Dáil debates
Tuesday, 11 April 2017
Topical Issue Debate
Social and Affordable Housing
6:05 pm
Michael D'Arcy (Wexford, Fine Gael)
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The issue I raise is an area that seems to have been left behind in the Rebuilding Ireland plan. I have gone through the plan and the affordable sector appears to have been ignored. I believe it is an important area. The problem with the rental sector is quite simple: there are too many people who are renting. A huge number of people are locked out of the market who have the capacity to purchase a property.
I will put it into context. According to the Central Statistics Office the average industrial wage is €35,600 per annum. At €33,800 those people entered a higher rate of tax at 40%, but it is not just 40%. It is 40% plus the universal social charge, USC and pay related social insurance, PRSI. Consider the Central Bank's rules for borrowing from a financial institution. Three and a half times the salary allows for the borrowing of €124,600 to purchase a property. If two people are earning the average industrial wage it allows for borrowing something less than €250,000. Last year the Society of Chartered Surveyors Ireland issued a very good report which showed that the cost to build a house in greater Dublin is €330,000. The numbers are actually quite simple. Those people are locked out of the market unless they get a very large amount of money from somewhere or somebody else. Not everybody is in a position where their parents or grandparents are capable of helping, where they have an inheritance, or where they won the lotto. Until we do something to help those people, we are going to have serious problems with homelessness and with the rental sector. The problem is growing and getting worse.
In the past, the local authorities had an affordable housing scheme. The information I have received in replies to questions I have put to the Minister is that those schemes have effectively been closed down. They are not functioning now and have not functioned for a number of years. I can understand that this may have been the case during the period when it was cheaper to purchase a property than it was to build one. The issue now, however, is that as the market has recovered and house prices have increased, we have not re-enacted those schemes. The Ceann Comhairle was once a member of a local authority. These local authority schemes were prevalent in greater Dublin and in the major urban areas such as Cork, Limerick, Galway and less so in Waterford. I hold the strong view that the State must intervene. The State has intervened in the past. The Rebuilding Ireland programme is a €5.35 billion scheme for people who are not capable of getting a house and to help deal with homelessness.
However, the niche for people who are just above that in lower, moderate and average pay seem to have been forgotten about. This is an area we cannot just forget. There are too many people renting. If there is a small inducement, we can get them into their own houses; the affordable housing scheme needs to be revived.
6:15 pm
Catherine Byrne (Dublin South Central, Fine Gael)
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I will be taking this matter on behalf of the Minister, Deputy Simon Coveney.
A range of measures is being taken under the Rebuilding Ireland Action Plan for Housing and Homelessness to increase housing supply overall, with the aim of creating a functioning and sustainable housing system which can meet housing demand at more affordable prices. The plan is divided into five pillars, with each targeting a specific area of the housing system. Pillar 3, entitled "build more homes", has a key objective of increasing the output of private housing to meet demand at affordable prices, including by opening up land supply and State lands, including the major urban housing development sites initiative, which identified large-scale sites in the main cities that are capable of delivering significant numbers of homes in the short to medium term to boost overall housing supply, a €200 million local infrastructure housing activation fund, National Treasury Management Agency financing of large-scale “on-site” infrastructure, planning reforms, putting in place a national planning framework and land management actions, efficient design and delivery methods to lower housing delivery costs and measures to support construction innovation and skills.
While there are no plans at present to reintroduce an affordable housing purchase scheme, pillar 4 of Rebuilding Ireland, entitled "improve the rental sector", provides for the introduction of an affordable rental scheme to enhance the capacity of the private rented sector to provide quality and affordable accommodation for households currently paying a disproportionate amount of disposable income on rent.
As set out in the strategy for the rental sector published in December 2016, the commitment to introduce affordable rental is now to be progressed through kick-starting supply in rent pressure zones. Lands held by local authorities in rent pressure zones are to be brought to market on a competitive tendering basis, with a view to leveraging the value of the land to deliver the optimum number of units for rent, targeting middle income households, in mixed tenure developments. The cost of providing rental units is to be permanently reduced by lowering the initial investment and development costs for providers - approved housing body or private - allowing the rental units to be made available at below market prices without the need for ongoing rental subsidies.
The local authorities concerned will identify a number of sites with potential and will move forward as soon as possible to issue calls for proposals from parties interested in developing projects. As speed of delivery will be critically important, appropriate licence arrangements, incorporating clear timescales for delivery, will be a key feature of the process.
This programme is being co-ordinated with the dedicated measures in Rebuilding Ireland to accelerate housing output from the major urban housing delivery sites, including support from the local infrastructure housing activation fund, LIHAF where necessary. Through this combination of measures, the Government is satisfied that a more sustainable housing system delivering accommodation at more affordable prices and rental levels can be achieved.
Michael D'Arcy (Wexford, Fine Gael)
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It goes to show that there is a major anomaly here, namely, that we have budgeted €5.35 billion for one sector while the sector immediately above it has nothing. It is a huge hole in the scheme. I am disappointed. I raised the matter before the Rebuilding Ireland programme was announced. It is an area we must revisit. In respect of the figure on the help to purchase scheme, we are looking at tens of millions of euro going into that scheme, which is welcome. The area I am talking about has been ignored, however. I flagged it. Something needs to happen here. I will be speaking to the Minister, Deputy Coveney, and the Minister of State, Deputy English.
This is the first occasion that I have got it out of the Department that there are no plans to introduce an affordable housing purchase scheme. It is a serious error. Part of the Irish psyche is to purchase property. Whether we like it or not, that is not going to change. Pillar 4 is about affordable renting. People do not like renting, especially in areas where rent is €1,200 per month. That is €15,000 per year. People will purchase but they need a little bit of help from the State. The State has done that successfully in a number of past decades, going back to the 1960s, 1970s, 1980s, 1990s and the 2000s. It needs to be reintroduced. It is a massive error of judgement by the Minister, Deputy Coveney, and the Minister of State, Deputy English, not to reintroduce the affordable housing purchase scheme.
Catherine Byrne (Dublin South Central, Fine Gael)
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I thank the Deputy for his contribution and appreciate his concerns. I had a huge interest in the matter as a member of a local authority during the time that affordable housing was being issued. Many young people got their first kickstart into buying a home for themselves that way.
These issues are included in the policy of the €5.3 billion that has been allocated by the Government to build houses. It is important to remember that we are at the beginning of a different kind of housing environment in this country. The Government is focused on being able to put in place more affordable housing across the board for anybody who wants to be able to buy a property, particularly young people and first-time buyers, which has already started, and particularly around people who want to come back and live in their own community. While there are no plans to introduce an affordable housing scheme at this time, we are confident that the wide range of measures being taken by the Government in the context of Rebuilding Ireland will provide opportunities for people to access good quality housing at a price level that they can afford. The increased supply is already starting to come on-stream and it is expected that it will be fast tracked considerably over the coming months.
I take on board what the Deputy has said; he speaks with great knowledge of the issue. I will relay his message back to the Minister, Deputy Coveney. The Deputy will speak to the Minister himself and we will have opportunity to speak together ourselves.