Eoin Ó Broin (Dublin Mid West, Sinn Fein)

As the Minister knows, Sinn Féin will be supporting this legislation. I thank the officials from his Department for the very detailed briefing they provided to committee members on both the Bill and wider issues around AHB strategy and reform. It is a single-sentence Bill, so there is not an awful lot to discuss in terms of its explicit content. However, given that it is related to the funding of AHBs and, potentially, local authorities, I want to make some general comments on how that funding is used in order to contribute to the wider debate, which I know the Minister and his officials are considering. This relates to the strategic review of the AHB sector and, ultimately, the new housing plan.

The Minister will not be surprised to hear me say we are not spending enough on the direct delivery of social or affordable homes by local authorities, AHBs and the LDA. When we dealt with the Revised Estimates two weeks ago, Deputy Ahern asked how much money was spent last year through Exchequer expenditure, AHB borrowing and the Land Development Agency on delivering social and affordable homes. The figure is approximately €5 billion. About €3 billion of that was Exchequer expenditure and the rest involves about €1.5 billion in AHB borrowing and the remainder last year for the LDA. Overall expenditure will increase somewhat this year. That is simply nowhere near enough to deliver the volume of social or affordable homes required to meet current needs. I refer to the objectively expressed need of those on local housing waiting lists, those in insecure and expensive HAP and RAS tenancies and those in need of affordable homes. Based on the Housing Commission’s own recommendations, we probably need an average of 15,000 new-build social homes per year from now to 2030 to meet that need. My estimation is that we also need an average of 10,000 cost-rental and affordable-purchase homes per year, and they need to be genuinely affordable. Unlike the Government, I also believe there needs to be a significant budget for acquisitions over the next five years. That means direct Exchequer apportionment for social and affordable homes will need to increase by €2 billion to €2.5 billion. AHB borrowing, which is currently around €1.5 billion per year, will probably need to move to about €2 billion. I say this by way of context. This is the only way we are going to meet social and affordable housing need through local authorities and AHBs.

The Taoiseach gets up and talks about €7 billion, but when this is boiled down to what is actually being invested in the forms of tenure in question, it represents a much smaller portion. Whatever way we do this – whether with the inadequate targets the Government has said, with revised targets in a new housing plan, which we await, or with the more ambitious targets that Sinn Féin and others have set – AHB borrowing is going to continue to increase significantly. Therefore, I urge the Minister to engage with the Oireachtas committee at the earliest possible opportunity on the medium-term plan for the HFA. It is not sensible to proceed by periodically having to come in here at the last minute to raise the borrowing cap. If the Minister has visibility on what he is likely to need from the AHB sector between now and 2030, there needs to be a sensible mechanism for incremental increases, obviously checked against whatever milestones are agreed between the relevant Departments.

The Minister stated in response to a question at the Revised Estimates committee meeting two weeks ago that there had been no delays in the delivery of projects funded in part by the HFA. Only a couple of days earlier, at the Construction Industry Federation conference, both the AHB sector and the private residential development sector, which provide many turnkey developments, were making the opposite case, citing significant delays.

I acknowledge that the considerable delays with CALF and CREL stage 1 approvals have been broadly resolved. That is what I am hearing from the AHB and local government sectors and developers engaged in turnkey and Part V developments, but there still seems to be some problem with the capital assistance scheme, CAS. Whatever the Minister’s public position on these matters, we need to ensure, particularly for smaller AHBs, AHBs with smaller stock and AHBs delivering special-needs housing for people exiting homelessness or with mental health challenges or physical or intellectual disability needs, that we unblock whatever delays exist regarding CAS applications. I am hearing from local authorities and AHBs that the pipeline for 2026 and 2027 regarding social and affordable homes has been affected by the delays. Ultimately, we will only know the position for sure when we see completion data throughout next year and the year after.

Local authorities can borrow from the HFA at a lower interest rate than AHBs. The reduction is significant. Particularly for cost-rental tenants, that has a significant knock-on effect on the rent charged. As the Minister knows, at current rents many cost-rental developments exclude a growing portion of those who earn too much to qualify for social housing but not enough to afford the rents in the private rental sector. They are now being excluded from cost rental because the rents are so high that they fail the affordability test.

When Mr. Barry O’Leary, the former chief executive of the HFA, appeared before the Oireachtas committee about a year ago, he said the lower interest rate charged to local authorities would reduce the rent in an average cost-rental tenancy by about €100 per month. That is a significant reduction over the course of a year; yet, because of an arbitrary borrowing cap across the entire local government sector, local authorities generally cannot borrow, whether from the HFA or the European Investment Bank, to fund cost-rental housing. Dublin city has been able to produce one development, in St. Michael’s Estate, but due to the cap it will not be able to produce more.

I am not arguing that local authorities should be able to borrow whatever they want. Of course, they should require sanction from the Department, but the State-wide local authority borrowing cap is antiquated and needs to be removed and replaced by the Department with a better, more flexible mechanism with adequate checks and balances.

On individual schemes, the smaller special-needs AHBs face a challenge because, traditionally, they have accessed the CAS rather than CALF and HFA loans. They are struggling to make schemes stack up for them to be viable. We need to move to a position where those smaller schemes, such as those of the Housing Association for Integrated Living, HAIL, and Focus Ireland, combine CAS with HFA loans and payment-and-availability agreements. Ultimately, that is where we need to go to make the schemes stack up; otherwise, we will struggle to get a sufficient number of what we generally call special-needs AHB units to meet sectoral demand. There should also be far greater integration of those units into general-needs affordable and social housing projects. More flexible use of funding, including HFA funding, would be useful in this regard.

There is a fundamental question to be asked about the CAS. Since it provides no monthly availability payment, the rent raised is simply insufficient to meet ongoing management, maintenance and future structural repair costs. It is essentially the same problem as the poor funding mechanism for local authorities. I realise there is a CALF review and I hope the Oireachtas housing committee gets to participate in it, but ultimately we need to move to a payment-and-availability-type agreement for all AHB properties.

Needless to say, that raises difficulties with historical CAS and capital loan and subsidy scheme properties from two decades ago. Many of the loans are now being paid off in full and, again, the AHBs simply do not have the revenue to maintain what is now ageing stock. I appreciate it is not a straightforward problem to resolve but it needs to be addressed.

On the recent changes to apartment design standards and VAT, we have AHB projects that have been through CALF and HFA approval. If developers come with a revised planning application, there will be a question mark over whether they need to have HFA approval again. Clarity from the Minister, publicly and for the AHB sector, would be useful. Likewise, clarity is needed on whether there will be any attempt to force developers, including those who have signed turnkey or Part V agreements with AHBs, to pass on the VAT reduction announced in the budget last week.

I do not believe there is a legally enforceable mechanism from the Government's point of view, but given those apartments are already under construction or are already viable, why should the State be paying an extra €20,000 per apartment for a VAT reduction simply to increase the profits of those large, viable and profitable developers?

To conclude, any extra money for social and affordable housing is welcome. We will not stand in the way of additional investment. If anybody thinks, though, that the €5 billion or so currently being invested in social and affordable homes is enough, it is not. The report of the Housing Commission makes that very clear. Until this Government accepts that and increases the funding significantly, we are not going to make sufficient headway in tackling this crisis.

See this speech in context