Wednesday, 17 February 2021
Land Development Agency Bill 2021: Second Stage
I move: "That the Bill be now read a Second Time."
A simple argument underpins this Bill and our broader approach to addressing the housing crisis. It is that the State has to step up to the mark to provide affordable homes for purchase and rent using all the means at its disposal. A good home provides shelter, stability and a safe location. It should be the launch pad for life's adventures and a refuge from its storms. The bricks and mortar of a solid home are the cornerstone of a good life. Owning one's home or having a cost-rental unit is the surest route to achieving those modest but vital aims. However, an ongoing affordability crisis has reduced home ownership rates to historic lows and increased the age of the average first-time buyer by almost a decade to 35 years of age. Ireland has plummeted from being a world leader to below the EU average rate of home ownership. For an entire generation, owning their own home is slipping through their fingers as they pay unprecedented levels of rent or languish at home saving every cent they can. A generation is caught in a rent trap and the Government and I want to give them hope and to reverse the decline.
The Land Development Agency, LDA, is an important step change in how we address the housing crisis by ensuring we make the most of all State lands to provide affordable homes for purchase and rent and take a strategic land management approach to the future. If the central promise of democracy is that each generation will be better off than the last, the current housing crisis represents a fundamental threat. In an era where the waves of dangerous populism are hitting the shores of established democracies, we need to keep our democracy strong and vibrant. The housing crisis creates an unstable system of haves and have-nots that reaches deep into the fundamentals of our society. Building a system that gives each citizen a clear stake in its prosperity is a Government priority. The struggle to boost home ownership levels and provide cheap, reliable reasonable rent is a core part of that effort to ensure politics delivers for all, including working people.
I am committed to pragmatism over dogmatism and ideology and will leave no stone unturned in addressing the housing crisis. The LDA is part of a comprehensive set of measures. In 2021, backed by the largest housing budget in the history of the State, we have the most ambitious social housing programme on record and we will start building new ladders of opportunity for young people caught in a rip-off rental market. It involves a sweep of proposals, not a silver bullet fantasy with more than €620 million of affordability measures alone. We are introducing a new equity scheme where the State will take a stake in one's home, lowering the mortgage costs, bridging the affordability gap and activating supply on existing planning permissions.
There is a new affordable purchase scheme with the State directly building affordable homes at scale on State-owned land. There is a retained and expanded help-to-buy scheme and our first ever national cost rental scheme with tenants getting keys this year, 2021. Today's Bill is an important part of those measures that has the dual goals of fully utilising State-owned lands to tackle the housing crisis and leading in strategic planning to build affordability into our housing system.
I will address both legitimate concerns and unfounded criticisms around the Bill to dispel any uncertainty and directly tackle any misinformation. Our politics needs to be better and our citizens deserve more than tired dogmas and empty slogans.
One is that the Land Development Agency will pay market value for State land which will drive up house prices. This is not true. The LDA will pay the affordable land value, not the full market value. The value is effectively set by the Minister for Housing, Local Government, and Heritage, which is me, by requiring a specific percentage of land to be used for affordable housing at prices the Minister will also set. The State bodies and agencies covered by this affordability requirement process are set in the Schedules to the Bill. The Valuation Office sets the specific price based on that affordability process. In Dublin city, for example, I expect this to be 100% social and affordable, so the land price will be minimal. The market value process in the Bill is in keeping with EU state aid requirements but it is fundamentally shaped by the affordability requirement. It is important to note that often land will not be transferred to the LDA at all as it will develop it on behalf of councils or other State agencies. I expect this to often be the case with local authorities as we can already see in Shanganagh and other sites under the control of the Land Development Agency.
Another criticism has been that the Bill is the same as the 2019 version. It is not. This Bill reflects the priorities for the LDA in the new programme for Government and also takes into account the report and recommendations of the pre-legislative scrutiny of the initial general scheme of the Bill in the last Dáil. There are a number of key changes to the original land development agency Bill published in 2019 and I will cover some now. There is a complete flexibility on affordability requirement with 100% social and affordable in suitable areas. The original Bill fixed it at 40% with 60% private. There will be clarity on transfer of State lands and first refusal for the LDA in this Bill but it was not in the 2019 Bill. There are clear compulsory purchase order powers in this Bill but there were none in 2019 Bill. In this Bill, the LDA is subject to freedom of information and enhanced Oireachtas committee accountability, an important measure which was not included in 2019 Bill. There is a stronger commitment to sustainable communities and best environmental practice. There is greater clarity on EU state aid compliance.
Another criticism has been that just 50% of developments will be affordable and the LDA is backdoor to privatisation. This is completely untrue. The 50% is a baseline requirement in the Bill to act as a guide. The Minister has full flexibility to set affordability to up to 100% affordable and social. Rather than apply a rigid one-size-fits-all approach to everywhere, this flexibility helps to future proof the Bill and gives me and any future Minister the scope to adapt to the specific needs and circumstances of an area. In cities like Dublin I expect it will be 100% affordable and social but in some regional towns it might be more suitable to allow for private development to ensure tenure mix. We need real affordability and flexibility for local needs, not old, untrue privatisation slogans pretending to be policies.
Another claim is that there is a weak definition of affordability in the Bill that will drive up prices. That is not true. The Bill defines affordability as being below the median market rate. This broad definition is in place to allow me to set specific rates for each geographic area by regulations. This means the Minister sets out what is an affordable price to buy or rent based on each area. This flexibility will accommodate local needs and is a key feature of the Bill rather than a one-size-fits-all approach. It also ensures future changes do not need to be made via a slow legislative process.
Another comment made is that the LDA is bypassing local councils to get council land. That is not true at all. The first refusal for the LDA would only arise where the local authority has decided not to develop the lands for its own functions. Section 183 of the Local Government Act will not apply to avoid duplication of processes arising which could delay the delivery of homes on local authority lands. Section 183 remains in place for all other land disposals. Bypassing section 183 will only be used in limited circumstances where agreement on lands is not possible. The majority of the LDA's work will be in co-operation with local authorities, which will maintain a central role in delivering housing. This is an important point. Local authorities will remain at the heart of providing homes it is my intention that the LDA will complement that work by providing services to build large, complex sites. I understand concerns about this provision and will review it annually to ensure it is working as required to speed up delivery but I am committed to avoiding delays and getting homes built.
Ultimately, the heart of this Bill is about ensuring that State lands do not lie idle in the middle of a housing crisis. That is something that all of us should be able to agree on. It is incorrect to state that the Bill has weak compulsory purchase orders powers that will undermine its strategic land management role. The Bill includes ransom strip compulsory purchase order powers unlike the original Bill, which had no such measures. This will allow the LDA to negotiate with landowners where necessary and to force compliance with its strategic plans should that be required. The CPO powers are in keeping with EU State aid rules and best European practice of similar agencies elsewhere, such as Freiburg in Germany that only uses compulsory purchase order powers in extreme circumstances. As the National Economic and Social Council has noted in its comprehensive work on the need for a Land Development Agency, the possibility of compulsory purchase order use is generally a sufficient basis to encourage negotiation and agreement between landowners.
It is not true that the LDA and its subsidiaries are not accountable or transparent. The LDA will be fully accountable to the Committee of Public Accounts, and will be subject to the Code of Practice for the Governance of State Bodies. The LDA's board will be recruited through the State boards process and the board members will have the required mix of qualifications. The accounts of the LDA and its subsidiaries will be subject to audit by the Comptroller and Auditor General and its records will be subject to the Freedom of Information Act. Prior ministerial consent will be required for the LDA to borrow, establish subsidiaries or enter into capital commitments. There is provision for ministerial direction to the LDA regarding strategic priorities.
As Deputies will be aware, there is a commitment in the programme for Government to extend the Register of Lobbying. It is my intention that the chief executive of the LDA and his or her senior executives would be designated public officials under the Regulation of Lobbying Act 2015, when the register is extended.
I will now outline the main provisions of the Bill. There are 10 parts to the Bill. Part 1, preliminary and general provisions, sets out the purpose of the Bill as well as providing key definitions for the Bill. Section 2 outlines the purposes of the Bill which in summary are to increase the supply of housing in the State. Section 4 provides the definition of relevant public lands and relevant public bodies which are key definitions for this legislation. Relevant public land is all land in a town with a population greater than 10,000 that is owned by a relevant public body. A relevant public body is a body listed in either Schedule 1 or 2 of this Bill. This part also provides that the Minister can issue directions to the LDA regarding the performance of its functions.
