Dáil debates

Tuesday, 27 September 2022

Financial Resolutions 2022 - Budget Statement 2023

 

4:40 pm

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats) | Oireachtas source

I will address the housing aspects of this budget. It is very disappointing that both senior Ministers, when talking about the housing measures contained in the budget, said that they feel the Government's housing plan is working. This shows that they are massively out of touch with the reality of people's lives when it comes to housing. They seem to be oblivious to the huge pain there is in this country due to the inadequacy of access to housing. This budget fails to tackle rents and the scourge of vacancy across the country. It also fails to tackle the damage investment funds are doing to housing in Ireland, charging unaffordable rents and driving down home ownership at the same time. The tax credit for renters, without properly enforced rent control and a rent freeze, will simply be gobbled up by landlords through rent increases. The tax on vacant homes is low and ineffective, at just 0.3%. It does not come anywhere near property price inflation, which is running at 8%. It is not remotely close to it and, unfortunately, it will be very ineffective. This budget fails to do anything about investment funds paying virtually no tax at all.

You might think the tax credit would go some way towards addressing the huge increase in rents in the past decade - they have almost doubled - but it will only make the smallest of dents in the very high rents tenants are paying. The failure to extend rent pressure zones nationwide, the failure to enforce them and the failure to introduce a freeze on rent increases means this credit will further fuel rental inflation. This is a subvention to landlords through the back door and will help fuel further rent increases. In the past year, new rents have increased by 9%, which is way above the cap allowed for under the rent pressure zone legislation. Those new rental prices refer mainly to existing rental stock where there are newly registered tenancies.

The rent pressure zone legislation simply is not working. It is not being enforced properly. The vast majority of investigations carried out by the sanctions and investigations unit of the Residential Tenancies Board relate to breaches of rent pressure zone legislation. Out of 38 sanctions issued in the 12-month period, through court orders, following work by the RTB investigations and sanctions unit, 35 sanctions were about failure to comply with rent pressure zone requirements. Significant parts of the country are simply not covered by the rent pressure zone legislation, including in the Minister's constituency. This is not because rents are not increasing to completely unaffordable levels in these parts of the country but because the rules are written in such a way that no matter what happens to rents in these areas, they will never qualify for any protection under the rent pressure zone legislation.

Some 62 out of 77 local authority areas do not qualify as rent pressure zones because insufficient data has been collected. There will probably never be sufficient data collected in these areas to allow them to qualify for that minimal level of protection. Renters in these areas have faced rent increases of as much as 60%. This tax credit, while they have no protection at all, will simply fuel further rent increases. In areas where we have rent pressure zones and they are breached left, right and centre, the credit will also fuel rental inflation. A rent freeze was absolutely necessary to go hand-in-hand with any tax credits for renters. That is exactly what we said in our alternative budget. It beggars belief that the Government does not understand this or that a tax credit without a rent freeze and without proper enforcement of rent regulations will simply be gobbled up by landlords through rent increases.

I could not believe that the Government is setting the tax on vacant homes at 0.3%. Does the Government not know that we have a housing disaster in this country? Does it not know that we have at least 90,000 vacant homes that we need to bring back into use? Is it indifferent to this? This is a statement of astounding indifference. House price inflation in the last year was 8%. A speculator sitting on a vacant home will have no incentive to do anything about that. Property prices have increased by 8% while speculators sit on them and the Government says they have to pay a 0.3% tax on that. It is pathetic to the highest degree. It does not recognise the issue that we have with vacancies. This Government and the previous Government have been talking about bringing in a tax on vacant homes since 2017. It displays a completely cavalier attitude to the housing disaster and its devastating impact on people. In our fully-costed alternative budget proposals, we put forward a punitive 10% tax on vacancy because we want to see every vacant home that is not in use brought back into use quickly.

It is unbelievable that the Government is exempting derelict homes from this tax on vacant homes. Why on Earth would the Government do that? It creates a perverse incentive for any owner of a vacant home sitting on it for speculative reasons to let the home go derelict so that it escapes this meagre 0.3% tax. There is a derelict sites levy, but we all know that the local authorities have been completely ineffective at collecting the derelict sites levy every year. Many local authorities do not collect any derelict sites levy from year to year.

