Wednesday, 31 January 2018
Ceisteanna - Questions - Priority Questions
Local Infrastructure Housing Activation Fund
59. To ask the Minister for Housing, Planning, and Local Government his plans to revert to the original proposal with regard to LIHAF funded developments as set out in circular PL 10/2016 of 26 August 2016, which required an affordability dimension for each site such that a minimum of 40% of homes were to be affordable; his further plans to ensure that affordable is defined so that they are accessible to those on low and middle incomes; and if he will make a statement on the matter. [4682/18]
When the Minister introduced the local infrastructure housing activation fund, LIHAF, which is a subsidy to private developers to open certain sites, the initial circular indicated that we would get 40% of any LIHAF supported development in affordable housing and that affordable would mean, in Dublin, a price of no more than €300,000. Within a month of that announcement the Minister, I suspect under pressure from developers, abandoned that, so we now do not know what affordable will mean in a number of sites and what percentage we will get, although the signs are that in many places it will be utterly negligible. What is the Minister going to do about that?
The primary aim of LIHAF is to stimulate and accelerate the early release of land for housing in urban areas with large demand, by opening up these lands with key enabling public infrastructure that would otherwise not be provided in the short term.
It was initially proposed that a capped price point would be set on a percentage of the housing. However, in consultation with local authorities, it was considered that setting a cap in 2016 for housing that would be developed up to 2021 and beyond was problematic and would have adversely impacted the commercial viability of some sites, with consequential negative impacts on overall supply. Accordingly, a second option was put in place where a cost reduction related to the LIHAF contribution could be spread over the housing development as a whole, reflecting in a lower price for buyers, or aggregated to provide a smaller number of more affordable units.
I have signed grant agreements in respect of 29 projects that were approved in principle last March and, in a number of these, local authorities have secured agreements from developers to aggregate LIHAF deductions to provide more affordable housing under qualifying criteria to be set in line with national policy on affordability, the affordable purchase scheme.
There will also be a social housing dividend from all the LIHAF sites, together with additional social and affordable housing to be provided on the State-owned sites. Regarding the 29 approved projects, and subject to the planning process, it is estimated that approximately 3,000 of the 18,000 new homes to be released by this enabling infrastructure will be for social housing purposes and a further 1,500 will be affordable homes.
Some 70% of approved sites are projected to have housing available at €320,000 or less, based on 2017 prices. With regard to the Dublin region, I have asked the local authorities to seek to provide as much affordability as possible on related sites and many of the projects in Dublin will have some starter homes for sale in that price range as well as more affordable housing.
The Minister always talks about social mix. In fact, his housing policy is one of social cleansing. In huge areas of Dublin his failure to secure adequate social and affordable housing on the developments taking place mean that people on low and middle incomes are being cleansed from, or driven out of, those areas due to the unaffordable housing. Cherrywood is a LIHAF supported development. Last October, Hines Real Estate Ireland Limited, the developer to which the Government sold that site for a song, offered the social housing element at the following prices: €243,000 for a one-bedroom unit, €358,000 for a two-bedroom unit and €442,000 for a three-bedroom unit. It is completely unaffordable. That was the discount price for the Part V element. There is no commitment to any level of affordability on the Cherrywood site and no idea of what the percentage of affordable housing will be. This is despite the fact that the Government provided €15 million in LIHAF funding. The Minister has allowed these guys to get away with murder and the effect is that people in the area on low and middle incomes, up to €40,000 or €50,000 per year, will not be able to buy houses on that site, even though it was a public site and it is subsidised with LIHAF funding. What is the Minister talking about?
It is important to understand the purpose of the LIHAF funding, which is to have the very large land banks, with over 500 homes per site, opened more quickly and to ensure the public money is returned in a lower cost of houses or an affordable purchase scheme such as I have announced. If one looks at the 1,800 homes which will be built on the 29 sites, on which I have signed off, 50% of them will be sold at less than €320,000. Some 4,500 units will be social and affordable housing, 5,900 units will benefit from a LIHAF reduction, while 7,700 will be sold at market rates. At the end of October 2017, the median price in the greater Dublin area was around €340,000. Thousands of homes will be built - both social and affordable housing - and benefit from a LIHAF reduction, with the remainder being sold at market prices. The Deputy's language is grossly exaggerated. If we consider how we might otherwise have used the €200 million, had we used it directly, we would have only built a few thousands units. In this way we will see at least 18,000 homes being built as private, social and affordable housing. There is a dividend for the State in the provision of 4,500 social and affordable homes, with 5,900 units being sold with the benefit of a LIHAF reduction. Some 50% of the 18,000 homes on the 29 sites on which I have signed off will be sold for less than €320,000.
Two people - a couple - earning €40,000 each can only borrow €312,000. I have just told the Minister about a LIHAF supported development in which two-bedroom units are being sold back at a discounted rate of €358,000, up to €442,000. They are not affordable for the average person who will be cleansed from the area. The local council only has plans to provide just over 1,000 social houses. People on those earnings cannot get onto the housing list because the Minister will not raise the eligibility thresholds. Middle income workers in swathes of Dublin, including the Minister's constituency and mine, Dublin South and Dublin Bay North, will be cleansed from these areas. There will be no social mix and it is social cleansing because nothing is being offered to middle income workers at levels they can afford because the Minister has left developers off the hook.
It is important when considering the Government's policy on the affordability of housing not to look at any one housing policy in isolation. It is important not to look at LIHAF funding only but also at what we are doing with affordable purchase schemes, the Rebuilding Ireland home loan scheme and the different things we are doing to reduce the cost of development. The Deputy likes to focus on one particular site and say it is not working for the taxpayer-----
-----but all of the evidence is that LIHAF is working for the taxpayer. On the numbers the Deputy gave in his example, the couple would be able to afford to meet the minimum price of €348,000 he mentioned if one were to take into account their combined gross earnings, the size of the loan they could take out, the deposit they would have to have, plus any assistance they would receive to buy.
No, I am not talking about the bank of mum and dad but about their own savings and the help to buy scheme which the Government has introduced. The affordability measures are working. Look at what LIHAF is trying to achieve and what it will achieve with State funding. We will get a much bigger bang for our buck than if we had invested the money directly. Furthermore, thousands of homes are being built on sites that may not have been built on until 2021 had we not put the funding in place. That is what is being delivered by LIHAF. It is increasing supply and there is also a claw-back in terms of affordability. Not every LIHAF project that was to be commenced is being followed through. In some instances, the developers are proceeding without the local authority or Government assistance and as a result there will be no affordable housing units on those sites. The LIHAF funding will help to secure affordability in parts of Dublin where previously there would not have been affordable homes available.