Part 2 deals with the establishment of the LDA as a designated activity company under the Companies Act. It will also facilitate a €1.25 billion equity investment in the LDA from the NTMA's Ireland Strategic Investment Fund. This Part also deals with the establishment of the board, appointment of the CEO and staffing matters. Section 13 sets out the functions of the LDA. The main function of the LDA is to develop and manage relevant public land and, where applicable, other lands for the provision of housing for the public good and in the public interest.
Section 14 provides that the LDA will provide services to local authorities when requested by such authorities to assist in the development of large-scale multi-tenure sites for housing and urban developments in population centres of more than 30,000 people. This will assist with the construction of increased amounts of affordable and social housing on local authority-owned sites and underpins the strong collaborative working which we have already seen between the Land Development Agency and local authorities to date.
Sections 17 and 18 provide that the LDA will be accountable to the Committee of Public Accounts and other committees of the Oireachtas. This is important as it will ensure transparency and accountability regarding the work of the LDA.
Section 20 deals with the staffing of the agency and also provides for the making of a superannuation scheme by the LDA.
Part 3 deals with the funding of the LDA. The National Treasury Management Agency (Amendment) Act 2014 will be amended to provide for the capitalisation of the agency through an equity investment from the Ireland Strategic Investment Fund, ISIF, of up to €1.25 billion. The LDA will also be able to engage in borrowing up to a limit of €1.25 billion. Ministerial consent will be required for that LDA borrowing. The initial shareholding in the LDA will be €100 million, with the Minister for Public Expenditure and Reform holding shares to the value of €99 million and the Minister for Housing, Local Government and Heritage holding shares with a value of €1 million. Part 3 also provides that the LDA will not be able to enter into capital commitments above a certain level without ministerial consent.
Part 4 provides that the LDA will be able to form subsidiary designated activity companies, DACs, for the purposes of carrying out its functions. These subsidiaries will be subject to the same level of governance and accountability as the LDA parent company and their published accounts will be audited by the Comptroller and Auditor General. The formation and winding-up of such subsidiaries will require the consent of both the Minister and the Minister for Public Expenditure and Reform in addition to the ministerial consents for borrowings and capital commitments by the LDA and its subsidiaries.
Part 5 deals with the dissolution of the existing LDA and the transfer of its functions to the new entity. Part 6 deals with financial reporting and the public accountability of the LDA. The accounts of the LDA and its subsidiaries will be prepared in accordance with the Companies Act and will be submitted to the Comptroller and Auditor General for audit. The LDA will also submit an annual report to the Minister for the group entity, including any subsidiaries.
Part 7 deals with the establishment of a public lands register and arrangements for the acquisition of land by bodies to the LDA. Sections 48 and 49 provide that the LDA will establish a register of relevant public land to identify land in urban population centres of over 10,000 people that may be suitable for housing. This register will be publicly available on the LDA's website. Public bodies will be required to co-operate with the LDA and the LDA will be able to request information from such public bodies in respect of relevant public land.
Section 50 provides that the LDA will report periodically to the Government with regard to land on the register and will include information on such lands assessed by the LDA to be fit for use for the purposes of this Act. Under section 52, the Government, having considered such a report, can direct that land of a Schedule 1 public body can be acquired by the LDA. Section 51 provides that where a relevant public body is seeking to dispose of land it must offer it for sale to the LDA in the first instance.
Section 53 provides that where the LDA is acquiring land from relevant public bodies under this Part, it will be acquired at market value, taking into account the fundamental requirement regarding the development of houses on public lands under Part 9. In effect this is an affordable land value which in reality will be a minimal price. Section 56 provides that where the LDA is acquiring land from a local authority under this Part, the provisions of section 183 of the Local Government Act 2001 will not apply.
Part 8 deals with compulsory purchase powers for the LDA. It is intended that the LDA will primarily purchase private lands for site assembly purposes through agreement with landowners. This Part provides that the LDA will have appropriate compulsory purchase order powers to purchase ransom strips of land where required for the purposes of its public functions.
Part 9 deals with the provision of affordable housing on relevant public land and former relevant public land. There will be a requirement for a proportion of housing provided on relevant public land to be made available for affordable housing by the agency or any other developer acquiring such land. Under section 73, the Government may exempt certain relevant public lands from these provisions where the land is owned by a body that is required to act in a commercial manner.
Section 75 provides that the Minister may set a percentage of housing higher or lower than the 50% level as set out in section 73 and may also set different percentages for different geographical or administrative areas, having regard to a range of housing-related matters and the achievement of the purposes of the Act. This will allow the percentage to be varied up or down to take account of local housing needs and market conditions.
Section 76 provides that houses provided under this Part shall be priced below the prevailing market price or market rent. It also provides that the Minister may prescribe a price or method for calculating the price and may set different prices for different geographical or administrative areas.
Part 10 deals with amendments to other Acts, including adding the LDA to the list of State bodies empowered to act as a development agency under the Planning Acts, which will permit it to develop planning schemes and enter into agreements with parties to develop strategic development zones. It does not confer any planning consent role on the LDA. This Part also provides that freedom of information legislation will fully apply to the LDA from the day of its establishment and also provides that records held by the dissolved LDA body will continue to be subject to such legislation. This will ensure the transparency of the LDA's operations.
Every Deputy is keenly aware of the scale of the crisis that confronts us. This is a state stepping up the mark. We have a moral obligation to put in place practical policies. We cannot let ideology get in the way of solutions or let one party's perfect be the enemy of the common good. I have directly addressed the criticisms of the Bill as best I can. I am confident that the LDA can play a major role in getting affordable and social homes built on State-owned land that is currently not in use. I call on all Deputies to support the Bill and to make sure we use every tool at our disposal to get bricks and mortar on the ground.
I look forward to our debate on the Bill. I hope Deputies will appreciate its importance and the need to enact it as soon as possible. I am sure they will. I will seek to respond to any specific questions and engage further on Committee Stage. I commend the Bill to the House.
I am sharing my time with Deputy Gould. A deceit is beginning to creep into a part of our debate on housing which suggests that the policy of the new Government is in some way different from that of its predecessor. In fact, when one looks at the evidence it is very clear that we are seeing more of the same. Budget 2021 was a clear example. There was just an extra €124 million for an additional 593 social houses above the existing Fine Gael commitments and a paltry €35 million extra for 390 extra cost-rental homes. No extra funding was provided for the serviced sites fund. The €50 million in pre-announced funding allocated for this year will only deliver 90 genuinely affordable homes for working people to purchase. The direct total spend on the direct delivery of affordable homes by the Government this year is only €85 million. That is in stark contrast to the total spend by the Government this year on initiatives that are essentially developer or landlord supports, which is in excess of €1 billion. This means that 11 times more is allocated to private sector-led initiatives than to the State, through its agencies, to directly deliver affordable homes for working people.
The Affordable Housing Bill 2020, with which the Oireachtas Joint Committee on Housing, Local Government and Heritage is currently dealing, is in a similar vein. Although some aspects, such as the serviced sites fund and cost-rental housing, are welcome, they are not the initiatives of this Government but initiatives which have had a long, slow and, at times, painful gestation. It is interesting that almost half of the money that will be spent this year on the mechanisms outlined in the Affordable Housing Bill 2020 are to be spent on private sector supports as against the direct delivery of genuine social and affordable homes. Just as those private sector-led initiatives failed under the last Government, so they will fail under this one. The Land Development Agency is filled with those problems. The Minister is right; as I have written on many occasions, his Bill includes substantial textual changes to the first Fine Gael general scheme.
The fundamental flaws which were identified in the Fine Gael predecessor Bill and which were outlined in the report of the Joint Oireachtas Committee on Housing, Planning and Local Government remain in this legislation.
It is not true for the Minister to say that somehow this is not undermining local authorities. That is exactly what it is doing. If we had a local authority-led approach to public housing delivery, we would not have a Land Development Agency. We would be funding, staffing and supporting those local authorities to deliver the social and affordable homes families want.
The Minister is correct that there will be sites that have 100% social and affordable housing and I will discuss one of those in a moment. I am not convinced, however, that we are not going to see large volumes of public land used for unaffordable open market priced homes. In fact, the core delivery mechanism of the Land Development Agency, once it moves beyond a small number of local authority-owned sites, will be joint ventures through subsidiary designated activity companies, DACs, with private equity investors and private developers. For them to be involved and to bring cash to the table, they are going to want the profit returns of unaffordable open market prices, such as we have seen, controversially, in O'Devaney Gardens and the deal, thankfully rejected by Dublin City councillors, on Oscar Traynor Road.
