Wednesday, 3 March 2021
Housing Shared Equity Loan Scheme: Motion [Private Members]
That Dáil Éireann:
notes that: - after much delay the Minister for Housing, Local Government and Heritage, Darragh O’Brien, has brought forward his affordable housing plan;
- much of that plan, including the Land Development Agency, the Serviced Sites Fund and the Cost Rental Scheme, are continuations of the last Government’s housing policy;
- the only new element that the Minister for Housing, Local Government and Heritage, Darragh O’Brien, has brought to the plan is an Affordable Purchase Shared Equity Scheme for first-time buyers;
- this scheme was not included in Fianna Fáil’s election manifesto or previously stated Fianna Fáil policy;
- the origins of the scheme are two policy papers published by Irish Institutional Property and Property Industry Ireland in March and May 2020;
- these proposals were based on a shared equity loan scheme in operation in England and Wales since 2013;
- in 2015, a report by Shelter concluded that the English scheme ‘increased house prices by 3 per cent’;
- in 2019, a report by the House of Commons National Audit Office (NAO) found that house price inflation for new build homes was 3 per cent higher than for second-hand homes since the shared equity scheme was introduced;
- in 2020, a report published by the Centre for Economic Performance at the London School of Economics (LSE) found that in London the Shared Equity Loan Scheme 'led to a 6 per cent increase in house prices’;
- while the NAO report concluded that the scheme increased the supply of new homes by 14 per cent, it also increased demand by 37 per cent, while the LSE report stated that the scheme ‘stimulated housing construction in the wrong areas’;
- in 2019, a report by the House of Commons Public Accounts Committee concluded that ‘three-fifths of buyers who took part in the scheme did not need its support to buy a property’;
- in September 2020, officials in the Department of Public Expenditure and Reform expressed concern that a shared equity loan scheme ‘will push up prices’;
- in September 2020, the Secretary General of the Department of Public Expenditure and Reform, Robert Watt, said ‘the property industry wants an equity scheme because it will increase prices’;
- in September 2020, at a meeting between the Department of Finance and the Central Bank of Ireland, concerns were raised that the shared equity scheme could ‘impact on prices’;
- on 16th February, 2021, the Economic and Social Research Institute told the Oireachtas Joint Committee on Housing, Local Government and Heritage that the proposed shared equity scheme ‘will very likely lead to higher house prices’; and
- on 22nd February, 2021, nine Fine Gael Councillors on Dublin City Council, including a close political associate of the Minister for Finance, Paschal Donohoe, wrote to the Minister for Housing, Local Government and Heritage, urging him to scrap the Affordable Purchase Shared Equity Scheme as it risked a ‘return to failed housing policies of the Celtic Tiger era’; is of the strong view that: - the Government’s shared equity scheme does not make homes more affordable;
- the scheme risks pushing up house prices and burdening working people with unsustainable debt;
- the scheme will benefit significant numbers of people who already have sufficient funding to purchase a home;
- the scheme will expose the State and taxpayer to significant liabilities in the event of a future property downturn; and
- the scheme will breach the Central Bank of Ireland’s macro-prudential lending rules if the banks are allowed to become participants in the equity loan; and urges the Government to: - remove the Affordable Purchase Shared Equity Scheme from the General Scheme and final version of the Affordable Housing Bill 2020; and
- re-profile the €75 million allocated to the Affordable Purchase Shared Equity Scheme in Budget 2021 to the Serviced Sites Fund, to allow for an increased delivery of local authority and Approved Housing Bodies affordable homes to rent and buy.
Fianna Fáil's developer-led shared equity loan scheme must be scrapped. It will increase house prices, saddle working people with debt and line the pockets of big developers with taxpayers' money. Facing a barrage of criticism from all quarters, this scheme is on its last legs. Before I remind the House of some of that criticism, it is worth remembering where this scheme came from. An entire generation is locked out of home ownership. Three decades of Fianna Fáil and Fine Gael housing policy has led to ever-higher house prices, ever-higher rents and a growing number of young adults stuck at home or stuck in a rent trap.
Need for genuinely affordable homes for working people to rent and buy was a key issue in the general election campaign last year. Interestingly, the shared equity loan scheme the Minister, Deputy Darragh O'Brien, is now trying to introduce did not feature in the general election campaign. It was not part of any election manifesto. Indeed, it had not been part of our housing policy discussions for the previous four years on the Oireachtas housing committee.
The first we heard of this scheme was after the general election when two leading lobby groups for the property and investment industry published proposals for a shared equity scheme and met housing spokespeople, including me, Deputy Darragh O'Brien and others to sell their wares. IBEC's property arm, Property Industry Ireland, published a detailed proposal. Another group, Irish Institutional Property, headed by a former secretary general of Fianna Fáil, published something similar.
Both of these proposals accepted that house prices were too high, but instead of focusing on solving the problem and bringing down house prices, they asked Government and the taxpayer to plug the gap. Sinn Féin told them in no uncertain terms where to go. This was, and continues to be, a reckless proposal. At best, it will lock-in unsustainably high house prices and, at worse, and more likely, it will push those prices up further.