Does the Government simply not understand what is happening with our housing disaster? Does it not see that students are commuting across the country to attend college because they cannot get affordable accommodation? Is it unaware that students are dropping out of college places because they cannot get affordable accommodation? Students are sleeping in tents and young people are living at home into their late 20s and early 30s. They cannot move out, move on with their lives and become independent because of our housing disaster. Some young people feel their only option is to emigrate. We are losing people with skills that we need in education, healthcare and disability services because of our housing crisis.

Does the Government not see the women and children fleeing domestic violence who have been returning to abusive partners since they cannot find anywhere to live? Does it not see the 74% of people fleeing domestic violence who have been refused places by refuges such as Saoirse Domestic Violence Services because they cannot provide people with somewhere to live? Does the Government not see the 290,000 hidden homeless people, as estimated by the Simon Communities of Ireland? They are not in emergency accommodation but they are staying with friends or family in overcrowded accommodation. They are sleeping on floors or couches because of our housing crisis. Does the Government not see the people who are working or studying who would never have been at risk of homelessness in the past but have become homeless? Does the Government not see that the majority of local authorities report that emergency accommodation is either full or close to capacity and that they will be turning people away from emergency accommodation? Does it not see the families sleeping in tents? Does it not see the heavily pregnant women who have slept on our streets, having been unable to get into emergency accommodation? A 0.3% tax on vacancy is a disgrace. It is utterly ineffective. To take this long to come up with such a pathetic proposal on vacancy does the entire country a disservice with regard to the housing disaster.

The Government has failed to put an effective tax on investment funds. An analysis by Killian Woods in the Business Postshowed that speculators and investors spent almost €1 billion in the last year buying second-hand homes in Ireland. Institutional investors and real estate firms bought one in ten second-hand homes, or 4,500 homes altogether. That is driving up the cost of housing for everyone else. According to The Ditch, a single fund bought more than 850 second-hand homes in the last three years and has become one of the biggest landlords in the country. Despite this, the tax paid by investment funds is in free-fall. Following a change to clamp down on aggressive tax avoidance, an effective tax rate of 17.9% was paid by Irish real estate funds. However, last year, this collapsed to just 5.9%. It is gravely disappointing that no measures have been announced in the budget to tackle this and instead the Minister simply said that he intends to carry out a review. The Social Democrats proposed an effective tax rate of 25% on investment funds through a levy on their profits. That could and should have been done by the Government today.

The Government is failing to act and to deliver on the promises that it makes about housing delivery on budget day every year. Every year, promises are made and then broken and targets are missed. In his speech for budget 2021, the Minister for Housing, Local Government and Heritage promised that 9,500 new build social homes would be delivered. Instead, a little over half of those were actually delivered in 2021. We were promised a paltry 350 cost-rental homes last year. Only 65 were delivered to tenants. Out of 10,000 affordable homes that we were promised each year by Deputy Darragh O’Brien during the general election, zero affordable purchase homes were delivered last year. We only have partial figures on housing delivery so far in 2022. Unfortunately, the news is not much better. In last year's budget, more than 4,000 affordable purchase and cost-rental homes were promised. So far, just 300 cost-rental homes and 325 affordable purchase homes have been delivered. This is far short of the Government's targets and the promises made in the budget last year. It is far short of the many thousands of affordable and cost-rental homes that we desperately need in this country. That renders the promises made about housing delivery by the Government on budget day meaningless.

The announcements about construction defects today are particularly disappointing. It is not clear if there will be any immediate measures to assist apartment owners who are grappling with the costs of fire safety and other defects. People with fire safety defects in apartments are being charged sums of money they simply cannot afford to pay for defective work that they are in no way responsible for. The failure to introduce some sort of retrospective tax credits for owner occupiers could lead to fire safety work being stalled or deferred. It is deeply unfair that landlords can avail of tax relief in that regard when owner occupiers cannot.

