Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

The Government welcomes the opportunity to highlight the recent amendments to Part V it has brought forward, which are a very important part of accelerating the supply of affordable and cost-rental homes. It also welcomes the opportunity the Bill presents to continue working on ensuring that our Part V provisions are appropriately calibrated and the Government will not be opposing it. We welcomed the support of Sinn Féin and other parties for the Affordable Housing Act 2021, which originally brought in these changes. It is important that they are kept under review and deliver homes. Any further analysis of this is welcome and future changes must be considered in this light.

The programme for Government includes a commitment to review the provisions of Part V of the Planning and Development Act 2000, to introduce requirements for affordable homes and to explore expanding it to encompass social, affordable and cost-rental housing. The Minister for Housing, Local Government and Heritage requested the Housing Agency to review Part V in light of the programme for Government commitments and, following receipt of that review at the end of December 2020, he acted on the advice of the agency and of the Department to bring forward very significant changes to Part V. These changes were made through the Affordable Housing Act 2021, which was passed by the Dáil in July with cross-party support. We are happy to share the review report to help inform the pre-legislative debate on this Bill.

The Government has reversed the reduction introduced by the then Minister, Deputy Kelly, in 2015 and has strengthened Part V, moving it to a flat 20% nationwide rather than just "up to 20%". At the same time, we reduced the exempted development size back to less than five units, from the previous nine, and we made provision for cost rental as well as affordable housing. The provision is stronger now than it has ever been. We made the change immediate for land bought before September 2015, when the percentage had previously been at 20%. We also made the change immediate for land purchased after the Bill was enacted in July, as developers clearly knew that the requirement would be at 20%. However, the question of how to deal with land bought while the obligation was at 10% was a more difficult prospect and the Housing Agency and the Department strongly advised the Minister that there was a need to have transition provisions for those lands. This issue can be considered further during pre-legislative scrutiny, as it is challenging. Let us look at the concerns. As part of its review, the Housing Agency examined the implications, including implications for overall housing supply, of increasing the current 10% social housing requirement related to all new housing developments to 20%, or above, and made recommendations on the use of the Part V requirement to generate a supply of affordable housing. The agency's review of Part V put forward options for consideration, including that the Part V requirement be amended to a mandatory 20% for social and affordable housing.

One aspect of the advice of the Housing Agency was that if an increased Part V requirement was to be introduced, provisions should be made for landowners who purchased land before the increase was announced, in line with the approach previously taken when the Part V requirement was originally introduced in 1999, and the agency advised as to potential transitional arrangements that might be considered. It recommended that an increase in the percentage contribution should include a provision to cater for land that was purchased when the expectation was of a 10% Part V contribution, and suggested various options for a transitional provision, including a sunset clause, which could apply to such transitional provisions in order to encourage developers to commence construction on existing sites.

The Department agreed with the advice of the agency. In recommending a transition provision with a sunset clause, the intention was to accelerate developments from those lands at a time when supply of homes is urgently needed. Having considered the advice, apart altogether from the need to be fair and proportionate to those who bought land when the provisions were at 10%, we did not want to enact a measure that could potentially result in planned developments being stalled because they were at the margins of viability and the policy change would make them unfeasible. We know that rising costs in the sector are causing serious problems and the effects of both Brexit and Covid have been keenly felt. Neither did we want to risk those developers moving to up their prices to recoup their losses from house buyers. The rising inflation in house prices is of serious concern to all and we wanted to mitigate any potential that the new Part V measures might contribute to that.

What we did want was for developers to stop sitting on lands and to encourage them to move faster. As clearly set out in Housing for All, the Government is acting now to reach an average of 33,000 new homes per year. To manage the risks to supply and to achieve our aims, we provided that lands bought when the provisions were at 10% would continue to be at 10% for a period of five years, after which the 20% would apply.

The transition provisions that were included provide that lands transacted between those two dates will have a period of time to develop at the 10% obligation, but where planning permission is granted after 31 July 2026 the obligation will be 20% in those cases also. This allows time for these developments to come forward, based on the existing financial appraisal that applied at the time of purchase of the land. It also allows time for the viability of developments to improve through the measures being taken in Housing for All, which is designed to move us to a sustainable housing market. The transition measures were an effort to strike a proportionate approach, ensuring that near-term supply would be unaffected by any knock-on effect of policy changes that could potentially affect the viability of developments that were based on financial appraisals at the 10% obligation.

It is important to note that instead of, as has been claimed, exempting land purchased when the percentage contribution was 10%, we have used the sunset clause to encourage development which provides for the application of the 20% requirement to such lands where the planning permission is being granted after 31 July 2026. This will encourage developers who purchased land in the September 2015 to July 2021 period to proceed with their developments within the next few years or else face a reduced planning gain. As a result, we hope to see an increase in the level of applications for planning permission to build residential developments on land purchased in the past six years.

It is also important to note that existing planning permissions for more than 70,000 units are not impacted by this Bill. The legislation as passed is what the Government believes to be the best balance of increasing the contribution that Part V can make to meeting the need for affordable and cost-rental housing, while maintaining its contribution to social housing supply and without jeopardising planned housing developments or being overly vulnerable to legal challenges, which whether successful or not, would have a chilling effect on all development while developers awaited the outcome. These are the key issues to be considered and discussed with stakeholders in any pre-legislative scrutiny sessions. The Government is willing to keep this under review.

We welcomed the support of Sinn Féin and others for the Affordable Housing Act 2021, which brought in these provisions in July. In that spirit, we are not opposing this Bill, as it will keep the provisions under review and the Government has no issue with them being subject to further economic analysis and scrutiny. Any changes must deliver more units and pre-legislative scrutiny will offer an opportunity to see whether further changes may be appropriate.

In the intervening period we hope that developers will be encouraged to act on planning permissions already granted and bring forward applications for permission in respect of lands they purchased in the past six years. The 70,000 planning permissions are live and will not be impacted by this legislation or the changes brought in last July. They need to be activated. Ultimately, the objective is to get homes built and the Government is open to any further changes that need to be made to get that done.

See this speech in context