Robert Troy (Longford-Westmeath, Fianna Fail)
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As the Minister of State is aware, the deputy leader of Fianna Fáil raised this issue during Leaders' Questions today with the Tánaiste following reports in today's newspapers that a further 295 houses in Leopardstown will be sold directly to an institutional investor. What this does is reinforce how Fine Gael favours financial institutions and big corporations over ordinary citizens. The Tánaiste's answer earlier today was really disappointing. It reminds me of what the previous Government did when it welcomed the vulture funds to this country. They were welcomed and enabled to purchase non-performing loans at knock-down rates thus enabling them to make huge profits on the back of ordinary citizens. A total of 2,923 houses were sold to these institutional investors. We are forcing young people out of the market. It is not just us on this side of the House who are saying this. The Minister of State will be aware that the UN rapporteur wrote a very strong letter to the Government condemning its policies saying that we are institutionalising home ownership.

The preferential tax laws constitute a significant incentive for these people to come in and purchase blocks of apartments and large housing developments. The tax laws that are applicable to these institutional investors are completely different to those that are applicable to small landlords with two or three properties that were probably bought as a pension fund. Typically, self-employed people buy a number of properties to use as a pension fund. They do not get the big write downs that these institutional investors get.

We also have a problem with the State itself buying wholesale instead of building local authority houses again forcing young couples out of the market. Young couples are being priced out of the market and are not getting the support they need to purchase their first home. The other night, I was out with Mary Fitzpatrick, who is running in the local elections. Planning permission is being sought for a large block of apartments on Botanic Road. People living in three different houses I visited told me that they would not mind if this development went ahead if it could be guaranteed that they could buy one of the apartments. These are elderly people living in large four-bedroom houses who want to downsize to open up opportunities to bring those type of houses back into the market but they are afraid they will be unable to do so. Unless the Government changes the regulations, they will be unable to do so.

It is really something that is hitting a nerve with the general public. It is not just people in the affected areas in large urban settings. Even when I travel around my constituency with local election candidates, people who will not be affected ask me how the State can do what it is doing. They ask how the State prioritises international funds over our own citizens and prevents them from getting on the property ladder and purchasing their first house. Change is needed. I know the Minister of State understands the challenges facing young couples. I ask him to tell me in his reply that the Government has listened to what has been said on this side of the House and that change is imminent.

Damien English (Meath West, Fine Gael)
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I thank Deputy Troy for raising this issue in a formal capacity so we can have a debate around it and bring some rationality to the conversation. Like Deputy Troy, I spend a lot of time meeting people for many different reasons on a weekly basis. There is a misunderstanding of what is happening in some parts of the housing market. When one spends time with people and has the chance to tease things through with them about the importance of all the different types of house building programmes and the different types of investors such as the State for social housing, pension funds, individuals buying their second or third home, first-time buyers and second-home buyers, one can see that we need all the different types of financial arrangements and purchases coming into a system to generate a full and sustainable market for housing. I want to be very clear about this because Deputy Troy tried to allude to what Fine Gael is supposedly about. Fine Gael and Independent members of this Government, with the support of many others here, want to deliver a sustainable housing construction market. This means that we need a combination of all sorts of different sources of finance and a combination of private housing; affordable housing, which is subsidised housing; properties for rent; and properties for purchase. We need to supply the market for first-time buyers. All the different categories of market need to be supplied. The overall target must be the number of houses we need every year.

In the past, we have had boom and bust when it came to construction. We have had 10,000 houses one year, up to 20,000 in another year, up to 90,000 in another year and then back down to 10,000. That is not a sustainable housing construction sector. It is not a sector in which people can safely invest their time and skills in education to develop for work in the construction sector. It is not a sector in which someone can develop his or her skills running and developing a company because it is not a safe place in which to do so. A safe place to invest is a housing construction sector that delivers about 30,000 units every year for the next 25 years. We have produced the population projections under Project Ireland 2040 and we know we need to deliver and get to about 30,000 houses every year for 20 years. Naturally, it would be great if we could wave a magic wand and have 50,000 tomorrow to deal with the current crisis but we must build up to that level. This year, about 23,000 houses will be built. We must also put in place a system that brings us close to 30,000 and keeps it at that in a managed and co-ordinated way that is right for everybody. I met people last night who paid probably twice as much for their house 15 years ago - a price they should not have paid but were allowed to pay because they were allowed to borrow way beyond their capacity. It was never sustainable in the first place yet they were allowed to do it. We cannot repeat that. I want to be clear on that before I go into further detail.

The Government is committed to increasing the supply of all types of housing, including social, affordable and private housing. Institutional investment in the private rented sector is just one aspect of this increasing supply. The Deputy is right that it should not make up all of it and it certainly is nowhere near that. It will not be near that because institutional investors will invest to a certain level and that is where it will go. The economic division of the Department of Finance recently published a report, Institutional Investment in the Housing Market, to bring clarity to the potential impacts of higher levels of institutional investment on the residential property market. The report examined the role of institutional investors and large-scale landlords in the Irish residential property market. It found that the combined purchasing activity of property funds, real estate firms and real estate investment trusts is relatively small accounting for a net 1% of transacted units in 2017 and not far above that in 2018. We checked the figures as well. Ownership of rental properties by large-scale landlords - those who own more than 100 rental units - is also low, accounting for 4.6% of the wider market. Yes, there is some activity this year. This is housing supply that will probably come in during 2020 and 2021, not necessarily this year. In some cases, they are pre-orders.

