Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

I thank my colleague, Deputy Cian O'Callaghan, and his team for drafting this legislation. The Minister of State indicated the Government is not opposing the Bill at this time.

That is disingenuous if it is intended not to assist with passing this legislation.

The Minister of State spoke about inaccuracies. I wonder who wrote his speech with regard to the 16 social housing leases last year. Even the reply to a parliamentary question I received last night said it was 1,440. I believe that is very much understating it.

Let us talk about what is really happening. We are at a pivotal stage in terms of a point of no return when it comes to leases. This includes a shift in policy from the State acquiring homes under Part V by way of lease as opposed to purchase at cost price. It is not happening by accident. It has all the hallmarks of a favoured policy that is being pushed by the Minister of State and the Custom House. It is hard to imagine a more expensive way of providing social housing. It will absorb huge amounts of the housing budget with little left for the more cost-efficient direct builds.

It was the same with the housing assistance payment, HAP, which was introduced in 2014. In common with others, I predicted that unless it was accompanied by a significant social housing build, it would absorb a huge amount of the social housing budget. That prediction has proved to be absolutely right. What was supposed to be a short-term policy has become a dominant housing support. At the time, it was all about pretending that the housing list was being addressed.

We are at another crossroads. Long-term leasing, usually for 25 years, is now becoming a more typical, if not dominant, means of the provision of social housing. It is a golden ticket; it is the winning lottery number and it is Government policy. We are told that it is part of the social housing mix. I believe the number of housing units being acquired in this way is seriously understated, however.

In my constituency, several housing estates, which were under construction by private developers, were snapped up by the council or an approved housing body, AHB, under long-term leasing. I will refer to three of them by way of example. In Johnstown in Naas last year, 49 houses were snapped up by the council. There was a good deal of local interest to purchase them and the expectation was that it would be possible, once that estate was complete and offered for sale. The expectation was that 10% of this estate would be acquired for social housing.

Exactly the same thing happened in Naas with the development of 125 houses. This was also long-leased. A large housing development was built in Leixlip, where 10% was to be acquired for social housing under the terms of Part V of the Planning and Development Act 2000. Sixty-one houses will not now be purchased. Instead, they will be long-leased for 25 years. Typically, the houses are leased for just below market rents with a four-year rental review. After 25 years, they are refurbished before being handed back. Despite the outlay, there is no asset at the end. It is effectively the same as paying the mortgage of the developer or the lessee for 25 years and then handing the property back in pristine condition. It begs the question of what happens to the tenant at the end.

There has been a promise of direct builds by local authorities and AHBs. The perception is that these are separate to the housing output by the private sector. I can see very few direct builds happening in my constituency. Essentially, I am seeing turnkey housing and long leases. There is also a complete lack of transparency on what is occurring. One file I checked last week had a blank Part V form. We have no idea, therefore, how the 10% social housing obligation is to be satisfied on that development. Replies to parliamentary questions on the numbers of long leases completely understate what I can see is occurring but we only will know when the transaction is complete.

I refer to an excellent article in The Currencyon 27 April, which details three different types of institutional investor. It is well worth a read. I want to quote from part of this article:

Right now, the leasing of social housing is still a relatively small part of the overall residential property market. But it's growing quickly. And industry players agree, a wave of money is on the way. ... One senior lawyer is expecting “an explosion of deals later this year". [A property lender stated] “We get probably 20 social housing projects in a week, and we probably get one private housing development in a week”. ... “Things have changed” said Dublin City Council's deputy chief executive Brendan Kenny. ... [He] has seen the long-term leasing market change and grow in recent years. Where before it was smaller players coming to them with portfolios of older homes, now it's institutional money buying newly-built stuff. “We prefer dealing with the big funds, even though they might be greedier and more expensive. They just want to collect the money.” ... [He went on to say] “Since Covid we have 800 units at various negotiation phases with developers.”

The international funds are, therefore, offering already-built housing units to Dublin City Council under the nose of the Minister of Finance in his own constituency. He seems to think that their only involvement is building them. The headline of The Irish Timesarticle of 28 April mentioned by Deputy Cian O'Callaghan reads, "Dublin social housing portfolio guiding at €21m". The piece goes on to state:

the vendors have not provided a precise breakdown of the portfolio’s composition, it is understood the properties comprise an equal mix of houses and apartments distributed across residential schemes located in the main in Finglas, Tallaght and Blanchardstown.

It further states, "The vendors, Allied Irish Property, specialise in investment in the residential sector throughout Ireland and in the provision of social housing to local authorities." The article shows very clearly that social housing has now become a tradeable financial product.

I raised this issue with the Taoiseach several weeks ago and quoted an article from the website of Hobbs Financial Practice, which I will quote again. The article, with the headline, "The new property market", states:

There is no requirement to deal with tenants, as local councils (or housing agencies) are your lessees. This is a hands-off situation with no risk of vacancies or the usual tasks associated with managing property lets. The cash comes directly from local government into your bank account, there is no intermediary.

Build a portfolio of approved social housing units, houses, and apartments that will be rubber stamped by local councils and housing agencies for long-term leases. Sleep peacefully without worrying about stock markets! Your obligations stop at buildings insurance [and] ... property tax.

It goes on to outline the key benefits, such as the average yield of 5% per annum,which is significantly above the Government bond, no vacancy risk, no advertising, no calls from tenants and that monthly rent payments will arrive into one's bank account like clockwork. That is the reality and the Minister of State need to brush up on it.

I believe the remit of the Land Development Agency, LDA, urgently needs to change. Currently, the remit includes using public land for private development, which unless stopped could produce more long leasing. Incredibly, it is using State assets at a time when all the evidence is that direct building is much more cost effective. The LDA needs to be changed to a project management remit where the land is used to build mixed communities with mixed tenure types including for sale, cost rental and social housing. We set that out in a policy position in 2016 and brought it to the attention of the then Minister with responsibility for housing, the Minister for Foreign Affairs, Deputy Coveney.

Affordable housing to buy or rent is key to people's affordable lives. We need to look at the available State resources that are going to be deployed on these long leases. We need to ask the question of whether we are using up all our ability to build houses with the HAP and now long leases.That is a really bad return. The Minister of State really has to look at this speech he gave and ask the person who wrote it where he or she got that information. It is so wide of the mark that the Minister of State is making a fool of himself by repeating it.

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