Damien English (Meath West, Fine Gael) | Oireachtas source

I did not get a chance to listen to all of the speeches but I will go back over them. Some of the speeches are linked to housing as well as finance. We have to recognise that the Bill is a combination of measures to address housing difficulty and to help those involved in construction, especially small-scale builders who are getting back into business and having difficulty accessing finance.

The Minister of State, Deputy Michael D'Arcy, introduced the Bill on Second Stage. I will address some of the issues raised about housing but before I do, I will address the confusion surrounding the figure of €750 million equating to 6,000 houses. It is not intended that Home Building Finance Ireland will fully fund a house. It will contribute towards the cost of building a house because most builders will use some equity and will not rely entirely on borrowings. It will also allow for a combination of borrowings, not just borrowings from the fund. I hope that clarifies the matter because some Deputies may be slightly confused in that regard. HBFI is designed to fund different types, scales and prices of houses. It is an activation measure.

HBFI is one measure of many. In all of the debates on housing, most Deputies have understood that the problem will not be solved by one action. We all know there is no silver bullet. Every intervention we can make has an impact and that is what we are trying to do. Certain builders in certain sectors cannot get access to money at the right price. This means it is not viable for them to build as building a house would be too costly. We are trying to address that through this activation measure. It will not create costs for taxpayers because the money will be recouped at a market rate. It is a worthwhile exercise.

Naturally, we would have liked to implement the measure one week after it was announced in last year's budget. However, it was flagged at the time of the budget that it could be May of 2018 before it was implemented. I am conscious it is now July. It took longer than any of us had hoped but the measure is coming through the Houses and I hope it will up and running in the months ahead. This fund will be another tool in the box to help people who want to build houses in all parts of the country.

As I stated, I did not hear all of the contributions but I will respond to some of those made while I was here. Deputy Fitzmaurice raised a couple of issues that are worth considering. As always, they were common-sense issues. Over the past two years, we have been trying to change processes, remove red tape, make it easier to build houses and change the system of delivering houses. The Rebuilding Ireland action plan is not only about building enough housing and homes. It is about re-establishing a sustainable housing and construction sector and setting out our plans for how much public, private and affordable housing we want to be built every year. We want to encourage people to invest in this area for the years ahead, to make it worthwhile for people to reassemble their construction teams and businesses and to encourage grandparents, parents and their children to acquire skills at all levels of education to enable them to work in construction. I mean all levels of education because in this country we often turn our backs on further education and training. Construction has much to offer, yet it is not often encouraged by grandparents and parents. Having sustainable construction rather than construction that gets out of hand encourages the belief that it is a safe sector to return to and in which to develop their skills, companies or business. Governments will come and go, but we are trying to plan for building a certain amount of housing every year for the next ten, 15 and 20 years and to keep output at a certain level.

While we are doing that, we should add a significant amount of social housing to our stock every year. The volume of social housing is low in this country compared with the rest of Europe. I will not go into the history of the issue but it is a fact. The commitment has been made and every party in this House agrees that, at a minimum, we need 10,000 new social houses per annum. That is the target we are trying to reach. In Rebuilding Ireland, we are committed to building 12,000 houses a year from 2021 onwards. When I speak on this issue, I emphasise that most Deputies of all parties support building at least 10,000 social housing units per annum. Even if Governments change, people now get that we are committed as a country to replenishing our social housing stock and keeping it at a certain level. At the same time, housing construction should reach between 28,000 and 30,000 houses per annum for the next 15 or 20 years because that is where we need to be to accommodate an increase of 600,000 in the population over the next 20 years. This also gives people confidence that it is safe to go into the construction sector.

There is still considerable capacity in the construction sector, which accounts for only 9% of gross domestic product, GDP. We would like that figure to increase to 13% or 14% but we do not want to return to a figure of 25% or more. That was not sustainable and we all knew it.

Deputy O'Keeffe made a point about the banks and he blamed Anglo Irish Bank. I will be honest in saying I believe the banks were not discouraged from engaging in certain lending practices and that was part of the problem They were allowed to lend money recklessly to developers and people who wanted to buy a home. People were allowed to borrow four or five times their income, which did not help them. I know that Ministers were warned this practice would cause a problem but the deaf ear was turned and it was allowed to continue.

