage homes across 21 different local authorities, owning and managing nearly 2,900 homes. Our pipeline for delivery for the next three years is 1,900 homes and our pipeline in discussion, which we have not yet confirmed, is nearly 1,700 homes. We predominantly deliver family housing, with approximately 10% for older persons and people with disabilities. The 60 dedicated and committed staff we employ gained a 90% satisfaction rating among our tenants for the services we provide in the last number of years. Our focus is on our tenants, both current and future. We do not always get things right but we always work to make things better. Through our values, our tenants are empowered to have a significant say in how our services are delivered and improved. Our willingness, empowerment, honesty, excellence, accountability and respect, WE HEAR, values, are lived by all in Circle. Circle is grateful for the opportunity to be here today to discuss the implementation of the Housing for All plan. The key areas we wish to address include the certainty and security of tenancies over a lifetime. This is something AHBs are in a position to offer, with potential for succession for family members. There are too many AHBs, but too few delivering new homes for those in need. Of the 400 registered AHBs, 250 are active but only 17 are delivering new homes. Of this, six are delivering more than 90% of all AHB homes and over 50% of all social housing at this time. There is a need to reduce the number of AHBs to a more reasonable number to ensure good governance and regulation. This could be done through regulation, but promotion of delivery through AHBs needs to be extended. In terms of delivery, Ireland is the only European country that insists that all social and affordable homes be provided by 100% debt; this is not sustainable. There needs to be a move away from debt into equity provided by the State, which would allow the State to derive other benefits. Circle suggests the State continue the work it started on the revision of the process of funding homes under the capital assistance scheme, CAS, the capital advance leasing facility, CALF, and the cost rental equity loan, CREL. With recent increases in cost and the difficulties of 100% debt finance, the latter two schemes are no longer delivering the previous level of output. The commenced reviews should include a reduction in the debt element, equalisation of interest rate elements and recognition that the private finance elements need sufficient resources to ensure success; otherwise housing delivery is likely to be limited in the coming years.
Circle suggests that the State drive co-ordination of housing delivery in a different way, perhaps similar to Sláintecare. AHBs have been accused of driving up prices due to the nature of the competition we are required to participate in; this competition is limited. Local authorities, as a rule, act as strategic enablers, determining where Part V provision will be agreed. As an AHB, we do not compete for this Part V provision. The AHB sector is well regulated, with clear statutory regulation from not one but three regulators. However, regulation is not undertaken of all social and affordable housing providers. Our sector welcomes regulation and suggests that it be introduced across all providers of housing - social, affordable and private - to ensure that the State is getting the best deal for the money it invests. There are a number of significant barriers to the delivery of homes for those in housing need. We hope these barriers will be discussed today.
These issues include current funding provision that does not allow for the development of community spaces. The cost of providing homes is another issue. Factors such as VAT on social and affordable homes, planning levies, development levies and utility costs could be reduced. Doing so would reduce the cost of homes by more than 15% with immediate effect. A cap on the level of profits earned by builders and developers who are delivering the homes would also ensure a reduction in costs. These measures would provide a degree of certainty in pricing for developers, builders, local authorities, the Land Development Agency, LDA, and AHBs. They would also help to moderate the prices generally in the market as greater transparencies could be derived.
The planning system in itself is a barrier to delivery. It requires reform and simplification to facilitate our growing and future population needs. The cost of finance is now a major barrier to the delivery of low-cost, affordable homes, especially under the CREL process. The requirement for 100% debt finance for each and every social and affordable home provided by AHBs means cost is a limiting factor, regardless of where the debt comes from.
There has been some recent criticism of the professionalisation and corporate nature of the AHB sector. The whole of Circle Voluntary Housing Association, as members of the Chartered Institute of Housing, are proud to call themselves housing professionals. We care about our values and our mission, which is to deliver homes for those in housing need. Professionalism is expected and required. We manage a company that turns over more than €10 million in revenue and has a balance sheet of more than €155 million in assets. We manage those assets on behalf of the State and our tenants and we have a responsibility to maintain them in the right way for the future.
The delivery of housing is about more than bricks and mortar. It is about the balance of State assets and the provision of homes for people. We have a ready-made delivery system in the AHBs, which are made up of people who understand what is needed and who have delivered for decades, are delivering today and have the capacity to deliver into the future. We urge that greater use be made of AHBs. I thank the committee for the opportunity to present to it today. We look forward to answering any questions members may have.
Steven Matthews (Wicklow, Green Party)
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I thank Mr. Hannigan. I call Mr. O'Gorman to make his opening statement on behalf of Clúid Housing.
Mr. Brian O'Gorman:
I am joined by my colleague, Ms Cormican, who leads our development. Clúid Housing has developed more than 10,000 homes across the country, involving the housing of more than 26,000 residents. I thank members for the invitation to address them on the topic of the implementation of the Housing for All strategy. All aspects of Housing for All are important but I will focus particularly on the delivery of social, age-friendly and cost-rental housing, as that is what we are engaged in and they are the aspects on which I can offer insight.
In recent years, the AHB sector has delivered more than 40% of all new housing supply, with a focus on new-build units and adding to our overall housing stock. The sector currently manages more than 50,000 homes and has significantly increased delivery in the past three years. As organisations, we have built our capacity to deliver social and affordable housing. The Housing Alliance, which comprises six of Ireland's largest AHBs, provided more than 3,000 new homes last year and hopes to deliver a further 4,000-plus units by the end of this year. The new-build social housing target under Housing for All is 47,600 homes, with AHBs tasked to deliver 45%, or almost 21,500. Clúid Housing alone has delivered 2,722 units in the past three years. That number is comprised of 2,293 social-rental homes, 147 age-friendly social-rental homes and 272 cost-rental homes.
Clúid Housing has built a strong platform for delivery of both turnkey acquisition and our own construction projects. Our pipeline over the next three years comprises 98% new builds. We have 698 homes on site at the moment under our construction programme, with another 1,300 in the pipeline for delivery over the next three years. We also have a strong pipeline with developers, with more than 3,400 homes we potentially can deliver with developers over the next three years. This pipeline relates to projects we are currently working on and that have the potential to be delivered.
Delivery has become more challenging, with constraints including construction inflation, rising interest rates, increasingly limited access to affordable land and the pressing need to provide homes to Ukrainians fleeing the war. Despite this, we have delivered more than 1,200 homes this year, 200 of which are new cost-rental homes. However, given the current viability challenges in construction and financing, meeting the overall social and cost-rental housing targets will become increasingly challenging. It is on this basis that I highlight three issues that, if addressed, would assist Clúid Housing to deliver housing and increase the chances of success in reaching the Housing for All targets.
The first issue is the funding model for cost-rental housing delivery. In 2021, Clúid Housing was delighted to deliver Ireland's first cost-rental homes, in Balbriggan, County Dublin. Alongside our AHB colleagues in Respond and Tuath Housing, we advocated for this new tenure for many years. We have delivered cost-rental homes in Dublin, Cork, Meath and Kildare. Cost-rental housing offers secure homes to low-income working householders. We have been taken aback by the demand that exists. Our first scheme in Balbriggan saw more than 1,000 households apply for 25 homes. We want to, and we can, deliver more. However, in the context of rising interest rates and construction costs, the current funding model is presenting viability issues. We welcomed the recent decision by the Cabinet to increase the amount available under the CREL scheme but this alone will not serve to ensure the viability of cost-rental projects in the urban and suburban areas in which they are most needed. Cost-rental housing needs to be housing delivered at cost. As costs rise, affordability will be challenging but it will improve in time. Cost-rental provision was always about a step change. It is an initiative that will realise its full potential over the long term. If it is to realise its great potential, the cost-rental model needs to be reviewed as a matter of urgency.
My second issue relates to our gearing ratio, which was referenced by Mr. Hannigan in reference to the Circle Voluntary Housing Association. While growth is to be welcomed, we are currently reliant on a 100% debt-funded model. In the interests of financial prudence, this is not sustainable. Our concerns are shared by the social housing regulator. In addition, the current situation reduces the sector's options for attracting private finance, as funders are likely to baulk at the high gearing ratios we are rapidly approaching. Our social mission is to supply secure, affordable and quality homes and we wish to continue to do so. The gearing issue needs to be resolved or we have the potential of running out of road. We are not seeking additional finance. Rather, we ask for a change to the way in which some of that finance is given. Some component of State equity is required to make our delivery sustainable. In moving in that direction, the State would be following what is the norm across most European countries
Third, the reclassification by EUROSTAT of the largest AHBs in Ireland in 2018 as bodies controlled by the Government is not in the interests of AHBs or the State. The result is that our funding and expenditure is now moved from the off-Government balance sheet to the on-Government balance sheet, prompting a range of concerns regarding future funding opportunities and competition for available Government funding, which will impact on social and affordable housing supply. Ireland's AHB sector is in the minority across the EU in how it operates. The strong and stable social and affordable housing systems throughout Europe were created by non-profit civil society organisations working alongside the state on behalf of citizens. As a sector, we need the support of the Government in addressing this long-standing issue.
We wish to underline our energy, focus and ambition in playing our part in the delivery of Housing for All targets. Clúid Housing and other AHBs are ready, willing and able to respond to the huge level of need and demand that exists for housing. We look forward to working with the Government and others in achieving our common goal to deliver high-quality, affordable housing that will be available in perpetuity to serve successive generations of Irish households.
Steven Matthews (Wicklow, Green Party)
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I thank Mr. O'Gorman. I invite Mr. Dunne to make an opening statement on behalf of Respond.
Mr. Declan Dunne:
I thank the committee for inviting us here today to talk about the delivery of the Housing for All programme. As an AHB, Respond works closely in partnership with local authorities throughout the country, the Department of Housing, Local Government and Heritage, the Housing Finance Agency, HFA, and the Housing Agency to provide social and cost-rental homes for people in housing need. After 40 years of existence, Respond is still rooted in two principles, namely, social justice and the human right to housing. Working towards delivery based on those principles is what drives us every day in the work we do.
More than half of the 350 staff in Respond are involved in directly providing other supports in the communities we serve. Those supports include 17 early learning and school-aged care services, three day care centres for older people, refugee resettlement services for people who are programme refugees and six family homeless services. Delivery on this combination of housing, building communities and supporting people's needs is largely our reason for existence and it feeds into those principles of the human right to housing and social justice.
We have been able to support a small number of Ukrainian families as well by providing accommodation in the course of this year. It has been a privilege to do that. As well as community services, like other AHBs, we are very much involved in delivery of housing with more than 16,000 tenants in their tenancies. Coincidentally we have the same response as Circle Voluntary Housing Association regarding the satisfaction rating from our tenants. There are some areas where they identify there is room for improvement that we have to address and we take that seriously. As with other AHBs, we have a tenant engagement strategy that involves our tenants in decision-making in the organisation. Respond owns and manages over 6,000 social and cost-rental homes. Last year, we delivered 624 new homes to people and commenced on-site 778 homes. Our current construction schemes range in value from €15million to €65 million, with total programme value in excess of €1.5billion. This includes homes delivered since 2018, homes under construction and homes approved by the board, scheduled for delivery in 2023 and 2024.
