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

The Bill has been two and a half years in gestation. Considerable work on the legislation and the ideas behind it started a year before the previous Government fell. As I understand it, the working group continued to work on it during the interregnum and modest changes, in my view, have been added by the Government. This means the legislation before us in fact does not represent the profound change in housing policy the Minister claims. It is much more a continuation not only of many of the core principles of Rebuilding Ireland but of Deputy Alan Kelly's Social Housing Strategy 2020, which was launched in 2014.

I will go through each of the four principal areas of the Bill to give the Minister my feedback. As the Minister knows, Sinn Féin supports the Bill. It is a qualified support. There are sections of the Bill the Minister undoubtedly knows we completely oppose. Even on those sections we broadly support, we believe the Minister could do a much better job and we look forward to engaging with them on these crucial matters on Committee and Report Stages.

All of the elements of the Bill, bar the shared equity loan scheme, are measures on which Sinn Féin, other Opposition parties and other Government parties have been campaigning and calling for years. An affordable purchase scheme led by our local authorities is something for which I and the Minister argued throughout the lifetime of the previous Government. We will support any measure that assists and funds local authorities, AHBs and community housing trusts to deliver genuinely affordable homes for people to buy.

The serviced sites fund model is not a bad model. There are better ways of doing it and the permanently affordable leasehold model Sinn Féin has proposed was initially proposed by Ó Cualann. Unfortunately, the banks would not support it. It is one that would guarantee not just affordability for the first purchaser but for all subsequent purchasers, to build up a stock of permanently affordable privately-owned tradeable homes into perpetuity. However, we support the serviced sites fund model at its current level so long as the homes are purchased at prices of €250,000 or less. It is important to be very clear the purchaser of that home still has to repay the shared equity portion at a later stage but for us the purchase point of €250,000 or less is key.

The difficulty is that the serviced sites fund is being used in other ways and we have some concerns about this, which I will make very clear. For example, in O'Devaney Gardens, because of the joint venture nature of the development with a private developer the purchase price of a three-bedroom unit would be €310,000 plus the €50,000 shared equity portion to be repayable to the local authority. This is €360,000. This is not affordable. It is the wrong use of the fund and I urge the Minister to examine it.

Likewise, the Department refused under the previous Minister to fund Dublin City Council to buy the glass bottle site to deliver the 15% affordable housing as part of the Poolbeg strategic development zone, and this land is now being bought above the guide price by the Johnny Ronan real estate group and others. The serviced sites fund, even if it were increased to €100,000, may not and probably will not on its own, deliver genuine affordability. So far, I am not seeing much evidence of the Minister or the Department assisting Dublin City Council with this. It is very disappointing that we do not have the regulations with respect to the scheme, and I ask the Minister in his response to let us know where they are at, when he intends to publish them and whether he will consult the Oireachtas housing committee. Local authorities need this to progress as quickly as possible and we will not stand in the way of it.

With respect to cost rental, it is very disappointing the section is a short number of pages, which means, in fact, the Bill does not deal with the substance of cost rental. This in itself will be dealt with through regulations. I make the same point as to when we will see these regulations and whether the Minister will consult, albeit in a time-limited manner, with the Oireachtas housing committee on these. The key problem, however, with how cost rental has been developed to date is that the entry level rents are too high. The cost of €1,100, €1,200 and €1,300 for one, two and three-bedroom units is not affordable for the key demographic above the threshold for social housing but unable to afford the private rental market. The way in which the financing is being structured does not lend itself to bringing down the rents to the kind of levels we see with new cost rental in Germany or Austria, with rents of €700, €800 or €900 a month depending on where they are. This means the financing model needs to ensure the soft loan component for the State covers at least 30% of the capital costs and the loan, whether from the European Investment Bank, EIB, the Housing Finance Agency, HFA, or elsewhere, is for 30 years or more, after which the soft loan from the State would be repaid.

It is a bizarre idea to separate the primary delivery of cost rental from the primary delivery of social rental. One of the great values of integrating social and affordable rental into the one provider is when the long-term loans on the cost rental are eventually paid down, the housing provider has a revenue stream to recycle into the management and maintenance of their stock as well as developing new stock. This idea that the LDA will be primarily involved in cost rental and local authorities primarily involved in social housing is the most short-sighted and ill-conceived element of the Government's approach to cost rental and I urge the Minister to reconsider. The idea, for example, that St. Teresa's Gardens should be an LDA project rather than a fully funded Dublin City Council project makes no sense. I am happy it will be 100% public housing similar to St. Michael's Estate but it would be much better if it was being developed as St Michael's Estate is, as opposed to what is essentially a split managed scheme with the local authority buying back the 30% social housing and the LDA ultimately profiting from the cost rental.

I am concerned, notwithstanding the Minister's remarks, about the involvement of private developers in the delivery of affordable cost rental. I want to be very clear. If an AHB or local authority or community housing trust wants to access private finance, whether it is equity finance or loan finance, so long as the rates are competitive in comparison with the EIB and the HFA, I have no problem with it. In fact, Clúid Housing recently did a very positive deal with Legal and General to secure the financing of homes but homes it will own at a point in time. If we allow private developers as opposed to private finance to deliver affordable cost rental, we will never get the return when that stock matures, which is one of the hugely important long-term benefits of this type of tenure.

The Minister clearly misunderstands the arguments many of us are making. It is not about the level of profit. Finance always costs something and if the cost of the finance is competitive that is not the problem. It is that at a point in time in the future, when the principal loans mature and the housing provider generates a revenue surplus, it should not go to the private sector. It should be recycled into public housing, whether delivered by local authorities, AHBs or other providers.

