Mick Wallace (Wexford, Independent) | Oireachtas source

This is the area in which I have spent my life. It breaks my heart how this issue and the challenges posed by the housing crisis have been dealt with. I am wondering who the Government is talking to and getting advice from. The Government is not in touch with the realities. There are massive problems in the housing industry and the Government is not dealing with them. It has an opportunity to do things because everyone knows the sector is on the floor. There are serious problems and we need to do things differently, but we are only scratching the surface. This is a missed opportunity.

In fairness to Deputy Bernard J. Durkan, I have not agreed with much of what he has had to say in the past four and half years in this House, but I heard him talking about the issue of housing earlier and he said some things I agree with. I did not agree with everything he said - that would be going too far - but I agreed with him more today than I have on any other day in the past four and half years. He is obviously aware of problems with which he is being forced to deal on a daily basis.

I admit that not only do I find those in government clueless about the housing crisis, but most of those in opposition are clueless about it also. Government Members are not alone in that regard. I will try to address the Bill as much as possible. I have before me the opening contribution of the Minister of State made the other night. I will pick out sections from it and give my tuppence worth on them.

The Minister of state said: "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." That is 100% true. In fact, I imagine there is even more. However, as I pointed out to the Taoiseach during Leaders' Questions on Tuesday, few developers are interested in building. The private sector is actually going to deliver less than those in government believe this year and next year and the main reason is that it will not pay. There is actually no money in building. The big elephant in the room is distressed assets, including all those units that have been added to the rental market, which have been sold for peanuts.

They have been sold for less than they cost to build. What builder would buy land or use land he bought and paid too much for to build apartments or houses at the moment, competing against assets being bought by US vulture funds for less than it costs to build? Why would one do it? Business-wise one could not do it. In lean times, if a person has already bought the land, it will expose the fact that they paid too much for it. Not only would the developer be exposed - or the builder because now they are often one and the same, having once been two different animals - we would also expose the bank that gave them the money. It would be financial suicide for them to develop sites at the moment, given that NAMA has been selling assets for a fraction of their real value. We might ask what is the real value and people sometimes say the real value is what one can get on a given day, but I disagree. The banks used to tell me that, but what happens if one had a piece of land and one estate agent valued it at €5 million, another valued it at €4 million, another at €4.5 million and another at €5 million, and at auction someone paid €11 million? I asked the bank if it was worth €11 million just because someone had paid that for it. It is not. It just means that is what he was prepared to pay for it - no more and no less.

One yardstick NAMA should use in selling apartments is the question of what it would cost to put up a block of apartments even if one had got the land for nothing. NAMA should not sell it for less than that price but it has been doing that wholesale. The price at which NAMA has sold assets is criminal. It is boasting about making €1 billion between now and 2018 but I do not understand for the life of me why it has flooded the market with properties when it had until 2020 to wrap up its business. It has sold stuff in a fire sale. I know the Minister, Deputy Noonan, did a deal with the troika in 2012 whereby we would deliver €7.5 billion by the end of 2014. We will actually deliver €15 billion from sales by the end of this year. It is pure nonsense. NAMA has been selling stuff in a rising market and it beggars belief. That is one of the reasons the Government will struggle to get the private sector to start building. It can give incentives but it still will not pay at the moment. If I was back building at the moment, I would not get the money from a bank to start building an apartment complex today.

I can tell the Government who is building the only real serious projects that will start in this city in the next couple of years. It is investment funds like Kennedy Wilson. They have bought big sites but it is no challenge for them because they have no intention of selling them. These guys are in it for the rental market. Rents in a working class area of this city have gone from €1,000 a month to €1,400 a month in two and a half years because a small number of people are controlling a huge portion of the rental market and they have formed a cartel. Rent is still going up and according to the Minister's own Department's figures of a couple of days ago, the amount of new completions of houses is going down. These guys will build them because they are not going to sell them so they will not have the problem of selling at below the cost of building them. They will rent them out in the long term. They might not stay here forever but they will get a good price for them in a couple of years' time if they want to flip them.