Our principal focus is adding to the national housing stock. This is a unique approach we have in Respond. A small proportion of what we do is the acquisition of turnkey properties. A total of 82% of what we do is buying sites and entering into a contract to develop housing on that site. That is the methodology we use. I noted that in an earlier meeting of the committee there was discussion about the high interest rates when developers are involved in development of schemes. In our particular case, this does not occur because we carry the interest costs and we do not incur the very high rates that banks levy on developers. The model is buying the site and then making stage payments to the developers as the construction is delivered.
In the current context, we are all only too aware of the serious challenges around housing and homelessness in Ireland. In particular, we are aware of the inflation costs and associated costs in construction and the impact they are having on our ability to deliver. This applies not just to us but other housing associations as well and, in fact, the whole housing sector in Ireland.
Our current funding models, CALF and CREL are being stretched and it is proving increasingly challenging to deliver the homes that we need to, given that we have seen a 22% increase in construction costs over the18 months to July 2022. We also have the interest rate cost on top of that.
I will go on to make a few suggestions as to how we might address some of the challenges we are all facing. Like others, we are very much involved in the affordable housing cost-rental scheme. With our colleagues in Tuath, we did the first new construction cost-rental scheme in Enniskerry Road. We are pleased that the model is being tweaked and improved over time by increasing the ceiling amount available to drawdown for CREL of 45%, which makes some of the schemes more viable to deliver with a particular focus on lowering the rents for the tenants involved.
We have advocated strongly for cost rental over many years in our pre-budget statements and we are delighted that this has now been established. We think that has been a game changer in Irish society. We want to commit to delivering a lot more of these. The Affordable Housing Act 2021 has made it possible for us to have this form of tenure. As with our colleagues in Clúid, we have seen the same level of demand. In Glanmire, County Cork, we had 32 homes there and 1,300 applicants so clearly there is a massive demand for more affordable rents. People are very aware of just how high they are at the moment.
As with our other colleagues, we believe that our current funding model of 100% debt finance causes some difficulties that might not be immediately clear. It is a difficulty because we are being encouraged to source funding from other sources. It is not going to be possible to do that if we have 100% debt. It just will not be attractive to private finance people to do that. However, we are well supported by the Housing Finance Agency, HFA, at the moment. It is not an issue for us today but we can see that it is going to become a limiting factor as time goes on.
Respond is strongly committed to delivering Housing for All targets and increasing the national housing stock through direct construction, which is 82% of what we do. We want to achieve these targets, working with our partners to provide much-needed homes for families and individuals in housing need. We are focused on finding practical solutions to delivering more homes for people that need them. Regarding some of the current challenges, we have been engaging with our partners, including the Department of Housing, Local Government and Heritage, the housing agents and others to look at some proposals. I would like to go through some of those for both the short and long term. In the short term, it is important for us to address the challenge we are facing in rural Ireland. It is quite difficult for us to apply the CALF model in rural Ireland. There is just as much need for social housing in other parts of Ireland as in the main urban areas. For that reason we think it is important that all local authorities should fully support the independently acquired market rent evaluations that are done. Every AHB is required to produce two sets of independent evaluations. Only then will it be possible for us to be viable to deliver throughout the country.
With regard to CREL, we need a mechanism to assist us with cash flow issues that we experience. The nature of what happens when this model is being applied is that often there is a requirement to put in finance for a period, which could be three or seven years, and it could be a substantial amount. We have done that up to now and we are happy to do it but there is a limit to what we can do. If we are to deliver hundreds and hundreds of these homes, we need another way to fund the cash flow.
We believe that development contributions should not be applied to the delivery of any social housing and we would also recommend that it does not apply to cost rental. Currently there is inconsistency about the social housing and it does not apply to cost-rental housing.
We also believe consideration should be given to the removal or reduction of VAT rates on social and cost-rental homes. This is something we have recommended over a number of years in pre-budget statements.
We agree with our colleagues that there should be a move away from 100% borrowing by AHBs. We believe that CALF and CREL could be reconfigured as equity because they are not required to be repaid in the short term anyway. We think this could be a mechanism to give the State much greater assurance on the long-term use of these homes that we are building.
We do not have all the answers but we are working towards the same goal of delivering the quality social and cost-rental homes to those who need them as quickly and efficiently as we can. We look forward to engaging with committee members in this session and hearing ideas and views from them.
Mr. Sean O'Connor:
I thank the committee for the invitation to speak here today. I am joined by colleagues, Ms Orla Cleary, director of corporate services, and Mr. Martin Loughran, company secretary and director of development. Tuath currently manages 10,000 social and cost-rental homes nationwide. We employ 175 people who work from our four offices in Cork, Dublin, Dundalk and Galway. Tuath's aim is to provide long-term, safe, quality housing at best value while locally helping to build vibrant communities. Working collaboratively with every local authority, the Department of Housing, Local Government and Heritage, the Housing Agency, other AHBs and lenders, primarily the HFA and AIB, we added 1,974 new homes this year, which is a record for us. We have responded to the pressing housing situation by providing high-quality and affordable housing to as many people in hard-pressed families as we can. That is the key remit of our board but we also provide high quality management and maintenance service which are valued by tenants day to day.
Tuath sees its primary role as that of a working partnership with public and private stakeholders: to increase the supply of social and cost rental housing; to increase investment in social housing and to treat social housing as no different to other key infrastructure; to improve choice for housing consumers; to provide effective and efficient long term asset management; and to deliver first-class services to tenants and to achieve best value and-or value for money.
It is clear that AHBs have the experience, expertise and appetite to provided additional social housing as well as cost-rental homes which are necessary to bring sky-high rents in the private market.
It is essential to increase choice for housing consumers by developing social, affordable and cost-rental homes, in mixed tenure settings. To date, we have provided 256 cost-rental homes. We have 150 more on-site, and we have invested more than €4 million from our own reserves to keep the rents as low as possible. We believe that housing customers deserve choice by way of a range of new housing products for those who cannot afford to buy a home on the open market or pay a private sector rent. We also believe that delivery of affordable home ownership requires additional focus by State-led agencies, as this area is not readily compatible with the governance structure nor risk appetite of most AHBs, including Tuath. We believe that the current State funding framework for the provision of new social and affordable homes is effective and of low risk to borrowers and lenders. Tuath's track record of delivery under this framework, along with that of my sector colleagues is proof of it working and delivering for people in need.
A significant flaw is that the current system is based on 100% debt funding, which in our view and that of virtually everyone in the sector, is not sustainable in the long term. However, professional, financial and property advice we have received is that high gearing per se in this environment is not problematic, but it could be if it continues unabated without some State equity. We strongly believe that part grant or a new form of government equity has to be introduced into the funding system to ensure its sustainability, and that it remains fit for purpose. Tuath welcomes the Department’s recently completed recommendations for funding the sector, and looks forward to working to implement change emanating from the review. Our view is that investment in social and affordable housing is an investment in infrastructure and an investment for future generations.
We also ask that the merits of ethical pension fund investment be explored, and a framework established to allow pension funding to flow into the sector. We ask for the consideration of a potentially off-balance sheet, ethically funded leasing model to allow pension funds to invest in social and affordable housing. We believe pension funds would invest on the basis of a State backed long-term income stream with the asset transferring at the end of the lease to the AHB, local authority or another new entity, such as a tenant management organisation for nothing or a nominal sum of €1. By doing this, the State could readily utilise massive pension fund capital, while preserving its own capital. Many funds internationally are seeking environmental, social, and governance, ESG, schemes with steady and not stellar returns, in ethical and socially based models. It would ensure that leased homes are retained in perpetuity as lifetime social homes, creating absolute security of tenure and sustainable, settled communities. Financial modelling carried out for Tuath by one of the big four firms showed that it can be cheaper for the State to deliver permanent social housing than other methods of leasing and-or debt funding. We respectfully suggest that this should be properly explored now.
The availability of land supply is crucial for AHBs to develop and construct new social and cost-rental homes. I understand and welcome the fact that a land acquisition fund to acquire private sites is likely to be established early next year. Housing for All caters for all groups, be they families, single people, the homeless, the elderly or disabled. Implementation of choice is critical. Tuath also asks that the State facilitates geographical choice in social housing by way of a national waiting list, or some sort of national transfer list, to allow applicants move from one county to another.
All newly built homes delivered or acquired by Tuath have energy ratings of A2. Increasingly, we are delivering near zero energy building grade homes. Over the coming years, we aim to retrofit our older homes to a minimum B2 energy rating. As an association, we are interested in retrofitting homes and reducing our carbon footprint over the long term. It will help to boost the economy. Tuath has delivered a number of schemes using modern methods of construction and off-site production, which is more environmentally friendly than traditional, highly polluting house building. We are committed to reducing our carbon footprint and believe that financial incentives should be provided to manufacturers and developers, including AHBs, to deliver more homes via modular construction methods. They are better for the environment and create more carbon-friendly and energy-efficient buildings, through sourcing green materials. The added benefit of increasing modern methods of construction would be speedier delivery. Incentives like reduced VAT rates, planning levy waivers and an additional funding multiplier for green modular construction projects could also help. In conclusion AHB’s, including Tuath, demonstrated huge resilience during Covid. Despite the current headwinds in the operating environment, Tuath aims to add an additional 5,800 homes by the end of 2026 but only with the continued collaborative support key stakeholders. We aim to keep going and doing more to change housing for the better and to work for people and places, not profit.
Steven Matthews (Wicklow, Green Party)
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I thank Mr. O'Connor. Before moving to the members' slots, I am conscious that some of them have to speak in the Chamber. I will accommodate members if everyone is happy for me to bring in certain members early who need to speak, or they can speak when they return. I call Senator Fitzpatrick.
Mary Fitzpatrick (Fianna Fail)
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I have just been notified of a division in the Seanad and, therefore, I apologise and I mean no disrespect when I leave. I appreciate the attendance of the witnesses and all the work done by their organisations, which is invaluable. They have been a beacon. One of them mentioned that housing is social infrastructure. It is the most important social infrastructure and the work that all the organisations do cannot be overstated. We could talk about it all day, and there is so much to cover from the financing to the regulation, organisation and construction. We want to be supportive and so we want to engage on all of the topics. However, I will start with the delivery and construction of housing. All the contributors touched on it to differing degrees. There is a debate ongoing between direct build and turnkey. There are arguments as to which delivers the best value. For me the one that delivers the best value is the one that delivers the largest number of good quality homes that are affordable and secure to people. It is something that this committee needs to tease out and understand. Mr. O'Connor said that 82% of Respond's homes are direct build. Clúid indicated from its numbers for the next three years that approximately two-thirds of the homes to be delivered will be turnkey. I will start with Respond and Clúid and then move to Tuath and Circle on the issue of what makes them decide to do direct build versus turnkey and what the benefits are.