The core problem of the joint venture model is that it pushes up development costs and prices, affecting not only the open market priced homes but, crucially, the so-called affordable homes which I will come back to a moment.
This is the central flaw of the agency. I dispute the Minister’s contention that this Bill deals with the substantive concerns of the Joint Committee on Housing, Local Government and Heritage through pre-legislative scrutiny. A small number of these concerns have been dealt with but the majority have not. I am reminded of the description of the Land Development Agency by the now Minister for Housing, Planning and Local Government, when he was a member of the joint committee as the lead Opposition spokesperson, when he rightly criticised it as a "Del Boy" model and indicated his party would not be supporting it unless there was profound change. To mix my metaphors slightly, the Minister is increasingly looking like Arthur Daley, trying to sell a clapped-out second-hand Fine Gael car with a lick of paint but with the same dodgy engine.
Two examples are a case in point. Shanganagh Castle in the Dún Laoghaire-Rathdown County Council area is the first. In 2017, councillors from all parties in that local authority unanimously agreed for a public housing development on that land comprising 597 social, affordable rental and affordable purchase homes. The problem was that the Government at the time refused to fund it. The land, in fact, sat idle not because the councillors did not want it developed but because Government refused to support it. Only in 2020, as a result of Fine Gael pushing the Land Development Agency, was a planning application submitted, albeit by the council and not the LDA. Construction will commence this year, although, unfortunately, rents will be beyond the reach of many working people, which will be €1,000 for a one-bed unit and up to €1,300 for a three-bed unit. Single people and couples on modest incomes will still find that a struggle to pay. We still do not know what the house prices will be. The LDA cannot tell councillors in Dún Laoghaire-Rathdown County Council what the price will be and the tragedy of Shanganagh is that if the Government had funded it when the councillors unanimously agreed to move ahead, it would have proceeded and families would be living in homes today that would have been eminently more affordable than what is on the table.
In the same local authority area we have the former Dundrum Central Mental Hospital, now called Dundrum Central which has the potential for 1,300 homes. It is HSE land currently being managed, as far as I understand, by the Office of Public Works. Unless the Minister can confirm to us today, and if he does I will be very glad to hear it, I do not believe that this will be a 100% social and affordable housing development.
If one looks at the affordability definition in the Minister’s Bill, it has to be something lower than the median price at a particular location. What was the median price at the end of last year for a two-bedroom apartment in that specific location? It was €557,900. The Minister is correct, and I will talk about this in a moment, that the LDA will pay the market value, depending on what that is going to be on the site. The real issue, however, is that will be more than the existing use value before the LDA became involved. It is hard to see, let alone with the unaffordable open market priced homes, that if this site is developed, even with these affordable houses, how it will be made affordable.
That is why I think this is the wrong approach. We have mechanisms to deliver public housing on public land. They have existed for a century and when they were funded, supported and staffed by Government, they did a good job. They are called councils and we should return to that model.
I will run through a number of key problematic aspects of the Bill. I will take issue with the Minister’s presentation of those, and we can take that discussion further. Part 4 of the Bill not only sets up the LDA as a designated activity company, DAC, but specifically allows for the creation of subsidiary DACs. These will be joint ventures, sometimes between different public agencies and the LDA. Others will be between equity investors and developers. They will not be subject to Freedom of Information Act, FOI, requests. The very final section of the Bill does not make reference to the subsidiary DACs and unless that is amended, it is a glaring omission. While they will be subject to the provisions of the Comptroller and Auditor General, it is not in the same way as with NAMA. These are look-back audits and investigations which do not provide adequate transparency or accountability in real-time. They will also not be subject in the same way that local authorities are to the public spending code or to the lobby register. I am so concerned about the lack of accountability and transparency that today I launched a transparency initiative called LDA-watch to provide greater public access to information about this project.
Section 53 deals with market value. The Minister is right that what will happen is that land will be sold at the market value for the use that it is going to be put to and if there is a percentage of social or affordable housing, that will affect the value. Likewise, if there is a percentage of open market, that will also affect the value. What the Minister did not tell Deputies is that this value will still be higher than the existing use value of that land which sits on the books of the existing State agency. The LDA will be paying more for that land than the value of the land on the books of the agency that is disposing of it. That will have an inflationary impact on the value of land, will push up development costs and will result in increased prices both on the so-called affordables as well as on the unaffordable open market prices. That is why Deputies in the Minister’s own party are deeply concerned by this.
Section 56, which is the stripping of section 183 powers from local councillors, is an appalling attack on democracy. We know what it is for. There will be occasions where central Government and the LDA will want access to certain local authority land but because councillors will be unhappy at the price to be paid to rent or buy in those developments, they will want the council to develop it. This is a mechanism of denying councillors the right to be able to say in respect of public land, such as Oscar Traynor Road, that not only must it be 100% public but that the affordable rental and purchase must be genuinely affordable for working people. This is removing a key power of local councillors and, I suspect, it is not just with an eye to the Oscar Traynor Road lands but also to the local authorities lands in Limerick and elsewhere.
On the section 59 compulsory purchase order, CPO, powers, the Minister is factually incorrect. When we had a presentation on the general scheme of the Bill from the Department officials when this was a Fine Gael Bill, we were told very clearly that there would be limited CPO powers for the non-commercial aspects of the LDA and that these would be ransom strip powers. All the agencies supporting active land management, from the National Economic and Social Council, NESC, and the Economic and Social Research Institute, ESRI, to the Housing Agency say that it must have full comprehensive CPO powers and it does not. It has the same limited powers NAMA had and that were in the original general scheme, which means it will not have the crucial active land management function intended in the first instance. It will also have no negotiating power when seeking to access land and will only be able to develop such land in partnership with the State agency itself.
The single biggest weakness in this Bill, and this is the responsibility of the Minister, Deputy Darragh O'Brien and Fianna Fáil because this is their inclusion in the Bill, is that for the first time in the history the State we have a definition of affordability. In fact, the word “affordable” is referred to in this Bill probably more than any other. The problem is that the definition is absolutely meaningless because, as the Minister said, the definition in section 76 is below the prevailing market price to buy or rent. To buy means below the median purchase price of a new home. That would mean a price of €460,000 in the Minister’s constituency last year, with the average rent in the Residential Tenancies Board, RTB, index of €1,800. If we pass this Bill, anything below that which is decided by the Minister will be legally defined as affordable. That is an absolute travesty.
We should not be linking our definitions of affordability to market prices, but to the ability of working people to pay a fair rent or a fair price to purchase. Section 77 of this Bill gives the LDA development agency status and the power to draft and submit proposals for strategic development zones, SDZs, subject to the approval of such designations by the Minister. There is a complete bypassing of the local authorities, however, which could choose to go to the board. Local authority-led strategic development zone processes are more democratic and transparent and produce a better result. That is not the outcome of anything in this proposal.
Before I hand over to Deputy Gould, I must say I always find it amusing when the Minister laments the decline in home ownership. Governments led by his party, particularly during the years of the Celtic tiger era, oversaw the most dramatic decline in home ownership because of the way in which our housing system was managed. That decline slowed somewhat but continued under governments led by Fine Gael. Nothing in this Bill convinces me that trend is going to be in any way reversed. Equally, I find it ironic when I hear the Minister talking about the housing crisis as if it is some force of nature and not something which he and his colleagues created when they were last in government and have tacitly supported through confidence and supply over the last four years.
The reality is that there is a better approach. Let us transform the LDA into a powerful and active land management agency with real CPO powers, a real budget and whole-of-Government support to use our public lands to the best strategic purpose. The LDA should not be involved in residential development, however. That aspect should be the responsibility of our local authorities, based on local need and local democratic decisions. If the Government wants to increase the supply of housing, it should not waste its time with the LDA. It should double capital investment in public housing on public land and deliver the 20,000 social and affordable homes promised in the election manifesto last year, but which it has since abandoned. In the context of Covid-19, the Government should focus on increasing the building of turnkey housing and ensuring developments like that on Oscar Traynor Road are fully public, social and affordable and led by our local authorities. They did that in the past and they can do it again in the future.
In my constituency of Cork North Central, the LDA is developing the St. Kevin's site as its flagship initiative. The Minister will be aware of the St. Kevin's site, which is the location of a former mental hospital owned by the HSE. The Minister might also be aware that for years I have been calling for this site to be developed.
It is shocking that I am still contributing on the St. Kevin's site, which the LDA is now developing. The Minister is making comments about the site now, but if he wants to know the real facts of the situation he should know that for 20 years this site has lain idle under governments led by Fianna Fáil and Fine Gael. If I had received the support of the Minister, Fianna Fáil and Fine Gael eight years ago when I sought the development of this site, we would now have houses on it and people living there.
