Paudie Coffey (Waterford, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

The primary background to this Bill is the housing supply shortage, which is one of the most pressing and important challenges facing society and the Government. This supply shortage is especially acute in Dublin, where demand for housing well outstrips supply and has done for a number of years, with consequential knock-on effects for house prices and rents, which impacts negatively on thousands of households.

As Members will be aware, in May 2014 the Government published a comprehensive Construction 2020 strategy for a renewed construction sector encompassing 75 specific actions aimed at addressing issues in the property and construction sectors and at ensuring any critical bottlenecks that might impede the sector in meeting residential demand, as well as non-residential commercial demand, are addressed. I have responsibility for co-ordinating the implementation of the Construction 2020 strategy on behalf of the Government, which is central to restoration of growth in our economy and growth in employment. The construction sector is one of the sectors which was most adversely affected by the economic downturn. In line with the significant decrease in employment in the sector, the level of housing completions has also reduced significantly since the downturn. To put this in context, at the peak of construction activity in 2006, more than 93,000 houses were built nationally, which in hindsight was an unsustainably high level, with 19,000 of these being built in Dublin.

By 2013 the number of housing completions had plummeted to a mere 8,000 units nationally, with just 1,200 of these being constructed in Dublin, an unsustainably low level of completions. We need to reverse this scenario and generate increased activity, with a view to increasing the number of house completions over a number of years in order to return to market equilibrium, where housing supply equals demand and where the sector operates at a more sustainable level in line with what one would expect in a well performing economy.

Since publication of the Construction 2020 strategy last year, we have begun to see some positive signs of recovery in the sector. The number of housing completions rose to 11,000 nationally in 2014, an increase of 30% on the 2013 figure, with just over 3,000 of these completions being in Dublin, while a further increase in activity is expected in the current year. However, we still have some way to go to overcome the current housing supply shortage. Taking account of household formation patterns which are changing, recent studies have estimated that in order to meet projected housing demand, we need to be building approximately 25,000 houses nationally on an annual basis, with between 8,000 and 10,000 of these being completed in Dublin.

Further to action 2 of the Construction 2020 strategy, a housing supply co-ordination task force for Dublin, comprising representatives of the four Dublin local authorities and other relevant stakeholders, was established, with an immediate focus on addressing supply-related issues in the Dublin area. The initial report of the group indicates that there are sufficient existing planning permissions or applications with no insurmountable infrastructural deficits with the potential, if acted on by developers, to supply almost 21,000 residential units in the Dublin area. The challenge now is to ensure the stock of existing permissions is activated and the associated housing supply materialises. While some of the barriers to activating these permissions appear to be financial and economic, the measures included in the Bill are designed to ensure perceived barriers to housing supply from a planning perspective will be addressed. These measures will not on their own solve the housing supply problems which are, unquestionably, multifaceted and require a broad-ranging co-ordinated approach, but the intention is that they will help to make a start in addressing these problems.

The main provisions in the Bill relate to amendments to the Part V provisions of the Planning and Development Acts to support the provision of social housing; the introduction of revised arrangements for the application of development contributions by planning authorities; and the introduction of a new measure, a vacant site levy, to incentivise the development of vacant, under-utilised sites in urban areas for housing and regeneration purposes. These main provisions are set out in five Parts, comprising 36 sections in total.

Part 1 of the Bill, sections 1 and 2, contains standard provisions dealing with the Short Title of the Bill, collective citation with existing planning Acts, construction and commencement. It also incorporates some standard definitions.

Part 2 which forms a substantial part of the Bill comprises sections 3 to 26, inclusive, and relates to the proposed introduction of a vacant site levy to incentivise the development of vacant sites in central urban areas for housing and regeneration purposes. This proposal follows from action 23 of the Construction 2020 strategy.

In other areas of interaction between public policy making for the common good and property rights the courts have determined that private property rights may be counterbalanced where there is a need to address matters of pressing or compelling concern and the wider community good. Examples in this regard include the Derelict Sites Act 1990, the derelict site levy and the Part V provisions of the Planning and Development Acts relating to social and affordable housing. In effect, there is already a legal precedent for measures of this nature impacting on private property which are socially desirable and in the overall common good.