On the shared equity loan scheme, the Minister's attempt to disregard very significant concerns from economists, reputable bodies like the ESRI and others is disingenuous. This is a terrible scheme which will inflate house prices. We know that is the case because that it what it does everywhere else. It led to a 6% increase in house prices in London. The Minister continually and knowingly, in my view, misrepresents the UK's National Audit Office report. That report does not look at inflation. Rather, it looks at the house price premium which is a completely different metric. We have said this to the Minister repeatedly and he keeps misrepresenting it because he thinks it will serve his interests.

This is a secondary loan. If it was purely a shared equity stake there would be no interest rate on it. The problem with interest rates is that the Minister is right. They start very low. If somebody is not in a position to start repaying a loan, in particular when he or she gets to year 15 and onwards, the interest rates will become punitive. The reason is that the purpose of the interest rate is to incentivise the buyer to repay at an earlier stage or remortgage at year 15 or 20. Unfortunately, as we learned from the last failed Fianna Fáil shared ownership scheme which had a mortgage interest rate four times higher than mainstream banks after the Celtic tiger collapse in 2008, modest income families at risk of losing income at a future point in time will not be able to refinance and will end up with very heavy housing costs.

I would like the Minister, if he could, to confirm in his remarks if the Central Bank has made a formal decision on the inclusion of the banks as co-partners in the scheme. He seemed to indicate earlier today in another debate that they have. If that is the case, can he tell us the detail of how much is involved and whether staff from the banks will be seconded into the special purpose vehicle to administer the loans? That also carries certain risks. Just as help to buy clearly led to an increase in house prices, and 60% of those availing of it did not need it because they had sufficient mortgage finance and deposit finance to buy a home, this will be the same. I suspect it will grow and last much longer than the Minister is claiming.

I fully welcome the provisions regarding Part V. The Minister knows he supported a Sinn Féin Bill to a similar effect during the last Government. It should never have been reduced to 10%. It is something Fianna Fáil and Sinn Féin firmly agree on and the sooner that is introduced the better.

On the owner occupiers guarantee, the Minister needs to reconsider having some level of application of the guarantee to apartments. If we want to have vibrant and sustainable cities and if those cities are, in the main, going to be made up of new apartment developments, we need to give people the option to own those apartments. Otherwise, what we are saying is that homeownership is something for the suburbs and regions, but not for inner city centres. That is completely contrary to the national planning framework and good sustainable planning. I urge the Minister to reconsider that and allow people to own and live in our city centres.

Likewise, it should be a provision in the owner occupier guarantee that the figure could be up to 100%. Planning authorities are best placed to decide the percentage tenure mix of rent or owner occupation in a given location. I would like to see that addressed.

In the few minutes I have before I conclude, I would like to say that legislation does not build houses. Investment does. While the Bill provides an important framework for that investment, if it is not followed up by a level of direct capital investment by the State in the delivery of genuinely affordable homes for working people to rent or buy, then all of this will come to very little. Our problem at the moment is that we know from figures given to the Joint Committee on Housing, Local Government and Heritage by the LDA and the Department of Housing, Local Government and Heritage, which are based on the current levels of investment in our local authorities, AHBs and the LDA, that delivery of affordable homes between now and 2025 will be exceptionally modest.

The Department has told us that this year 530 units could be delivered, between rental and purchase. Next year the figure could reach 700. By 2023 it may get to 1,000, but they are pre-Covid figures. The LDA will not have delivered a single home until five years after it has been established, in 2023, and even then it will only be a few hundred. It will be 2025 before it breaches 1,000. That tells me that unless something changes in budget 2022, the Government will not reach the target of 4,000 affordable homes by 2025. Obviously, that is the average over a ten-year plan, and I appreciate that, but the Minister can hear the point I am making.

My view is very clear. We need, at a minimum, an annual average target of 8,000 genuinely affordable homes every single year for the next decade. Half of those should be affordable rental and half should be affordable purchase. The reason I say that is that is what the National Economic and Social Council, NESC, housing agencies, the ESRI and, more recently, the NTMA, have called on the Government to do. We need a doubling of direct capital investment in local authorities, AHBs, community housing trusts or whatever other not for profit providers exist to deliver those home.

The problem is that Fine Gael does not want to spend that money. That is why we are having such uncertainty around the future funding of the LDA and the cost rental equity loan was a measly €35 million this year, despite the fact that the Minister's budget ask from his Fine Gael colleagues in the Department of Finance was actually much more significant than that. That is why we have a cost-rental equity loan, CREL, scheme in the first place rather than an expanded capital advance loan facility. We need 20,000 public homes, comprising 12,000 social and 8,000 affordable, annually if we are going to make a dent in this crisis.

The last points I want to make are about home ownership. The Minister, as he liked to do in opposition, now says as Minister that he believes in home ownership. Home ownership started to decline, and declined most rapidly, when the Minister's party was last in government because of the private sector-led policy his party pursued which pushed up house prices and rents and made home ownership difficult for so many.

If the Minister is serious and genuinely wants to deliver homes at prices that people can afford, then he needs to radically shift policy. I have yet to see any evidence of that. Ultimately, however, the locked out generation, the housing needs of which the Minister and I want to see met, will judge by action and not fine words on the floor of the Dáil or ink on the page of a piece of legislation. They will judge on how many homes are built and at what price they are delivered year after year.

Until we see the level of public investment that everybody, bar the Government, seems to think is needed in the direct delivery of affordable homes to rent or buy, this problem will not be solved. If the Minister comes out with a great plan in the summer, and takes the advice of Sinn Féin, NESC and NTA and doubles capital investment in the delivery of public housing in budget 2022, he will have our support. If not, we will keep coming back and saying that until there is real change, the crisis will get worse and we will continue to advocate what we believe are the necessary solutions to give people the affordable homes that they not only need to but rightly deserve.

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