The whole issue with the LDA, this Minister and this Government is that they have failed to support local authorities and to invest in building houses. I live in Gurranabraher, which is a housing estate built by Cork City Council some 80 years ago. We know many such estates were built by local authorities around this State. This Minister and this Government, however, now want to take the power away from the local authorities. I welcome the development of the St. Kevin's site, but I want to see that development undertaken for social, affordable and affordable cost rental housing to allow people, especially those with young families, to have a start to buy a home. I say that because the housing crisis in Cork is unbelievable.
At the meeting of the Joint Committee on Housing, Local Government and Heritage yesterday, I asked a question about the expected affordable rates for the cost rental housing at the St. Kevin's site. I was told those rates would be between €900 and €1,100. I will explain to the Minister that most of the people whom I know in Cork looking for affordable rental housing will not find those rates for one-bedroom and two-bedroom housing to be affordable. I listened with interest to the Minister when he said that we must build sustainable and safe communities for people. We all have that aspiration and we want it to happen, but then I look at the LDA's non-existent public consultation. To educate the Minister a bit, the St. Kevin's site in Cork has only one entrance and exit, no access to public transport, no cycle lanes, and no investment in infrastructure, and that is because the community I represent in Cork North Central has been disadvantaged for years by governments led by Fianna Fáil and Fine Gael.
If we are going to undertake this development, let us do it right by putting in the infrastructure and making the resulting housing provision truly affordable. I say that because we were told at the presentation I attended that up to 40% of the site could be private housing. We want details and clarity regarding how much social, affordable and affordable cost rental housing will actually be delivered. I fail to understand why there is so much secrecy and why this information will not come out until after the planning permission has been approved. The Minister talked about transparency. How can we have transparency in a process when we will not find out the details until after the planning permission has been approved?
Turning to other issues I want to raise, the Minister talked about local government. This Bill will remove powers from local government and from democratically elected councillors of all parties and none. Those councillors were given a mandate and it must be respected. Local government powers have been eroded under this and previous governments and this endeavour is only more proof of that happening. I believe that local authorities are the bodies which should build social and affordable housing.
We are in the middle of a crisis where people are looking for hope. People want to see light at the end of the tunnel. I want to support a Government which will bring that about, but I do not think that the Minister is doing that and I know this Government is not. People need hope. I have been sending emails regarding the details involved in this initiative back and forth to the Land Development Agency for several weeks. I have been seeking even an estimate of how many social and affordable houses will be delivered. I conclude by stating the housing crisis needs innovative and ambitious solutions, but the LDA has not delivered one house yet and I do not believe that this Bill will speed things up. We must build houses now and invest in people.
This Bill, as presented to the House, is very much a double-edged sword. Significant aspects of the Bill are to be commended, but other elements act as red flags and present a considerable challenge to us in the Labour Party as to whether we ultimately feel that this Bill will be fit for purpose. I hope the Government will take the opportunity to listen to our constructive criticism of the Bill, as well as accepting our support for aspects of it, and will use this debate as an opportunity to consider how best we can collectively amend the Bill so that we can legislate for an LDA which will do what the people of Ireland need it to do.
Let us remind ourselves of why we are here and what problem this Bill is intended to solve. We are in the middle of a crisis involving housing, homelessness, social housing, rental affordability and unaffordable house prices, as the Minister knows. Will this Bill help us to solve these problems? Will this Bill help us to solve the housing crisis and to keep it solved? We can break down that question into two main parts. The first concerns whether we need an LDA. The second part of the question then, if we agree that an LDA is needed, is if this Bill will deliver the LDA we need.
The answer to the first part of the question is yes, we need an LDA. The concept of an LDA is a good one. The former Deputy, Jan O’Sullivan, proposed a development bank to develop public housing on public land. This structure subsequently became known as a land development agency and is Labour Party policy. There is a large amount of public land, and a properly constituted LDA could help the State to utilise that land to provide an increased supply of public housing and create a mechanism for proactive management of the State’s land to help to solve the housing crisis and deliver more social and affordable housing.
The next question is whether this Bill gives us an LDA which will clear the social housing lists, lower private rents and increase the supply of houses that people can afford to buy.
The answer to that question, with the Bill as it currently stands, is maybe. In truth the effectiveness of the Bill will be entirely dependent upon the policy of the Minister of the day and his or her Department, whoever that may be. And therein lies the reason for concern.
We have serious concerns that there is a real danger under this Bill that the LDA could end up as a mechanism for the wholesale privatisation of large tranches of public land with a subsequent windfall profit for private agents while delivering only a bare minimum of 10% public housing and only 40% of moderately discounted housing labelled “affordable”, with the remainder sold at a price the market will bear.
An example of this concern in the Bill is at section 73, which seems to guarantee that 50% of the housing will be affordable, but actually provides no such guarantee because section 75 states that the Minister may set a percentage of housing higher or lower than that set out in section 73 and can also set different percentages for different geographical or administrative areas. Essentially, the seeming protections in the Bill of the 50% affordable housing aspect provide no such protection.
The second area of concern is the concept of market value of the land and the subsequent price paid for the housing built on it. The Bill mentions the concept of market value but the CEO of the LDA, Mr. John Coleman, has told the Joint Committee on Housing, Planning and Local Government that “the land will transfer at a value, taking account of the affordability requirement. Effectively, the value will be reduced to facilitate the delivery of affordable accommodation on the land.” So, we have a mechanism where land can be acquired at anything down to zero cost, depending on the project. Section 53 of the Bill provides that where there is a dispute, “The Minister shall prescribe the manner in which the market value of relevant public land shall be determined".
Another concern is in section 76 which states that any housing prescribed under section 73 must be below the prevailing market price or market rent, but it makes no prescription as to how far below the market price or rent the housing will be.
In section 55 we have a provision for disposal of land by the agency, again with ministerial consent, where it "is no longer required by it for those purposes or the performance of those functions." Presumably this is when the houses are built or no more houses will be built. It is presumed that the agency will make disposals to the private sector including but not limited to private individuals and commercial entities as well as to local authorities, approved housing bodies and other public bodies.
What we have here is a series of provisions that allow the agency to acquire land at prices to be effectively determined by the Minister, to deliver a level of social and affordable housing determined by the Minister, and then to dispose of much of this housing to private entities, again at prices approved by the Minister. This is an extraordinary level of power. It is a power to deliver housing for the public good, but also the power to deliver a considerable transfer of value from public to private ownership in deals that will have no remedy until after the fact.
Effectively, the LDA is there to create deals that deliver housing. In discussing the Bill, we need to ask ourselves what level of scrutiny there is on these deals? When we look at it, beyond the Minister, there is a serious lack of democratic accountability. We find that far from adding control or checkpoints to the process the Bill explicitly removes the role of local authorities in scrutinising any of these deals regarding land acquired from the councils. This removes a level of public scrutiny at a crucial stage in any project on local authority land. At no point in the process does anyone outside the agency, the Minister and the Department get to scrutinise these deals end to end to ensure a sense check on whether we are delivering value for the people from public landbanks. These are landbanks that were explicitly protected by the Labour Party from the planned privatisation by Fine Gael after the 2011 election.
This deficit of scrutiny brings us to the nub of the matter. Fine Gael and Fianna Fáil are two parties with a long history of delivering for the private sector. In Fianna Fáil in particular we have a party whose toxic relationship with private interests in this sector crashed the economy, collapsed the housing industry and destroyed capacity to build houses, resulting in the current drastic undersupply.
Part of the function of a land development agency is to try to break the boom and bust cycle by providing a steady predictable stream of projects on land it has acquired and a steady stream of public housing to act as an anchor against future housing bubbles. In an ideal world one would not need to involve the private sector in the delivery of these houses. In the short to medium term, however, some level of private sector involvement is inevitable.
The local authorities have been at the receiving end of a lot of the blame for the failure of the State to build adequate public housing. The truth is that the local authorities have long since been removed from any real decision-making power or capacity over public housing and we have a Department that has been institutionally reluctant to support any large direct local authority building on public land. Fine Gael took strategic housing development legislation, apparently almost verbatim, from the vested interests. The Minister will excuse me if I suggest that such a massive change in the way we manage public land, and particularly local authority land, will require a great deal more democratic scrutiny than is currently provided for in this Bill.