It should come as no surprise that the Minister, Darragh O'Brien, and Fianna Fáil bought into this developer-led scheme because that is what Fianna Fáil did with housing policy when it was last in government. The last shared ownership scheme of the Celtic tiger era was based on similarly flawed policies. The 50:50 shared ownership scheme racked up huge levels of unsustainable debt on first-time buyers. More than 50% of those who entered that last Fianna Fáil developer-led scheme ended up in significant mortgage distress, some losing their homes and others having their properties transferred back into social home ownership. This scheme is even worse. Contrary to what the Minister has been saying in recent days, there are no meaningful checks to protect first-time buyers. This is not a scheme targeted at those in greatest need. The direct involvement of the banks, which the Minister is seeking, with potentially punitive interest charges makes it much worse.
We know this scheme from the property industry lobby and the Minister is based on an English scheme that has been in place since 2013. That, too, was meant to be short term but has been repeatedly extended for almost a decade. The most recent research on that scheme from the London School of Economics, published last year, shows in high demand areas it has pushed up house prices by 6%. It has increased the supply, but in the wrong place where houses are not needed, and it has increased demand three times more than it has increased supply. Worse still, 60% of those who availed of it did not need it; they had sufficient mortgage credit to purchase a home, but those that were not able to buy a home and got it, as well as the taxpayer, are now, according to all of the reports published by government and academic sources, exposed to significant risk into the future. The London School of Economics research I mentioned stated very clearly in its conclusions, "Only developers and landowners, not new buyers, benefited from the policy-induced price increases of the scheme."
The Minister, Deputy Darragh O'Brien, has been saying repeatedly that the criticism of this scheme by the Opposition is predictable. Unfortunately, we are not the only people criticising the scheme. Last year, in email correspondence between the Minister's Department and the Department of Public Expenditure and Reform, released to me under freedom of information, Department of Public Expenditure and Reform officials said, "It will push up house prices." The former Secretary General of the Department of Public Expenditure and Reform, Robert Watt, said, "The property industry wants an equity scheme because it will push up house prices." We know from a variety of media reports that the Central Bank is extremely concerned about the impact of this scheme on house prices, bank lending and consumers, although we will not know the final verdict of that body until later this year. Two weeks ago, the ESRI told the Oireachtas housing committee, "This scheme will very likely lead to house price increases" and the mainstream of the property industry, the Institute of Professional Valuers and Auctioneers, who are the people who buy and sell homes in every county of the State, have said that in their view this will push up house prices and it is simply a way of getting around the Central Bank lending rules. It is not just experts, industry and the Opposition saying this. For example, Fine Gael councillors in Dublin city and Green Party Deputies are saying this is the wrong scheme and it should be scrapped, with the money diverted into genuinely affordable homes.
There is an alternative. We should remove the pro-developer shared equity loan scheme from the legislation and transfer the €75 million into the serviced sites fund, which would deliver 1,500 genuinely affordable homes in the coming years, and then go further and increase that and the cost-rental fund so that we are able to deliver 4,000 to 5,000 genuinely affordable homes at prices working people can afford, by which I mean rents of between €700 and €900 per month and house prices of between €170,000 and €230,000, depending on where one lives. This is what the Minister promised during the general election campaign but seems to have forgotten about thus far.
The Minister, Deputy Darragh O'Brien, and the Government are clearly under pressure.
They are now claiming that their pro-developer shared equity loan scheme is a short-term, small-scale measure. Of course, that is not what the Minister was saying last year. We know from freedom of information requests that he was seeking between €200 million and €300 million for this scheme in the budget negotiations. He was reported in the media last December as saying that, ultimately, 40,000 first-time buyers could benefit from it. He is still in negotiations with the pillar banks to double the fund from €75 million to €150 million. Contrary to the Minister's claim, it will apply to a significant portion of the first-time buyers' market in high-demand areas. We know, because the English experience makes it very clear, that short-term equity loan schemes are like crack cocaine; once one tries them, one is hooked and it is very difficult to withdraw. In England, more than £17 billion has been spent on such schemes in almost ten years.
It is clear that the Government has been stung by widespread criticism and is now scrambling to change its story. Rather than do the right thing, the Minister is pushing ahead regardless. I am not sure whether it is arrogance or incompetence on his part. Whatever it is, he is putting first-time buyers at risk. Buying a home is the single largest purchase of somebody's life. Why any politician from any party would want to go back to the bad old days of developer-led housing is beyond me. We know how that ended the last time. We cannot let Fianna Fáil drag us back to the bad old days of the Celtic tiger. We cannot let Fianna Fáil jeopardise the future of thousands of first-time buyers by heaping unsustainable debt on them in order that they can buy overpriced homes and line the pockets of big developers and institutional investors.
The choice before Deputies in this debate is very simple. Let us scrap the Fianna Fáil developers' scheme. Let us invest the €75 million earmarked for it into genuinely affordable homes. Let us then increase that fund even further to deliver the thousands of affordable homes that working people need and deserve. If Members believe in that, I ask them to support this motion and force the Minister to withdraw this reckless scheme.
Tá géarchéim tithíochta ag cur isteach ar mhórchuid de dhaoine agus ar chaighdeán saoil oibrithe, ar theaghlaigh agus ar dhaoine óga ar fud na tíre. Tá an ghéarchéim seo ann mar gheall ar deich mbliana d’Fhine Gael i gcumhacht agus ní thig linn an seans a ghlacadh go ndéanfaidh Fianna Fáil an scéal níos measa arís. Níl dabht ann go mbeidh sé níos measa mar gheall ar an scéim atá molta ag an Aire agus an Rialtas. Caithfear deireadh a chur leis an scéim seo.