Mr. Declan Dunne:
The first thing to talk about is the definitions of "turnkey". There are different definitions about what is and is not turnkey. In the private housing sector, turnkey usually means that somebody builds something and they finish that out. They finance it, manage the construction and someone else comes in and buys it at the end of the process. In many ways, there is nothing wrong with that if there is value for money and that is a sensible thing to do. We are not criticising that. It is a particular methodology and one that has been used for many years. There have been previous discussions in this committee about different forms of contract. I mentioned particularly the high interest rate that applies that for developers during the construction phase. That is just simply because bankers have to take into account the risk involved. They see a much higher risk during construction than in other parts of the process. The approach we have taken in Respond, and some of our colleagues are doing exactly the same, is that we enter into a site purchase agreement with someone who has land. This is probably a developer who has identified a piece of land, has gotten planning permission and is considering developing it.
At that stage they have discussions with various parties and have many choices, such as the Land Development Agency, LDA, or the local authority directly, following which they decide who they will partner with. In our form of engagement, we give them certainty in terms of finance because we are able to do so, with the support of the Department and the accelerated capital advanced leasing facility, CALF, model. That gives us the money, and it is the State's money we are using, to purchase that land on day one, which also gives us safety by owning that land, and then we make payments at each stage of the development.
This was referred to in the previous committee meeting about oversight of quality control and that we do not end up replicating defects. We have an internal team of more than 20 architects, planners and quantity surveyors, and we use external experts. We check before the payment is made that the work has been done to our satisfaction and there are no defects. We warranty that and ultimately work through the process. Since they do not have to borrow that money from the bank with interest rate involved, we therefore get the houses at a better price. That is the approach we are using. There is nothing magical about it but it seeks to try to address that issue that has been raised.
On the alternative, just to say we do it and local authorities do it, so the public works contract is a very familiar method for local authorities and AHBs and we have done it a number of times. In that situation you have a piece of land that may not have planning and you have a long period to get through the planning process and then go out to tender and get the most advantageous tender. In that process there is a potential escalation clause in it. With Respond it is a fixed-price contract so we have a tied-in price. We can pay more, and if there is a reason and it can be justified, we can look at that but it gives control. We are not in a children's hospital scenario and we have some control over it. We are not saying we are the only one or the perfect one but I am just explaining what our practice is, why we do it and the benefits we see from it.
Mary Fitzpatrick (Fianna Fail)
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I thank Mr. Dunne. Will Mr. O'Gorman or Ms Cormican respond?
Ms Fiona Cormican:
Clúid Housing, like Respond, does a lot of its own construction programme where we do not have any developers involved. We get the site either through an expressions of interest, EOIs, from a local authority, we appoint the design team and the contractor, build directly and manage that. Around a third of our projects are our own construction and we like it because we get the quality we want in the locations we want. However, managing construction projects under the general conditions of contract, GCC, contract is very onerous, and not only that but also we have to cash flow those projects, because once you are in a contract, you have to pay when the payment date is due. We spend around €15 million per month, and we can go as high as €15 million in a month in terms of cash flow in construction projects. That is what limits us from doing it. If we could do 100% construction, we would be delighted to, but that is a huge amount of money to have to pay out monthly to manage that. That money comes back in but very often we have to front-fund it. That is one reason we do not do it.
The other reason is we try to keep a balance of 50:50 between our own construction programme, which includes the projects Mr. Dunne outlined where we buy a site from a developer and they finish out the site, and developer turnkey for the very simple reason of deliverability. There is a limited amount of construction we can deliver. The developer turnkey will deliver them and we pay for them at the end. We are trying to keep that balance all the time between the two. In fact during Covid-19, our own construction programme was the one that delivered because all the developers were off site whereas all our construction programmes got a derogation from the Government and we were able to deliver. A pipeline is a pipeline and it moves all the time, but even though our pipeline look likes it is two thirds developer turnkey, that will change as our projects get planning permission and come through the process, and that will become more of a balance - about 50:50 into the future. Does that answer Senator Fitzpatrick's question?
Mary Fitzpatrick (Fianna Fail)
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Yes, it does.
Mr. Russell Grainge:
I thank Senator Fitzpatrick for her question. My colleagues in other AHBs have set out the mechanisms by which we operate. The Senator's question was around what is a better option. I do not think there is a better option. There is only really a risk profile associated with the different types of delivery mechanism we use. There are three, really. There is the forward purchase development agreement, which would be the turnkey; a forward-fund development agreement, which is design and build and is the kind of approach Respond and Mr. Dunne have discussed; and direct delivery, where you are procuring the design team, procuring the contractor for a procurement route and going through a public works contract.
In terms of risk profile, the risk to the organisation in terms of a turnkey type delivery is probably far lower than the other two types of delivery stream. Ultimately, for a smaller organisation that is more attractive initially because you are purchasing a product at the end of a process and you do not have to cash flow it. There is no need for the cash reserves or restrictions around cash there would be with the other two types of delivery mechanism, but those other two methods provide more certainty in terms of outcomes. Where you are wholly dependent on the developer to deliver a product for you, there is less certainty around timeframes for delivery and things can drag sometimes. There is not so much control over that. There are mechanisms that can be put into the development agreement to try offset some of that but it does not always work in your favour.
There is much more control over direct delivery because you are procuring your design team and contractor. However, there are the restrictions Ms Cormican mentioned in terms of cash flow to try to get a lot of them to site, and land has to be procured. That in itself has risks around planning and land purchase and other elements associated with that.
Design and build is a happy medium in between, in some respects. You are working with a developer and have a degree of certainty over the output and the quality of the end product, but ultimately you are not wholly responsible in terms of the procurement of the initial contract because you are dealing with one entity so there is less risk around that process.
Due to the different risk profiles associated with it, it very much depends on the risk appetite of the AHB's board in association with it and, ultimately, the size of an organisation and what it can afford to deliver and what it can do in the delivery in terms of how much finance and support it has in terms of its own cash reserves. Ultimately, there will be a lot more output through direct delivery or design and build than through turnkey, but they all have their place within the overall structure. As an organisation going forward, we would want to do far more direct delivery and forward funding of development agreements-design and build type projects, but you have to get to a size and scale to be able to do a lot of that, which is what we work towards as an organisation.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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I thank the witnesses for their presentations. It is good to have them back before the committee. Like Senator Fitzpatrick, I acknowledge the very significant volume of work they and all their teams do in providing much-needed social and affordable homes to their tenants. On Mr. Hannigan's point on professionalisation, it is a very good thing but it is also important that, as their organisations become increasingly professional, holding on to that voluntary sector community ethos is key, particularly in how they engage with their tenants, because they are not the same as private sector tenants. I know they agree with that but it is just to put that on the record.
I warmly welcome the shift from our previous conversation with some of the witnesses towards the call for equity finance. It is the most eminently sensible proposition, because it would fix a particular problem they have but also there is a reason the State should want to do it in terms of them continuing to have a minority interest in the asset into the future. There is a win-win both for the approved housing body sector and the Government and it is a proposition I fully support.
I would be interested in some of the witnesses' responses to whether, if we were to merge CALF and the cost rental equity loan, CREL, into a single fund, keep them at their current rate but have them equity financed rather than loan financed, that would fix the problem. If that is the answer, the witnesses need to say that very clearly because that then moves the debate on to whether the political will exists to do that. From an administrative point of view, having two funds for projects that are increasing mixed tenure makes no sense. Having a single fund in which you can mix and match the tenure mix and for it all to be equity is a good thing. I would be interested in the witnesses' thoughts on that.
On the availability agreement, I believe Mr. Dunne said they were still having trouble in terms of market valuations. I thought the review of CALF would decouple once and for all the availability agreement from market rents. That is clearly not the case. Will someone give an update on where that is at? Until we move to full cost recovery, it really is a bizarre way of doing things. I had thought the CALF review had concluded, but it seems that issue has not been resolved. If people have thoughts on that, I would be interested to hear their views.
I am getting the impression from listening to the witnesses that they will all meet their output targets for this year, particularly on the social housing side.
I am not hearing anybody say they will not. Nobody mentioned commencements. Given the private sector is in trouble in terms of commencements, if the witnesses were able to share with the committee what the target commencements were for this year and what they are actually going to commence by the end of the year, that would give us a sense of the scale of the financing challenge. I suspect all of the witness organisations are struggling with commencements, which is partly to do with the financing challenges. This would be a good place for them to put that information on the record if they have it and they are in a position to share it. It is open to anybody telling us exactly what they want in terms of equity, what is happening with the CALF review and what their output is in terms of commencements.
On the CREL review, will the witnesses tell the committee what they are asking for? I can imagine, but the more specific they are with the committee, the clearer it will be. Is it a matter of solving the equity issue? Would that get us over the hump or is something else needed? The shorter the answers, the more everyone will get to come in. Apologies, I have a cheek to say that as a politician.
Mr. Declan Dunne:
I will refer to some of the things I have said, to be clear about it. Others will have many contributions, I have no doubt. On why we are asking that independent market evaluations be applied, it is until such time as the CALF review is completed and published, which is disconnected from rents. Once that happens-----
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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Has Mr. Dunne any visibility on when that might be completed and published? We do not.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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The Minister, Deputy O'Brien, said it was the Department of Public Expenditure and Reform, so that means it could be there for quite a long time.
Mr. Declan Dunne:
I do not know the answer to that. That is as much as we know. In the meantime, we live in a pragmatic world. There are people out there in terrible situations depending on houses. That is why we are asking for this to be done in the meantime. It is a pity. The Deputy is correct that if that review disconnects that, that would solve the matter and it would be greatly appreciated.
On the question the Deputy asked about CREL and CALF in terms of equity, what the problem is and if that will fix the problem, it would go a long way and it could help us greatly move towards being off Government balance sheets. We must think about the fact future housing need will be massive. A huge number of houses will be needed. We need to think about how the State has requirements on its capital for hospitals, roads and all sorts of things. We are cognisant of that and moving towards equity may help with that.