I ask the Minister to fix loopholes in this Bill. As it stands, there is a serious concern that these loopholes could facilitate a wholesale rip-off of the public sector by private interests at the whim of any Minister who has been captured by private housing interests. I am seriously concerned about the absence of approval by democratically elected bodies such as the Dáil or local authorities. This need not be the case. As the work progresses it will be inevitable that a few standard templates will emerge. While the first few deals may attract considerable attention, as time goes on a level of standardisation will hopefully emerge and analysis of the success and failure of previous projects will allow for a relatively easy and public process of evaluation.
We have discussed how the Bill provides for the acquisition, development and disposal of public land, but just as important for the long-term success of the agency will be the acquisition of additional private land. The LDA will have the power to acquire private land at scale again at market value. With a bit of imagination the Bill could provide an opportunity to deliver on the recommendations of the Kenny report to allow land to be acquired at a current use value rather than at inflated speculative prices. In order to be truly successful, the LDA will need to be able to acquire land to be developed at reasonable costs and for us no longer to be dependent upon the whims of private entities. This is a missed opportunity to provide a mechanism to make redundant the tactics of speculative acquisition, hoarding and flipping of sites by companies who make planning applications but never build houses and whose only objective is to create an artificial shortage of suitable sites that they can exploit through inflated sale prices. This is the very issue that caused the last housing bubble and crash and if we are not careful it will also cause the next.
We are in favour of a land development agency with significant power to acquire public and private land with the express intention of working in partnership with local authorities to deliver public housing on public land. We want a far tighter definition of what success looks like and a far tighter scrutiny of the value delivered on an ongoing basis, and we need far tighter democratic protection from the exploitation of the agency for the private sector at the instigation of the Minister.
Ultimately the success of the Bill will depend on whether we get enough social houses built to start clearing our housing lists and will depend on whether we get rents down to levels that mean we no longer waste billions of euro on short-term private rental at exorbitant rates. The success of the Bill will depend on whether the houses built are not just technically “affordable houses” or technically “cost rental” houses but are houses people can actually afford to buy or rent, and that we do it without pouring public cash without scrutiny into the bank balances of private entities. The best way to prevent the housing scandal of the future is to legislate now for the proper scrutiny of the key decisions that are made by the LDA as they are being made.
This is a very important legislative proposal, which I very much support. We need to be real about what has happened in this State in the past so that we can make the right decisions now. I would absolutely challenge what Sinn Féin has said about houses, the private sector and local authorities. The fact is, that between 2011 and 2017 NAMA offered 6,640 houses to local authorities up and down country. These houses were built and empty and ready for occupation but the local authorities just took 2,500 of them and rejected all the rest. In Dublin alone, the four local authorities were offered 2,000 fully completed homes. They took 776 of these, which was 38%. The 12,024 houses that were offered to the Dublin local authorities then went to the exact people the Deputies are talking about, to the vulture funds and to those who exploit the people who live in the houses now. That is the reality of what has happened in the past. Local authorities did not step up to the mark and they did not do the job. They did not have the capacity to do their job in most parts of the country. This legislation will aggregate all the land that local authorities and State bodies have and it will consider areas of population greater than 30,000, specifically, to say "What can we do, how can we effect change, how can we make sure this land is built on, and how do we make sure we meet the needs of our communities?" Yes, of course we need affordable housing and social housing.
We need to look at people who are earning but cannot get into the market because properties in the city centre are occupied by wealthy people, bankers, those working for vulture funds and so on. The Land Development Agency should build homes and apartments in cities and major town centres for teachers gardaí, nurses and other middle income people who can go in there if they have the qualification and if they are essential workers, because they cannot otherwise compete in the marketplace and they cannot pay the rents. We should also look after them. We need to ensure that we designate sites for them. Apartments and appropriate supports should be in place for them.
We also need to look after older people in our society. The Land Development Agency should ideally get land that would suit older people and build energy-efficient housing to reduce their carbon footprint. It needs to ensure that older people find it attractive to move from their existing homes, which are far too big for them in many cases, into smaller, more appropriate and better located properties.
Considerable action is needed. We need to end the diatribe against people who work to make a living. If local authorities can work with people to reduce what the State must pay, why not work with private enterprise? What is wrong with working together to reduce the cost for everybody? That makes sense. I will make a further contribution on Committee Stage.
I welcome the opportunity to discuss and examine the Bill to establish the Land Development Agency on a statutory basis, as the Minister outlined earlier. The Land Development Agency has one key priority which is to increase the supply of social, affordable and sustainable housing. The agency will utilise State lands to build social and affordable housing while creating sustainable communities. The agency is already working on nine sites across Ireland to develop 4,000 homes in co-operation with local authorities.
Shanganagh in Shankill in my constituency is a perfect example of this where the Land Development Agency is working with the local authority there. Dún Laoghaire-Rathdown County Council approved a partial transfer of land of the site to the LDA. The Minister has now allocated €18 million and almost 600 units will be delivered with planning permission already in place. The development of that site is under way and we will see bricks and mortar very soon. That site will contain 200 social homes, 91 houses for affordable purchase, and 306 cost rental units, which is to be welcomed.
Based on what I have heard from constituents, they are eager to apply to the scheme. They have heard about affordable housing for many years but have never been able to apply. This unlocks that potential. It is beyond me as to how anybody in this House could suggest they would not support affordable housing after spending years of talking about affordable housing. These cost rental homes will provide an affordable option for people whose earnings are above the threshold for social housing support but who struggle to rent. As the Minister has outlined in his contribution, those people, whom we have all met, are trapped in the rental market.
For years those in Opposition parties have spoken about affordable housing and other housing solutions to assist gardaí, retail workers and other workers, hard-working people who struggle to pay the existing rent for the houses they are in at the moment. This project will deliver for workers, not only in my constituency of Dún Laoghaire but throughout Ireland. The simple message from the people who attended meetings such as the one I hosted with the Minister, Deputy Darragh O'Brien, and councillors Justin Moylan and Michael Clarke is that they just want homes built. They want practical solutions and an end to the endless ideological debates about housing.
The Land Development Agency Bill is good news for people who are currently renting. We need to provide a solution for those people. We gave a commitment that we would do that, and this Bill does just that. The Land Development Agency has long-term Government funding and access to State-owned lands and the industry experts to support such innovation. Ultimately, it is about providing affordable and social homes for rent and purchase. I welcome the Minister's clarification addressing genuine concern about the Bill. I call on all Deputies to support the legislation and help to end the housing crisis.
Public land is a public asset. Public homes should be built on public lands but at prices that are affordable to the public. It is not a difficult idea to understand. Local councils in the past built most of Dublin's houses and we need to get back to that. Sinn Féin believes in this model of delivering affordable housing for families. We will not stand back and allow the Government sell off our public land to the highest bidder to build homes that no one can afford.
My constituency of Dublin Bay North needs affordable housing. Families are desperate and the Government is making it worse week by week. The proposal for the Oscar Traynor Road was proof of that. The original plan was to gift a huge parcel of public land to a developer to return an amount of public housing that was just not acceptable. The Department of Housing, Local Government and Heritage needs to cop on and wake up. The proposed houses would have been out of reach and totally unaffordable for constituents who grew up in the area, who have families in the area, who want to live in the area and who want to contribute to the great community I represent. Councillors from all parties and none have now put forward a new proposal that has the support of the local people and will deliver affordable and cost rental houses for people in the area.
The Government's policies are failing these people. We need a step change. The Minister needs to listen to the experts and take on board our constructive opinions and advice. The ESRI believes that the shared equity scheme will increase house prices and the Department of Public Expenditure and Reform shares that belief. This is absolutely bonkers. This housing crisis is not helping anyone and is making people desperate.
Sinn Féin wants to work with the Minister to solve this crisis but he just will not listen. He cannot keep dismissing us at every turn. We are telling him about constituents who are asking us to plead with him that they want their families to live in these areas and that they want to put a roof over their heads. If the Government cannot deliver on this, then the Minister will have failed and society will have failed.
The Bill before the House will remove our local councillors' powers to vote against plans which they believe are not in the best interests of their communities. This is not democratic. It takes away local decision-making from those who know their areas best. I cannot stress this enough. This is an attack on all parties. We do not believe the Bill will deliver affordable housing on public land. The Minister still has not even told us what he believes the cost of an affordable home is, which in itself speaks volumes.