The housing crisis did not happen by accident. It happened as a result of a decade of failed Fine Gael policies. Workers and families cannot afford a continuation of that failure. That is why the proposed Fianna Fáil developer-led scheme from the Minister, Deputy Darragh O'Brien, must be scrapped. It is a demand-side response to a supply-side problem. It is bad economic policy with one effect, namely, to push up house prices. The scheme is an import of the Tory policy implemented in Britain and peddled here by property developers. The Minister has been taken in, hook, line and sinker, and is selling their wares.
Under the scheme, the Irish taxpayer will, in essence, be betting on the housing market. The head of the National Audit Office in the UK commented in the report on the British scheme: "The scheme has...exposed the Government and the taxpayer to significant risk if property values fall..." The same report found that the risk extends to borrowers themselves, who, if they want to sell their property soon after purchase, might find they are in negative equity. The scheme the Minister is proposing could see the buyer taking on an overall debt equivalent to more than five times their income, bypassing the Central Bank's mortgage measures. Those measures were put in place for a reason, namely, to protect borrowers and avoid what the Central Bank describes as a credit house price spiral. The scheme seeks to sidestep the rules, risking further house price inflation. The ESRI told the housing committee that it will very likely lead to higher house prices. The ESRI's was not the only voice giving that warning. Its view is shared by the Central Bank. Even the former Secretary General of the Department of Public Expenditure and Reform, Mr. Robert Watt, stated that the property industry wants this scheme because it will increase house prices.
The Minister should listen to that statement from Robert Watt. He said those in the property industry want this scheme because it will increase house prices. The ESRI, Central Bank and other bodies are all saying the same. Yet, the Minister is determined to plough ahead with this damaging policy despite all the warnings. It is reckless and a display of arrogance from the Minister. The resources are better spent by investing in genuinely affordable homes. We know that is the real answer to what is needed. What is needed is to scrap this scheme, drop the arrogance and support the motion from my colleague, Deputy Ó Broin.
This is plainly a scheme designed by property developers for property developers. It is nothing more than a regurgitation of failure. A similar scheme was attempted in Britain by the Tories. All that succeeded in accomplishing was pushing up property prices. The ESRI and the Central Bank have made it known that they have concerns, as have county councillors and Deputies from the Minister's party and the other Government parties. Yet, those in Fianna Fáil seems consumed with a form of cognitive dissonance of the type which allows them to imagine that a repeat of the failures that led to the property crash in 2008 can somehow lead to a different outcome in the world of today. The only real difference between Fianna Fáil's approach during the previous property crash and now is that today the Government is asking the taxpayer to get in hock for millions from the outset rather than what happened previously, when those responsible were content to wait until they had destroyed the country's financial well-being and lumbered the ordinary workers of this country with a debt that will burden their families for generations to come.
In my county of Wicklow people simply cannot afford to rent or purchase at current price levels. The fact is that this Fianna Fáil scheme does not and will not make houses more affordable. It will simply push up prices. Outside of Dublin, Wicklow has the most expensive house prices anywhere in the entire State. This has resulted in the breaking up of communities and in families being forced to live apart as well as losing their close supports and sense of place in the communities where they grew up. They have had to leave in search of more affordable accommodation farther south in Wexford and farther afield.
This scheme fails to address specifically those with the most need. Yet again, those in Fianna Fáil are asking us to put in place a scheme for the benefit of their developer mates. This is a bad scheme and I am calling on all Deputies from across the political spectrum to support the motion, reject the scheme and put in place a proper affordable scheme that will address the housing needs of our citizens.
Here we go again back to the good old days. It is the good old days for developers who have an open door directly into the Department of Housing, Local Government and Heritage to write the policy for the Minister. The shared equity scheme is in tatters. The ESRI has dismissed it. Auctioneers have dismissed it. Fine Gael councillors in Dublin City Council - one of whom is a senior adviser in the Department of Finance - have dismissed it. Two of the Minister's Green Party colleagues in Government have dismissed it. They have said that the €75 million allocated for it should be put directly into building public houses.
The question is why the Minister is persevering with it. The only answer can be that we are back to the good old days of Fianna Fáil in government aided and abetted by its developer friends. They come straight in the front door with a nod and a wink, a pat on the back and a deal done. Developers wrote this policy for the Minister when Sinn Féin told them to sling their hook. I am referring to the developer friends who, along with others, bankrupted and destroyed the country.
A little over a year ago the population of our country voted for seismic change. They voted for something different. They voted for people who would stand up for them and introduce a social housing building programme never before seen in the history of the State. This shabby proposal is not that change. Young people in our country need affordable and public housing built directly by this State through our local authorities. The Minister is now almost eight months into his brief as the Minister for Housing, Local Government and Heritage. We still have not been told how much an affordable house should be.
My constituents in Enfield, Navan, Trim and all around County Meath need hope.
They need certainty that they will be able to buy their own home and be able to afford it. This half-baked measure must be scrapped and the Minister must build direct-build affordable housing for people.
Most of the people I grew up with cannot afford a home and have no hope of ever having a permanent one. Some will. Some will qualify for social housing and may get that after many years waiting. However, for the majority a permanent home is hard to imagine and out of reach. This is crushing and frustrating. It makes people so angry to spend so much money on rent that it stops them putting any kind of deposit together. It is one of the biggest issues that comes to my constituency office and I am sure to the Minister's as well - people who simply do not feel they have any hope and find it impossible to imagine planning for the future. I have the discussion with them and tell them there is talk of a scheme like this or another like this and so on but what is there in concrete terms? What can we actually offer them? In reality, in the vast majority of situations the answer is effectively nothing. There is nothing for these people. They fall between the cracks and have no support, and this is a huge category of people. Thus affordable housing is absolutely key.