Regarding whether that fixes the CREL model, there are practical issues. All of us here have the common objective of trying to have the lowest possible rents for people in desperate situations who are paying ridiculously high rents. As we have piloted the CREL model so far, there has been criticism of why it is so high or why it is €1,200 or €1,400. This is because we do not have an affordable housing model, we have a cost rental model. The cost rental model means everything is associated with the cost, as it should be. That includes the cost of building, land, interest and so on, and interest rates have risen significantly. That is the challenge we have to a great extent as we tailor the model and pull it and twist it try to get the rents as low as possible, which is always our focus. Having the equity will certainly help but we must be realistic and say what are the costs. The costs are very different from what they were previously, which is the outstanding issue. This has to be replicable, sustainable and capable of being delivered by local authorities, the LDA and by us. We need a model that will work for everybody. That is as much as I can add to that.
Mr. John Hannigan:
CALF and CREL being one fund would be eminently sensible. What we are seeing and required to provide across most local authorities are mixed tenure schemes. At this time we have to make two separate applications to two separate elements of the one Department to get an answer. You are not guaranteed they will get the same answer. Having one approach for the delivery of social and affordable housing would be excellent.
On whether that will fix the current system, it will equalise the system and will get to the same problem, whatever it might be. That is one thing that can be guaranteed. We have different problems with the two different schemes. With CREL, the risk is on the cost of finance as well as the cost of delivery. The cost of finance now is a major issue. Regarding CALF and payment and availability, P and A, side of it, the issue is that the cost of delivery overall is a significant element. The variability between local authorities determining which element of CALF you get or how much CALF versus how much P and A you might get also means you get a different element of delivery. Having one mechanism that covers the lot would be fantastically helpful. I do not know if it would resolve all of the issues but it would certainly move towards that resolution.
I will ask my colleague to speak about commencements in a second. The committee has heard about where we are with the CREL review. The decoupling issue is significant. It is going to cause some difficulty as regards valuations for the future. At the moment in Ireland, there is one valuation methodology, which is the red book methodology. There are different variations within it but it is effectively one methodology. Within that, there is no opportunity to say something is social housing versus private housing. We have the same valuation process based on market rents. If there is a decoupling from market rents and cost is used, the cost will be over the level of the value in a large proportion of schemes, particularly in higher cost areas. The difficulty with that is, when our balance sheet is reviewed, our auditors say we are overvalued and we have to write down the value of that property in our balance sheet, which causes concerns for raising private finance because people start to see that the book is overvalued.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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If that is where we are going to end up, surely it is better to get it done and deal with the consequences?
Mr. John Hannigan:
I agree, but there is an easier way to get there, which already exists in another jurisdiction. A significant valuation process has been put in place in the UK which specifically recognises existing use value for social housing. That model enables you to raise the value of the money needed to build the property at the cost it is being delivered at. That takes away any potential devaluation of the balance sheets and allows social housing organisations to create more social housing as a result. There is a mechanism. The red book does not recognise it yet, but with the requirement from, for example, this committee or from Government to do that, then the red book could be updated for that process.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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It would be good if, after the meeting, the four organisations were in a position to share commencement targets and commencements with the committee. That way we will all get to have them rather than-----
Steven Matthews (Wicklow, Green Party)
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I think we will get to answer the commencement question in later rounds. On that existing use value of social housing Mr. Hannigan referred to-----
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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It is very interesting.
Steven Matthews (Wicklow, Green Party)
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-----would Mr. Hannigan be in a position to forward that on?
Steven Matthews (Wicklow, Green Party)
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We can try to engage and seek clarity from the Department on the CALF review.
Emer Higgins (Dublin Mid West, Fine Gael)
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I thank all of the witnesses for their presentations and for engaging with the committee. I also thank them and their teams for everything they do daily to help us in the housing emergency. I have questions and comments which I have framed around a few themes, including stock and the funding propositions the witnesses have spoken about. I also have a few general process questions which may or may not be relevant to this discussion. I am taking the opportunity to learn about it.
From a stock perspective, I would like to get a handle on what percentage of the organisations' stock is accessible and whether there are any issues or trends with newly built accessible housing. In my area, sometimes when people move in or are due to move into accessible stock, it does not go smoothly and there are issues with doorframes and things like that. Are there any identifiable trends in that regard?
We have spoken a lot about CALF and the scheme revision. I am interested in understanding if CALF units are currently working. Are people in the witness organisations' CALF units able to meet the rent? Are they able to make their payments? Do the witness organisations think, with rent allowance qualification not happening any more, the housing assistance payment, HAP, needs to be looked at in that model?
What vacant stock is currently on the books? Are Garda checks creating any delays in filling those vacant units? Tuath indicated that the move to affordable housing might not work for the AHB model. I would like to understand a little better why that might be the case. From a funding perspective, I get what Mr. Hannigan is saying. Part of it is that you cannot make surpluses to reinvest Government grants or cover capital, but there is maintenance stock and there are big issues with older houses. That matter needs to be resolved. The points about CREL and CALF have been heard loud and clear. It is interesting to think that if we had one fund it would simplify matters quite quickly.
On the UK evaluation process, I would like to get the views of the other AHBs as to whether a similar system here could be a winner. If there is unanimity on that, I would be happy to put it to the Minister and lobby in favour of it.
Is the current model of differential rents for the various local authorities working? Would a standardised differential rate of rent work better? In the context of more vulnerable households, is six months a long enough period for support to live independently, SLI, workers to be assigned?
Steven Matthews (Wicklow, Green Party)
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Does the Deputy want to direct the question to a particular witness?
Emer Higgins (Dublin Mid West, Fine Gael)
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I ask that all of the witnesses comment on accessibility, percentages and current vacancy levels. I also ask that any of the witnesses whose organisations have CALF units to comment on those.
Ms Niamh Randall:
I will begin with the CALF model and rents. Our arrears are under 3%, at approximately 2.6%. We work within the differential rent model, which means that, as people's circumstances change, rents can be revised upwards and downwards. This makes things more affordable. It is particularly important during this cost-of-living crisis that people have that option available. It is working at this point.
I do not have figures to hand on vacant stock and accessibility, but I will be happy to share the information with the Deputy outside of the committee.
The Deputy made a point about maintenance. Retrofitting is really important, particularly in the context of older AHBs. We have been in existence for 40 years. As a result, we have stock that is 40 years old. With this stock, environmental considerations, fuel poverty and energy ratings are important. We need to ensure that there is funding for retrofitting. In the context of the cost-of-living crisis, how much it can cost people to heat their homes, particularly if those homes are not energy efficient, also comes into play.
What was the question about the SLI model?
Emer Higgins (Dublin Mid West, Fine Gael)
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SLI workers are currently assigned for six months. Is that long enough? Does Ms Randall feel that it would create longer tenancies and get people more settled and in situ for longer if it was longer on a case-by-case basis?
Emer Higgins (Dublin Mid West, Fine Gael)
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Yes.
Ms Niamh Randall:
We work with families who have experienced homelessness in six different settings, five in Dublin and one in Limerick. The key point is that many families are homeless due to affordability issues, particularly in the private rental sector. We also find that some families have additional needs. It is a smaller proportion of families, but we tend to work with those who have a larger number of more complex needs . We work with them to address those needs from a trauma-informed perspective. The hope is that the one experience of homelessness that these families have will be the only experience of homelessness they will have. We look at the issues that might have caused homelessness to occur in the first place, and then we support the families to move as quickly as possible out of emergency accommodation. Like everyone else in the sector, the challenge we are finding at the moment is access to homes. Previously, families would spend approximately six months in emergency accommodation. The timeframe in that regard is increasing. It is also important to have open-ended support for people who might need it.
We are hugely supportive of the Housing First model, which works very successfully internationally. It also works well for families in other settings. Considering that and ensuring that open-ended support is available is important. We want to ensure that people can sustain their tenancies in the longer term.
Emer Higgins (Dublin Mid West, Fine Gael)
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What is the position with regard to vacant stock and differential rent?
Ms Niamh Randall:
The challenge with the differential rent is that it is administratively heavy in nature. It was introduced with the best intentions of providing very affordable rents and being a fair way to approach it. However, there are some unintended consequences. People living very close together could be paying very different rents because they fall under the remit of different local authorities. Certainly there is a commitment within Housing for All to review this process. We would be very interested in engaging in that process of review, particularly in the context of discovering what it would be replaced with if it were to be brought to an end. We need to ensure that the latter would be something that is very fair for the tenants and the AHBs. Going back to the point about maintenance and retrofitting, we would welcome engagement on the process around that.
Emer Higgins (Dublin Mid West, Fine Gael)
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What about vacant stock?
Emer Higgins (Dublin Mid West, Fine Gael)
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Perhaps Ms Randall could circulate them afterwards?
Mr. Declan Dunne:
A very small proportion of our stock is vacant. All the organisations here are relatively large, so even a small percentage represents quite a number. None of it is acceptable. The issue of voids, as we call them, is a major one for us. It is a key performance indicator, KPI, that we are all required to have for the regulator. We have a benchmarking process between us. We measure our performance against each other to see how we are doing and we are looking at the UK model as well.
Emer Higgins (Dublin Mid West, Fine Gael)
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What is the benchmark trending at?
Emer Higgins (Dublin Mid West, Fine Gael)
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I am sure someone must have it if it is a KPI
Mr. Declan Dunne:
It is a very low percentage. The bottom line is that it still represents homes that people could be in. In our organisation, we have quite a large working group because in order to move properties forward there is a number of different things that have to happen. First, you can have difficult stock that is very old and that needs significant work to bring it back into use. You also have different experiences regarding the actual need and demand in certain areas and the suitability of a particular property to the people on the list at a particular time. It is not really an issue in Dublin or the larger cities, but it can be the case in smaller areas. We are working very hard on this. Our boards are asking us every day how we are doing. It is a very small proportion of what we are doing, but we would really love it to be zero.
Emer Higgins (Dublin Mid West, Fine Gael)
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Does anyone have that figure?
Emer Higgins (Dublin Mid West, Fine Gael)
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Can I have a response on differential rent?
Ms Fiona Cormican:
As Ms Randall pointed out, differential rent is very onerous because we are using so many rates across the country. It would be a lot simpler if there was one differential rent. It would also be more equitable because if an estate is divided by a county line, people can be paying different rents.
On accessibility, all our housing is Part M compliant, which means it is wheelchair accessible. Clúid operates to a lifetime homes standard and we have our own design guide. The lifetime homes standard has 16 design requirements to make homes not only suitable for living in at the moment but suitable for adapting in the future. All the organisations in the AHB sector operates with that in mind. Even when we buy from a developer, we provide our design standard and we expect them to meet it before we consider buying the properties.
Emer Higgins (Dublin Mid West, Fine Gael)
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We have cases of people in hospitals who were living in HAP properties and who want to move somewhere else because they are now, for example, in a wheelchair. They are waiting in hospital, potentially regressing, because they are not getting the rehab because they are not being offered anywhere to live. Is there a shortage of specifically adapted homes or is it just that they are on a list?
