Thursday, 22 November 2018
Social Housing Bill 2016: Second Stage [Private Members]
I move: "That the Bill be now read a Second Time."
Before I get into the short Bill before us I want to ask a couple of sincere questions. How many real social houses do we actually need to meet the level of demand that is out there at the moment? I use the words "real social houses" deliberately, partly because that is what the Joint Committee on Housing and Homelessness spoke about in 2016 in its report in discussing houses owned by local authorities in approved housing bodies. When we are talking about meeting the long-term needs of people on social housing waiting lists, notwithstanding the need for subsidised private rental accommodation as a short-term measure, real social houses are what we should be looking at. We need approximately 130,000 real social houses. There are just over 70,000 households on the local authority housing waiting lists, approximately 40,000 households in receipt of the housing assistance payment, HAP, and just under 20,000 households in receipt of the rental accommodation scheme. Any Government strategy that is going to work in the short to medium term has to have a target of a minimum of 130,000 units to meet current need.
Rebuilding Ireland has committed, between 2018 to 2021, to building 30,000 real social houses owned by local authorities and approved housing bodies. Post-Rebuilding Ireland, if one looks at the targets outlined in the national development plan, up to 2024 approximately 10,000 real social houses a year are planned. That means that between now and 2024, on the basis of the current targets, the Government is going to meet approximately 45% of the real long-term social housing need of the households currently on the list. That means, of course, that not only will it be short on current need but it will also be unable to take into account future need as more people join the list. Of course, that is assuming those targets are met.
I have always been very clear that the Rebuilding Ireland targets in 2016 and 2017 were met. There is a concern, particularly given the fact that the construction targets at the end of the second quarter of this year are only at 28%, that that target might not be met this year. It is a significant target, so we will have to wait and see. The gap between what will be delivered under Rebuilding Ireland and the national development plan is not in doubt. It is enormous.
When we look at affordable housing we can see that the situation is actually somewhat worse. If one were to ask how many affordable homes to buy and rent we need in our housing system, the straight answer is that we do not know. The Government does not attempt and has not attempted to calculate the level of need that is out there in terms of affordable homes for rental or purchase. Amarach Research figures published yesterday at the Housing Agency's conference tries to give a sense of how many people living in the private rental sector, for example, are paying over 30% of their income for their accommodation. The number is quite high. The ESRI, in a paper published earlier this summer, spoke about 32% of households paying more than 30% of their income on rent or mortgages. However, in the bottom 25% of income earners it is 75%. This clearly shows that there are thousands, if not tens of thousands of households, in desperate need of affordable housing.
Rebuilding Ireland, when it was originally published, had no targets whatsoever for affordable housing. While there are now a number of schemes, including cost rental pilots, the serviced sites fund, local infrastructure housing activation fund, LIHAF, and the Rebuilding Ireland home loan, the targets are still very hard to understand. Perhaps over the course of the next three to five years we might get 6,000 to 10,000 affordable rental and purchase units, but clearly nowhere close to what is required.
All of that, of course, is before we raise the issue of Brexit. We have had two very interesting hearings in the Joint Committee on Housing, Planning and Local Government in the last two weeks. All of the people appearing at that committee, including representatives from the ESRI, the Nevin Institute and industry bodies, told us that any negative Brexit, whether a hard Brexit or a negative soft Brexit, will have an impact on both housing demand due to increased inward migration from Britain or elsewhere in the European Union, and also an impact on private sector costs in terms of construction and financing, as well as potentially affecting delivery of the private sector units.
Rebuilding Ireland and the national development plan will not meet social or affordable housing need, and we have a very significant risk coming down the line which might further reduce private sector supply at a time when we have a significant reduction in the number of private rental units in the private rental sector. It could also knock some of the social housing support targets off-line as private sector units that are targeted for HAP, RAS and long-term leasing do not come on stream.
The conclusion of all of this is that the current plan, even if one thought it was a good plan and that it would deliver on all its targets, is not going to meet anything close to the level of social and affordable housing need. It is on that basis that I have brought forward the Bill in front of us. It is very simple. It says that with respect to standard private sector developments the Part V component of social and affordable units should be at around 25%, which is close to the original Fianna Fáil legislation of 20%. It also adds that in strategic development zones, particularly because of the importance of these sites, the target should actually be 30% social and affordable homes, the mix to be determined by the relevant local authority and the planning process. Many developments are already doing this. In my own constituency, in the Shackleton development a developer recently entered into a voluntary agreement with the local authority and Túath Housing for 26% social housing. It makes eminent sense from its point of view. The Minister will know that his predecessor, the Tánaiste, played a very positive role with Dublin City Council and local communities in Poolbeg to ensure that strategic development zone would have just under 30% social and affordable housing.
What we are putting on the table is something that is already happening. Many developers are actually very interested in a higher percentage of Part V housing because it solves some of their financing problems and makes it easier to secure bank finance for the remainder.
The Government says that mixed tenure is key to sustainable communities. I support the social housing infill projects, but many of them are not encouraging greater mixed tenure. In fact, there is social housing infill in areas with large volumes of social housing already in place. Some research from social housing policy experts in this State is beginning to suggest that if the portion of Part V units is too small it creates a sense of isolation and marginalisation for the small number of social housing or lower-income tenants living in large private housing estates. If the Government was really serious about sustainable communities and the mixed income and mixed tenure model, it would be looking to have a portion of Part V units in private developments higher than the current figure of 10%. From the points of view of the developers, of need and of the Government's own policy, what is in this Bill is actually eminently sensible. I find it hard to imagine anybody would be unable to support it.