What is the point of having a big fanfare for a so-called affordable housing scheme if it is out of the reach of the people who I grew up with, out of the reach of those it is meant to be for? It is pointless. Unless we invest significantly in cost rental and cost purchase, all of us will be confronted in years to come by people who are frustrated and angry that they have been locked out of getting a permanent home because false options - illusions like this - fail to deliver for them. It may deliver for the developers, and handsomely, but it is not going to deliver affordable housing. It is going to deliver something that is just going to cause more frustration, anger and people locked out of the communities they want to live in.
The solution is in cost rental and cost purchase. If I were the Minister, I would look to the fact that most local authorities around the State have banks of land they would love to build affordable housing on. However, unless something is done to assist them with the debt attached to that land, it will hold back schemes, for example, in Cork city and county. It will make them unaffordable and unviable. The Minister would be far better served by talking to those local authorities about how he can relieve them of the debt on that land so they can deliver affordable housing on it. As for this scheme here, the ESRI, the Central Bank, the Institute of Professional Auctioneers and Valuers and the former Secretary General of the Department of Public Expenditure and Reform all have concerns it will increase the prices of houses. Even Fine Gael councillors on Dublin City Council and some Green Party Deputies think so. There are very few people for this, and for good reason. It is going to make it harder. This scheme is not the solution. We all want solutions but this is adding fuel to a fire that is out of control. Affordable housing can be delivered through cost purchase, cost rental and assisting local authorities with their debts, not by assisting developers.
Ba mhaith liom mo chuid ama a roinnt leis an Teachta McAuliffe. Bogfaidh mé an leasú ar son an Rialtais.
I move amendment No. 1:
To delete all words after “Dáil Éireann” and substitute the following: “notes that significant progress has been made on an extensive range of measures included in the Programme for Government - Our Shared Future, building on the initiatives already undertaken and in progress, which are now being brought forward by the Minister for Housing, Local Government and Heritage, to support individuals and families to access affordable housing, in particular:
— this Government is delivering on its commitment to ensure that everybody has access to good-quality housing, to purchase or rent at an affordable price;
— Budget 2021 included €3.3 billion for housing, a 24 per cent increase on 2020, and the highest investment in housing by any Government in a single year;
— the Minister, working across Government and with all housing delivery partners, is delivering on the Government’s Programme for Government objectives to:— put affordability at the heart of the housing system;— to this end, since taking Office, the Minister has already published the Affordable Housing Bill 2020 and introduced the Land Development Agency Bill 2021 to the Oireachtas;
— bring forward proposals for State-backed affordable home purchase schemes to promote home ownership; and
— deliver the State’s first ever cost rental homes;
— both of these significant pieces of legislation will facilitate immediate direct delivery of affordable housing, targeting middle income earners facing high rents and often out of reach purchase prices for new high-quality homes, while supporting the expansion of the affordable housing sector in Ireland over the short to medium-term;
— to provide financial support for affordable housing, €620 million was provided in Budget 2021 for new and existing affordable housing measures, with a focus on immediately stimulating supply;
— Budget 2021, together with focusing on delivering over 6,200 directly supplied homes by local authorities under the €310 million Serviced Sites Fund, introduced a new Affordable Purchase Shared Equity Scheme to target first-time buyers with a help to buy scheme;
— Budget 2021 also introduced a new Cost Rental Equity Loan, to deliver the first ever cost rental properties by Approved Housing Bodies in areas of high demand and high housing costs, with the Exchequer funding supplemented by Housing Finance Agency low cost, long-term finance, making €135 million available in total; and
— the Minister has already announced the first 390 new cost rental homes targeted to be delivered this year under the new scheme, with the additional 50 cost rental homes at Enniskerry Road, Dún Laoghaire-Rathdown which are also due to be completed this year and supported by the Department’s Serviced Sites Fund;
in terms of new measures, further notes that:
— the Irish housing system needs to provide additional new homes to meet current and future demand while new homes cost more than second-hand homes due to the enhanced quality and energy efficiency making viability an issue and meaning that home ownership is pushed further away from individuals and families starting out in life;
— in recent years, first-time buyers have increasingly shifted to buying second-hand homes and the stock of such homes for sale is diminishing;
— planning permissions for new homes have maintained strong growth but commencements have decreased recently;
— it is critical that new supply of affordable starter homes is encouraged and that overall supply increases by circa 40 per cent over the immediate period ahead, to meet the demand as Ireland’s economy recovers from Covid-19; and
— relying on any one measure or one channel of supply would be very high risk and would be limited by each sector’s capacity to deliver, instead all channels, State and non-State, are being mobilised to support affordable housing delivery;
in terms of the new Affordable Purchase Shared Equity Scheme, also notes that:
— the scheme is one short-term, targeted measure in a multi-faceted approach to increasing housing affordability;
— the scheme was devised in consultation with other Government Departments and housing delivery partners, in order to provide an immediate boost to first-time buyers for new homes;
— the proposal has gone through the rigorous cross-Government policy development processes with a mandate given to the Department of Housing, Local Government and Heritage to design the scheme for Government consideration;
— the scheme continues to be developed in close consultation with relevant Government Departments, housing delivery partners, international comparator bodies and other key stakeholders;
— with final parameters of the shared equity scheme close to finalisation, but not yet announced, the stance taken by the opposition is premature and based on incomplete information;
