Tuesday, 26 January 2016
Social Housing: Motion [Private Members]
Our approach to tackling homelessness has been handled in a holistic manner with a focus on prevention wherever possible. In 2015, our policies were designed to increase local authority flexibility, test innovative new approaches and provide strategic support to front-line staff in delivering services. I have increased funding for homeless services to €70 million for 2016. This will ensure continued progress towards the target of ending involuntary long-term homelessness and the need to sleep rough.
In 2016, I intend to build on the good start achieved under the social housing strategy by delivering a further 17,000 units across all social housing programmes; putting in place a pilot affordable rental scheme for those on low incomes through securing a long-term increase in the supply of affordable properties to meet the needs of those households that would otherwise struggle to make rental payments under current market conditions; using rapid housing delivery techniques as a way of significantly improving emergency accommodation and decreasing the reliance on hotel accommodation, a method that will deliver 500 units; continuing the roll-out of HAP to more local authority areas; continuing to implement the measures set out in the social housing strategy and Construction 2020 across the Government; and introducing choice-based letting allocations in all local authorities to improve the service offering and deal with the high refusal rate in some areas, an issue of which we are all aware. By building the capacity of local authorities now, my aim is to see them build 10,000 homes per year by 2020. This is why my Department approved an additional 420 staff for local authorities in 2015.
Until the full benefit of the decisions that we have implemented is seen, there will be too many people on the housing list and too many struggling in homelessness or in danger of falling into it. We are committed to maintaining the momentum that we achieved in 2015 and to building on the progress made so far. It is a difficult challenge to tackle, but we have made a good start in delivering 13,000 new social housing sets of keys to people last year. We are utilising all avenues available to the State to do this, including via NAMA.
The motion calls on the Government to direct NAMA to provide for social housing purposes 50% of the 20,000 houses that it will build. This displays a fundamental lack of understanding, or perhaps a more sinister wilful ignorance, of NAMA's mandate, function and general property rights. I am shocked that some of the same Deputies who worked so hard to put together the NAMA Act have tabled a proposal that shows a fundamental misunderstanding of that very Act and the work of NAMA. Deputy Cowen knows it. The essential issue that has been ignored is that NAMA does not own the land or property securing the loans of its debtors; it owns the loans. While NAMA has some additional powers provided under the Act, its role is that of a lender whose loans are secured by assets controlled by its debtors, much like a bank but not a property owner. When a NAMA debtor sells a property, it is in order to generate the greatest proceeds to repay as much of the debt to NAMA as possible. Under section 10 of the NAMA Act, NAMA is mandated to act in a commercial manner in order to obtain the best financial return for the State. Fianna Fáil and everyone else know this. Practically speaking, this provision means that NAMA is mandated to secure the highest repayment from its debtors on these loans.
NAMA and its debtors are generally aligned in this regard. Each seeks to generate the maximum proceeds available from the sale of security in repayment of NAMA loans. NAMA debtors are legally entitled to maximise the value of the assets securing their borrowings to maximise the repayment of their debts. Any decision or action taken by NAMA that reduced the proceeds available to a debtor from the sale of an asset and, as a result, reduced the amount that debtor was able to repay to NAMA, would be a breach of property rights, would deviate from NAMA's mandate and would undoubtedly be subject to legal challenges.
Residential development funded by NAMA is delivered by NAMA's debtors and receivers who are subject to the same planning requirements as all other applicants in the planning process, including Part V. The suggestion that the Part V requirement could be applied at a higher rate for NAMA debtors than for the rest of the market would be commercially discriminatory and simply would not withstand legal challenge. It is important to point out that NAMA had facilitated the delivery of 2,000 units for social housing through the NARPS special purpose vehicle. As I have said before, the Government is trying to right the wrongs of a dysfunctional property sector. The social housing supply problem is a subset of the wider supply problem in the property market.
In addition to important measures being implemented under the social housing strategy with regard to increasing social housing supply, it is by substantially increasing housing supply more generally, particularly in large urban areas, that we can deliver a sustainable solution to the current housing crisis. This we are addressing through such measures as those set out in Construction 2020. Increasing the level of housing output will increase the affordability of housing. I hope everyone understands that. In turn, it will have a positive effect – a knock-on effect – on our ability to provide social housing. A shortage of supply is at the heart of the current challenges in the housing sector, and the Government is addressing this on a number of fronts. A number of important measures have been taken already and they are aimed at improving housing viability and increasing supply.
The Urban Regeneration and Housing Act 2015, which commenced in September 2015, introduced a number of reforms regarding, inter alia, Part V of the Planning and Development Act, the retrospective application of reduced development contributions, and the introduction of a vacant site levy. These measures were introduced to incentivise the development of vacant and underutilised sites for housing and regeneration purposes. Together these legislative provisions are aimed at putting in place structural reforms of planning and land development processes that will support an increase in the output of housing to meet the needs of everyone. Given that these measures will take time to affect supply fully, the Government agreed a comprehensive suite of shorter-term measures to improve the operation of the private rental sector and stimulate increased housing supply, as set out in Stabilising Rents, Boosting Supply.