I do not want to sound disrespectful, but I can almost hear the Minister's speech as I am saying those words. I am sure he will tell us that he appreciates the sentiment behind the Bill. He will tell us he accepts that I am genuinely trying to increase the supply of social and affordable housing. However, he is going to tell us about unintended consequences. It has almost become the standard response when something is actually a good proposal but for whatever reason the Government does not want to support it. It relies on the politics of unintended consequences. The only unintended consequence I can imagine the Government might see in this is as follows. It might allege that the developer, denied the profit margin on the 15% that would have been private and is now social and affordable, will seek to recoup it on the remainder of the private units. The irony, of course, is that every time we propose putting social housing into private development the first thing everybody tells us is that it will lower the value of private sector homes. It is one of the objections by which some parties' councillors around the country try to block Part V developments. I do not think there is any evidence to suggest this, and if the Minister does use that argument I hope he relies on evidence rather than mere supposition to justify his position.
With respect to Fianna Fáil, I genuinely do not know what that party's position will be. I really hope that Fianna Fáil supports the Bill, both because of its spirit and the fact that it is close to Fianna Fáil's original Bill. If Fianna Fáil Members are concerned that 25% is too high I am genuinely open to amendment on Committee Stage. I would prefer 25% and I think that logic suggests it. However, if on Committee Stage Fianna Fáil's representatives were genuinely to suggest they could agree on a lower percentage, I am open to doing that. Anything above 10% is better than 10%. I appreciate that this is a slightly different idea, but I can say the same about the 30% figure for the strategic development zones, SDZ. If Fianna Fáil is interested in a genuine discussion with us either on the percentage or on the wording by which we frame it, we are genuinely open to doing that. The Bill could outline an aspiration of up to 30% rather than making it the minimum figure.
The reason I say that is that something very important happened in the Joint Committee on Housing, Planning and Local Government today. A positive outcome followed a very strong collaboration between Opposition parties, spurred on by the very successful mobilisation of students in Dublin, Galway and elsewhere, which put an issue on the agenda of this House that I do not think the Government had intended to deal with. Opposition parties, in particular ourselves and Fianna Fáil although others supported it too, said that we need action on this. We tabled our own legislation and we met with the Minister. To the Minister's credit he accepted the arguments that we put forward, and it was reported in the committee today that the Department is working on amendments in line with the intent of the Sinn Féin Bill, the Fianna Fáil Bill and the desire of other political parties on the committee. It looks like we are going to end up with exactly the kind of protections that everybody here says they want as a result of that action. My appeal to Fianna Fáil today is that we did it on student housing. There is a credible argument that we could do it on this as well, and we are genuinely open to compromise if that is of any assistance.
What is the consequence of us not doing this? It is very simple; there will be fewer social and affordable housing units. At a time when we are in desperate need of increased output no matter what interpretation of the figures one uses, anything which increases the quantum of social and affordable housing must be considered. The offer I made to Fianna Fáil of looking at the percentages and the wording I also make to Government. We said today as we progressed our Residential Tenancies (Student Rents, Rights and Protections) Bill 2018 that if the Government brings forward its own amendment we will take ours off the table. I make exactly the same offer today. If the Government comes forward with something sensible and credible we will work on a cross-party basis to achieve it.
I refer to the Housing Agency's conference yesterday. The Minister spoke at the start and I was there for the bulk of the presentations. One of the really interesting things that struck me was that during the course of the conference, a range of voices who were particularly expert in looking at the private rental sector made some very startling and blunt observations. Sherry FitzGerald, not an organisation known for its left-wing radicalism and calls for State intervention, very clearly stated that if we consider the properties leaving the private rental sector, that is, the 9,000 rental properties we have lost in the last year and a half, and consider the current low level of private sector investment in the private rental sector, which may be producing 4,500 to 5,000 units a year at a time when 10,000 units are needed, there is clearly a huge problem in the rental sector. EY, another organisation not known for its radical socialist politics or strong advocacy of State intervention, examined what is happening with job growth in the economy. Its representatives noted that while there are very positive signs in aggregate, large numbers of people are coming into employment who are still on low or modest wages and private investors' activity in the rental sector will not meet the need of those people now in work. In may cases they are not eligible for social housing support and they are desperately in need of affordable rental or indeed purchase.
Mr. John O'Connor, with all of his expertise, was asked if he thought the market could fix that problem. When he was asked if it is time for an even greater level of public intervention in the affordable housing market, particularly rental, he said yes. He was not having a pop at any political party, but he said very clearly that in his view there was not a sufficient appreciation across the political spectrum of the scale of intervention in State-led affordable housing, particularly affordable rental housing, necessary to tackle the crisis. He said that if we do not address that, we are going to end up with an even bigger problem in the months ahead.