It is notable that the Minister for Housing, Local Government and Heritage has left the Chamber for the rest of the debate on the Land Development Agency Bill. I would not say that except that a few weeks ago during questions and answers with the Minister for Housing, Local Government and Heritage, he created a scene when one of the Opposition spokespeople left. He seemed to think this was an incredible slight against him and against our Chamber. It is ironic that he has left and will not hear directly the issues of concern that I want to raise. I know a Minister of State is present, but to be fair to him, his responsibilities relate to heritage and biodiversity, and he does not have responsibility for housing. Therefore, I believe it is appropriate to raise that matter.
We need a strong Land Development Agency. We need strong active land management and we need strong compulsory purchase order powers for that Land Development Agency to ensure we can build a good and consistent supply of affordable and social homes. Unfortunately, this Bill fails to do this. Once again, the Bill fails to provide the kinds of safeguards we need to ensure public lands will not end up in the hands of private developers. In addition, there are no safeguards to ensure homes built on what are now public lands will not be sold off to international investment funds and real estate investment trusts, REITs.
If the Minister is sincere in the comments he made at the start of the debate, and I have no reason to think he is not, he has the opportunity to bring forward amendments to this Bill, to change it, bring in safeguards and close down avenues for privatising public land, the selling of land and sales to international investment funds. He can do that. It is within his gift to address the concerns we have raised. He said in his opening statement that this is not a back door to privatisation but he failed to give any meaningful assurances on that or any details of substance. There needs to be actual action to close down those avenues in this Bill and to stop that happening.
The Minister said that this is a different Bill from the Bill drafted by Fine Gael in 2019. If it is a different Bill, why did we not get pre-legislative scrutiny on it? He cannot have this both ways. Either it is the same Bill and we do not need pre-legislative scrutiny or it is a different Bill, in which case why have we been denied pre-legislative scrutiny? The Minister cannot have it both ways.
I welcome the Minister's statement that lands owned by Dublin City Council will be public lands, and if acquired by the LDA or if there is LDA involvement, 100% affordable and social homes will be the outcome. That is a very welcome commitment. However, why is what is what is good enough for Dublin City Council not good enough for people in other areas of Dublin or, indeed, other areas of the country? If the Minister feels there is a need for flexibility, why does he not set the baseline as 100% affordable and social homes with some element of flexibility or adjustment from that baseline? Why set the baseline at just 50% affordable homes?
Housing that is affordable to buy or rent remains beyond reach for many families. During the election campaign this time last year, the Minister, Deputy O'Brien, promised 50,000 direct build social homes and 50,000 direct build affordable homes. Where are those homes? We have been told by the Minister that we are only going to see 530 direct build affordable or cost rental homes this year. That is just a 1% delivery of what he promised he would do in government. Instead of getting those direct builds, there is an over-reliance on private developers, which build homes at costs that are simply out of reach for most people. New homes provided by private developers are sold at about twice the build cost, with land, professional fees, levies, taxes and developers' margins and profits accounting for the rest of the costs. Construction costs in Ireland are significantly higher than in other countries such as France and Germany. In the Netherlands, for example, construction costs are 18% lower than in Ireland. A key factor in home delivery in countries like the Netherlands is how they bank land and ensure that land is brought into the equation at low and affordable costs. The model of relying solely on private developers and speculative development is a broken one. It does not work and it is abundantly clear that we need a change in direction.
We need to ask two key questions about this Bill. First, who is writing housing policy in Ireland? Second, who is benefiting from it? In the shared equity loan proposal being put forward by the Government, as well as the previous Government's legislation around co-living and strategic housing developments, we have seen quite clearly the heavy influence from the construction industry and developers in how housing policy is written. On the shared equity loan the Government is bringing in, a senior Government official recently stated, "The property industry want an equity scheme because it will increase prices". Likewise, the ESRI has also critiqued the shared equity scheme. In a report on de-democratising the Irish planning system, academics Dr. Mick Lennon of UCD and Dr. Richard Waldron of Queen's University Belfast claimed that lobbyists for the development industry played a key role in the creation of our strategic housing developments and housing policies. With this Bill, we should be delivering affordable housing by cutting out developers' fees, profits and margins. We should be tackling land costs and ending land speculation. We should build housing that is affordable to buy or rent on public land and we should end the transfer of public land to private developers. All those things could be done if the Government and the Minister wished to do them.
One of the keys to ensuring the delivery of affordable homes is building up a sufficient pipeline of land that is suitable for development. There are some good examples in other European countries of how land is strategically managed. In Germany, the planning law freezes the value of land when the local municipality decides to designate an area for residential construction. The municipality then acquires the land, produces a master plan for development, puts in the necessary infrastructure and uses the uplift from selling plots of land to pay for this investment. There is almost no scope for individuals to profit from land speculation. In the Netherlands, local municipalities have played a similar role in assembling land for development, which includes powers to use compulsory purchase orders, CPOs, to build up strategic land banks. While they have these CPO powers, they often do not need to use them.
In contrast, in Ireland, when a local authority rezones land, the landowner makes a windfall profit from changing the land from agricultural to residential use, often increasing the value of the land tenfold or even a hundredfold. When the State invests in infrastructure to enable the delivery of homes on this land, the private landowner reaps the benefit of increased land values. All of these increases in land values are reflected in the final price of a home. This is why it is so important that this Bill should include compulsory purchase order powers. Such powers were recommended before I was born, and probably before the Minister was born as well, in the Kenny report in 1973. Yet, that system has still not been put in place and we do not have the strong CPO powers that are needed. Instead, the Bill envisages a much more limited role for the Land Development Agency, focused on assembling land banks from existing State agencies and local authorities.
The 2018 report on urban development land from the National Economic and Social Council, NESC, and its recent 2020 report on housing policy, are very strong on the need for CPO powers for the LDA. It is not just the NESC that has said this, incidentally. The programme for Government said so as well and committed to allocating proper CPO powers to the LDA. Yet, such powers are effectively missing. It will have powers around infrastructure and ransom strips but it is limited to that. The role of the agency is, therefore, going to be very limited. These powers are a key part of what we need in a strong and effective LDA to drive down the costs of housing and to make it much more affordable.
In recent times, local councillors have correctly insisted that public land should be used only for the delivery of homes that are genuinely affordable and should not be sold on to private developers. This Bill would strip councillors of the power to determine how land in the ownership of their local authority is best used and would allow the LDA to acquire council lands without the consent of local elected representatives, which is an attack on local democracy. We have one of the weakest forms of local democracy in the western world, and if this Bill passes unamended, it will weaken local democracy even further. To be fair, I do not think that is the intent of most Government Deputies or Ministers. Most of them would recognise that we need to strengthen local democracy. I ask them to reflect on that. Not only would the Bill do that, it would also allow the LDA to flip these lands on to a third party and on to private developers, subject only to ministerial sign-off. In many cases, these lands will then be developed through a company set up in partnership with the LDA and private developers. This, again, is going to push up the cost of homes.
The Association of Irish Local Government, which has members from across the political spectrum and all political parties, including Government parties, has said it has grave concerns about this Bill, particularly sections 49 and 56. Let us make no mistake. Local councillors are insisting that all their land that is suitable for housing should be used exclusively for social and affordable housing.
If this Bill is passed unamended, the Minister with responsibility for housing will have the power to override that and their lands can be acquired through the LDA. In this situation, part of that land can be used for full market price housing or sold. Critically, in terms of affordable housing and how that is defined, that is a key flaw and weakness in this Bill. We need housing that is set at a genuinely affordable rate and not at the definition of below full market rate, which is not a good enough definition and it will not work.
I will give an example of how affordable homes can be delivered. I have heard others say that the delivery of affordable homes at prices which people on average incomes can genuinely afford is pie in the sky. It can be done. I refer to Dun Emer in Lusk, where Fingal County Council in partnership with the Ó Cualann Cohousing Alliance is delivering homes ranging from €166,000 for a two-bedroom apartment to €258,000 for a three-bedroom semi-detached home, with monthly mortgage repayments of €698.57 for the apartment and €1,085 for the house. These are prices within the range of people on average incomes. Critically, these are homes that are being delivered on public land. Part of the reason this level of affordability is built into the scheme is that the development is on affordable land. It could not be done by private developers or at full land prices.
With the right level of ambition, the LDA could transform housing delivery in Ireland, ensuring that much-needed homes are provided at affordable prices. This Bill will allow for privatisation through the back door and, therefore, will allow private developers to enrich themselves through the acquisition of public land. Members need not take my word for this. I ask them to listen to what Senator Michael McDowell had to say about it. Senator McDowell's politics are different from mine and that is why I am quoting him. He said: "All of the signs are that the Land Development Agency is mainly intended to facilitate the provision of existing publicly-owned land to private developers." These views are held across the political spectrum.