Emer Higgins (Dublin Mid West, Fine Gael)
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When we talk about them all being Part M, they are not necessarily fully accessible because they would not meet the spec.
Victor Boyhan (Independent)
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I welcome the AHBs. We have read the submissions and I thank the organisations for those. I am very much a supporter of the AHBs. I know some local authorities have some serious concerns about the AHBs but when you start asking why that is the case, you suddenly realise that many of their arguments do not stand up. As someone who has been involved with local government for many years and who is familiar with the work of the AHBs and with the outputs of local authorities, my general comment is that AHBs deliver homes.
We have to get away from ideology. I do not care who is delivering the homes once we are delivering homes. That is important. Those homes they must be proper, sustainable and represent value for money. There is also a role for the local authorities. It it not exclusive to any one group. There is a huge role for both. From my experience of AHBs, the record is that they manage their new homes well. They maintain them well and operate a good strong tenancy support system. They are good at picking up the rent and at maintaining their buildings. There are many positives. What I might have thought about the AHBs a few years ago, has gone full circle. AHBs set the standards. Local authorities are closely associated with the electoral system and representation. They feel that somehow holds them back sometimes for a range of reasons I do not have the time to go into. I am sure the witnesses know the story. That is important.
In the first quick round, will each of the witnesses tell the committee the number of homes they have in their property portfolios? That is for the four organisations.
There is also something else I want to take up with Tuath, namely, the issue of ethical pension fund investment. This is important. I have read a little about it in the UK. I have certainly read a little about it in Denmark. I do not know whether any financial modelling has been done in respect of this matter. Will Mr. O'Connor confirm whether such modelling has been carried out? I ask that he not spend any time on the matter today but that he furnish the relevant information to the committee. I would like to hear more the matter and I am sure the committee would too.
The other issue I will touch on is a common theme in all the presentations, namely, incentives such as the reduction of VAT, planning levy waivers and additional funding for the multiplier of green modular construction. They are all impressive and interesting. I take it the witnesses have presented these proposals to the Government. Will they share with the committee what the response was? Are they pushing an open door? Is there any support for them? As a committee, we would benefit from hearing about it and what the Government's response was.
Mr. Hannigan referred to the key areas the witnesses want to address and spoke about "the certainty and security of tenancies". That is one of the biggest issues. When people are asked, including local authorities and AHBs, the issue is whether people will have certainty. Many people say they do not want HAP because they will have no certainty or tenancy and they will be pushed on. If I am in a local authority house, I can leverage politically in my community against anything happening to me. That is a challenge and a reality.
I will leave the witnesses with those thoughts and I ask that they respond to them.
Victor Boyhan (Independent)
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Will the witnesses call out their organisations as I want to mark the figures against them?
Mr. Sean O'Connor:
I represent Tuath Housing. We have 10,139 homes. We have had an enormous growth spurt in the past few years. In the past three years, we have added more than 1,000 homes each year.
The Senator touched on a few other points. I referred to the potential of ethical pension funding. There are established leasing models elsewhere, especially if we look to our nearest neighbour, the UK. We did considerable work on this a few years ago, generated some interest, went on a fundraising expedition and, surprisingly, came across some large funders, including a $1 trillion American fund - if the Senator can get his head around that - that was interested. It wished to invest €300 million through Tuath Housing on the basis it would be social housing in perpetuity. The key difference between this model and 25-year leasing model is that at the end of the latter, the property has to be returned. For the pension fund manager, that was a deal breaker. He required certainty the asset would transfer to Tuath Housing, the local authority or a new entity, such as a tenant management organisation, for €1.
Victor Boyhan (Independent)
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As we are tight for time, I suggest that Mr. O'Connor provide some detail on that in writing to the committee. That would be helpful.
Victor Boyhan (Independent)
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I thank Mr. O'Connor. I do not mean to be rude, but I am conscious that the clock is ticking. I only have one minute and 22 seconds and I wish to get around to the other groups on the numbers.
Mr. Declan Dunne:
The number of social and cost-rental homes owned and managed by Respond is 6,036. Respond is allergic to leasing. It does not manage properties that are leased and then returned after 25 years. We think the latter is poor value for money so we do not do it. Our complete focus is on adding to the national housing stock. That is our particular orientation. I acknowledge and welcome what my colleague from Tuath said about the solution to that.
In addition to those homes, we have 1,410 homes under construction. They are substantially complete and we hope they will be delivered in the next 12 to 14 months. We also have 1,456 homes that have been approved by the board and that are ready to go on-site next year. We are focused on commencement because once they start, the are going to happen.
On the initiatives and whether there is an open door, there is. There is great collaboration from all political parties and the system trying to find solutions. People are focused because the demand is so great.
On certainty of tenancy, all our social homes are lifetime homes for the time the person is alive. In fact, if their children qualify for social housing, they can also continue to live in that home for their lifetimes.
Victor Boyhan (Independent)
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Can I hear from the other two organisations on their numbers?
Steven Matthews (Wicklow, Green Party)
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I will allow a few more minutes because it is an important question. There is no need to rush. We will jump back to Mr. O'Connor as Mr. Dunne gave us the number of houses, the number under construction and those heading to construction. Does Mr. O'Connor have a similar figure for what is under construction?
Steven Matthews (Wicklow, Green Party)
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Mr. Dunne referred to a figure of 1,456 which are awaiting-----
Steven Matthews (Wicklow, Green Party)
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These are considerably large numbers of houses we are talking about. The figures Mr. Dunne gave were 6,036, 1,410 and 1,456.
Victor Boyhan (Independent)
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That is okay. I was trying to ascertain what we have today.
Steven Matthews (Wicklow, Green Party)
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This is important information.
Victor Boyhan (Independent)
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We have more than 16,000 homes today we have heard of. The other two groups are going to indicate how many they have.
Mr. Brian O'Gorman:
Our current stock is 10,189. Some 89% of those homes are wholly owned and managed by Clúid Housing and the remaining 11% are managed on behalf of other social landlords, such as local authorities or other AHBs. We have 698 homes on site at the moment under our construction programme, another 1,300 are in the pipeline and a further 3,400 are with developers.
Steven Matthews (Wicklow, Green Party)
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Can I clarify that? Clúid has 1,300 in the pipeline and 3,400 with developers.
Steven Matthews (Wicklow, Green Party)
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That is a separate category. What is the delivery window for the 1,300 and the 3,400?
Victor Boyhan (Independent)
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That is approximately 30,000 homes today in AHBs. I had no real sense of that until now and it is an interesting figure. The ones being planned are more interesting. Those are the numbers we need to keep tracking. I will wrap up by saying that many talk about too many AHBs and clearly the top-brass AHBs are with us today. That is a matter for another day, however.
Those figures in respect of what the bodies have and what they are building are the ones we would like to continue monitoring. However, I say well done to them on their achievements and I thank them for their time.
Steven Matthews (Wicklow, Green Party)
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The Senator has saved me the bother of adding up what they put in their opening statements. That was an important line of questioning there. We have had the Land Development Agency in several times. They provide us with quarterly updates of progress on sites. These updates include houses that have gone to design, houses that have gone to tender and shovels in the ground. Would a basic quarterly update be something these organisations could also provide to the committee? Mr. Hannigan wants to come in, followed by Mr. Dunne.
Mr. John Hannigan:
For my sins I am also chair of the Housing Alliance, which comprises the six largest associations. We can provide those data on a monthly basis to the committee. It would probably be better to do it on a quarterly basis but we would be happy to do that on behalf of the six largest associations.
Steven Matthews (Wicklow, Green Party)
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I want to clarify the point Mr. Hannigan made. Those figures we have just relate to these four approved housing bodies, and there are many more of them. I call Deputy O'Callaghan.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank the four approved housing bodies for their contributions and opening statements and for all the very good work they do. The previous discussion on numbers gives some idea of the scale of the operations, and the significant growth there has been in scaling up over the last number of years, which also presents particular challenges. I have a few questions, the first of which is for Tuath and is to take up where Senator Boyhan left off with its representatives about ethical pension funding. Do I understand from Tuath's reply that it was not able to get funding for a certain number of units because they were long-term leases, as opposed to in perpetuity? I would like the witnesses to continue that as they were cut off. The in-depth modelling done by Tuath shows this can be better value for money. Is that published or otherwise available, and can a copy be sent to the committee?
Mr. Sean O'Connor:
The in-depth model was mostly carried out for us by PwC. It was supplied to the Department of Housing, Local Government and Heritage and the Housing Agency at the time. It was tested and agreed to be cheaper than the cheapest debt funding solution. It is partly to do with how the money is paid back. The pension fund, for example, requires a 5% yield of coupon payment. It will put in 5% of the capital and expect 5% back per year, plus an index to keep pace with inflation. With the pension fund we spoke with, we pushed very strongly at the time for our payment and availability agreements to be linked to market rent. The pension investment manager hated that. They felt Ireland was too spiky, with ups and downs. It wants steady, not stellar returns. It is matching the coupon payment with pension liabilities. There were three pension funds, two were Irish and one was non-Irish. They were all highly ethical. They all had the same objective, which is that it had to remain as social housing in perpetuity. We modelled it out on a construction scheme, on a Part V turnkey project and a design and build project. On every project it was several million euro cheaper over a 25-year term. I have no question in my mind that it is cheaper. I am not sure what the issue was. I think leasing was getting a bad reputation, and it was tarnished with that, even though it is leasing to own. The State would own it at the end. It is a very interesting concept. It has been done elsewhere. A key thing about it being cheaper is that when you borrow money you are having to pay capital and interest back. There is no interest in this. It is a straightforward yield payment with an index link to European inflation. It just works out cheaper. Providing the yield requirement is not daft, it can work out cheaper.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Too be clear, is it that while it was shown this would work out cheaper and better, it did not proceed because leasing had a bad reputation, even though this was leasing to own?
Mr. Sean O'Connor:
I do not think there was a mature enough discussion about it to be frank. It was dismissed because it had the word, "leasing" in it. However, that is the type of model it is. It is a long-established, sale, build and lease-back model. It is not much different to public private partnership, PPP,-type initiatives.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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The issue was in the investment side feeling it was not ethical enough or something along those lines. Is that it?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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The point we should be taking from this is it certainly shows there is huge potential here and if we could get it right, it could get provide sustainable, cost-effective and ethical funding. Is that the conclusion the committee should be taking?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank Mr. O'Connor. That is very helpful.
Is Circle's proposal for a cap on the level of profits by builders and developers based on a particular model? Is it in place in other countries? Is Circle aware if it is grounded on other experience? I would like its representatives to tell us more about that. It was one of the many proposals it made.