To conclude, this is a genuine attempt to put a proposition on the table to deal with an important issue. It is not going to solve all of the problems. It is a small but significant piece of the jigsaw to advance the response to the crisis. I am genuinely urging all parties and independents to look at it positively and to support the intention of the Bill. If they want to amend it, we are open to amending it on Committee Stage to ensure that instead of the 10% that is currently provided we can have a potential proportion of 15%, 20%, or as I would much prefer, 25%. This will ensure a greater level of social and affordable housing is delivered in the years ahead for the people who so desperately need it.
I do not think we have ever had a properly functioning housing market in this country, at least not since 2002. We have to get involved as a State and as a Government. We have to play an active role and do so for many years to come to meet the needs of different people in our country today. One thing that is clear at the moment, particularly as we look at the budget that has just passed for 2019, is that the Government is actively involved in the housing market. We will spend more money next year on housing than any previous Government has ever spent in a single year, some €2.4 billion. That will go into different solutions to help people in housing need. Between one in four and one in five homes built this year and next year will be a social housing home, which is quite something given where we have come from. As part of the confidence and supply agreement we have agreed the largest affordability package in a decade between ourselves and Fianna Fáil. We have launched the Land Development Agency to use public land for building houses. We are doing much more than that, around regulations, ideas and initiatives like cost-rental. We are holding conferences on homes for the elderly and how we can wire that into our planning for the future. These are things that we as a Government and a State, through the Department, local authorities, housing bodies and other stakeholders, are doing to ensure that we are directly involved in housing solutions for our people, because we have to be.
The purpose of all of the measures we have brought in during the last couple of years under rebuilding Ireland, and will continue to bring in during the following years under project Ireland 2040, is to ensure that we move away from the violent market-led swings up and down that we have seen in the housing sector far too many times in this country's history.
Those swings can affect rental prices, the price of a home, the number of people employed in housing, the amount of money we get in taxation from housing-related products and services and even the number of homes being built. Ninety thousand homes - twice too many - were being built. The number fell to fewer than 5,000 a couple of years after that. Tens of thousands of builders and workers lost their jobs. Hundreds of thousands of people fell into mortgage distress and other types of distress as a result.
What we are trying to get to is a steady and sustainable output. We talk about sustainable housing delivery. It is not jumping to 60,000 homes next year to fall back to 20,000 homes the following year. It is a consistent output of supply, somewhere between 7,000 and 9,000 homes a quarter. We are close to hitting 6,000 homes a quarter. We will get somewhere in the region of 20,000 new homes this year and 25,000 new homes next year. That is sustainable delivery.
The important point about that delivery is that it will ensure that no matter what happens in terms of future economic shocks, there is a committed level of taxpayer-sourced funding for housing delivery in the wider economy but also that intervention in terms of social and affordable housing schemes. We have that in the ring-fenced programme, Rebuilding Ireland. We have it in some of the new measures to leverage more private finance and different types of finance, not from the Irish sector exclusively but from different areas, to help protect house building in the economy.
We must include social housing at the core of what we do every year when it comes to housing construction and we must ensure that homes, as they are built, are affordable. The use of that word "affordable" is not to imply, just because one does not come under an affordability scheme, that the other houses being sold are unaffordable. What we are really talking about with affordability are homes subsidised, either to buy or to rent. What we are trying to do is prevent and protect against shocks that hurt people and result in them needing emergency accommodation. It is an unacceptable situation, as we have all stated previously, to have people going into hotels tonight as part of an emergency response until we have these homes built. We want to make sure that we never have to rely on hotels for families as a type of emergency accommodation.
The Deputy who brought forward this Bill was incredibly condescending in assuming to know what I might think about it or the arguments that I might make. He does not have the responsibilities the Government has and his party does not have the responsibilities that both Fine Gael and Fianna Fáil have in establishing confidence and supply, and to dismiss the idea of having to consider unintended consequences is incredibly naive. Of course, we have to think of the unintended consequences. The reason we came forward with Rebuilding Ireland as a package across the housing sector was that we had to think about the knock-on effects of different policy proposals that we brought forward. If one brings proposals forward in a piecemeal fashion without thinking about the possible negative consequences, one could do more harm than good. We have to be conscious of unintended consequences. What led us into the crash was many different Ministers and others trying to do the right thing in most instances, making individual decisions and those decisions not being joined up. It led to the chaos we had when our housing sector collapsed and it took the economy with it. My responsibility, as a Minister, is to make sure that I think of all possible consequences from every policy that is brought forward.
I will not be bullied by the Deputy in the way that he presents his arguments or in the way that he, his leader and his party try to treat Members in this Chamber when we try to have reasonable debate. We need to move beyond these personal attacks. People are fed up with such attacks. They want to focus on policy. Let me focus on the Bill that we have at hand because I am not interested in personal attacks.
This Bill assumes that there are no other streams for social housing delivery today. It seems to ignore the multiple streams that we now have for social housing delivery to protect us from future shocks. We have Part V, which we have reformed. We have housing bodies now playing a much more active role in the delivery of social housing and partnering with local authorities, which have taken back responsibility and are ramping up the delivery of social housing. We, obviously, also acquire homes as well - there are properties to acquire - where we can help people more quickly, and often more cheaply, than if we were building directly. We enter into long-term lease agreements as well because it is another way of the State being able to bring security and safety to people in their homes, adding to the stock of social housing.