— the Department of Housing, Local Government and Heritage has examined and assessed the impact of similar schemes in other jurisdictions, including England, learning from experience in developing the Irish scheme;
— the United Kingdom (UK) scheme, for example, has supported some 250,000 home purchases, and is considered to have met its objectives with a 2019 report from the UK National Audit Office finding that the English ‘Help to Buy: Equity Loan’ scheme increased overall supply by 14.5 per cent, while increasing purchase prices for buyers in the scheme by less than 1 per cent on a like-for-like basis;
— the Irish shared equity scheme will be more targeted than other international schemes to ensure it delivers on its objectives of helping first-time buyers, who need it, into new homes sooner, while at the same time encouraging and increasing new build supply to meet that realisable demand;
— the State’s financial exposure in the shared equity scheme is €75 million, just over 2 per cent of the State’s housing budget in 2021, and this can support an estimated 2,000 first-time buyers to realise their aspiration of buying a new home, representing 10 per cent of new homes built last year, and overall a targeted and time bound scheme could support 8,000 new home purchases over a three year period;
— taking on board legitimate concerns that any new market-based scheme could have unintended consequences, the Government are ensuring safeguards are being built in to tailor eligibility to meet individual affordability needs only, and to manage prices through area-based price caps; and
— the scheme will be reviewed after one year to ensure it remains on track to meet objectives; and
furthermore, notes the Government’s intention to:
— accelerate and expand affordable housing delivery in the context of the ongoing review of the National Development Plan and the new housing strategy being prepared by the Minister;
— fully utilise the provisions of the Affordable Housing Bill 2020 and the Land Development Agency Bill 2021, to support affordable housing delivery by local authorities, approved housing bodies, the Land Development Agency (LDA) and through all other channels;
— accelerate delivery of affordable homes by local authorities under the €310 million Serviced Sites Fund, to deliver 6,200 new affordable homes and bring forward proposals to expand the scope and potential of the fund;
— maximise the existing Help to Buy Scheme, which has already seen approvals of more than 22,000 applications, and the Rebuilding Ireland Home Loan, which has lending of €354 million since 2018;
— expand Part V of the Housing (Miscellaneous Provisions) Act 2009, to encompass affordable as well as social housing;
— mobilise the LDA to work with local authorities, State agencies and other stakeholders to deliver affordable housing by leveraging its expertise and the €1.25 billion in Ireland Strategic Investment Fund funding and land bank available to it; and
— build sustainable mixed communities, avoiding over-concentration of any particular housing types in areas, by requiring local authorities to complete Housing Need and Demand Assessments to inform the delivery of an appropriate mix of housing typologies to cater for the needs of disparate household types and sizes, and thereafter by delivering affordable housing to complement the planned increase in the social housing stock of more than 50,000 homes, to help meet those needs.”
We are in the middle of a housing crisis, as most Deputies will actually recognise. Faced with such an emergency, we need to use all tools at our disposal to address the challenge across both the private and public sector. I am committed to delivery over dogmatism to boost housing supply and open up homeownership to a new generation of people. We need to stop letting one party’s perfect be the enemy of everyone else’s good when facing this crisis. Silver bullet fantasies and cynical hysteria politics do a generation locked in a rent trap a great disservice. I am committed to using every single weapon in our arsenal to fight this battle and turn the tide in our housing crisis. I am committed to this because I want to help people to own their own homes at an affordable rate. To refuse to use the private sector would be fighting with one hand tied behind our back. Instead we need to show energy, innovation, flexibility and commitment to get bricks and mortar into the ground.
However, this morning’s Private Members' business is, unsurprisingly, deeply cynical. It is a manoeuvre and nothing else, and has nothing to do with constructive proposals for the housing sector. It dedicates nearly 600 words to scrapping a scheme that has not even been finalised yet and the details of which are yet to be published.
It is the approach of a party interested in manufacturing problems but not in providing solutions. The Dáil will debate the affordable housing Bill in the coming weeks, including the shared equity scheme element of the Bill, and Sinn Féin and others will have a chance to put forward amendments on Committee Stage. If that party was interested in solutions, it would use that opportunity. Instead of allocating its Private Members' time to putting forward practical legislation, it is using it for the hysterical politics that is its defining characteristic.
That type of politics is particularly depressing in the face of the sheer scale of this housing crisis. I remind Deputies that home ownership levels in Ireland have fallen from highs of 82% in 1991 to below the EU average today. We need to address that and give a whole generation of people an opportunity to buy their own home at an affordable rate. We need new approaches. That is why our affordable housing Bill and the Land Development Agency Bill are so important. Only time will tell whether Sinn Féin will actually support those tangible measures to help us get through this crisis or just oppose the Bills, as it usually does.
We need to use short-term measures to boost supply while other supports such as direct State build of affordable homes come on stream. The equity scheme has three main aims: to boost supply, bridge the affordability gap and support jobs and economic recovery. The scheme involves the State taking approximately 20% on average in any new build, subject to regional price caps, while a deposit and mortgage is taken out on the rest. The equity stake itself is free for the first five years, with modest fees applying thereafter. Some €75 million has been put aside, with potential additional funding, to reach the aim of supporting approximately 2,000 homes and 2,000 individuals this year. These are people who are caught in the rent trap. They are people who I will not abandon and who I and this Government want to help.
