Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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5. To ask the Minister for Finance his views regarding the continued upward spiral in house prices and rent, the increasing concentration of property ownership in the hands of a small number of very large corporate investors, in terms of macroeconomic stability and the capacity of ordinary families to access affordable accommodation; his proposed measures to deal with this situation; and if he will make a statement on the matter. [46337/14]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Rents in Dublin have risen in the past year by 17% and by 8% and 7% in Cork and Galway, respectively. They are spiralling out of control. This is related to the concentration of wealth that I mentioned and, specifically, the increasing concentration of commercial residential property in the hands of big corporate investors. It demonstrates the folly of the big sell-off of many NAMA properties and other residential property and loans to the big corporate interests that do not give a damn if people are priced out of the market as long as they can make money.

Michael Noonan (Limerick City, Fine Gael)
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I am aware of the price changes that have taken place in the residential property and private rental markets. Nationally, residential property prices rose by 16% in the 12 months to October 2014 according to the Central Statistics Office. The most recent daft.ienational rental index indicates that rents nationally were 10.8% higher on average in the third quarter of 2014 than a year previously.

The Government's view is that the impetus for recent price and rent developments comes from a shortage of supply, particularly in Dublin and, to some extent, in the other major cities. As part of economic recovery, there is an increased level of housing demand, particularly as a result of the growth in the number of people at work. However, thus far, supply has not responded adequately to match demand, leading to increased prices and rents. The Deputy will be aware that Construction 2020: A Strategy for A Renewed Construction Sector sets out the Government's strategy to address these issues and remove blockages from the system in order to get the market moving and increase supply. Some 75 time-bound actions are included in the strategy. My Department is party to a range of actions which, among other issues, focus on appropriate and sustainable development financing, transparent and sustainable mortgage lending, the application of the tax code to the construction and property sectors and addressing legacy issues associated with the property bubble.

I have introduced a number of targeted initiatives in various budgets since 2011 to aid in revitalising the property and construction sectors and help to increase the supply of suitable residential housing stock in certain urban areas where supply limitations are most pronounced. The Finance Act 2013 introduced the real estate investment trust, REIT, tax regime. The acquisition of properties by REITs is part of a broader effort to have a more sustainable, professionalised, long-term property rental market for the benefit of both investors and tenants. More recently, as part of budget 2014, I introduced a number of measures, including subject to state aid approval, the extension of the living city initiative to include Cork, Galway, Kilkenny and Dublin and the broadening of eligibility criteria to include all buildings built prior to 1915.

Additional information not given on the floor of the House

In the budget I extended the home renovation incentive to rental properties whose owners were liable to income tax. In the coming months I will launch a public consultation process to examine if owners of zoned and serviced land are hoarding land and delaying development. I have also signalled that the capital gains tax exemption introduced at the bottom of the market will be discontinued from January.

Access to development finance is a key issue that needs to be addressed to ensure the proper functioning of the property market. It is clear from work undertaken by my Department that the funding model for development is fundamentally changed from the previous mainly debt-based model, with more equity now needed.  In this context, the Ireland Strategic Investment Fund, ISIF, under the auspices of the NTMA, is exploring ways, through its commercial mandate, to support financing projects that will enhance the supply of housing. In addition, NAMA has stated it expects to fund the delivery of 4,500 houses and apartments to serve the greater Dublin area in the period from 2014 to the end of 2016.

There are encouraging signals to indicate that policies introduced by the Government are having an effect. In particular, there has been a large increase in housing commencements in the first half of 2014, while applications for planning permission have exceeded 2013 figures each month and are up by almost 20%. Increases in housing supply should lead to a moderation of price and rent rises in the property market, in turn improving access to affordable accommodation. In addition to the measures I have outlined, my colleague, the Minister for Environment, Community and Local Government, has recently published the Social Housing Strategy 2020: Support, Supply and Reform which sets out to address issues of social housing provision, as well as accessibility and affordability. The strategy proposes to provide 35,000 social housing units in the next six years through a combination of construction and acquisition and to meet the housing needs of up to 75,000 households.

On the Deputy's question around the increasing concentration of property ownership, historically the private rented sector has been characterised by small-scale landlords. Attracting large-scale investment in professionally managed residential property, for example, using REITs and other options for long-term investment, can have an important role to play in helping to deliver the professional high standard sector tenants deserve. As part of Construction 2020, the Department of the Environment, Community and Local Government, with the housing agency, is developing a national policy towards professionalising the private rental sector, to include issues such as investment, standards and regulation.  A key element of their research is to assess the policy treatment of the sector, with a view to making recommendations to encourage more and larger scale investment in order to increase the supply of good quality, secure and affordable rented accommodation.