We often talk about numbers and percentages. The Deputy, in his speech, outlined some. On this idea of 20% or 25% social housing homes, one in four to one in five homes built this year, and again next year, will be social housing homes. Of new builds, 20% to 25% will be social housing homes. Project Ireland 2040 talks about 110,000 new social housing homes in the stock of social housing by 2027 which is not far off the figure the Deputy himself gave. The stock of social housing will increase by 8,000 this year, and 10,000 next year. These are real social housing homes. They have walls, roofs, doors and windows, gardens, and keys. People live in them. They have security in their homes because it is social housing.
We also have to recognise in the solutions that we are bringing about with Rebuilding Ireland and Project Ireland 2040 in terms of the stock of social housing that not everyone will want to live in a social housing home. Many people will be happy to be supported, through State supports such as the housing assistance payment, in the rental market because of the flexibility it provides depending on where they are in life. We have to recognise that physically built homes is not the only solution for people. That is programmed into Rebuilding Ireland, which, in coming forward with the number of 50,000 homes, was approved by the Oireachtas committee. We now have hard-wired into our plans for the next ten years this constant output of social housing homes being delivered directly by the State with its partners.
This Bill also ignores the changes that have been made to Part V after we learned the lessons from the crash. No payment can now be made in lieu of Part V homes and the homes have to be delivered. It is not possible to transfer a site or a part of the site. We can conclude the agreement before builders are able to go on site because it is all about focus on delivery of the finished units for social housing.
The Bill also ignores the fact that we have a Land Development Agency, which is a different way of going about getting something back for the planning gain that arises when a planning permission is given or property is zoned. Part V will continue to be a way of doing that but with the Land Development Agency, we can now strategically acquire land before it is zoned, master plan it, put the infrastructure in place, get the planning in place and get the zoning in place. We will get the uplift that is normally got by a developer because the State is the developer and we then use that for dividends, such as affordable housing or more affordable homes. That is the purpose of The Land Development agency, LDA.
It also ignores the fact that the affordability provisions were stood down previously in 2011 because affordability was not an issue after the crash. In 2011, house prices were still falling and they continued to fall through 2012. We were left with 3,000 ghost estates, some of which we are still dealing with. House prices are on average still 20% below the peak even though there are, of course, rapid house price rises in certain parts of the country, but they are beginning to slow. Affordability, as a result, is a different challenge depending on where one is in the country and other factors.
We have now recommenced those affordability provisions because there is a significant affordability challenge in the country today. That is why it is important that the State maintains its involvement. The State has really become involved in the past number of years with Rebuilding Ireland. That involvement is being maintained because what is certain is that as we build more homes, if we want to make sure that those homes are more affordable, not only through subsidised housing but also through affordability being delivered, for example, through extra supply, we have to make sure that we become involved to make affordability happen. We have done that through the Rebuilding Ireland home loan. We have had more than €200 million - the first tranche - in housing agency approvals and those should flow down through the credit committees and local authorities. The rent-to-buy scheme has been successful in helping young couples get the deposit together to buy a home.
We have brought in the rent caps. New legislation is coming which will better enforce those rent caps and give greater powers to do that. We have the €300 million, which we announced in the budget, over the next coming years to allow the Government to share the burden of the mortgage with the individual or couple who are looking to buy a home. We have cost rental that we are trying to do with scale at St. Michael's and other places using new forms of finance, such as the European Investment Bank, which needs to become a major part of our rental market. In that way, of course, the State will stay involved in delivering affordability for a number of years to come.
We have to make sure also that as we drive affordability in our housing supply, we are driving different types of homes. It is easy to build the three-bedroom semi-detached house. We are good at that in this country. We are not as good at building apartments. That is why we have new apartment guidelines, new height guidelines, and provision for a greater number of studios. One does not need to get planning permission to build above the shop now as long as there are fewer than ten units. There are new guidelines for build to rent, which is seeing greater investment. There are new guidelines for co-living. All these things, including the consultation process that has begun in regard to elderly people's homes and elderly living, will help us bring about greater security of housing supply because the houses will met the needs of people as their lives change and as the economy changes because of the technological revolution that we are going through.
If I could welcome one provision in the Bill, I would welcome the fact that it seeks to in some way mirror the provisions that we brought forward with the Land Development Agency in terms of making sure that when we bring forward public land for house building we are trying to get a social mix. It has been unclear until now whether Sinn Féin was in favour of a social mix when it came to housing delivery. We believe that we should use housing policy to support and unite communities, not to divide them, and that is why we came forward with our proposals for social and subsidised housing on public land with the Land Development Agency. I hope that is support for those policies in the Land Development Agency plans.
The big risk with this Bill is that it will increase the cost of building homes.
The Deputy is wrong to dismiss that because, of course, the cost of providing those homes at a lower price will have to be transferred on to the build price of the other units on that site. That could make those homes more expensive as the builder seeks to achieve a margin on those homes that are built. When social housing is proposed in certain local authority areas, local residents in existing homes will object, which they should not do, and be supported by politicians, which should not happen. One of the fears voiced is that it will lower the price of the existing homes in that area. I think they are wrong on that score. I do not think, however, it is wrong to suggest that if the builder is going to lose money if a greater proportion of homes are built on the land, this cost would not be transferred to the homes that are to be built. In trying to achieve affordability with these measures and without thinking about the other consequences that would come from this blunt instrument, it will make homes less affordable for young people and young couples. That would be the net effect of this Bill. It will achieve the opposite of what it seeks to achieve just like other proposals like the Focus Ireland amendment on preventing evictions. They sound very good when one hears them but when one drills down, one realises that they could give rise to far more notices of termination, overwhelm the system and force more people into emergency accommodation than are prevented from entering it.