The Bill states that on 1 January 2019 planning authorities will be empowered to apply an annual vacant site levy of 3% of the market value of vacant sites which a planning authority has determined were vacant or idle in the preceding year. There are many problems with this. This is not a land tax and the Government is not dealing with the problem of landbanking. The biggest problem in the construction industry is landbanking and the fact that there was not even a semblance of implementation of the Kenny report, which the situation is screaming out for. The 3% levy is a token gesture and there are too many loopholes for words. First, if the mortgage on it is between 50% and 75%, the charge will only be 1.5%. If it is between 75% and 100%, the charge is 0.75%. Give me a break. Who in God's name is buying vacant sites and landbanking without borrowing the money? Does the Minister think people are buying sites for cash? They are not, as it would not make business sense. It pays to borrow in this area. The number of sites we will find that are not mortgaged out are very low. People do not turn up with buckets of cash to buy this stuff. They get loans from the bank so the land is mortgaged and most of them will be exempted as a result. Also, the measures do not even come into effect until 2019. Talk about kicking the can down the road. What year are we in? It is 2015. This is just nonsense.

There is another loophole. The legislation states "if" the site is vacant. If I had a two or five-acre site in north Dublin with planning permission for 200 apartments, would I allow the Government to charge me a 3% vacant site tax on it by leaving it 100% vacant? I would not. I would make sure it was not 100% vacant and that at least half of it was being used in some form or another to avoid the tax. It is too easy for words.

Another provision stipulates that a vacant site will be any area of land exceeding 0.1 ha, but 0.1 ha is 1,000 sq. m or a quarter of an acre. This city is full of pockets of vacant small sites. The big player would own some but not all of these sites. I built 27 apartments and 4,500 sq. ft. of commercial space in a basement car park on a site with 750 sq. m and the Government will not catch that site. It can sit there for the next ten years and the owner need not bother his backside building on it and the Government is not going to touch it. By staying over 0.1 ha the Government is avoiding most of the infill in Dublin city. It does not make sense.

We all know that Part V did not work as we did not get 1% in social housing units from it. The Government is doing away with allowing developers to buy their way out of it and that is good but it has reduced the 20% to 10%. I would not shoot the Government for this but it is making a serious mistake. It should have written that 10% in stone on every site but it has not. It has allowed flexibility and the big guy who builds in a well-off area is going to get out of it. That is a given. Remember where you heard it first. I promise the Government that he will get out of it. That is 100% true. He will not pay it and will do it somewhere else and the Government is allowing that. It is saying it will make sure 10% social housing is delivered on each site by doing its best to make it happen but that is not what it should be doing. It should be writing it in stone so that every site in this country has a minimum of 10% social housing units. We have huge problems in our cities and towns with ghettoisation. We have put all the troubled and poor people together and watched unemployment, deprivation and drug problems develop, all in little nests in different parts of Ireland, and we are not addressing the problem. Ghettoisation is a problem that impacts on just about every single Department of Government in one way or another. There is not one Department independent of it and it is costing this State a fortune to deal with the problems that come from it. The Government is not writing in stone that if a person is building 100 apartments on a site in Ballsbridge, 10% of them should be social.

I built places with some social units in them and there is trouble in some of them because of the deprivation and drug problems. However, if we continue down the road of saying we do not want them, that a particular place is just for people of a certain economic bracket and social sphere and that only people from the private schools can afford them, we will continue to have the problems we are experiencing today. Some Government some day will take a responsible decision and do things differently. This is not the way to organise housing in any city or town in any country in the world. We have more problems than most. We probably inherited snobbery from the Brits but, as I see it, it is a bigger problem here than in Europe. Not setting in stone the requirement for social housing in every single site that starts in Dublin is a big problem.