In summary, my Department continues to monitor developments in both the purchase and rental property markets. In line with the Construction 2020 strategy, the Government will continue to work on addressing remaining challenges in the property and construction sectors.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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There is a rapidly spiralling housing and homelessness crisis. A major proportion of the income of ordinary people is going towards keeping a roof over their head, which is adequate proof that the Government's policy in this regard has failed dramatically and that radical action is required. Construction 2020 and other pie in the sky projects will not cut it any more. People just cannot afford to put a roof over their head. This is because the process has been left to the market and the Government made a critical decision to allow NAMA and other bailed-out financial institutions with property portfolios and so on to flog them to big corporate investors who do not give a damn about affordability; they only care about how much money they can make. The State should intervene in the market; it should control rents, take back some property and charge affordable prices, instead of charging on the basis of making a profit, as the people involved in the market are doing. If we do not do this, the issue will get out of control. As the National Competitiveness Council has indicated, workers will be forced to go on strike in order to have their pay keep pace with accommodation costs.

Michael Noonan (Limerick City, Fine Gael)
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Although rents have risen rapidly throughout the country and particularly in Dublin in the past 12 months, they are still not where they were a couple of years ago. There was a collapse in the rental market similar to the collapse of housing values. As the economy is being restored, rents are going up again, although they are still not back where they were a couple of years ago.

There is not a shred of evidence to support the Deputy's theory that rising rents are connected to NAMA's policy of selling assets, which it is required to do. The problem is there is a lack of supply which sometimes is connected to regulation. One of the issues to which one can point is the regulation introduced some years ago that all apartments or flats should have en-suite facilities. This compares to the bedsit arrangements where there was a bathroom in the corridor that served two or three bedsits. That took 5,000 bedsits out of commission as they could no longer be rented.

That is why I extended the home extension scheme to landlords. I am allowing them to restore bedsits that are out of commission by carrying out the work needed to provide en-suite facilities, thereby enabling them to abide by the regulation. It is a supply side problem. When an economy that had been sinking begins to rise, it is very difficult to switch on construction, but it is now happening extensively around Dublin.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I accept that there is a supply problem. We should immediately use €4 billion of NAMA's cash reserves to start a massive public works programme involving the construction of affordable housing. It is not that NAMA is creating this problem but that it has no interest in solving it. More to the point, the people to whom NAMA sells these assets have no interest in the problem. I am not making a moral judgment; I am simply making a statement of fact. Big corporate investors in property do not give a damn about affordability or the housing and homelessness crisis. The Minister's job is to give a damn about these things. They will charge market rents or what they can get, even if it makes property unaffordable for significant numbers of people. Those who increasingly control the private rented sector and the property sector do not give a damn about whether ordinary people on low and middle incomes can afford property. As long as they can rent stuff to the people who can afford it, they will make money. The Minister's job is to make sure housing is affordable. That is basic. The economy cannot function if substantial numbers of people in the economy cannot put a roof over their heads. That is elementary. The State has failed to intervene by taking control of rents, prices and enough property to make sure rents and prices are kept down.

Michael Noonan (Limerick City, Fine Gael)
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As I said, there is no evidence to support the theories the Deputy is propounding. The Minister for the Environment, Community and Local Government, Deputy Alan Kelly, made a major announcement last week on housing, including social housing. He set out a number of initiatives, which are fully funded by the Government's decision, to deal with this problem. It is a very progressive and far-seeing programme and NAMA is playing its part. The Deputy will have noted that there was a big residential element to yesterday's announcement of the development of Boland's Mill, although I accept that the emphasis is on commercial offices. NAMA is working through its client developers to supply houses and apartments in Dublin. My contention that supply is coming back is supported by a survey conducted by one of the specialists in this area, as published in yesterday's newspapers, which found that there had been 370 multiple starts - groups of houses or apartments - to date in 2014.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Who can afford to buy them?

Michael Noonan (Limerick City, Fine Gael)
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There is a demand and they will be bought. I am not saying there is no problem. All I am saying is the problem is being addressed and that the Deputy's analysis of the problem is fundamentally flawed.