Let us put the idea into perspective. It forms one part of the four-pronged approach in the affordable housing Bill which, working in tandem with the Land Development Agency Bill, is a fundamental shift in housing policy. It covers our first national cost rental scheme, to be implemented this year, and our first direct local authority-led affordable building in more than a decade, also to be implemented this year, with prices ranging from €165,000 to €265,000. It also comprises a shared equity scheme that will give individuals and first-time buyers a choice of where they can buy this year. Subject to Cabinet approval, the Bill will provide a newly expanded Part V to encompass affordable housing in new developments.
In financial terms, let us look at the €75 million. It is absolute nonsense to say that this €75 million will ratchet up house price inflation. It comprises 2.3% of the €3.3 billion housing programme and less than 0.7% of the €11 billion mortgage market but it is 100% of Sinn Féin's interest in Government housing policy. The details of the proposal are being finalised but the equity scheme is living rent-free in Deputy Ó Broin's head. It says everything about Sinn Féin's obsession with Trump-style hysteria that Deputy Ó Broin compared an equity scheme that will help first-time buyers with crack cocaine and kept a straight face while so doing.
I accept legitimate constructive criticism. Indeed, I actually welcome it. Any scheme worth its salt has to stand up to scrutiny and be willing to take improvements on board. The ESRI committee contribution rightly stated that the targeting of any credit market intervention is critical. To address those concerns directly, the scheme is targeted, time and finance limited, and subject to regional price caps to activate supply immediately, stop inflation and ensure realisable supply. Last September, the Central Bank noted the proposal as an abstract concept of the idea, but this scheme is based on equity, not debt, with no obligation to buy out. It is not a second mortgage and the macroprudential rules are fully protected. We are continuing to engage with the Central Bank and the Directorate General for Competition on the scheme. That work is ongoing and progressing well.
Ultimately, the reason behind the motion lies in Sinn Féin's consistent opposition to home ownership. It voted against affordable ownership motions and it has opposed the help-to-buy scheme, the first-time buyer's scheme that has supported 22,709 individuals and families to get their own home. It is now looking to scrap a scheme that has not even been published yet. Its Deputies can continue to vote against such initiatives and deprive workers of the secure homes they want, but I am not going to allow that to happen. I am going to work on behalf of those people, as is the Government. Sinn Féin is criticising a short-term measure but it has put forward no viable solutions for swift delivery.
The Sinn Féin housing plan, a phrase I use advisedly, involves building 20,000 homes without any idea where they will be built or by whom. Sinn Féin representatives never say how long it is going to take. The shutdown of the construction sector does not matter when one is building houses in the sky. The ownership scheme published by Sinn Féin excludes couples earning the average industrial wage and at the end of it, anyone availing of the scheme does not own his or her home. We have an issue that needs to be sorted now. Action is being taken but all that some of my Opposition colleagues do is continue to oppose without bringing forward any viable solutions.
The core foundation of my and the Government's policy is that owning one's own home is good for individuals, families, communities and our State. A person earning a decent wage should be able to buy a home and the State should play a central role in supporting that aspiration. It is all too clear from the opposition of other parties that they do not share those core beliefs and will continue to oppose measures to support home ownership. The hopes of generation rent are dependent on Government action and that is what I, as Minister with responsibility for housing, am doing. I will leave no stone unturned in working to put forward real solutions to help those people to realise their dreams. I hope some in the Opposition will get on board.
After a decade of housing policy that effectively abandoned affordable home ownership, a new Minister in a new Government is publishing legislation that introduces cost rental for the first time, reintroduces council-led affordable housing, applies a permanent affordability charge on all public land and provides affordable home loans to those accessing housing in the short term while these measures come on stream. Let there be no mistake - Fianna Fáil and this Government are delivering public housing on public land with affordable rental and affordable purchase schemes.
I can understand why Opposition parties are trying to find things to oppose; after all, they supported many of those proposals with Fianna Fáil when we were in opposition. They are focusing today on a measure that is expected to cover a tiny percentage of market transactions in order that they can repeat outdated slogans about Fianna Fáil from decades ago. I heard the word "developer" 20 times in the 20 minutes of the Sinn Féin contribution.
Many people speaking today will also reference a scheme in England with similar characteristics to the shared equity loan scheme. People will compare the two schemes and make the assumption that the criteria used in Ireland will be the same as those introduced by the Tories in England when perhaps they will be the same as those introduced by the SNP in Scotland, with very different results.
It has also been cited that the Economic and Social Research Institute, ESRI, is opposing this scheme but we should put on the record what was stated by the ESRI. It stated that the scheme will provide access to housing for households that would otherwise be unable to make transactions. It stated that the scheme is with merit and if done in the right way, could provide solutions. I urge people to look at exactly what was said in that committee meeting.
The ESRI has stated that the scheme is possible, as has the National Audit Office, yet Opposition parties oppose it without seeing any details at all. I encourage young people out there to call their Sinn Féin Deputies, ask them to support the Affordable Housing Bill and the affordable and cost rental schemes, and ask them to ensure a generation of Irish people have access to housing.
Sometimes less is more. During the term of this Dáil, the Minister has brought forward several housing and property proposals that have failed the test of delivering meaningful supply to the property market. His earlier contribution was cynical, even though he used that word a number of times in the course of it. I heard him use the word "hysteria" in a recent media interview and thought it was just a once-off but he used the word six or seven times in this morning's contribution. He is obviously rattled.