The Bill contains number of changes to the vacant site levy provisions compared to the general scheme which was published some months ago, all of which are intended to make the provisions as fair, reasonable and proportionate as possible. Essentially, it now proposes that, from 1 January 2019, planning authorities will be empowered to apply an annual vacant site levy of 3% to the market value of vacant sites which a planning authority has determined were vacant or idle in the preceding year. The sites liable to the levy will be in designated areas identified by the planning authority in its development or local area plan for residential or regeneration development.

Section 3 provides for definitions of terms used in the context of the vacant site levy provisions such as "housing", "market value" and "owner". Section 4 outlines that the vacant site levy provisions shall apply to residential or regeneration land, other than land owned by a local authority for housing purposes.

Section 5 is central to the vacant site levy provisions in that it provides for the definition of a vacant site which shall be residential or regeneration land as zoned by a planning authority in its local development or local area plan. In the case of residential land, this means a site in an area where there is a need for housing which is suitable for the provision of housing and is vacant. In the case of regeneration land, it means a site that is vacant and has an adverse effect on the existing amenities or character of the area. A vacant site will be any area of land exceeding 0.1 ha but which does not include a structure that is a person's home.

Rather than go through the remaining sections of the vacant site levy provisions individually, sections 6 to 26, inclusive, which are quite complex and detailed, I will instead give a summary of the provisions in order that Deputies can obtain a better understanding of how the proposed scheme will operate.

Beginning on 1 January 2017, a planning authority shall establish and maintain a register of sites, the vacant sites register, of lands zoned for residential or regeneration use which, in the planning authority's opinion, were vacant sites during the preceding year. Before 1 June 2018, a planning authority shall issue a notice to the owner of a vacant site included in its respective vacant sites register indicating that such site owner shall be charged a levy in respect of 2018 in January 2019, with such charge to be continued every year thereafter until the site is no longer vacant. A planning authority shall, as soon as possible after the entry of a site on the vacant sites register and at least every three years thereafter, determine the market value of a vacant site and serve notice on the owner of the site of the valuation, or revised valuation, of the site in question which may be appealed to the Valuation Tribunal. A planning authority, or the Valuation Tribunal on appeal, may, where it considers it appropriate, deem that a vacant site has a zero market value where there is no market for the site or it is on contaminated land and the estimated necessary remediation costs in order to use or develop it exceed its market value. With effect from 1 January 2019 and every year thereafter, a planning authority shall, in respect of the preceding year, charge a vacant site levy of 3% of the market value of a site on the owner of each site included in its vacant site register, which shall be payable on demand or by instalments if agreed by the planning authority.

To help to alleviate the financial burden faced by the owners of vacant sites which are subject to a site loan, a zero rate of levy shall apply if the outstanding amount of the site loan is greater than the market value of the vacant site on the date of its determination. This is to address site owners in negative equity who may have purchased sites in the boom years. Where the outstanding amount of the site loan is between 75% and 100% of the market value of the vacant site on the date of its determination, a reduced rate of 0.75% shall apply. Where the outstanding amount of the site loan is between 50% and 75% of the market value of the vacant site on the date of its determination, a 1.5% rate shall apply. The vacant site levy shall remain a charge on the relevant land until it is paid. Where there is a change in ownership of a vacant site, or the owner of a site dies, the amount of levy chargeable on such sites in respect of that year or the previous year shall be zero. This shall not apply where ownership of the vacant site transfers from one company to an associated company, to another member of the family, other than on the death of the owner, or for the principal purpose of avoiding the obligation to pay the vacant site levy. The vendor of a vacant site on the register shall, before the completion of a sale of the site, pay to the relevant planning authority any vacant site levy due in respect of that site. Moneys received by a planning authority in respect of a vacant site levy shall be spent by it on the provision of housing or the regeneration of the area. Regeneration expenditure can include the preservation and protection of structures of special architectural, historical or cultural interest, the provision or improvement of educational, recreational or cultural facilities for the local community and projects or works to improve local shopping streets and business areas.

In line with fair procedures, numerous opportunities are provided for site owners to make submissions and appeals to planning authorities, An Bord Pleanála and the Valuation Tribunal on the proposed inclusion of a site in the vacant sites register, the annual notices of levy liability, the market valuation arrived at for a site and the annual demand for payment of the levy.