We talk about a steady output of housing and all the different measures that are in place to deliver social housing, all the commitments that have been given, all the funding that is there and the programmes that are there to ensure we have subsidised and affordable housing coming on stream. We must get to a steady output of housing and fix our broken housing sector. When it is fixed, we can look at other proposals. We can look at different things we might do when we finally manage to secure the number of homes we need to be built every year in this country. We are not too far off that point. A number of measures and policies have been introduced. People say they have had enough of different schemes, policies and announcements. We have introduced regulations in respect of Airbnb and we brought in our rent Bill. We need to spend more time focusing on delivering, hitting those targets and doing things to bring about the delivery within existing policies and programmes. We must ensure that if we bring forward significant money for affordability, it is drawn down and spent by local authorities and used to deliver the land for affordable homes.
One contradictory element of the Bill is that it seems to now rely on private builders to deliver social housing. I thought we had learned that lesson and moved away from the provision of social housing exclusively through private developers. What we have tried to in all the policy measures we have brought forward is bring the responsibility back to the State. That is happening. There is room for Part V. It is part of achieving social mix and making sure we get a dividend back for the gain the developer gets from obtaining planning permission and so forth. However, we need this multi-stream development of social housing to protect it into the future should a difficulty with the private sector or other parts of the economy arise that might put that social housing provision at risk.
A good Government needs to intervene directly in the market and stay involved. That is what we are doing. Rebuilding Ireland, Project Ireland 2040 and all the other plans we put in place maintain our commitment in this regard. I welcome support from any Deputy in this House for the Government's policy when it comes to the mixed development of housing on land, be it private or public, but now is not the time to place extra costs on builders when they already have cost challenges. This Bill would make homes less, rather than more, affordable for the vast majority of people and, again, would outsource social housing to the private sector when everything we have been doing in the past three years involves taking back that responsibility.
I welcome any opportunity we have to debate the number one issue in the country, namely, the provision of housing. As housing spokesperson for Fianna Fáil, I enter this debate with an open mind. I wish to place on record - we have said it time and again - that we believe the reduction from 20% to 10% under Part V was a regressive step on the part of the previous Government. I am of the view that 10% is too low. We must also look at the consequences of increasing it from 10% to 25%, which seems like a significant jump. The percentage is 30% under strategic development zones. We need to look at how that delivers.
Deputy Ó Broin and the Minister have acknowledged that regardless of the political hats we wear and the parties to which we belong, all of us in this House know that rents are out of control. My biggest concern is that an entire generation of people will never be able to aspire to own their own homes. This is why Fianna Fáil insisted and worked hard in confidence and supply to ensure an affordable housing fund of €310 million was put aside over the next three years - €100 million per year - to establish an affordable housing scheme whereby individuals and couples could purchase their own homes. That is a fundamental part of getting people back in and I want to see that delivered. What we tried to do was use our mandate in a constructive way but also to be critical. I have been very critical of Government policy from time to time but I have also come forward with our alternatives and other suggestions. This is why I welcome the Bill. It does not try to do anything other than put forward another viewpoint and another solution. We need to increase housing delivery.
There is one issue that Deputy Ó Broin might address. I want to follow on from the point made by the Minister about the apparent over-reliance on the private sector. I agree with the Minister about that. I have been very strong and clear in saying that public housing should be built by the State on public land as well. We have enough zoned and serviced State-owned land to deliver approximately 114,000 homes and we should be doing that. I welcome direct build and building on State-owned land. In Deputy Ó Broin's constituency recently, mixed schemes were voted down by councillors. I understand that some Sinn Féin councillors opposed it. There will be local reasons. As someone who represents Dublin Fingal, I have always put on the record the fact that I have supported every social housing scheme that has been proposed in my county since I entered politics in 2004. I have never objected to one nor have any of my colleagues and we will not do so in the future. We need engagement with local communities but, fundamentally, people need homes. Fianna Fáil believes in that. It is a core belief. It comes down to delivery. It involves ramping up supply. The targets in Rebuilding Ireland are for in the region of 50,000 public homes between now and 2021. We need to see an increase in that. If this means some increase in Part V in order to deliver it, that is fine. This year, three quarters of all social homes will be delivered by the private sector. That is an over-reliance on the private sector. We need to make sure the balance struck is correct. I would like to see a focus on housing delivery on State-owned land. This is why we insisted on an increase in the discretionary cap from €2 million to €6 million in our budget negotiations with the Government in order to give local authorities more autonomy to allow them to build, relieve the Customs House of some of the work it is doing and streamline the process. I would like to see that cap increase to €10 million so we can have local authority estates of up to 40 or 50 homes being built without having to go through the 59 week, four-stage procurement process.