While we have difficulties with housing and people accessing the finance they need to buy their dream home, there is some control on the amounts people can borrow. That will help people in the future. They might not like it today but they will thank us in the future for not leaving them exposed because they were able to borrow to buy a house at too high a price. While these measures were introduced by the Central Bank, which is independent of Government, policies are set by this House and we all buy into the approach taken on this issue. That was not the case in the past when banks were allowed to go wild. I do not only blame the banks because they were allowed to act as they did by the system, despite warnings. That left us in a position we do not want to be in again.

Deputy Fitzmaurice referred to different forms of housing. We want to fund different types of housing and construction, be it off-site in factories, modular homes or on-site with traditional build or the insulated concrete form, ICF, which was a project to which Deputy Fitzmaurice referred. It is a Lego-type house that is built with insulation and filled up with concrete. I built my house that way and it is quite common in Ireland. It is not just an American dream and can be done here quickly. What we are trying to do is give people access to money to fund different types and methods of construction, some of which are rapid and some of which are not.

Most of the delays, however, are not in the construction end. They are in getting onto the site, having the land or field developed, putting in infrastructure and getting through the planning process. I am often told that back in the 1930s and 1950s we built thousands of houses. While that is correct, there was no planning and procurement and very little effort to gain community involvement or acceptance. I am not even sure if Part 8 developments were allowed so it was much easier to build then. I am not saying it was right or wrong but the system gives everyone a say, which means it can be slow to navigate. We are trying to find quicker ways to navigate it to be able to produce houses.

This requires bringing people along on the journey and gaining acceptance of social housing, Traveller-specific housing, affordable housing and the need for integration. Not everyone wants that but it is the right thing to do and that is a journey we must travel. We are slow to do this in some cases. Some councils are slow to adapt to this need while others are quicker and are leading the way. From my point of view, the system has changed enough to show that there should be no more excuses. The money, the land and all the different tools are available to develop sites quickly. Local authorities have set their targets and plans and have been given funding. Confidence and people are back in the system and there is no reason we cannot now deliver the houses we need apace.

Housing is beginning to be built. I wish I could click my fingers and houses would be ready today but I cannot do that. The Central Statistics Office, CSO, which is independent of Government, confirms that we are beginning to make progress. Up to 20,000 houses are in development. We know from the commencement notices in the past 12 months alone that more than 18,500 units have started. We know, independent of Government, from the CSO figures, that an additional 15,000 new houses were built last year. In addition, more than 1,000 houses were finished in ghost estates that commenced years ago. They are also new houses. While they were not fully new starts, they are new houses in the system. There were also 2,600 more houses which were houses that were not in use for the past couple of years, they did not have an ESB connection and they are now back in the system. Some 18,000 houses are in play today this year that were not there last year. That is progress. I wish it was a lot more but we are moving in the right direction. This year, we should see move than 20,000 houses added into the system and next year I expect that we will be back at 24,000 or 25,000 houses.

We want to go beyond that again but we are making steady progress and by addressing housing supply and bringing houses into the system, we are helping to solve the housing shortage that affects people at different levels. It affects those who are renting and paying high rents, those who are waiting for social housing and in a crowded house at home and those in emergency accommodation, whether a hotel, bed and breakfast accommodation or a family hub where they do not want to be and most want to leave as quickly as they can. The supply of housing will help us to deal with all of that but in the meantime, while we are catching up with supply and intervening in many different areas through planning changes, financial changes and funding infrastructure, we have to provide better services for those who are homeless. That is what we are trying to do by spending taxpayers' money of nearly €120 million this year to provide these services and give homeless people access to some form of accommodation. It is not perfect and it is not the ideal place to be. It should only be temporary but we should make that journey a little bit easier than what it would have been a couple of years ago. That is where we are trying to focus funding. This money is part of the supply end. It is an activation measure, which will not fix the issue of housing for everybody. It is another tool in the box and if we keep implementing these measures and delivering more changes, it will help.

I thank all of the Deputies for their contributions and the support that has been offered to this important Bill. It is clear that we all share the important aim of increasing the supply of housing in the State. The availability of appropriate development finance for commercially viable residential purposes has been regularly identified as a key contributing factor for the ongoing shortfall in residential supply. It is not the only factor but it is an issue that is causing difficulty for many and we have to try to address it.