I will move on to Part 3, which comprises just one section - section 27. This amends section 23 of the Derelict Sites Act 1990 to provide that a derelict site levy shall not be payable in respect of any land in respect of which the vacant site levy is payable under the Urban Regeneration and Housing Bill, when enacted. That is to ensure a double payment situation does not arise in respect of the vacant site levy or derelict site levy.

Part 4 deals with two separate issues, namely, local authority development plans and development contribution charges applied by local authorities. With regard to development plans, section 10(2) of the Planning and Development Act 2000 outlines the objectives that planning authorities are required to take into account in the preparation and adoption of development plans for their respective areas. Those include the zoning of land for residential, commercial, industrial, agricultural, recreational and other uses in line with the proper planning and sustainable development of the area; the provision of necessary infrastructure to facilitate development; and the preservation of structures of historical interest as well as the character of the landscape of the area.

Section 28 amends section 10(2) of the 2000 Act to provide that the current objective incorporated in a development plan for the development and renewal of areas in need of regeneration should be broadened to provide that such objective should be for the explicit purpose of preventing adverse effects on existing amenities in such areas, urban blight and decay, anti-social behaviour, or a shortage of habitable houses or land suitable for residential use or a mixture of residential or other uses. This amendment is necessary to support the vacant site levy provisions - elaborating on the principles and policies relating to the levy - and outlines the basis for identifying lands as being in need of regeneration for the purposes of being so designated in a local development plan.

With regard to development contribution charges, these are generally used towards the provision of necessary public infrastructure such as new roads, footpaths, lighting, open spaces and car parking to service new developments. In line with action 14 of the Construction 2020 strategy, section 29 amends section 48 of the 2000 Act to provide that where a new development contribution scheme is adopted by a planning authority to provide for reduced development contribution levies compared with those which were in place under the previous development scheme, the reduced development contributions under the newly adopted scheme shall have retrospective effect for existing planning permissions that have yet to be activated. In addition, section 29 provides that where there are unsold housing units in a development, the new lower development contribution scheme shall also apply to those unsold housing units.

Section 30 amends section 49 of the Planning and Development Act 2000 to provide that the arrangements in relation to reduced development contributions will also apply in respect of supplementary development contribution schemes which are sometimes deployed for the purpose of facilitating a particular infrastructure project in a local authority area such as a new motorway intersection which will directly benefit the development on which it is imposed. These changes to the development contribution provisions should assist in reducing costs for developers, make developments more economically viable and influence developments to be brought forward sooner than might otherwise be the case and at a lower cost, which is critical in terms of improving housing supply.

The final Part of the Bill, Part 5, relates to amendments to the existing Part V provisions in the Planning and Development Act 2000 concerning social and affordable housing. In this regard, action 9 of the Construction 2020 strategy called for a review of the Part V requirements with a view to ensuring it is delivering as intended, and the bringing forward of any legislative changes deemed necessary. In this regard, the original Part V housing supply provisions in section 93 of the 2000 Act have played a significant role in the delivery of social and affordable housing since their introduction. There are many people in good quality housing today as a result of the Part V mechanisms. Furthermore, Part V has been successful in delivering social integration and more sustainable mixed tenure developments throughout the country. That was one of the of the positive outcomes of the original Part V arrangements. However, the economic context within which the original Part V provisions were developed in 2000 has changed, as has the mix of housing need. The capacity of Part V to deliver on its objectives is related to the level of housing construction activity. Accordingly, since the downturn and the decreased construction activity associated with it, Part V has delivered very little in terms of social housing in recent years. Notwithstanding that, in the context of a recovering housing market and increasing housing construction activity, it is considered that the Part V mechanism, with appropriate adjustments, has the potential to again be a significant contributor to future social housing provision. From the Government's perspective, it remains proper that the gain to developers derived from the planning system should contribute towards meeting the housing needs of citizens, including those on local authority housing lists.