I heard some people complain that the Government has done away with the requirement for developments of less than four or five units and have increased the threshold to nine or ten units. I would not shoot the Government for that decision either given that the requirement is back to 10%. There was a huge problem when it was at 20% in the way it was dealt with. There was a massive problem. I often found that there were times I could not bank a development. I could not get funding because I was being asked to provide 10% or 20% social or affordable housing, but I was getting nothing for the site value. I was paying, say, €100,000 a unit to buy a place where I could put in 30 apartments. I was being offered agricultural land prices for each unit I was going to deliver to the local authority. It was working out at about €1,000 a unit. If I was putting in ten social units on a site on which one could get 50 apartments, I should have been given whatever they were costing me or a market rate. Instead I was getting an agricultural price for them - €1,000 a unit. I was going to the bank with this and it was saying I would not make any money. I would tell it the price of houses will keep rising and I will eventually make money and it would say I was depending on the price of houses to rise in order for the development to make that money.

Of course, the big problem was something else which people never understood. People thought the builders were all making a fortune. We actually were not. The people making a fortune were the people selling us the land. I paid €5 million for one fifth of an acre in a working class area in north Dublin city. The guy who sold me the land made some serious money. When I built the apartments, I am not exaggerating, if I got €400,000 for them I would only break even. I had to get €420,000 to make a few bob it had gone so mad. It was the land banker who was making the money. When we were not developing at all and were just builders, we were working on a 4% margin, which is not so outrageous. We were looking to make 4% on projects. That was our target. When we were developing, initially we made far more money. Then, of course, when the whole thing went bang, we lost more money. The builder who never went developing was fine and he survived the crisis. I had assets worth €80 million which reduced in value to €20 million in the space of approximately 15 months and that was me gone. Such is life. I did not ask anyone to bail me out and while I see most of my competitors back working now that is neither here nor there.

I had better move on because I am running out of time. The Government told us in December it was giving us a housing strategy. It is not a housing strategy. I swear to God it is not. I wish it was but it is not. I really would like to know where the advice is coming from and to whom the Government is talking. It needs to talk to the people who have been involved in the industry. We know where the cheating goes on and where the problems arise. There are so many improvements that can happen now. Things can be done so much better. I am not blaming the Government for all the housing problems but I am disappointed it is not dealing with them. They started under Fianna Fáil and they got worse. This Government came into office and, sadly, has not addressed the problem. The Government is afraid of those with vested interests and its site levy is a strong indicator of that fact.

There are people who land bank in this town. It is reckoned that in or about 2005, some 95% of the land bank for development in County Dublin was owned by 26 people. That is scary stuff, but we are still not dealing with it. We are not addressing the problem. There was a big hullabaloo about all the social housing the Government was going to provide, but it is completely linked to its dependence on the private market. It is not going to work. It is already hugely problematic and it is the wrong way to go. It is going to deliver so many problems. I scream at night thinking about what is going to happen in the housing market. It is going to get worse. I swear to God it is. I wish I could say otherwise, but I just know things are going to get worse over the next couple of years. It does not have to be that way. The private sector is not going to deliver the units as long as we have NAMA and the State-owned banks and institutions. We have IBRC, NAMA and AIB selling stuff off for less than it is worth. Now the Government thinks the private sector is going to start building again. It can forget it. It is not going to happen. The Government's prospects are too tightly linked to it.

People think that it is crazy. There is a stigma around social housing in Ireland, but we need to start building State-owned houses again and we need to do it now. We should not wait. The Government should get the land, fast track the planning permission and start building. It should also build houses in a way that will suit the people who will live in them. The Government needs to grasp that nettle and start building State housing again. It should build it everywhere and not just in ghettos and it should be built every bit as well as private housing.

Of the few guys who did a bit of social and affordable housing in their developments and did not buy their way out of it or move it to a ghetto, most of them put inferior material in the social and affordable units in comparison to what they were putting into the units in the private part. That was a disgrace, but they were allowed to do it. This again goes back to the lack of building regulation. Phil Hogan brought in new regulations. All they do is increase paperwork and bureaucracy. We are still not checking the work that is done. The Government has to go back to the system of having a clerk of works to check how the work is done and the local authority needs to sign off on it having been done properly. It is not going to cost an absolute fortune. The Government has reduced the contribution levies. It should use that vacancy to add a bit extra to cover the cost of local authority inspections of any work that takes place. It is not rocket science; it is called commonsense.

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