My concern in respect of the Bill relates to unintended consequences. To be honest, I have not made a definitive decision on it. I wanted to hear the debate here this evening. I would like to see the Part V level increase. There was an over-reliance on Part V on the part of previous Governments, including those led by Fianna Fáil. The correct thing to do has been to halt cash in lieu and moving sites but when this is done, it automatically reduces the percentage delivery under Part V through putting in those restrictions. We could have brought forward a Bill saying that we want 40% Part V because it would deliver more homes but we really need to look at what that would mean. We are about delivery, an affordable housing scheme and more public housing. Rents are out of control. Year on year, we are looking at about 11% in Dublin while rents nationally are 30% above the 2008 peak. We need to house people in permanent homes that are secure for them.
I work with colleagues in this Chamber in a non-political manner to find practical and robust solutions to our housing crisis, which is still a national crisis affecting so many people. The essential solution is so easy as to be frustrating to so many people. We need a massive increase in the supply of houses, particularly publicly-owned housing, and affordable houses for sale. Increasing the supply of housing means that we must increase the number of new housing units constructed.
The construction industry in Ireland is engaged in its entirety in the private sector. This fact is not ideological. It is not neoliberal or capitalist; it is just the truth. Quantity surveyors, plant machinery operators, bricklayers, carpenters, electricians and plumbers are engaged with private sector employers, or are self-employed, to build the houses the people need.
I come from a business background but I am a practical politician who believes that the State must control and, crucially, manage housing supply in Ireland. I believe that housing is a right that every citizen should expect the State to supply it as part of the social contract between Government and the citizen. It is my strong conviction that the State must control and supply housing for rent and affordable sale to citizens.
The purpose of this Bill is to provide credible alternative solutions. Fianna Fáil, in a principled and pragmatic effort to secure housing units for public use, introduced the Part V process. This process was controversial at the time, with many elements of the construction industry opposed to it. Originally, the Part V process allowed for up to 20% of new housing units to be provided as public housing. Despite its success, it needed to be reviewed and amended. However, Fine Gael made the mistake of reducing the Part V requirement to 10% from 20%, a 50% reduction, thereby contributing to the worsening of housing supply. Its commitment to ideology resulted in shrinking the public stock of housing coming on stream when houses were most needed. Fine Gael's inability to take the necessary steps to ensure that every family and person in this country could have a home is another failure of public policy.
This Bill provides that Part V be increased to 25%, with a maximum of 35% on SDZ lands. The question is: "What is the sustainable level for the industry?" The Part V process is an integral part of the solution to our housing crisis but it currently provides the incorrect percentage and significantly more can be achieved through it.
The Minister, Deputy Eoghan Murphy, said that this debate should not be personalised and that it should be about policy. For the people who need solutions, it is intensely personal. For the people in homeless accommodation, on housing lists for more than a decade, in mortgage distress, priced out of the market, in overcrowded conditions, living with three or four generations in one house and living in poor quality housing, it is very personal. There are many people in despair over their personal circumstances.
I am currently dealing with a couple who have eight children and are living in a HAP tenancy in Clonee even though they are from Dún Laoghaire. This is the third HAP-RAS tenancy they have been in. A few four-bedroom houses have come on-stream in Dún Laoghaire but it does not look like they are going to get one of them. Despite pleading with the council, it is not looking good. This family has been through a tough time. This is just one story. I deal with dozens of similar cases every week. This is personal for those people. They need solutions, they need them fast and they need to be real solutions.
The Minister appealed for us not to be ideological and to be practical. I refer him to an advertisement in the property pages relating to the Honeypark site, which was previously in NAMA and given back to Cosgrave. The Government made the decision to give it back to Cosgrave, who it paid to build it out and now Cosgrave is making the money on it. The Government has done the same with other sites. The sale price for these 214 recently completed apartments, which are being sold to international investors, is €95 million, which is €440,000 per three-bedroom apartment and they are not that big. On another property page, there is an advertisement regarding the sale of more than 1,600 apartments, many of them in Honeypark and almost all of them on sites that were in public ownership, namely, NAMA, and given back to developers, which are being sold to international investment funds for €610 million, which is just under €400,000 per unit. Many of the apartments are three-bedroom, which the investment funds are renting to people in Dún Laoghaire at between €2,400 and €2,800 per month. A number of them are being rented to Dún Laoghaire-Rathdown County Council. This is a joke.
Further up the road, there is another site, Cherrywood, which was also in the hands of NAMA but was returned to Hines. The company has obtained a lot of planning permissions and thus increased the value of the site. It has also flipped some of the site to Cairn Homes. Regarding the 10% of units the company is providing for social housing, it is asking for in excess of €400,000 for some of them. When we had this land in State ownership, via NAMA, the prices were much lower. It is a heist. We give the developers land free of charge and they sell, rent or lease it back to us for a fortune. This is madness.
Who can afford rent of between €2,400 and €2,800 per month? Who can afford to buy the units at €440,000? Virtually nobody, particularly not the people who need council housing. The local authorities also cannot afford to buy them at that price for social housing and people earning up to €80,000 per annum cannot afford to buy them. These units are being bought by investors to rent at extortionate prices, which causes one to think. The Government says that we need these people in the property market to help us. I think we want these people running out of the country screaming because we impose such heavy taxes on them and put such severe rent controls in place they are forced to leave, because only then will house prices drop. We do not need them here. They are driving prices through the roof. They are exploiting the crisis. Because they know the people they are going to rent to cannot afford to buy at this level they can charge these rents. This is the vicious circle we are in.
