Eoin Ó Broin (Dublin Mid West, Sinn Fein) | Oireachtas source

I move:

That Dáil Éireann:

notes that: - after much delay the Minister for Housing, Local Government and Heritage, Darragh O’Brien, has brought forward his affordable housing plan;

- much of that plan, including the Land Development Agency, the Serviced Sites Fund and the Cost Rental Scheme, are continuations of the last Government’s housing policy;

- the only new element that the Minister for Housing, Local Government and Heritage, Darragh O’Brien, has brought to the plan is an Affordable Purchase Shared Equity Scheme for first-time buyers;

- this scheme was not included in Fianna Fáil’s election manifesto or previously stated Fianna Fáil policy;

- the origins of the scheme are two policy papers published by Irish Institutional Property and Property Industry Ireland in March and May 2020;

- these proposals were based on a shared equity loan scheme in operation in England and Wales since 2013;

- in 2015, a report by Shelter concluded that the English scheme ‘increased house prices by 3 per cent’;

- in 2019, a report by the House of Commons National Audit Office (NAO) found that house price inflation for new build homes was 3 per cent higher than for second-hand homes since the shared equity scheme was introduced;

- in 2020, a report published by the Centre for Economic Performance at the London School of Economics (LSE) found that in London the Shared Equity Loan Scheme 'led to a 6 per cent increase in house prices’;

- while the NAO report concluded that the scheme increased the supply of new homes by 14 per cent, it also increased demand by 37 per cent, while the LSE report stated that the scheme ‘stimulated housing construction in the wrong areas’;

- in 2019, a report by the House of Commons Public Accounts Committee concluded that ‘three-fifths of buyers who took part in the scheme did not need its support to buy a property’;

- in September 2020, officials in the Department of Public Expenditure and Reform expressed concern that a shared equity loan scheme ‘will push up prices’;

- in September 2020, the Secretary General of the Department of Public Expenditure and Reform, Robert Watt, said ‘the property industry wants an equity scheme because it will increase prices’;

- in September 2020, at a meeting between the Department of Finance and the Central Bank of Ireland, concerns were raised that the shared equity scheme could ‘impact on prices’;

- on 16th February, 2021, the Economic and Social Research Institute told the Oireachtas Joint Committee on Housing, Local Government and Heritage that the proposed shared equity scheme ‘will very likely lead to higher house prices’; and

- on 22nd February, 2021, nine Fine Gael Councillors on Dublin City Council, including a close political associate of the Minister for Finance, Paschal Donohoe, wrote to the Minister for Housing, Local Government and Heritage, urging him to scrap the Affordable Purchase Shared Equity Scheme as it risked a ‘return to failed housing policies of the Celtic Tiger era’; is of the strong view that: - the Government’s shared equity scheme does not make homes more affordable;

- the scheme risks pushing up house prices and burdening working people with unsustainable debt;

- the scheme will benefit significant numbers of people who already have sufficient funding to purchase a home;

- the scheme will expose the State and taxpayer to significant liabilities in the event of a future property downturn; and

- the scheme will breach the Central Bank of Ireland’s macro-prudential lending rules if the banks are allowed to become participants in the equity loan; and urges the Government to: - remove the Affordable Purchase Shared Equity Scheme from the General Scheme and final version of the Affordable Housing Bill 2020; and

- re-profile the €75 million allocated to the Affordable Purchase Shared Equity Scheme in Budget 2021 to the Serviced Sites Fund, to allow for an increased delivery of local authority and Approved Housing Bodies affordable homes to rent and buy.

Fianna Fáil's developer-led shared equity loan scheme must be scrapped. It will increase house prices, saddle working people with debt and line the pockets of big developers with taxpayers' money. Facing a barrage of criticism from all quarters, this scheme is on its last legs. Before I remind the House of some of that criticism, it is worth remembering where this scheme came from. An entire generation is locked out of home ownership. Three decades of Fianna Fáil and Fine Gael housing policy has led to ever-higher house prices, ever-higher rents and a growing number of young adults stuck at home or stuck in a rent trap.

Need for genuinely affordable homes for working people to rent and buy was a key issue in the general election campaign last year. Interestingly, the shared equity loan scheme the Minister, Deputy Darragh O'Brien, is now trying to introduce did not feature in the general election campaign. It was not part of any election manifesto. Indeed, it had not been part of our housing policy discussions for the previous four years on the Oireachtas housing committee.

The first we heard of this scheme was after the general election when two leading lobby groups for the property and investment industry published proposals for a shared equity scheme and met housing spokespeople, including me, Deputy Darragh O'Brien and others to sell their wares. IBEC's property arm, Property Industry Ireland, published a detailed proposal. Another group, Irish Institutional Property, headed by a former secretary general of Fianna Fáil, published something similar.

Both of these proposals accepted that house prices were too high, but instead of focusing on solving the problem and bringing down house prices, they asked Government and the taxpayer to plug the gap. Sinn Féin told them in no uncertain terms where to go. This was, and continues to be, a reckless proposal. At best, it will lock-in unsustainably high house prices and, at worse, and more likely, it will push those prices up further.