Mr. John Hannigan:
I am aware of some European countries where it already exists and where there is a limit, particularly for the delivery of social housing, whereby the state sets a rate above which they cannot earn. It requires a greater level of transparency than we currently have in Ireland in terms of the publication of costs etc. It would require an overhaul in how the system works. It mostly relates to public contracts in those jurisdictions but it is successful in limiting the market in terms of its growth and earning potential. In Ireland at present, many developers are saying their margins are being excessively squeezed because they are in fixed price contracts at a time when cost inflation is going through the roof. However, I suggest that a lot of them, if not all, are still making a significant margin that is keeping them in business. We need people to stay in business. Having a guaranteed return allows them to plan for that, and it allows them to gear for that for the future.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank Mr. Hannigan, and I will leave it there.
Steven Matthews (Wicklow, Green Party)
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I would be really interested to explore Mr. O'Connor's point on ethical investment and to see what more we could do.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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It is not so much that we want the detail of the modelling. Even a summary would be very useful. If this committee is going to advance that proposal, we need something. The explanation given was helpful but we would like something more than that.
Steven Matthews (Wicklow, Green Party)
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I will take the next slot. In Mr. Hannigan's opening statement, he spoke about community spaces and I recently had a discussion with somebody on this issue. Could he expand on that?
Mr. John Hannigan:
I am happy to do so. I have a history of having worked for Respond at a time when we were delivering a number of direct build schemes. Each of them had a community centre at the heart of it. The scheme we are currently building in Inchicore is housing with support, which is a very new form of delivery. Referring back to a previous question, we are delivering specifically-designed accommodation for older persons to allow them stay in their homes much longer than previously, so they do not go on to nursing homes. The costs of doing that are quite significant. The funding mechanisms at this point for either CAS or CALF are insufficient and cannot be accounted for within that development process. Moreover, CREL funding does not exist at all for this kind of housing. We have to look for additional funding elsewhere. The HSE has come up with an agreement to fund the capital element and enable that to happen, along with the community lottery funding we are also trying to access. However, that is a very limited level of funding. There is a statistic at the moment that 98% of current 24-year-olds will acquire a disability before they die. We are looking to build more homes for older persons, or lifetime homes because we know people are going to acquire disabilities. Enabling them to stay and live in place within their communities without having to move to nursing homes requires us to start delivering spaces that enable services to be provided. Our current funding mechanisms do not allow for that at all. It would be helpful for those kind of things to be looked at.
Even in terms of space for children to be able to play, we are building in the inner city in Dublin 1 at this point in time and we were asked, in the design process with Dublin City Council, to put a community element within that building. Again, that could not be funded under the current schemes which meant the inner-city children who will live in that scheme, which is a one, two and three-bedroom scheme, will have very little of their own space to be able to play within. We had proposed a five-a-side football pitch, for example. It cannot be provided under the current funding schemes. If we are trying to develop our inner city and long-term lifetime homes for people who want to stay in their community, then the funding mechanism has to look at that element of the community spaces and they are unable to do that-----
Steven Matthews (Wicklow, Green Party)
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At present, does it include places for local family resource centres to meet or to offer younger people's services? Not a permanent place but a meeting place they can go, and shared community spaces like that?
Steven Matthews (Wicklow, Green Party)
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If Mr. Hannigan wanted to include that in a development of 60, 70 or 100 units he is not allowed to do that under the current-----
Steven Matthews (Wicklow, Green Party)
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Would that have to be absorbed into the cost?
Mr. John Hannigan:
There is a limited level of funding available through the lottery funding but my colleagues in Respond would be absolute experts in this because they have done so many of these. There is very little funding available for that level of space that is required to maintain those communities.
Steven Matthews (Wicklow, Green Party)
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I am finding this to be a difficulty in a number of areas I work in as well, the lack of these particular places. Did Mr. Dunne want to come in on that?
Mr. Declan Dunne:
To pick up Mr. Hannigan's point, Respond has been around for 40 years and has a history of different funding models. We have more than 100 community buildings around the country. It is wonderful that they are there and are providing a whole range of services including disability services, youth services, our own childcare services and so on. It is really quite important so I agree fully with what Mr. Hannigan has said. However, it leaves us now with an electricity bill of €500,000 last year just for those properties alone, never mind insurance or anything else and you can imagine what that is now. That causes certain challenges. There are some developments we are doing with local authorities which have planning where it is in the Part 8 process and they included community buildings and it makes it very hard to make those viable. We managed, somehow, to do a miracle on one to make it happen. However that becomes the challenge. It goes back to that issue where absolutely, we are in a terrible crisis in respect of the criticality of people having beds and homes and all of that but it is also about societal outcomes, that is, outcomes for children and people and we need to think a bit about that. We have used our resources that have been built up over years to fund us to be able to finance that construction phase but also to finance these activities. We are supported by a whole range of public bodies to deliver the services we provide such as the Dublin Region Homeless Executive, the HSE in some cases and many others. However, having the building there to do it means something will happen in that community that is so badly needed. I fully the support the need for some mechanism for that.
In terms of the retrofit issue, so far we have spent €20 million of Respond money, which was matched by the Sustainable Energy Authority of Ireland, SEAI, at €40 million, to retrofit 2,000, I believe, of our homes. We have around 650 yet to do so if you have homes that are being built this year, they are wonderful and beautiful and are A-rated and whatever but what about your tenants from 1982? What about your tenants from the late 1980s? We have a big responsibility to address the fuel poverty issue. We have been doing that for a number of years and will continue to do so.
Steven Matthews (Wicklow, Green Party)
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I was in a local authority-built development in Wicklow, which was brand-newly opened and it was of a high standard with heat pumps and the high insulation value. That is an affordability issue as well, if you are spending your money trying to impossibly heat an uninsulated house. If you go to the stock of housing built in the 1980s or even in the 1990s or 2000s, the challenge can be seen. Does Respond apply to the SEAI for that matched 50% funding?
Mr. Declan Dunne:
Similar to other AHBs here, we have a responsibility in terms of regulation for the upkeep of our homes. We have an asset management strategy, which is a whole range of different approaches to maintenance and our average spend is around €10 million per year. It will probably be €12 million next year. When the scheme originally arrived from the SEAI, it was initially very attractive, so the grants might have been 60%. It is now the other way round; it is about 40%. We take advantage of that as much as possible but we have to mix and match and make sure we are not just simply doing the retrofitting, which is very important but we cannot do it to the exclusion of our responsibilities for all the other classes of maintenance for all of our other homes.
Steven Matthews (Wicklow, Green Party)
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I thank Mr. Dunne and appreciate that. I wanted to ask a further question on that. There was a reference to planning being a barrier, I do not know whose presentation that was in. Mr. Hannigan put his hand up for that one and we will come back to it in a further round because he knows there was an amendment being introduced into the Planning and Development and Foreshore (Amendment) Bill 2022 today and I want to ask for his views on that. I will move to the next slot and Deputy Higgins will take the second Fine Gael slot and I will then go to Deputy Gould.
Emer Higgins (Dublin Mid West, Fine Gael)
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I will not bring in any new topics because I had listed 20 questions that we did not get through. We spoke about vacancy rates and voids and I want to figure out if there are any impediments or barriers that we as a committee could help remove to help to get those figures down even lower? I had heard on the grapevine that Garda checks are an issue sometimes and that they hold things up so if there is anything like that, now is the opportunity to raise it.
We spoke about accessible homes and the difference between part M compliance and fully specced-out in terms of the downstairs bathroom and all the rest. Does anybody have any targets? Is that a key performance indicator, KPI, and is it something in the plan for delivering fully specced-out, accessible homes? I got the views of a couple of agencies on differential rents already in terms of whether we need a standardised differential rent and I know as part of the Housing for All plan there has a been a commitment to look at the whole model. My last question was about the UK valuation process Mr. Hannigan raised to get a litmus test from the other agencies as to whether that is something they agree on. Perhaps if Tuath Housing could start as I have not heard from them yet.
Mr. Sean O'Connor:
Our void rate is around 3% but with the turnover this year of 1,900-plus properties that is a lot of empties. Our average turnaround time is around seven weeks. There is an issue around receiving nominations, which I think is Garda check-driven so anything which could be done to reduce that would be great. Our rent arrears are very similar to others and our current rate is approximately 2.7%. The differential rent scheme is very progressive and based on people's ability to pay. We operate, like many here, in every county in Ireland. We operate multiple differential rent schemes when we are charging people. Incidentally, our average rent is €63 per week, so of course it does not matter whether one lives in a five-bedroom house, a studio or an apartment, as one's rent is based on ability to pay. The same approach is taken if people get into difficulty with rent arrears. We all have hardship policies to deal with that. The eviction rate is very low. I think this year we evicted one household for non-payment of rent, two years with no communication, contact, or payment of rent. I am very glad that a national differential scheme is in the programme because it is urgently required. It does not make sense that someone in Leitrim could be paying less than someone in Louth or Dublin city and that equation can be put anywhere. There are major differences. I will hand over to my colleague, Mr. Loughran, to answer the last question about part M and disabled access.
Mr. Martin Loughran:
One of our unique points is that we are relatively young in the sense that the majority of our growth has come over the last five or six years so a lot of our projects came in post the building control amendment regulations, BCAR, system which mean the majority of our units that have been delivered are part M compliant. That does not mean they are suitable for everyone and additional works are often required. The influence one has depends on what stage of the process they become involved so it is a lot easier for projects in which we are involved in preplanning and for which we are responsible for design. Like everyone else in the room, we have a number of different delivery avenues. Where projects already have planning, we are more limited but we work directly with the local authority at the point in which we go in, so for every project that comes in, the first conversation is with the local authority to see if there is demand for particular unit types. We then look at what is available in terms of a particular projects. You take in things like ground floor units, apartments, duplexes and that type of thing.
The majority of programming we are involved in is pre-commencement. We have the influence at that stage.
With regard to specific targets, we look at a minimum of 10% where we are part of disability action groups. There are avenues of funding that are available, such as the capital assistance scheme, for these unit types. It also comes down to that first initial conversation with the local authority to ensure the demand for those particular unit types ties in with the project it is proposed to deliver.
Emer Higgins (Dublin Mid West, Fine Gael)
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Would others like to comment?
Ms Orla Cleary:
Our average wait time to receive nominations is approximately 59 days. Part of that is for the Garda checks, which adds to the delays. In terms of the additional piece on the differential rent, we carry out an assessment of all our tenant rents annually. We send out what is known as a confidential information statement and the tenants send in their income details. That there are approximately 30 or more different rent assessments makes that quite difficult-----
Emer Higgins (Dublin Mid West, Fine Gael)
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I can imagine.
Emer Higgins (Dublin Mid West, Fine Gael)
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I thank Ms Cleary. That makes sense.
Mr. Brian O'Gorman:
I support all of what colleagues have said here. Having one equitable differential rent throughout the country is something that we would all support. We understand there are political issues with introducing one in terms of winners and losers, but there should be general support on this.