The Minister spoke about €75 million. The concern about that amount of investment is that it opens the door to his friends in a modern version of the Galway tent. The Minister will be having Zoom and Microsoft Teams meetings with his property developer friends.
The latest demand-led proposal is the shared equity scheme. It will do nothing to increase the supply for those who desperately need housing. It will do nothing to reduce costs. The scheme will increase property prices and profits for developers. It seems that it is back to business for Fianna Fáil. I clearly remember the crash. Friends of mine do not live in the country anymore because of the crash and we certainly do not want to go back to that again. The general election, over a year ago, was fought on the issue of housing and the need to deliver social and really affordable housing for people and this scheme does not address that matter.
If the Minister was serious about it, he would put money into local authorities and let them lead the building of housing that we need.
At every turn the Minister is quick to dismiss the Opposition. He most recently described the Opposition's objection to this scheme as borderline hysterical. Are the concerns raised by the ESRI, the Institute of Professional Auctioneers and Valuers and those of the Central Bank also hysterical ravings? Are the concerns raised by the nine Dublin-based councillors of the Minister's coalition partners, Fine Gael, who suggested it was a return to the politics of the Celtic tiger, hysterical musings? No, they are not. It is sensible objection to poor policy in the public service. Ignoring the advice of experts and ploughing on with a failed policy is a better example of a response derived from uncontrolled emotion.
The scheme is supported by property developers and those who would like to see demand increased. This was not in the Fianna Fáil election manifesto. Such a scheme was floated, however, by Irish Institutional Property and Property Industry Ireland, IBEC's property arm. The property industry wants an equity scheme because it will increase prices and it seems that Fianna Fáil is again beholden to that industry's desire.
The UK charity, Shelter, for instance, showed that the UK version of the scheme pushed up prices. Without an adequacy of supply, a scheme such as the Minister has proposed will drive up demand and increase prices. He cannot be oblivious to that. The scheme he has proposed will increase house prices and benefit those who already have sufficient funding for a mortgage, leaving the State prone to loss should there be a downturn in the property market. I mentioned at the outset that less is more. The Minister should slow down, stop this bad idea, listen to the experts and the Opposition and not be guided by developers. He should do what he was put in a position to do, that is, build council houses.
The Government’s Bill highlights what Sinn Féin has been saying for years, which is that Fianna Fáil is being led by the hand by developers and speculators. Are Fianna Fáil members suffering from amnesia that they do not remember what happened in the previous property crash, how they brought the country to its knees and hundreds of thousands of people had to leave this country because of the damage they did to it? The Minister is now coming forward with this new proposal for a shared equity scheme that is being supported by developers and speculators and he and his party colleagues are criticising us for not getting on board.
Fianna Fáil supported the previous Fine Gael Government, which destroyed the housing sector in this country. It never supported local authorities and never invested in social or affordable housing. Now the Minister has come in here today and is giving out about Sinn Féin and Deputy Ó Broin's policy. Deputy Ó Broin is trying to put money where it needs to be spent, in local authorities, to develop real social and affordable housing for people.
We want to work with the Government, but we cannot work with a Minister who is putting developers and speculators ahead of ordinary people. My colleague, Deputy Ó Laoghaire, stated there are people who will never own a home as long as Fianna Fáil or Fine Gael are in government and as long as they have these policies. The problem is their policies and ideologies are that market forces will deliver. The one thing we know for a fact in this country is that if we are waiting on the market, the speculators and the developers to solve the housing crisis, it will never happen. We have told the Government. It has seen what happened. For once, could we just keep it simple? Let us build houses and deliver for ordinary people and families who want hope. That is why I am here. I campaigned on a policy to deliver affordable and social housing for people who need it and that is why we should support my colleague's Bill today.
Since the Government was formed the Minister has been promising to deliver affordable housing. He has had sufficient time to explore options, and if this is the best he can come up with, then we have a real problem. The idea of a shared equity purchase scheme that is being put forward by him simply will not work. I would argue that it is worse than similar schemes in the past. History has shown us that schemes like the one the Minister is proposing have proved disastrous for people and have inflated house prices. As Deputy McAuliffe and the Minister should know, we are still dealing with the repercussions and consequences today of the earlier scheme which was introduced originally in the 1990s and 2000s.
In my experience, I have found that many of the people on this earlier scheme ended up accumulating huge and unsustainable debts, forcing them to go from mortgage to rent after having paid their mortgage for many years along with their rent, as the scheme entailed.
This new scheme will prove equally disastrous for people in the long term and will undoubtedly result again in inflated house prices, which the ESRI and others, as well as members of the Minister's own party, have warned the Minister about. I am concerned that the scheme is a throwback to the mistakes made during the period of the Celtic tiger. I am also concerned that the subsequent collapse of the economy lay in part with the misconceived dependence and reliance that Fianna Fáil placed on developers to build affordable housing.
We need to look at and expand on existing housing projects such as the Ó Cualann Cohousing Alliance, which as a proven track record of providing realistically affordable housing over the last years. My colleague, Deputy Ó Broin, our spokesperson on housing, has put forward viable and realistic options for affordable housing, for example, through the delivery of public housing by local authorities, approved housing bodies and community housing trusts, by increasing capital expenditure, setting realistic prices for affordable housing and so on. I recommend these solutions to the Minister and urge him to consider a realistic and workable scheme that will not result in inflated house prices.