This Bill is about building full market price unaffordable homes on public land at a time of a national housing crisis. It specifically allows for this. Section 27 allows for an upper ceiling of €1.25 billion that may be borrowed by the Land Development Agency. This is in addition to the €1.25 billion capitalisation of the LDA, which equates to a maximum ceiling of €2.5 billion. This makes it impossible for the LDA to build up a strategic land bank pipeline of land and to build it out at the same time on the scale that is needed. This means there will have to be substantial private sector involvement and transfer of land to private developers. This will push up the cost of homes delivered. Section 29 specifies that funding can be made available to the agency from the Ireland Strategic Investment Fund, ISIF. As we all know, ISIF has a commercial mandate and will be seeking commercial returns on its investments. This, again, will push up the price of housing, making it less affordable.
A key weakness of this Bill is that it provides no protections against homes built on public land being sold to REITs and international investment funds. This will lead us into the absurd situation whereby we will be subsidising people on low incomes renting privately owned accommodation on public land on which only social and affordable homes should have been built. We will be subsidising their insecure renting through HAP and subsidising private developers and investment funds. It would be much better value for money to ensure in this Bill that only social and affordable homes can be built on public land. This would also be much better for the individuals and families involved who then would be able to avail of long-term, secure social housing and the peace of mind that comes with that rather than the constant worry and threat of eviction into homelessness.
Affordable homes delivered by private developers or the Land Development Agency acting with a commercial remit to maximise returns will result in these affordable homes being more expensive than they should be. We are likely to see affordable homes delivered, albeit at a discount from the full market price, but not at a level within reach for many people on average incomes. Make no mistake. The Land Development Agency will facilitate the privatisation of public land through the backdoor. This is being dressed up by the Minister as delivering affordable homes but it is an attempt to transfer public lands to developers, which will drive up the cost of homes built on public lands. We need to break from the failed policies of the past that locked thousands of people out of secure and affordable housing. It is telling that there are no protections in this Bill to stop REITs and institutional investors buying up to 40% of the homes built out on public lands.
If the Government is serious about delivering affordable housing on public land, it should commit to amending this Bill to prohibit the sale of public land acquired by the LDA to private developers, guarantee that 100% of homes built on land acquired by the LDA will be either affordable or social housing and prevent the sale of homes built on public lands to REITs and institutional investors. This Bill will ensure that developers continue to profit while families spend years living in box rooms. It will mean that international investors are facilitated while people are driven into homelessness when they cannot afford the rent. The deference to developers and international investors must stop. It is time that we put the housing needs of people first.
A little over a year ago, the Minister, Deputy Darragh O'Brien, in opposition said the following about his predecessor, Deputy Eoghan Murphy, and the current Tánaiste, Deputy Varadkar: "It's their wealthy friends they've prioritised to changing planning laws to have a situation where it's far more advantageous to have investor funds operating in this country." We now have a Bill brought forward by the Minister for Housing, Local Government and Heritage, which does not protect us against international investment funds acquiring and buying up homes built on public lands.
We need active land management, a Land Development Agency with strong, compulsory purchase powers and for affordable and social homes to be built on public lands. Instead, we have a Bill that will enable lands to be taken from public bodies and flipped to private developers, allow many of the homes built on public lands to be sold on to international investors and REITs and envisages 40% of homes built on public lands to be built at full market price, which will be out of reach and unaffordable for a generation locked into paying exorbitant rents.
This Bill, if passed without amendment, will have consequences. It will mean that we will not deliver affordable homes at the rates that we could. This will be a lost opportunity and it will mean more people being pushed into homelessness. We have a choice. I ask the Government to listen to our concerns and amend this Bill.
I welcome the Bill and the publication of the Affordable Housing Bill 2020. Separately, I take this opportunity to welcome the establishment by the Minister of the working group to examine the issue of defective housing, which is an issue in my constituency. As we all know, housing was a big issue in the general election held this time last year, particularly the provision of social and affordable housing. The measures proposed in this Bill and the Affordable Housing Bill 2020 will ensure the provision of homes for affordable purchase, cost-rental and social housing.
I would like to raise the situation regarding a site on the Oscar Traynor Road in Santry, Dublin. Many people will know that last November Dublin city councillors voted against plans for 853 homes on this site despite the fact they had previously voted in favour of this scheme in general. The arrangement with Glenveagh Homes would have seen the construction of 428 private houses, 253 social houses and 172 affordable houses. The site has been idle for years, certainly since 1985 when I was first elected to Dublin City Council.
The scheme was not ideal and the affordability of the proposed houses was an issue. We now have another delay. The pursuit of ideology by certain councillors is getting in the way of the practical provision of social and affordable housing.
The area in question, which comes under Dublin City Council's area B, has the largest social housing list in the country. I understand that a cross-party group of councillors has now come up with its own plans for the site. The proposals are currently being assessed by Dublin City Council management and I wonder whether they are practical. This scheme needs to be brought to finality and the houses must be built on the land. A mixed-tenure development is required. Ideally, it should be done by the council but, if that does not happen quickly, there could be a role for the LDA in co-operation with the council. New measures provided for in this legislation and in the Affordable Housing Bill 2020 should be utilised to ensure that much-needed homes in this area are built without any further delay. I hope the two Bills are enacted as soon as possible in order that people have the full details of the various schemes and can fill out application forms in their local authority. At the moment, they are hearing about general plans and principles only. They just want the Government to get on with the job.
I welcome the fact that the LDA will have no role in regard to individual planning applications and that the existing arrangements will remain in place. I am also glad that the strategic housing development provisions will not be renewed at the end of this year. They have led to unsustainable planning in my area, including the construction of huge build-to-rent schemes. Building and construction, which has been suspended because of the Covid-19 situation, must resume as soon as possible. We need to start building houses.
This Bill aims to address the obvious need for increased housing stock in Ireland. It proposes to do so by bringing together stakeholders such as local authorities, housing agencies and voluntary groups to provide services to local authorities in order to assist them in the performance of their functions. In doing so, it will provide more affordable housing for the tens of thousands of people left waiting following our economic collapse.
The initial investment of more than €1 billion under the Ireland Strategic Investment Fund offers a significant opportunity to change the landscape in terms of how we fund housing developments in this State. We must be ambitious in our goals if we are to change some of the negative traits that have developed in the housing market in recent years. I certainly hope the LDA can play an important role in that regard by providing a broad base of housing supply that will serve a wide range of people in our society and create the balance we wish to see within our communities. The development of new housing stock should not fall victim to the mistakes of the past. All developments must include adequate services and infrastructure that will meet the needs of those who reside there.
The LDA can play a significant role in helping the national effort to reduce carbon emissions. As noted in the programme for Government, the agency should be tasked with delivering low-carbon, sustainable and climate-resilient housing. This will be key in our fight against climate change as we embark on the challenge to turn the tide of the looming climate catastrophe. To emerge from this battle, we must face up to the need to change countless aspects of our lives and the system we rely upon, including how the State manages and delivers housing projects. Last year saw many of us spend a lot of time in our homes. This has highlighted the need for energy-efficient housing that uses heat and electricity effectively. We should not see the requirements for affordability and efficiency in housing as mutually exclusive but, instead, as intrinsically linked. I am confident that the LDA can make a positive contribution to this aspect of Irish housing provision in the future.
I am acutely aware that concerns were raised in the course of committee hearings in 2019 regarding the forerunner to this Bill. The rights of local authorities should be protected into the future, particularly with respect to non-residential land, unless otherwise requested by a local authority. The balance between legislation we pass in this House and the power of local authorities is very important. We must consider that balance carefully, particularly in regard to the use of public lands and how it affects communities across Ireland.
The Government is committed to completing the major changes that were started in recent years within the housing market. I acknowledge the point made by the Minister, Deputy Darragh O'Brien, that there are too many Members of this House who are too engaged in playing ideological football when it comes to housing, when the current national housing policy has, in fact, taken ideas from both their playbook and our own. That should and must be acknowledged. We all recognise the problems in the housing market and we all want the upcoming generations to have the ability to afford a home. Efficient use of our public resources will be vital to the success or failure of our efforts to reach this goal.
It is disappointing to see another housing measure that is based on the very conservative ideology of both Fianna Fáil and Fine Gael. Unfortunately, it will fail to deliver social housing. In reality, this legislation will increase house prices and push affordable homes further out of the reach of ordinary workers and families. It is a Bill for developers. There are serious problems in housing provision for workers and families whose income is just above the threshold for social housing but not high enough to enable them ever to get a mortgage from a bank or other lending institution. Those people are trapped in private rental accommodation, without rent controls or security of tenure. The Government's LDA will do little to resolve that issue and will, most likely, make it even worse.