With regard to voids, we have had experience this year where we have been doing allocations for cost rental properties. We have used a lottery engine to get a random selection. There are technologies available that should make allocations very smooth and straightforward. The possibilities exist and we do not understand why it cannot be introduced across the country. There are many shared services applications in place that would-----
Emer Higgins (Dublin Mid West, Fine Gael)
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Is Mr. O’Gorman referring to things like choice-based letting, CBL?
Mr. Brian O'Gorman:
I refer to things like a choice-based letting that would employ technology to allocate properties when they become available. Some local authorities have choice-based lettings. However, we would all welcome a shared services approach that could be used for all local authorities.
This is a personal view, but I have had always had a problem with Garda checks, which stigmatise social housing and are not used in other sectors. Strong procedures are needed to combat antisocial behaviour, but they should not be used as a filter with regard to housing and addressing housing need.
Emer Higgins (Dublin Mid West, Fine Gael)
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I agree. People, regardless of whether they pass the Garda check, are still going to be housed. This is a differentiating factor between approved housing bodies, AHBs, and local authorities. Do the witnesses have any comments on what Mr. Hannigan suggested about the UK valuation process?
Ms Fiona Cormican:
I was looking for the figures on voids. We would use the UK valuation process. We borrowed €54 million from Legal & General, which is a pension fund. It used that process when valuing the properties we bought under that fund. It is not unfamiliar.
In Ireland, as Mr. O’Connor says, we are still using the red book valuation. That assumes that if units are to stay in social housing, they will have a lower value. That impacts on our gearing. We need a valuation system that helps us to value our portfolios properly, which would alleviate some of the gearing pressure. It will not solve the problem because we will still get to the point of a gearing issue eventually, but it would alleviate the problem somewhat. I would be in favour of us exploring it in some more detail.
Emer Higgins (Dublin Mid West, Fine Gael)
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That is interesting. Ms Cormican might keep us abreast of that if it is likely they may work together on it or if they come up with a joint recommendation. I would love if we could invite the witnesses back to the committee to discuss that in a bit more detail because it is quite a meaty topic that we will not necessarily get to the bottom of today.
Thomas Gould (Cork North Central, Sinn Fein)
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I thank the witnesses for all the work their organisations are doing. I have been in contact with all the groups in Cork. To be fair to everyone involved, I find the co-operation levels and the work are excellent. The attitude with which they approach housing, social housing and homelessness is refreshing. They want to deal with people and they are solutions-based. We have problems and we are trying to fix things. To be honest, this will not be fixed today or tomorrow, but at least from looking at the witnesses’ submissions I can see there are plans. That is what is it is all about: putting plans in place to try to solve these crises. Whether it is affordable, social, cost rental or homelessness, we need a solution. From reading the witnesses’ submissions I can see great work is being done as well as being planned for the future.
I am very concerned about the comments that were made in this committee about community spaces and a lack of funding. I come from Knocknaheeny, which was a big social housing development. Three-bedroom housing developments were built for the regeneration of Moyross and Ballymun, but no playgrounds, parks or buildings were put in. They just built an estate and they walked away. We cannot go back to that. The witnesses have spoken about that. If there were a number of recommendations, where should that funding be coming from? I do not think they should be going from pillar to post to try to get a few bob out of other places to provide these spaces, buildings or services. Surely, with the work the witnesses do, that funding should be part of it. Someone made a point about the final contributions they have to pay. Surely those financial contributions should be used for that kind of work. Would that not be a solution? That is my first question.
Steven Matthews (Wicklow, Green Party)
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Is the question on development contributions?
Thomas Gould (Cork North Central, Sinn Fein)
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Yes.
Ms Fiona Cormican:
One of the solutions to all of this is a focus on mixed tenure schemes, or tenure blind schemes as we can call them. Mr. Hannigan mentioned earlier that our focus should be on mixed tenure schemes. When I speak of mixed tenure schemes, I mean truly mixed tenure, where we work with developers to deliver private, social, affordable, cost rental, older persons’ and special needs housing, all in the same scheme. One of the ways to make the schemes affordable and to ensure we have the proper facilities in place is to use the developer’s profits on the private homes to help to cross-subsidise the communal spaces etc. However, funding should also be available to us to ensure we contribute our share to those spaces as well.
For example, I will go back to the issue of the 100% debt funding. All our schemes are 100% debt funded, whereas the local authorities have access to the affordable housing fund or to capital grants. The Land Development Agency, LDA, itself, has a significant fund made available to it. The only organisations that are being asked to deliver housing on 100% debt finance are the approved housing bodies, which are charities. It is difficult to get 100% debt finance for social areas, parks, playgrounds etc. Therefore, our only way of doing it at the moment is to work closely with developers to try to cross-subside those areas through their sale of private housing.
Thomas Gould (Cork North Central, Sinn Fein)
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Why is that the case? Call me old fashioned but there is the issue of regeneration. My dad still lives in Knocknaheeny and I live down the road. We are putting millions, if not hundreds of millions, of euro into regenerating areas. We know what the solutions are. One of the issues is that, as we build housing, we must put the infrastructure in at the same time, if not before. Is it the Department or is it the Minister? Where is the blockage? What Ms Cormican is saying to me makes perfect sense and I have lived that. Who is blocking it?
Ms Fiona Cormican:
There is an example of a very big scheme in Dublin city that was voted out. It was voted that there would be no private for sale on that scheme. Straight away, this took away developers’ profit and took away that contribution to the parks and the areas. That is common. The local authorities, councillors and elected representatives vote against any private element in large schemes.
Thomas Gould (Cork North Central, Sinn Fein)
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I know developments that are going on in Cork at the moment such as one on the Middle Glanmire Road, which I think will have 26 social and 26 affordable units. Other examples are Hawkes Road and Togher. There are developments coming in now with cost rental. The one in Glanmire, which was mentioned earlier, has 32 properties and 1,300 people applying for them. People were ringing me asking me to put in a letter for them. I put in letters to the council every week supporting people's claims for social housing but when it is a lottery, I did not think that it was appropriate for me as a Deputy because if there are 1,300 people in there, how can I say that one person is more deserving than another? There is no private housing in those developments. One is just being built now and there is not an inch of green space in the development. Why was that allowed? Why did whoever built it not get the resources or funding to ensure there was? It is all about building sustainable communities but if you do not have green spaces for kids to play in, we will back here in five or ten years' time.
Steven Matthews (Wicklow, Green Party)
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Do Mr. Hannigan and Mr. Dunne wish to come back on that?
Mr. Declan Dunne:
I do not know what example that was going to be. The Deputy asked why. In the course of my career I was on the board of Ballymun Regeneration for ten years as a community representative. We know what the lived experience was in that area, what a community it is, what has been achieved and how much it has been transformed since. Huge investment has been put in. The State and everyone involved in this is trying to solve it and everyone understands, but there are two reasons that come to mind for why we find ourselves in this situation. The pressure to deliver is massive. It is so important because people just do not have a house. We are rushing to do the minimum because it is so badly needed. The second is a lack of understanding. If I may say so, it is clear the Deputy has that understanding. That is why my opening statement spoke of our mission of social justice and a human right to housing because housing is fabulously important. In terms of social determinants of health and well-being, housing is the single biggest issue to improve the health of a family and individual but it is not the only one. As for all the things the Deputy is talking about, there is not really the understanding. It is only when you have lived in a community where such things are absent that it becomes so crystal clear what the impact is on mental health and youth development. Constantly, we look at the families that we are putting in these homes and thinking that in ten years' time they will all be teenagers so the question is what are we doing in that regard. The pressure to deliver is one of the causes and it is understandable, as we have to get people into homes somehow, but the second thing is that lack of understanding. I would argue that this is a bad decision economically if we do not do these things properly.
Ours just happens to be that kind of organisation with six homeless services, 17 childcare units and all that kind of stuff, so we invest in that and we believe in it. We are working to become a trauma-informed organisation. A vast majority of staff are trained in that to understand what might be going on for people, what might be triggering them and how we in our interaction might have a positive engagement with them. It is about basic resources and that focus on early years and after school services and the difference that makes. More than half our tenants are at work but many of our tenants are lone parents and we all know the poverty and difficulties they are facing and so on. What is going to happen for those children? There is some good news and that is the quality of the housing provided by these bodies and local authorities is really fabulous, so no child in local authority or AHB social housing is embarrassed to bring their friends home from school. They probably or possibly have the nicest house. I would support the Deputy in trying to build this understanding that it is not just about housing and estate management but it is about communities and understanding the life cycle that people go through because it will be a very false economy if we do not.
Ms Niamh Randall:
Mr. Dunne covered some of the points I was going to make. The really important thing is not only to look at the economic cost of all of this but also the social cost and the focus on prevention. It is what we have learned, including from some of the mistakes of the past. When we are looking at prevention, it is about primary, secondary and tertiary prevention. I was fortunate to visit Young Knocknaheeny which is an excellent project very similar to the Youngballymun project. It is an excellent intervention, with really important work happening there. We want to ensure, however, that we do not have to develop these "Young Whatever-estate" projects into the future. It is the focus of ensuring that we build this understanding of prevention and early intervention into our estates and to work with people who might be at risk or more vulnerable and to ensure that people have that space to play, engage and have those community connections as well. It is about housing but it is also about having these vibrant, diverse communities where people want to live, where they want to be part of the community and where they are proud to be part of their community as well.
Thomas Gould (Cork North Central, Sinn Fein)
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May I come in again? I am sorry but I will be leaving.
Steven Matthews (Wicklow, Green Party)
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It is an important point. The good news for everybody is we will all be leaving shortly.
Thomas Gould (Cork North Central, Sinn Fein)
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I have pages of questions for the witnesses and I was listening to the debates earlier. Something came up earlier about 59 days waiting for nominations from local authorities and the seven-week turnover of voids. We have had local authorities here, namely, the four Dublin ones, Waterford, Limerick, Cork and Galway, and Cork is the worst at nearly 95 or 96 weeks, which is a crazy length time. All were high 40s. It might have been Waterford but one authority said that it was looking to get it below 20 weeks for local authorities. I think seven weeks is brilliant and it just shows what you can do.
The other thing is to speed things up. It goes back to the 59 days waiting for nominations. Is it possible to have people ready? Is it possible to have a short list? What would need to be done to get the turnaround even quicker? Are there changes needed in local authorities? Does it need changes in legislation? Is there a recommendation that we could bring to the Department or the Minister? I understand the point that was made earlier about Garda vetting. Garda vetting can represent a delay but you could have people vetted and ready to go. Do our guests have a request of us that we could put in our report and that would help them to improve on their already excellent times?