I commend Deputy Ó Bróin for bringing forth this Bill. We similarly proposed this in the motion that was defeated by the Government. Fianna Fáil did not vote for it, for which I criticised it heavily at the time, because it liked some of what was proposed but not all of it.
There is a problem. The Minister has a point. The motion we tabled during the summer proposed a minimum of 20% social and affordable housing and a minimum 30% on SDZs. There is a problem if that is all we do. I regret that what Deputy Ó Bróin has proposed is not enough. We need 100,000 social houses on public land, for which we have sites available, over the next five years to even begin to get near solving the problem, which equates to 20,000 houses per year. Anything less and we are in serious trouble. On Part V, there is a problem as well, even with this proposal if done on its own.
The problem is that if we buy the units back at these prices - and the State must, under the Part V scheme, lease or buy them - it will cost the State a fortune. We should therefore not buy the completed units. This was the point Mel Reynolds made, and I put it to all in the House, particularly the Minister. He said we should take the 10%, 20%, 25%, 30% or whatever the percentage is - and I think 25% and 30% are good percentages - of the land now and upfront, not the completed units whenever these speculators decide to build. We do not know when they will build. In Cherrywood, for example, one of the biggest planned residential developments in the State, not a single unit has been built. The developers got it about six or seven years ago from NAMA. We should therefore take our chunk now, take a chunk near the entrance to Cherrywood so we avoid any of the servicing problems and so on and build our bit now. This would mean we could build it at a much cheaper price. The State can build on the land at about €200,000, perhaps €250,000 - or less, between €170,000 and €220,000 - per unit. If the State buys the land, it will be relatively cheap; if the Government waits for the developers to give the State the completed units, the State will be waiting forever and will pay a fortune when it arrives.
This is what we should do on all these sites, whether strategic development zones or whatever else. We should take the land now so it becomes public land and build at the price at which we can build, which will be cheaper and then we will deliver the units more quickly. This is a very serious, practical proposal. Whatever percentage is agreed on this, this proposal would make a significant difference. It would accelerate things and collapse the dichotomy that Deputy Darragh O'Brien and the Minister proposed when they spoke of the impact on price and so on because it would not be-----
I refer to Deputy Darragh O'Brien's criticism that this is reliance on the private sector. We would not be relying on the private sector because we would be taking the land and it would become public sector land.
This is a serious proposal and I would like to hear a response from the Minister on it. It would make a big difference. If the Minister does not believe so, I would like him to explain how we will get these people on these strategic development zones.
Lastly, in ten seconds I want to say this on social mix. The Minister's comments are a bit rich. On public sites he wants to sell off public land to the private sector because we must have social mix, but on the private sites we can only have 10% public, so the social mix is different because it is a private site. This is not a serious notion of private mix; it just covers for the fact that we are allowing the private sector to dictate housing.
I will try to be brief in fairness to the Deputy and to allow him to come back in on the Bill he has tabled.
To respond to Deputy Boyd Barrett's comments in the round, we talked at the Housing Agency conference about sustainability, specifically sustainability in housing delivery. "Sustainable" is a contested space, a political space. It has many different meanings: economic sustainability, social sustainability, etc. It is not a neutral political term. The Deputy and I have fundamentally different ideas of a sustainable housing market. He wants a single-source solution involving one source of finance, one source of delivery. I think we need multiple streams to protect us from shocks we have not even considered yet that could come in the future. In the past we relied on a single stream of delivery for social housing and it did not work. We can all agree that Part V did not work under previous Governments because the Government came to rely too much on it for the delivery of social housing. That delivery did not happen because developers bought out of their responsibility-----
It is important we recognise that local authorities often acquire additional homes in a new development beyond the 10% stipulated under the Part V obligation. Home aspiration is incredibly important, but we must also recognise that in the future more people in this country will rent. It will become more of the mix of housing, and we need it to be more mixed. In doing so, we must provide greater protections for renters: longer-term leases, cost rental, stronger tenant laws and a stronger RTB to protect not only tenants' rights but also landlords' rights. All these things are needed as we move to a mature housing sector. It is also important we ask ourselves what is the right number of social housing homes to be built each year at present as we ramp up supply. Is it one in four, one in five? That is where we are. I accept that when we get to an output of 35,000 homes a year, which we will get to in two or three years' time, it might be time to revisit this, when the Land Development Agency has been in operation for a number of years and when other things might be happening in the wider economy. We must always revisit our policies to ensure they are working and are current, and that unintended consequences that were not thought of at the time have not developed in the meantime.
While there are some potential risks in the one-stage cap, it is worthy of consideration, and Deputy Darragh O'Brien knows from our engagement at the time of the budget that we are considering it, provided we can do it in line with the public spending code. That work continues and will come to a conclusion very soon.