The establishment of HBFI will help remedy the shortfall by providing a much needed boost to the supply of funding for residential development around Ireland for those who need it and cannot get it and for those who make a good business case that they can manage and use it and get good value. HBFI's allocation of €750 million in funding will have the capacity to fund more than 6,000 homes in the coming years. It is not to fully fund those homes but to be part of their funding and to make them happen. It is estimated that this delivery could reduce the annual shortfall by about 10% over a three-year period. This would be a significant contribution but it would not make the HBFI a dominant player in the funding for residential development market as it would leave room for banks and other finance providers to increase their contribution to funding much needed residential development in the coming years.

A question was raised about credit unions making their money available. They do not have €9 billion available for housing. They have €9 billion in savings that they want to invest in different areas but not all in housing. They would like to invest €1 billion, maybe more, in housing. Like everybody else they will not put all their eggs in one basket. We should not keep on saying €9 billion. They have access to a lot of money. I have engaged with them. The system was changed to allow for that investment. We are trying to partner them up with approved housing bodies and others to make it happen and to get the interest they need on that money to make it worth their while and get it into housing. We do want their money. It is taking longer than I thought it would to get them onto that pitch but we have made a little progress since February and March. I hope we will see more projects that the credit unions are involved in. That will bring more competition and put more pressure on the banks and everybody else to play their part.

HBFI represents a unique opportunity for the State to leverage its existing resources to address one of the country's most pressing issues. Through NAMA the State has amassed considerable expertise in financing residential developments that have already delivered more than 7,200 new residential units. It is incumbent on the Government to make the best use of this available expertise in order to make a welcome and valuable intervention in the residential housing market. This is especially pertinent as NAMA approaches its planned dissolution in 2020 and the State is at risk of losing the valuable expertise it now possesses in this area. HBFI will be established as an independent company pursuant to the Companies Act with the Minister for Finance as the sole shareholder. This model has been successfully used by the Government in the past in establishing the Strategic Banking Corporation of Ireland, SBCI. As such HBFI will operate as an ordinary market operator and seek a commercial market equivalent return on its lending. This approach will not only protect taxpayers by ensuring that it is reimbursed for the risk it takes in funding development projects but it is also necessary in order to ensure that HBFI complies with EU state rules. I have heard some people say it is a bad use of taxpayers' money, that it will cost us money that we could spend elsewhere. It will not cost us money because it is cost neutral. We get a return on our money and it will cover its costs as well. It is to give access to money to people who cannot get it through the normal channels that would have been available in the past.

While some Deputies might call on this new agency to provide cheap or subsidised financing for developers, engaging in such discount lending would seriously jeopardise the effectiveness of HBFI's intervention in the market and would give rise to State aid issues. That would not be the best use of taxpayers' money. Our job is to activate and to help but taxpayers' money can be spent elsewhere. This is to cover its costs, to help but not to utilise taxpayers' money. We are trying to make it happen as best we can. Acting as a market operator will allow the HBFI to comply with these rules and focus its efforts on areas of the market that are not currently well serviced.

It is expected that this strategy will result in HBFI providing much needed funding to enable viable residential projects to get up and running in the areas that are not targeted by the main banks or alternative lenders in the market. While HBFI will be open to all applicants who meet its lending criteria it is envisaged that they will be small and medium sized developers outside the major urban areas who will be the primary beneficiaries of this initiative. It is open to them all but the ones who have access to finance already will continue through their usual channels and those who see this as their best option will come forward and draw down the money.

The envisaged 20% equity requirement for access to HBFI lending is a significantly more manageable threshold for social developers to reach than the much higher equity requirements currently sought by the mainstream banks. A further unique feature of HBFI will be that it will provide funding to relatively small projects of ten units or more. HBFI will also seek to provide a transparent and standardised product which will allow these developers to engage easily with the agency and outreach programmes that are planned for later in the year to assist the application process. These features will enable the financing of some smaller developers which are struggling to access funding in the market, thereby supporting small business and facilitating the return to the market of some operators who have not had the opportunity to take advantage of the improving economic landscape in Ireland.