Mr. Declan Dunne:
Everybody here knows this but one is the choice-based letting system, where the tenant can select a property they are actually interested in so that when they go to it they are likely to find it suitable for themselves and their families. To allocate a property and have someone move into it, there could be a number of people visiting the same property who do not find it suitable. The choice-based letting system, which is adopted by a number of local authorities and which is a fantastic system on which they should be commended, means that the people who do apply are going to something they are likely to be interested in. That is the first one.
The only other thing we have discussed is starting earlier. Now, there is risk in here for us. Basically we know we have an expected date for delivery. Predicting housing completion is a hard enough job at the moment and, in fact, we build in a six-month fudge factor beyond what our architects tell us is actually going to be the date. We had a scheme in Bluebell recently and one in Charlestown, where we had 138 apartments and we saw a dramatic improvement in the allocation process. We worked really closely with Fingal County Council. We put our heads together and we came up with a combination of our staff and its staff working really closely. Some of our colleague organisations came to us asking how had we done it and what happened? There was no difference. Fingal and ourselves were just absolutely focused on one thing. If it needed resources and we had them, we shared them but we had a joint committee overlooking it. We were able to do that in a quarter of the time that we normally do. I do not think it is not rocket science but there is need for more focus on that.
Mr. Martin Loughran:
Transparency of programmes is key. We have all discussed our own programmes. We have visibility for 12 or 18 months in advance of when we expect projects to be delivered. There can be delays and communication is key. Work is ongoing with each of the local authorities. The alliance members and the housing committee in the alliance have worked collaboratively to produce an allocations protocol. The main principle of this is to get information to the local authorities earlier. The target for any project we aim to deliver is that we send across the information four months in advance. This includes details of the project such as floor plans. Beginning the process earlier means we are more likely to have tenants ready to move in. There has been a remarkable improvement since this has happened.
We deliver a number of forms of tenure, as my colleagues have pointed out. These include cost rental, which is an emerging form of tenure. The big difference between cost-rental and social housing is that we take full control of allocating the properties. As Mr. O'Gorman pointed out earlier, we are using technology for a lottery-based system, which is helping us. It highlights the difference when we take the lead ourselves. We allocate the properties quickly. It takes out the need for Garda vetting, which potentially delays projects.
Steven Matthews (Wicklow, Green Party)
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I thank Mr. Loughran and Deputy Gould. Before I adjourn-----
Thomas Gould (Cork North Central, Sinn Fein)
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Could I get in one more question?
Steven Matthews (Wicklow, Green Party)
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I have already given the Deputy ten or 12 minutes.
Thomas Gould (Cork North Central, Sinn Fein)
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Go on, for luck.
Steven Matthews (Wicklow, Green Party)
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We need to go to the Chamber shortly. Ms Cormican said earlier that when we take out the private element, we end up reducing the profitability and this impacts on the delivery of other aspects. Will she elaborate on and clarify that?
Ms Fiona Cormican:
What I am trying to say is that there seems to be an attitude in this country that private development is bad and that private developers are bad people. The reality is that nobody in the local authorities is out delivering houses themselves, neither are we are out with shovels and laying bricks ourselves. We rely on the private sector. Creating synergy with the private sector would allow us to create properly mixed tenure schemes where we all contribute to the development, master planning and developing of very good blind mixed-tenure schemes where everybody can live together. The profits made on the private sale of properties can be used to help subsidise communal spaces and facilities such as pitches. Many good proposals have been put forward by private developers to do this on State land alongside AHBs but when it comes to the floor of the council chamber, they get voted down because people do not want to see any land going anywhere near private developers. This does not make any sense.
Steven Matthews (Wicklow, Green Party)
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This is councillors who vote down the proposals.
Thomas Gould (Cork North Central, Sinn Fein)
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They want to build private houses on public lands.
Steven Matthews (Wicklow, Green Party)
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This is my slot. I will let the Deputy back in if he wants to defend that but I was not picking out any political party. I was just looking for clarity on the matter.
I have another question in which I will be slightly parochial. I will not name the agency but in my constituency of Wicklow, a site was passed for inclusion in the Part 8 process in 2018. It is the Central Garage site in Bray. I believe the agency that has it is represented here. What is the barrier to something that was passed in 2018 not even having a shovel on the ground now? Do the agencies represented have this type of site, which has been sitting there for three or four years? What might the barriers be? Mr. Hannigan is nodding. I do not think it is his agency. I cannot remember.
Mr. John Hannigan:
It is not my agency but I will take some of the heat off some of the other agencies that might be involved. Yesterday we launched a site that has taken seven years to get to the turning of the sod. It is still another 18 months away from delivery. Part of the problem with some sites is that ownership, particularly if they are coming from local authority ownership, can be complex. Getting clean title on properties can be very difficult, particularly if there was another business there previously that may have contamination or other issues. I am aware of the site the Chair has mentioned because I bid for it when with another agency many years ago. We were not successful.
There are also difficulties with planning. Part 8 can be fantastically helpful but it can also be quite long and complex. It requires quite a lot of work beforehand that people do not see. They see a site going into the Part 8 consultation process and coming out of it but the element that takes place prior to this can be quite long and arduous.
An AHB pulling together the finance for a particular project can also be a complex process depending on what is going on to it. There are multiple reasons it can take longer than normal. For the project we have just started a large proportion of the delay was due to trying to assemble all of the pieces of the land where it had been carved up over a number of years. Getting clean title on it was very difficult. We tried to use Part 8 for it but we were told to go the standard route. That took a little bit longer.
There are multiple reasons for delays. None of us want delays because most of us have to carry a financial site cost. Local authorities, and rightly so, borrowed in the past and are looking to clear the debt to be able to move on and purchase other loans. That in itself can be a difficulty in paying for it at a particular point in time.
Steven Matthews (Wicklow, Green Party)
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This leads on to my earlier question with regard to planning being a barrier to delivery. The witnesses may be aware of the amendment being proposed by the Minister to section 179 in Part 8. Do they foresee this is something that will speed up delivery of social, affordable and cost rental housing? Do they see it as something that would be beneficial to AHBs? Do any of them want to comment on that?
Steven Matthews (Wicklow, Green Party)
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An amendment has been tabled to the Planning and Development and Foreshore (Amendment) Bill by the Minister that seeks to speed up the delivery of social, affordable and cost-rental housing by exempting the delivery of this type of housing from the Part 8 process as long as it is commenced before the end of December 2024. The witnesses may not be aware of the amendment because it was only tabled quite recently.
Mr. Martin Loughran:
Anything that reviews the planning system would be welcomed by everyone in the room, at the risk of speaking for everyone. It is probably one of the biggest challenges. We can see it is not only about the number of projects that are failed to get approval. There are also projects that are getting approval but not commencing. It is about the timeframe it takes projects to get through. It is the viability and suitability of projects that are being approved. This is something we are experiencing. Anything that looks to speed up the process and improve the viability of what is being approved is something that we welcome.
Mr. John Hannigan:
I am not aware of the particular elements of the amendment. The difficulty we have is that it is not the only thing that needs to change. A range of elements in the planning process need to change to speed it up. There are suggestions, which I have not seen, to change the judicial review process to bring it back into local authorities to give them greater control over how the planning element might happen. The reality is that all it will do is lengthen the process because it does not take away the judicial review element at the end. It puts in another step. This should make it easier in some respects but, unfortunately, it is likely to make it more complex in the longer term and create additional delays. Simplification is the most important element. There are other ways that simplification could happen. For example, the strategic housing development process was not by any means brilliant but it allowed certainty of timescale. We knew a decision would be made. If strategic housing developments had gone through the right process, there might have been better outcomes. At least we had a clearly defined end-of-process at which point a decision could be made about investment. We do not have this any more. I am not sure from what I have heard so far that the changes being proposed will give this certainty.
Steven Matthews (Wicklow, Green Party)
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I agree to a certain extent that what is probably required is legal certainty for everybody involved in a development in the area, and not only the investor, agency or developer but the people who live in the area and those who wish to live in the houses that would be developed.
The legal certainty needs to be there. However, that also needs to be hugely supported by very well-resourced local authorities and An Bord Pleanála in order that they can make those decisions in a timely manner. There is no point in giving people a 16-week window and a whole load of highly complex cases to decide and forcing them to keep to that time limit. That is what creates mistakes and pressures and can lead to judicial review processes. Did Deputy Gould wish to come back in?
Thomas Gould (Cork North Central, Sinn Fein)
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I thank everyone for their answers. I want to go back to one point that was raised earlier. I get what Ms Cormican said about having mixed tenure. One of my issues is that too much social housing will only create problems. A mixed tenure is needed across social, affordable and cost-rental homes and homes for older people and those with disabilities. That feeds into my last comment for the witnesses. I thank them for all their contributions.
My one worry is about acquisitions when organisations are buying developments that are produced and built. If they are negotiating with a developer themselves, they are telling a developer what they need. Even if they are going to buy a development off the books or the plans, they still have an input. My worry is about when a development is bought after it is built. The standard X amount of two-bedroom or three-bedroom homes are bought, but no single units or very few universal design or universal design wheelchair-accessible homes are bought. That is a concern for me.
Mr. Dunne made the point earlier that people are pressured to deliver housing. If the Department and people in local authorities are sending out a clear message, it should be need led and not developer driven. That is important. I encourage the representative organisations to be as strong as they can without delaying anything. They are doing excellent work but that is an issue.
There are 10,000 people on Cork City Council's waiting list. We know 5,000 of them are single. However, we are not building 50% of the properties as one-bedroom or two-bedroom units, which are needed because people with children might be separated and stuff like that. We are seeing three-bedroom houses. Do not get me wrong; there is a need for three-bedroom houses but we need a balanced delivery. I would make that point. I apologise; we have to run. I thank everyone.
Steven Matthews (Wicklow, Green Party)
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On behalf of the committee members, I thank the witnesses for the work they are doing. They might bring that thanks and acknowledgment back to their staff who are out in the fields the whole time designing, building and maintaining that really good resident liaison and relationship they have. It is incredibly important.
I finally got to tot up those figures we received earlier. Correct me if I am wrong, but the figure I have is somewhere in or around 30,000 units. Over the next three to five years, we are looking at another approximately 18,000 to 20,000 units, which are urgently needed. If we add that to the LDA proposals, local authority Part Vs and other deliveries, however, it shows a good pipeline. It is never enough and never fast enough. We all live by that. It is important to have that really good quality design I see from approved housing bodies. When I sat on a council and people came in to make presentations, we could see that a huge thought process had gone into the plans. These are homes, not just units and houses.
I ask Mr. Hannigan for a quarterly update. That would be really helpful for us. It does not need to be massively in-depth in detail, but similar to what the LDA provides for us on a quarterly basis. That would be really helpful. I thank everyone for their attendance today.