In December last year, I enacted two major Bills to put the key elements of Stabilising Rents, Boosting Supply on a statutory footing. The first is the Planning and Development (Amendment) Act 2015, which strengthens the status of aspects of planning guidelines issued to local authorities on planning matters to ensure their consistent application, especially relating to apartment standard guidelines. It also streamlines the process for the making of modifications to strategic development zone, SDZ, planning schemes. The second is the Residential Tenancies (Amendment) Act 2015, which provides for an increase in the rent review period from one to two years. The third comprises increased notice periods for rent reviews and greater protections for both tenants and landlords. There are also a suite of other measures. These measures will bring much-needed stability to the rental sector pending the coming on stream of the supply of new housing throughout the country.
Cognisant of the difficulty faced by some households in accessing the housing market, an affordable rental pilot scheme was announced as part of budget 2016, with €10 million being made available to fund a pilot in 2016. This will be an ongoing annual commitment to secure a long-term increase in the supply of affordable properties. The pilot scheme is expected to work on the basis of tenants paying the majority of the rental cost from their own resources, with the State helping to meet the shortfall. It is intended that the scheme would be made available to employed low to moderate income households. Details of the scheme are being finalised in my Department and will be announced very soon.
The supply measures set out in Stabilising Rents, Boosting Supply are designed to kick-start increased provision of housing at affordable prices in key urban areas given the current dearth of supply which is impacting upon rent levels, homelessness and competitiveness. My Department estimates we need approximately 8,000 residential units in Dublin to meet increasing demand. In 2015, only 2,700 were delivered by the private sector.
It is within this context, of all hands on deck to increase the supply of housing, that I welcome that NAMA expects to be in a position to fund the construction of up to 20,000 new residential units on lands securing its loans, predominantly located in Dublin and the surrounding conurbation, thereby taking in the neighbouring counties of Wicklow, Kildare and Meath, over the next five years, with approximately 75% of the units expected to be starter homes. NAMA continues to play an important role in the delivery of social housing, having delivered 2,000 houses and apartments to local authorities and approved housing bodies for social housing use. NAMA will continue to work with my Department, the Housing Agency, local authorities and approved housing bodies to ensure its commitments on social housing are delivered.
The Government has deployed every mechanism available to it to address the dysfunction in the housing development sector, signalling very clearly that, on the one hand, land hoarding will be addressed, while also responding to industry calls to tackle viability in the short term. The construction sector must and will ensure it is acting sensibly and responsibly, especially in regard to matters such as the price being paid for development land. The Central Bank's macro-prudential lending criteria are frequently criticised as one of the key reasons supply is not forthcoming. While I broadly agree with the Central Bank's rules, I have said that I believe they need to be tweaked. There appears to be a sense in the construction sector that it should not budge when it comes to land and construction costs and that it expects alternatively that continuing under-supply will force the Government or, more precisely, the Central Bank to relent on mortgage lending rules. This will not happen. This would bring us back to the past when there was flexibility on lending which led ultimately to a spiral of land and property speculation and our economic collapse. The previous Government knows all about that.
The current Government has listened to the calls on measures to reduce cost, enhance viability and enable supply. Now, in return, there must be realism regarding the operation of the land market and development costs. I very much hope that, as the financial institutions continue with their asset management and disposal functions, they ensure sites move into the control of people seriously interested in development and housing supply rather than value increases based on property speculation. If the development sector fails to act sensibly, the Government will be determined to ensure the vacant site levy will be operated vigorously and comprehensively.
I am glad to have had the opportunity once more to address the House on these very important and sensitive issues, which are paramount to me, every other Member and everybody living in the State. This country is dealing with what was left behind after Fianna Fáil's 14 years in government. Its legacy was a property bubble that contributed to an economic crisis, which in turn led to massively reduced budgets for key social services, such as housing. The country is also dealing with the abandonment of social housing construction by Fianna Fáil, which has thoroughly compounded the problem of finding homes for those most in need. Unsustainable oversupply in the completely wrong locations was replaced with minimal supply and pent-up demand, putting great pressure on the private rental sector.
The Government has set out its plans of action under both Construction 2020 and the social housing strategies.
Housing will take some time to get right. In the meantime, we have to protect the most vulnerable. We are reaping the rewards of our action-driven approach to increasing supply, with the social housing needs of 13,000 households being met in 2015 and an expectation that the needs of a further 17,000 households will be met in 2016.
The Government's comprehensive response, as I outlined, is a cross-government approach. All stakeholders - local authorities, various agencies, approved housing bodies and the National Asset Management Agency, NAMA - have a part to play. Our policy response to the housing challenges deals with all the key segments of the housing system and includes vital immediate, short, and medium to long-term objectives, which must and will be met. This will take time, which is the reason the strategy will be in place until 2020. Those who claim there is a silver bullet are telling a pack of lies.
By their nature, it will take years to deliver the houses we need. However, the Government has put in place the structure needed to deliver these units. In the past year, 13,000 sets of keys have been given to families as a result of the social housing strategy we launched. I am determined that this work will continue and the State will deliver the units that are needed in the years ahead.