I would urge caution when it comes to progressing a Bill such as this. First, we do not want to increase the cost of building houses at this time. We have done a number of things to try to decrease the cost of building and now we want to get those homes built. We do not want to build in further uncertainty or further costs for builders up and down the country at this crucial time. We do not want to make homes more unaffordable for the vast majority of people. As it stands, 80,000 people qualify for social housing; therefore, there are more people who do not qualify for social housing. We do not want to make their aspirations for home ownership or a secure place to live less tangible, less achievable, because of the unintended consequences of the provisions in this Bill. What we really do not want to do is to fall back once again on the private sector for the provision of social housing-----
-----and come to rely on it too much by bringing in the provisions in this Bill. Let us not go backwards. We have multiple delivery streams for social housing. This year more than 4,000 new social housing homes will be built but the stock of social housing will increase by 8,000 homes. Next year the stock will increase by 10,000 homes. These are positive developments for people in emergency accommodation, on the housing list or in overcrowded accommodation to get a home, to get their own front door and their own key. In tandem with this we now have local authorities bringing forward public land for the development of affordable housing under the affordability scheme that was agreed during the budget negotiations with Fianna Fáil. We also now have the Land Development Agency, which is not a response to the crisis as it should always have been there, but which will help to bring forward public land in high-demand areas and a social mix. It is not, as Deputy Boyd Barrett said, selling off lands to developers. We are the developer. It is bringing forward public land for homes for the general public. We should support that principle.
I will respond briefly to each of the Deputies. To respond to Deputy Darragh O'Brien first, I have always thought that if Part V is to work well, it should be additional to the mainstream delivery of local authority and approved housing body-owned properties.
The intention of this Bill, therefore, is not to replace that delivery but to supplement it and give a greater quantum above and beyond the existing targets. I think on this we agree.
I also wish to address the issue of rising costs. One of the big costs for many developers at present is finance, and one of the problems developers have with finance is the level of risk involved. If a developer has banked 20%, for example, of the units as Part V, that reduces the risk, reduces the cost of finance and could bring down the cost of delivering the units. Developers will have to make a choice as to the overall prices of the units. In many of the private developments I am looking at, having 10% social, for example, and now 10% affordable, if that is what we could move towards, would ensure that at least 10% of an overall development would be guaranteed genuinely affordable for the working families many of us represent. I think we are on the same page in respect of the supplementary nature of these additional units. The arguments about increasing costs do not stand.
I agree with Deputy Boyd Barrett that this is not a stand-alone policy. He and I have supported many motions tabled by each other's parties to increase the overall quantum of real social housing. The only thing I will say to him is that Part V units are bought at a discount. The Department has given us the figures for 2017 and the discounts, broadly speaking, are very healthy, so the units are not being bought at market prices. There are one or two exceptional projects that are outliers, but the general thrust of Part V is still significant discounts because the units are not being bought at the open market value of the land. I will share those figures with the Deputy if he is interested.
That is one of the areas where there are outliers. I will share with the Deputy the figures the Department has given us.
To respond to the Minister, I have always accepted that the State is spending more than it was spending before. My criticism is that it is not spending enough to meet the need that is there. The Minister tells us, for example, that 120,000 social homes will be delivered over the next ten years.
It will be slightly less than that because the Minister and I have different definitions of real social housing. If I did, however, accept that definition of 120,000, I note we have 130,000 households in need of social housing now and more are going to come onto the list every year. Even on the basis of the Minister's figures, therefore, he is coming nowhere near meeting need.
On affordability, there are times when the Minister says things that make me concerned that his understanding is different from the rest of us. Affordable housing should not be subsidised. The whole point of affordable housing is providing homes to buy or rent where people pay the economic cost of the delivery and innovative ways are found of cutting out additional cost without having to subsidise. Cost-rental is not subsidised. If the Ó Cualann Cohousing Alliance houses could never be sold into the housing sector, they would not be subsidised. That is an important point.
I am sorry the Minister found my intervention condescending. I do not have some magical powers to see into his head, it is that his office briefed the media after the Cabinet met on Tuesday. That briefing explained the reasons the Minister would not support this Bill and I am just relying on his own media presentation of that.
I apologise if that upset him. I also have to respond to the accusation that I was trying to bully the Minister. First, presenting a Bill and making a reasoned argument for it, even if the Minister disagrees, is not bullying.
I can be accused of many things, including being boring, irritating, a pain in the neck and getting things wrong. I do not believe that anyone who knows me or has witnessed my conduct in this Chamber and in committee would genuinely say that I am a bully. I might do things that really piss off the Minister - apologies for the language - but that is my political job as an Opposition spokesperson to hold him to account. Let us avoid that kind of personalisation and let us stick the issue. That is what I did, with-----
-----the greatest of respect. Every single attack I have made in respect of the Minister has been on what I believe to be his track record. We can, however, deal with that as we go. What nobody can accuse me of is being a bully. Let me also correct the Minister. The Dáil Committee on Housing and Homelessness made a specific proposal. It suggested the building of 10,000 real social housing units, owned by approved housing bodies and local authorities, every year for five years. That is not what is in the Minister's plan. That is not what is there and 8,000 real social houses will not be delivered this year because 2,000 of those will be leased from the private sector for a period.
That is fine. It is the policy of the Minister but it is not what the Dáil Committee on Housing and Homelessness recommended unanimously. Similarly, the figure of 10,000 will not be reached next year because I assume there will be approximately 2,000 leases. While I welcome each of those houses, that is nowhere close to what is required. The interesting point in the Minister's presentation is he has still not given us any greater clarity on genuine targets for delivering affordable rental or affordable purchase. The schemes have been renamed but not the targets. I appeal again to Fianna Fáil. We are open to compromise and have from now until the vote next Thursday to work on that. I am more than happy to sit down and agree figures if that is what can be done to progress a reasonable and sensible proposal for legislative change.