If we are to increase the scale of housing in all counties, in areas where it is needed, we will have to attract those operators back in, those who have the skills, who might be reluctant to step back into a market that burned them before. If we work carefully with them using proper business plans and building plans they can successfully come back into business here, make a decent return on their money and their time. It is not a question of creaming the profits. It is to deliver quality product.

Reference was made to the different types and quality of houses we build nowadays. A house built under today's regulations and with the certification process that is in place should not and would not compare to a house we built ten, 15 or 20 years ago. It is probably worth the extra cost because it is a totally different product, much cheaper to run, more efficient and environmentally friendly. Deputy O'Keeffe must recognise that too. That does involve additional cost at the start but there is a good reason for that. I have also heard people quoting figures for certification and the regulation amassing unnecessary red tape and costs. That is not the case. It is not necessary to spend between €20,000 and €30,000 just for the certification process. It is the extra work on the quality of the house that is costing the money not the necessary paper for the certification. People should analyse that if they have any doubts about it. I have met the companies in that business and it can be done quite affordably. I would disagree with anybody who thinks they are better off not having a certified house. It is worth the money to make sure a house is built properly and to a high standard. I have seen too many houses, and we have had debates about houses, of poor quality. The Oireachtas Joint Committee on Housing, Planning and Local Government did some good work on that too. It is important that we get quality houses, as affordable as we can make them but we do need quality.

A suggestion was made about having one design for social housing to be rolled out around the country. I can recognise the benefits of that from the points of view of cost and efficiency but it would not be right to have the one design or shape because we might want something different in Louth, Wicklow or Meath. We might argue over certain things but I think we all agree we might want different types of houses in different parts of the country. There is no reason, however, that we cannot have a similar type of specification for certain types of house and make it a bit easier to get a price and value. We are trying to do that and to standardise the process in the system. We are focussing now on how to move the house more quickly through all the processes in our Department and the local authorities.

Some Deputies raised the issue of affordability and there have been suggestions that the HBFI's intervention should be limited to schemes that produce low cost housing only. Compliance with state aid rules requires that the HBFI fund projects as any other market operator would. While the agency will fund projects that deliver affordable or low cost housing it cannot be selective about how it might achieve that. The banks, however, are controlling the amount they lend. People are restricted. They cannot go mad. They can generally only afford a house of a certain price. The builders we want to fund through this scheme will be delivering prices that the market can afford. They have to prove their business case, that they can sell the house. If houses are too costly they will not sell because there is a limit to what people can borrow based on what they earn. We are trying to develop products that will suit that market too.

In order to ensure state aid compliance HBFI will not be directly involved in development. Its role will be solely as a commercial lender and therefore it will not have any role in designing the housing mix contained in the schemes it funds. It will judge their viability but it will not design them. HBFI will provide lending on commercial market equivalent terms and conditions and its approach will be akin to that of any bank or private investor providing this form of funding. As a result HBFI will not have targets for social or affordable housing but will make a significant contribution to supporting the delivery of additional supply of all types of residential housing in the coming years. Its focus will be on supply. Our job is to dictate on affordable levels, social housing and the mix. We are trying to convince all involved in housing, certainly from the local authority point of view, to focus on getting a supply of housing, then we can measure the number that should be affordable, social and private. We have to get the houses up and running.

9 o’clock

When we have a conversation around our State land bank, we should think about the supply of houses and work out site by site what is needed when it comes to the mix of social versus affordable versus private housing.

It is also worth highlighting that any residential development that the HBFI will finance will be subject to Part V of the Planning and Development Act 2000. As such, it is expected that a minimum of 10% of anticipated output of this investment by the HBFI will become available for social housing through the statutory mechanism. That 10% is a minimum. We see many sites coming through now which are going above that. The owners of these sites and the people who want to build on them are looking for them to be de-risked and are happy to have the State take more than the 10% minimum, and we are happy to engage in that. We have asked the local authorities to engage on those sites also. Apart from using our own private landbank, we will engage with people who genuinely want to contribute housing to our system at good value and a good price. There will be engagement regarding the percentage, it is not set in stone but is a minimum of 10%. We will encourage many of those sites to deliver much more than that.