Informed by an extensive public consultation process and an in-depth review of the Part V provisions, the Bill provides for a series of amendments to the operation of the Part V provisions, with the principal objectives of enhancing the economic viability of developments, maximising the opportunity for the delivery of social housing units, securing the principle of integrated mixed tenure developments, and addressing weaknesses in aspects of the existing legislation identified in a number of court judgments. The proposed provisions will also be a key component of the range of delivery mechanisms that will be required to achieve the targets set out in the Government's Social Housing Strategy 2020. My Department estimates that in the region of 4,000 additional social housing units will be delivered by 2020 using the new Part V provisions which will be a significant contribution to the ambitious social housing targets set out in the strategy. Upon enactment of the Bill, the new Part V arrangements can also be retrospectively applied to existing planning permissions where works have not commenced. In the operation of the revised Part V arrangements, the priority will be to secure social housing units on site. The current practice of developers making cash payments in lieu of social housing is to be discontinued.

I will now outline the key changes to Part V in some more detail. Section 31 amends section 94 of the 2000 Act by requiring a planning authority to consult approvedhousing bodies in its functional area in the preparation of its housing strategy and to have regard to relevant housing policies of the Government or any Minister. It also halves to 10%, from 20%, the percentage of land that must be provided for social and affordable housing in a housing development.

With regard to affordable housing, Deputies will be aware that the general scheme of the Bill, as published some months ago, proposed that the existing statutory provisions relating to affordable housing would be removed from the Statute Book. However, after further consideration, in particular following the contributions made during the scrutiny of the general scheme by the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht, the Government now proposes that the existing statutory provisions relating to affordable housing will be retained in the Planning and Development Act in order that when the current acute need for social housing has been met, it may be possible to reintroduce the affordability aspect into the Part V arrangements when and if required. Up to now, Part V has been perceived as an inefficient process which caused difficulties for developers and local authorities alike. Under the existing arrangements, any Part V agreements are required to be reached within an eight-week period, but in practice that was rarely achieved. Accordingly, section 33(1)(a) will now require a Part V agreement to be reached between the developer and the local authority prior to the commencement of works on a development. That is to be notified by the lodgement of a commencement notice to the planning authority by a developer, which will reduce the opportunity for negotiations to become protracted beyond commencement stage, as has generally occurred up to now.

Sections 33 and 34 amend the options contained in section 96 of the 2000 Act with a view to maximising the provision of completed social housing units by a developer. The transfer of land to a local authority for the provision of social housing will remain the default option, as is currently the case. However, the option of making a cash payment to a local authority in lieu of social housing is being removed, as is the option of providing sites or land elsewhere. The transfer of completed social housing units off-site on other lands, however, will be allowed in specific circumstances, for instance, where there is insufficient social housing demand at the location of the proposed development and where there is greater need at another location. Provision is also being made for the Part V obligation to be fulfilled by developers through long-term leasing of properties and rental accommodation availability agreements.

The complexity and ambiguity of some wording within the original Act has resulted in several significant court cases.

Accordingly, a number of technical amendments are being provided take account of court judgements and practical difficulties reported in the operation of Part V. These include the provision of greater clarity on the meaning of terms such as "attributable costs" and "equivalent monetary value". These amendments are intended to improve the Part V negotiation process for all parties. Section 36 amends section 97 of the original Act of 2000 to provide that the social and affordable housing obligations on developers shall in future apply only in respect of developments consisting of ten or more houses. Currently, developers are exempted from Part V obligations in respect of developments consisting of four or fewer houses.

On Committee Stage, I will bring forward a number of technical amendments primarily relating to the Part V provisions which are required to remove any doubt regarding the application of provisions relating to the charging of rents. The Bill contains a number of fundamental, important and necessary revisions to the Planning Act of 2000, all emanating from the Government's Construction 2020 strategy and all aimed at increasing housing supply. The amendments to the Part V provisions and those providing for reduced development contributions will in particular help in reducing costs for developers and removing disincentives to construction, thereby making developments more economically viable and helping to increase housing supply. As a major employer, the performance of our construction sector is central to Ireland's economic recovery and well-being, and the measures in the Bill should assist in stimulating jobs in the construction sector, as well as in the manufacturing, retail and professional sectors that it supports.

The other main measure proposed in the Bill, the vacant site levy, has a positive objective to incentivise the development of vacant, underutilised lands for housing and for regeneration with a view to breathing life back into designated urban areas and addressing urban decay. All the measures proposed in the Bill - the Part V revisions, reduced development contributions and the vacant site levy - are socially and economically desirable and serve the overall common good. I commend the Bill to the House and would like it to refer it to the Select Sub-Committee on the Environment, Community and Local Government.

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