Long-term leasing is a gift to developers and investment funds where their full financing costs or their mortgages are paid off by the State, typically over a period of 25 years, and where the developer or investor keeps full ownership of the home at the end of the lease. The announcement today on continuing long-term leasing by the Government is very disappointing. It is an abuse of the English language for anyone to come in here and say they are winding down long-term leasing when in fact they are ramping it up. It is an abuse of the language. The people are not stupid and they can see this for what it is. The Government is, in fact, ramping up long-term leasing by committing to another 2,530 new long-term leases in addition to what they have already committed to next year.

There are solutions to the housing crisis. Instead of giving money to developers and funds, we could instead use this money to build additional affordable housing. We need more supply but it is critical that we get more supply of homes that are affordable for people to buy and rent. An excellent model is being provided by Ó Cualann in building affordable homes in Dublin, Cork and Waterford. The Ó Cualann projects have shown how they can deliver affordable homes, which are three bedroom, well designed, energy-efficient homes that can be sold for between €230,000 and €260,000. This model needs to be urgently scaled up and rolled out nationwide.

The Social Democrats fully costed budget proposals show how we could build 10,000 social homes and 10,000 affordable homes, including 5,000 cost-rental homes and 5,000 affordable purchase homes next year. We proposed: to end the multi-million euro subsidies to developers; to introduce a new effective tax rate on investment funds; and to introduce a punitive tax of 10% on vacant and derelict homes to bring those homes, which we desperately need, back into use quickly.

New rents have increased by 9% in the last year. House prices have increased by 8%. Homelessness increased by 30%. Child homelessness increased by 47%. The profits of the largest developer in Ireland increased by 84% in the first six months of this year. Never in the history of Ireland have rents been so high, have house prices been so high, has homelessness been so high, and never in the history of the State have the profits of our largest house builder been so high.

There have been many promises made on housing by this Government over the past years, many of which are simply not being delivered. The Government’s plan is not working. Housing is key to human dignity. Bundleacht maidir le dínit an duine is í an tithíocht. The Government must move out of its denial on housing and it must take effective action to deal with our crisis.

Long-term leasing is a gift to developers and investment funds where their full financing costs or their mortgages are paid off by the State, typically over a period of 25 years, and where the developer or investor keeps full ownership of the home at the end of the lease. The announcement today on continuing long-term leasing by the Government is very disappointing. It is an abuse of the English language for anyone to come in here and say they are winding down long-term leasing when in fact they are ramping it up. It is an abuse of the language. The people are not stupid and they can see this for what it is. The Government is, in fact, ramping up long-term leasing by committing to another 2,530 new long-term leases in addition to what they have already committed to next year.

There are solutions to the housing crisis. Instead of giving money to developers and funds, we could instead use this money to build additional affordable housing. We need more supply but it is critical that we get more supply of homes that are affordable for people to buy and rent. An excellent model is being provided by Ó Cualann in building affordable homes in Dublin, Cork and Waterford. The Ó Cualann projects have shown how they can deliver affordable homes, which are three bedroom, well designed, energy-efficient homes that can be sold for between €230,000 and €260,000. This model needs to be urgently scaled up and rolled out nationwide.

The Social Democrats fully costed budget proposals show how we could build 10,000 social homes and 10,000 affordable homes, including 5,000 cost-rental homes and 5,000 affordable purchase homes next year. We proposed: to end the multi-million euro subsidies to developers; to introduce a new effective tax rate on investment funds; and to introduce a punitive tax of 10% on vacant and derelict homes to bring those homes, which we desperately need, back into use quickly.

New rents have increased by 9% in the last year. House prices have increased by 8%. Homelessness increased by 30%. Child homelessness increased by 47%. The profits of the largest developer in Ireland increased by 84% in the first six months of this year. Never in the history of Ireland have rents been so high, have house prices been so high, has homelessness been so high, and never in the history of the State have the profits of our largest house builder been so high.

There have been many promises made on housing by this Government over the past years, many of which are simply not being delivered. The Government’s plan is not working. Housing is key to human dignity. Bundleacht maidir le dínit an duine is í an tithíocht. The Government must move out of its denial on housing and it must take effective action to deal with our crisis.

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