It should come as no surprise that the Minister, Darragh O'Brien, and Fianna Fáil bought into this developer-led scheme because that is what Fianna Fáil did with housing policy when it was last in government. The last shared ownership scheme of the Celtic tiger era was based on similarly flawed policies. The 50:50 shared ownership scheme racked up huge levels of unsustainable debt on first-time buyers. More than 50% of those who entered that last Fianna Fáil developer-led scheme ended up in significant mortgage distress, some losing their homes and others having their properties transferred back into social home ownership. This scheme is even worse. Contrary to what the Minister has been saying in recent days, there are no meaningful checks to protect first-time buyers. This is not a scheme targeted at those in greatest need. The direct involvement of the banks, which the Minister is seeking, with potentially punitive interest charges makes it much worse.

We know this scheme from the property industry lobby and the Minister is based on an English scheme that has been in place since 2013. That, too, was meant to be short term but has been repeatedly extended for almost a decade. The most recent research on that scheme from the London School of Economics, published last year, shows in high demand areas it has pushed up house prices by 6%. It has increased the supply, but in the wrong place where houses are not needed, and it has increased demand three times more than it has increased supply. Worse still, 60% of those who availed of it did not need it; they had sufficient mortgage credit to purchase a home, but those that were not able to buy a home and got it, as well as the taxpayer, are now, according to all of the reports published by government and academic sources, exposed to significant risk into the future. The London School of Economics research I mentioned stated very clearly in its conclusions, "Only developers and landowners, not new buyers, benefited from the policy-induced price increases of the scheme."

The Minister, Deputy Darragh O'Brien, has been saying repeatedly that the criticism of this scheme by the Opposition is predictable. Unfortunately, we are not the only people criticising the scheme. Last year, in email correspondence between the Minister's Department and the Department of Public Expenditure and Reform, released to me under freedom of information, Department of Public Expenditure and Reform officials said, "It will push up house prices." The former Secretary General of the Department of Public Expenditure and Reform, Robert Watt, said, "The property industry wants an equity scheme because it will push up house prices." We know from a variety of media reports that the Central Bank is extremely concerned about the impact of this scheme on house prices, bank lending and consumers, although we will not know the final verdict of that body until later this year. Two weeks ago, the ESRI told the Oireachtas housing committee, "This scheme will very likely lead to house price increases" and the mainstream of the property industry, the Institute of Professional Valuers and Auctioneers, who are the people who buy and sell homes in every county of the State, have said that in their view this will push up house prices and it is simply a way of getting around the Central Bank lending rules. It is not just experts, industry and the Opposition saying this. For example, Fine Gael councillors in Dublin city and Green Party Deputies are saying this is the wrong scheme and it should be scrapped, with the money diverted into genuinely affordable homes.

There is an alternative. We should remove the pro-developer shared equity loan scheme from the legislation and transfer the €75 million into the serviced sites fund, which would deliver 1,500 genuinely affordable homes in the coming years, and then go further and increase that and the cost-rental fund so that we are able to deliver 4,000 to 5,000 genuinely affordable homes at prices working people can afford, by which I mean rents of between €700 and €900 per month and house prices of between €170,000 and €230,000, depending on where one lives. This is what the Minister promised during the general election campaign but seems to have forgotten about thus far.

The Minister, Deputy Darragh O'Brien, and the Government are clearly under pressure.

They are now claiming that their pro-developer shared equity loan scheme is a short-term, small-scale measure. Of course, that is not what the Minister was saying last year. We know from freedom of information requests that he was seeking between €200 million and €300 million for this scheme in the budget negotiations. He was reported in the media last December as saying that, ultimately, 40,000 first-time buyers could benefit from it. He is still in negotiations with the pillar banks to double the fund from €75 million to €150 million. Contrary to the Minister's claim, it will apply to a significant portion of the first-time buyers' market in high-demand areas. We know, because the English experience makes it very clear, that short-term equity loan schemes are like crack cocaine; once one tries them, one is hooked and it is very difficult to withdraw. In England, more than £17 billion has been spent on such schemes in almost ten years.

It is clear that the Government has been stung by widespread criticism and is now scrambling to change its story. Rather than do the right thing, the Minister is pushing ahead regardless. I am not sure whether it is arrogance or incompetence on his part. Whatever it is, he is putting first-time buyers at risk. Buying a home is the single largest purchase of somebody's life. Why any politician from any party would want to go back to the bad old days of developer-led housing is beyond me. We know how that ended the last time. We cannot let Fianna Fáil drag us back to the bad old days of the Celtic tiger. We cannot let Fianna Fáil jeopardise the future of thousands of first-time buyers by heaping unsustainable debt on them in order that they can buy overpriced homes and line the pockets of big developers and institutional investors.

The choice before Deputies in this debate is very simple. Let us scrap the Fianna Fáil developers' scheme. Let us invest the €75 million earmarked for it into genuinely affordable homes. Let us then increase that fund even further to deliver the thousands of affordable homes that working people need and deserve. If Members believe in that, I ask them to support this motion and force the Minister to withdraw this reckless scheme.

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