There are approximately 340,000 tenancies registered with the Residential Tenancies Board, RTB, of which approximately 310,000 are private rented tenancies. The vast majority of landlords, just over 70%, own just one property with a further 16% owning just two properties. Almost 86% of the registered rental housing stock is possessed by landlords with less than ten properties so it is not the case that it is 100% of the market, which was the impression being given this week. In any given week, there will be certain news items that take over. It gives the impression that all the activity involves these multinational investors. That is not the case.

In the context of a residential rental sector which is largely composed of small-scale landlords, there are certain benefits associated with institutional landlords as part of that mix. Product mix is important and some tenants may prefer to lease from a larger landlord while some may not. What is important here is that we increase the overall supply as well as introduce changes in legislation to protect tenants and give them more rights and services. There is a focus on this issue because the price is quite high in some cases because we still have a dysfunctional housing market and a dysfunctional rental sector. As we increase supply across all the different sectors, it will help smooth that over and deal with that crisis and people will then accept that we need to have different types of investors, including the person buying his or her own house. We need to generate enough supply and to do that: we need all people coming to the table.

Robert Troy (Longford-Westmeath, Fianna Fail)
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The Minister of State is not saying anything new. Nobody is saying that it involves 100% of the market but institutional investors' share of the market is growing rapidly because they are buying more and small landlords are getting out. The reason why small landlords are getting out is because they are taxed to within an inch of their lives. A total of 52% or 53% of the rent a small landlord gets goes on tax. Does the Minister think it is fair that there is a different tax system for institutional investors versus small landlords? I do not think it is. Does he think it is right that these funds are coming in, distorting the market and driving up the cost of properties and rent?

6 o’clock

Savills projects that rent will increase by a further 17% in the next three years. I really do not know how people can afford to rent any more.

If the Minister of State wants to talk about supporting and changing the market, he needs to support the young couples who dearly want to get into the market and buy their first house but who are unable to do so. As for the Rebuilding Ireland mortgage which the Government announced and launched and which was hailed as the panacea for all things, that money has been used up and the criteria for the scheme are very restrictive. I have been in contact with a young man who is separated and looking to buy a second house with his new future wife. Due to the fact that he was in a situation before, he was automatically disqualified. The scheme is far too restrictive.

If we want to change the market and support our citizens, the Government needs to change the regulations brought in a number of years ago that drove up the cost of houses. I am not talking about reducing the number or quality of the regulations or their quality but the time it takes to go through the certification process in the Republic of Ireland should not be a multiple of the time it takes in Northern Ireland. That simply should not be the case. We need to suspend development levies for developers who are willing to sell their houses as affordable houses to young clients. What we should be doing is giving breaks to our own citizens, not tax breaks and incentives to large institutional companies to come in and piggyback on our citizens. Unfortunately, the Minister of State has said nothing thus far which gives me any comfort that the Government will change tack.

Damien English (Meath West, Fine Gael)
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Again, I need to address a number of those issues. First, I will address the issue of regulations. The Deputy will be familiar with projects in his area that were built to a poor standard. In fairness, I know he is not a supporter of the latter. I wish to clarify to everyone here that there is no intention of changing the regulations such that we will have a poorer standard of property building.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I referred to the certification process.

Damien English (Meath West, Fine Gael)
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We entered government with a regulation process that had allowed too many developments to be built to a very poor standard. A lot of my time is spent working with people in Donegal and Mayo living in homes affected by mica, people in our counties whose homes are affected by pyrite, and people in apartment blocks in Dublin that are built to a poor standard. We are not going back to that.

Robert Troy (Longford-Westmeath, Fianna Fail)
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That is not what I said. The Minister of State should be fair.

Damien English (Meath West, Fine Gael)
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I am not stating that it is what the Deputy said. I will be very clear, however: there is no intention of relaxing regulations. We want top-class, quality houses, and that is what people are investing in. There are too many people out there who have high mortgages on poor-quality houses. That cannot happen again.

The certification process is often blamed here. It is claimed it is too costly. The cost does not necessarily relate to the certification process; it is the additional cost to build a house properly, which did not always happen in the past, to meet those regulations. There are high-quality homes being built because of the certification process and proper regulations and adherence to them. If done properly, the certification process can be carried out without causing too much distress to people. I ask the Deputy to trust me on this, though: people are much better off investing in a certification process. I know that people choose not to go this route when building their own one-off homes. I would not recommend this because I have seen too many houses that are not built to a high standard.

I want to be very clear that the tax system for individual landlords is being considered. A working group is in place to examine this in order to see whether individual landlords are being treated fairly. As for institutional investors, tax changes have been made to encourage resources to be pooled together to be invested in housing because we want to develop a proper, functional rental market. We accept that the rent is too high and we are all working to increase supply to bring rental costs down. This is a problem in the short term, but we will be fixed with supply in the long term. I have been working with the various developers weekly on many of the sites to which I refer. The State does get involved. We purchase houses and compete for vacant properties that no one else is purchasing. Some of these sites often get activated because an investor, the State or someone else steps in to buy a chunk of the properties from the plans to get the scheme started. We do this in some cases too because, again, we want to keep sites open and keep activity going. It is important that we get the right blend, and we are getting it.

An impression has been given this week that it is all skewed one way, which is just not factually true. If Deputy Troy analyses the market last year, he will see the sectors involved. There are probably fewer than 4,000 units in the investment sector; up to 6,000 units are being used for social housing purposes; the housing market itself accounts for over 11,500 units; and one-off housing accounts for 5,000 units. This is quite a reasonable divide across the system, so the impression being given this week that it is all skewed in one direction does not represent the truth.