It is important also to remember that the Government's primary response to current issues in the housing market is contained in Rebuilding Ireland. It is our five-year action plan for housing. We are in year two of it. It has make many important interventions. It has changed the system when it comes to delivery. Many more houses are coming on stream, although not as much as I or any of us would like to enable us to address the emergency nature of the housing issue. Last year, an additional 7,000 social houses came into the system. They were not all brand new or directly built by the local authorities but they are available to house families and were not in the system a year ago. This year we will see close to 8,000 new additional social houses coming into the system. They were not in the system last year and are now available to provide homes for people who badly need them. On top of that, we have another 17,000 or 18,000 solutions through current housing measures such as the housing assistance payment scheme and rent assistance. They are important interventions also but I recognise they are not permanent social housing stock. We are getting to the stage where we will be delivering 10,000 social houses every year before we come to the end of period covered by Rebuilding Ireland and we will be delivering 12,000 social housing a year after that period.

Home Building Finance Ireland is only one part of the Action Plan for Housing and Homelessness. Through that action plan, a suite of measures has been implemented to facilitate increased residential construction activity and to ensure the sector's capacity to produce more affordable homes. These measures include the introduction of fast-track planning reforms and more flexible planning guidelines, a €200 million capital investment and enabling infrastructure to open up housing lands, as well as the progression of large-scale mixed tenure housing projects for social, affordable, private housing and publicly owned lands. I would like to see progress on those sites move even quicker. We saw some progress yesterday in O'Devaney Gardens where the Minister turned the sod to start that project. We need those sites to deliver houses even quicker. Part of my job with the housing delivery unit in our Department, on behalf of the Minister, Deputy Eoghan Murphy, is to drive that activity and instill some pace and urgency in it. I recognise the support we have received from many of the political parties in this House and at council level in that drive.

It has taken us two years to get to this stage and we now need to crack on and build on what we have done during the past two years. People often say the Action Plan for Housing and Homelessness is not delivering and ask where is the proof of its delivery. We are in year two of that action plan. I remember the same question was asked in year two of the Action Plan for Jobs. People told me it was not delivering and asked where were the jobs. That question was not being asked in years three, four and five of that action plan because people could see that jobs had been delivered. Sometimes it takes a few years to change the system, to put in the foundations and build the houses. We cannot click our fingers and suddenly a house will appear. The site must be serviced, the infrastructure must be delivered and the house must be built. That is now happening. People can see that 20,000 houses are being built around the country. People will be living in them at the end of this year and into next year. Those houses were not in the system last year.

Deputy O'Dowd was right in saying it is not true to say that nothing is happening and no houses are being built. They are being built and people can see them. The Central Statistics Office, CSO, which we all trust and refer to every day of the week, is confirming they are being built. I hope people will move on from that argument. We can argue that there is not enough of them but that is a different story.

We are not saying there are not thousands of people living in emergency accommodation who should not be there. It is not a proper place to be living. There are nearly 4,000 children living in emergency accommodation. Nobody wants that or will be satisfied until that is brought to an end and we ensure all those people are accommodated in homes. We will continue to deal with that. We will work through the system using a combination of new social houses and rented houses. We have to rely on the private sector for a period until we build up our own supply and with all our efforts we will be able to do with that also. That involves changing and reviewing certain practices. There is something wrong if we have people living in emergency accommodation who refuse housing assistance payment housing and who would rather live in a hotel than in a house. That might mean that we need to reconsider that policy but it does not mean that the housing assistance payment scheme is wrong because 37,000 people are living HAP tenancies and the majority of them are quite happy. Some have had a bad experience but a perception has developed about HAP housing, which is causing probably hundreds of families to refuse a HAP house. We need to work on that policy intervention and build trust in the scheme. There is no place better than a house for a family to be living. If it is one's permanent home that is great, but if it cannot be one's permanent home, a rented house in the short term is much better than living in emergency accommodation. That is not a appropriate place in which to be living with a family. We are working with that system. As I said initially, while we are waiting to get somebody a permanent house, we will try to make their journey a little bit better in the meantime, be they be in temporary accommodation or emergency accommodation.

The HBFI is another tool in the box and will help to deliver houses. It is not a magic wand or a silver bullet. There are many silver bullets and we need them all. Thankfully, supply and the trends are beginning to go in the right direction. We need to build on that and, hopefully, we will not have the housing crisis the housing authorities have to deal with today in the years ahead. We do not want people to be paying too much for a house or for rent or living in emergency accommodation. Nobody wants that.

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