I want to highlight the land aggregation scheme, which currently manages five State-owned sites in County Laois alone. There is a total of 40 acres suitable for housing under that scheme but the State has no plans in place to develop housing on those sites. I note that the Government's Bill will only assist in the development of sites in areas with a population of more than 30,000. That will exclude all of counties Laois and Offaly. There has been much said about local authorities' ability to deliver. Laois County Council, a small local authority, will house 150 families in new housing in the space of six or seven weeks. This shows that even small local authorities have the ability to deliver new social housing. As I have said, a total of 150 families will be housed in Laois in a six-week period.
I want to highlight a number of provisions in the Bill. It defines affordable housing as housing that is offered at the median price for a particular geographical area. The issue is that the median price is calculated on the basis of the price of all homes, both modest and mansion. The Minister knows that this pulls the price up artificially and makes it too high for the people looking to buy. It is an inflated price that the average worker and family cannot afford. Second, the legislation compels the LDA to pay the full market price for land from public agencies even if the land has a low existing-use value on that agency's balancing sheet. This will drive up inflation and, therefore, the cost of homes on LDA land. Third, the Government is establishing yet another layer of quangos, to be called "designated activity companies". Some of them will be joint ventures, which strips away powers from local democratically elected councils. The Minister indicated that applications under section 183 of the Local Government Act 2001 are slowing things down. If he was ever a member of a local authority, as I was, he will know that section 183 applications move very quickly through councils, usually in a matter of weeks. What he said is a load of rubbish and it should be put to one side. I thought the Minister had more sense than to come out with something like that.
Sinn Féin has published its alternative to the Government legislation. We have detailed proposals for a new agency with strong CPO powers to deliver an average of 20,000 local authority and affordable homes for workers and families over five years. Our proposals would see a mix of affordable, social and cost-rental housing. We are talking about truly affordable homes for low-income and middle-income workers. These are the people who are stuck in the middle, trapped in private rental accommodation and locked out of owning their own homes forever.
I understand that. Listening to this debate, all I can say is "wow". I do not know whether to laugh or cry when I hear what Government spokespeople are saying.
Of course, the Minister has left the building, like Elvis Presley, but the boys are back in town - that is all I can say. The boys are back in town, as Phil Lynott put it - Fianna Fáil and the developers.
I find it absolutely shocking beyond belief that we have Government people accusing the Opposition of ideology. It is utterly laughable, as is the reference to how we must not repeat the mistakes of the past. This legislation is a souped-up hyper-speed version of the mistakes of the past. It is a heist. It is the legal mechanism to pillage the entire public landbank. It is absolutely extraordinary. It applies to every public body, not only the local authorities, and every bit of their land. It is not only their housing land, but any relevant land - we need only look at the definition. Designated activity companies can take any parcel of land from any public body and they can do what they like with it, in effect. It is unbelievable.
This is worse than the National Asset Management Agency. At least we had the NAMA land briefly in our ownership before it was given back to the investors, vulture funds, real estate investment trusts and so on. They flipped the land, made a fortune and then leased it back to us at extortionate rents, but at least the land began in private ownership. In contrast, this is the actual public landbank of all public bodies and we are going to hand it over to designated activity companies. Every public site is to become a private company shielded from freedom of information and democratic oversight. They will be insulated by commercial sensitivity to enable them to do deals with investment vehicles and third parties - I wonder who they are. The boys are back in town and this is going to be the cash cow, the ultimate prize. They can now plunder the public landbank.
Of course, the Bill should have done something else but it does not. Among the institutions not mentioned are those which own church lands. Where are the compulsory purchase powers to take all the church lands and use them? No, the companies will be able to take land off the HSE. They will be handed over to private developers but land will not be taken from the Sisters of Charity and all the institutions that were responsible for the abuse of women and children. They can keep their land. They will not be touched by any of this, but the public landbank will be plundered and handed over to private developers.
At a minimum, 50% is to be privatised. That is the guideline. However, the Minister will have the power to vary this. He says he might vary the 50% figure downwards and that we might get more social and affordable housing. Equally, there could be no social and affordable housing at all because the Minister can vary it to whatever level he wants. The Minister can also give an opt-out, even on the one aspect of social housing that is possibly offered - the Part V 10% obligation. In any event, we get that obligation on any private development. Yet, the developers can even opt out of that. The Minister can give a waiver and cash is given instead to the local authority. The legislation does not even specify that such cash should be spent on public and social housing. This is exactly what happened before the crash when private developers were paying development levies in cash to pay off their 20% obligation. That money was never used for housing.
Of course, it was all about incentivising an absolute stampede or goldrush by the property developers who crashed the entire economy. Now, we are not going to do it on private land but we are going to do it on public land. No one could make this stuff up.
There is no obligation for social housing. Social housing is mentioned once at the beginning but is not included at all in the functions of the agency. It simply disappears.
Affordable housing is defined as below market price, but then it is strictly and explicitly linked to local market conditions. It is not even linked to average market conditions, which might at least average it out and bring down average prices and rents because it is done on a national level. Instead, it is based on local conditions. In south Dublin average house prices are between €500,000 and €600,000. Affordability as defined by this Bill could be €599,000, €550,000 or €500,000. It is totally useless. If a person lives in Dún Laoghaire and is a low or middle-income worker, the person does not get paid more because he or she lives in Dún Laoghaire. The person still has to pay the rent but rent is €2,200 or €2,400 - that is what is being charged.
The requirement of the legislation to benchmark affordability in terms of cost rental at local market conditions means de facto it will be unaffordable for the vast majority of people who desperately need it. Even cost rental is benchmarked against the market. It is absolutely shocking. In fact, cost rental will eclipse traditional social housing completely because the landbank that the council might have built public housing on will be taken by the land development agency in large part.
There is one thing that really sickens me. Much of this heist of public land is being justified on the basis that we must have social mix. Jesus, that is patronising. It is sickening patronising nonsense from the Government about people from different backgrounds. Of course, that snobbery is ultimately at the base of the Fianna Fáil and Fine Gael establishment. They have been running councils for the past God-knows-how-long. The Government simply does not like council housing - that is the truth of it. Those in the Government do not like council housing. They want to do away with council housing and replace it with cost rental. Yet, insofar as any social housing will be delivered cost rental housing will be benchmarked against the market. This means it will be more expensive. Moreover, social housing, because the Government has not lifted the income thresholds, will now be only for the poorest of the poor. In fact, this will intensify social segregation. It will create a new category in the hierarchy of social segregation in respect of housing. That is what it will actually do. In fact, that is already happening. In the past, nurses, bank workers, teachers and other public servants would have got access to social housing because the thresholds were adequate. The vast majority of working people saw social housing as a legitimate thing to do. Yet, because the Government does not increase the thresholds, it is now stigmatised as only for people on the lowest level of income. Soon, only the people who are on base social welfare payments will actually be eligible to go for social housing, and that is exactly the agenda. For everyone else, we do not have rent linked to income, but we have cost rental linked to market finance and local market conditions.
I will outline another reason why the Government refused to define affordability as a specific proportion of people's income. It is because the agency is going to partner with investment vehicles. Those same investment vehicles will also be building on their own private land in nearby areas at full market price. If Hines or some other company in Dún Laoghaire want to flog apartments at €450,000 in Cherrywood, they will hardly build houses in Shanganagh, for arguments sake, for €250,000. That would not really work for the developers because it would undermine the market. That is why the Government will not define affordability in terms of a proportion of people's income or at a genuinely affordable level. It is because the investors the Government is hoping to drag in to develop public land would not put up with it. That is the truth of what is going on.
I am unsure whether there is much more to say about how horrible and absolutely appalling this legislation is. It is an absolute heist. There is nothing ideological about it. This is about greed, facilitating greed and a political establishment that is utterly captured. It has always been captured. The rich in this country have always made their money by property, by exploiting property and by speculation. This applies to property developers and Fianna Fáil in particular, but Fine Gael did the same with the international vulture funds that the party brought in to benefit from the crisis generated by the last speculative and developer-led frenzy.
Of course, we can add in the affordable housing legislation that has come out. That will strap people in so-called affordable housing with a double mortgage - not only one mortgage but two mortgages.
I will move the adjournment. I hope we can mobilise popular opinion to defeat this legislation before it gets passed. I hope we can actually force in legislation that will take the land off the speculators and vultures. That is the action we really need to take.