When Fianna Fáil took over the housing brief, the Minister made it clear from the start that he was happy to continue with the failed policies introduced by Fine Gael which, as we know, caused the housing crisis and failed to solve the housing crisis. To see Fianna Fáil introducing failed British Tory housing policies is a new low even for Fianna Fáil. This motion outlines a long list of evidence showing that shared equity schemes increase the cost of and demand for housing, and lead to the development of housing in the wrong areas. We have seen evidence from the British model. The Minister and his colleague might like to say that it is just Sinn Féin that is opposed to this policy. The ESRI, the Central Bank, the former Secretary General of the Department of Public Expenditure and Reform, journalists and everybody else is opposed to it. Even Fine Gael sees that this is a bad scheme but it is Fianna Fáil reverting to type.
Developers are still drawing up Fianna Fáil housing policies. It is developers who want shared equity schemes, because they increase property prices at the expense of people desperate to own their own home in a hopelessly dysfunctional housing market. Lobbyists for developers wrote this policy and the Minister grabbed it and ran with it. Has Fianna Fáil learned nothing from its time in government, when it bankrupted this State, destroyed the economy and caused misery and financial ruin for thousands of Irish people? This scheme risks increasing house prices. That is the opposite of what we need and it will burden working people with unsustainable debt if the value of their property increases. If values fall, it will expose the taxpayer to significant liabilities. I ask the Minister to stop going with developer policies, to put people first and to do the right thing by scrapping this scheme.
I thank Sinn Féin for tabling this motion. It has been tabled in advance of the legislation coming to the House and being discussed in detail but given how legislation has been debated here in the last few months, we do not know how much time we will actually get to discuss legislation in detail, especially when we get to amendments. Any opportunity that we get to discuss housing and the provisions of a Bill, although we do not yet have the exact details, is welcomed by the Labour Party, so I thank Deputy Ó Broin and Sinn Féin for tabling this. The previous speaker made a charge to the Minister, Deputy O'Brien, that this is a return to type for Fianna Fáil.
That is a very wounding charge because the roots of this housing crisis are in the collapsed economy of 2008, which is when our entire economy was leveraged against the construction industry. When the housing industry failed, everything fell with it and that is why we have a housing crisis now. We have not been able, 13 years on from that crash, to get ahead of and beat this housing crisis. In my first contribution on housing in this Dáil, in a debate with the Minister in his new role, I said he would have to choose between two different Fianna Fáil legacies. One is the traditional Fianna Fáil legacy which the party prides itself on, of building local authority housing at a great scale, creating communities throughout the country, not just in Dublin. Fianna Fáil was not the only party to do that back in the middle of the 20th century but it has a proud tradition in that regard. The other is the legacy of the late 1990s and early 2000s, which led ultimately to where we are now and the current housing and homelessness crises. It is still premature to make a judgment because the Land Development Agency Bill has not been brought before the House yet but the shared equity scheme, as presented, is a genuine cause for concern. I know the Minister will say the Opposition is being dogmatic and unfair and that it is unsurprising that we are against it. Maybe it is not unsurprising that the Opposition is against the scheme or has questions regarding it but it is not just Opposition Members who are against it or have serious questions about it. As has been mentioned already, the ESRI and the Department of Public Expenditure and Reform have also raised questions. In the motion itself, Sinn Féin quotes the House of Commons Committee of Public Accounts and its concerns over shared equity schemes. When we have Sinn Féin quoting reports from the British Houses of Parliament, then we need to sit up and take notice. Maybe there are some genuine questions here that need to be tackled, answered and resolved in advance of this legislation being brought before the House in its proper form.
The tone of the debate around housing also has to change. We need to focus on policy, which is why the Labour Party welcomes this opportunity to talk about this policy. Increasingly there has been an overly personalised element to the debate between the Minister and the senior Sinn Féin spokesperson, Deputy Ó Broin, which needs to end. This issue is too important. People have been contacting my office who are unaligned, as far as I can tell, to any party or campaign but have concerns about this shared equity scheme on a number of different levels. In particular, many of them see this as a developers' charter. The Minister and I represent the same constituency. We represent the same people who are having the same experiences in the youngest constituency in the State. We both know the levels of negative equity that existed, the impact of the crash and the pyrite crisis, which was so heavily focused in Fingal. There is an awful lot of damaged psychology in relation to the housing market in our own constituency, as well as around the country. Getting this right and getting an affordable housing scheme right is so important for constituencies like ours. In such young constituencies there are many young people who have been renting for a long period of time. Some may have cobbled together a deposit although the majority have not. They need something to hope for and they are genuinely concerned about this scheme.
Inequality in this country is growing at a rate that will take decades to reverse if we do not act now. The wealthiest 20% in Ireland has a median wealth of €835,000 per household while the poorest 20% has a median wealth of only €1,000. The figure of €835,000 is up from €560,000 in 2013, which is still an eye-watering sum for so many people. Wealth has increased because house prices have increased. Furthermore, 70% of all household wealth is held by people over 50 years of age. The bulk of wealth in this country is held by older people and not by younger people, who are locked out of the housing market and unable to get in.
People have genuine concerns about being able to get into the housing market because there are no measures on, or definition of, affordability. There is concern that developers will be setting the agenda in this regard. A few estates have been built in our constituency, and I am sure this is reflective of other locations as well, where the first phase of a development that is built will generally have houses that are generous in size. Those houses will be just about affordable, or just above it. As subsequent phases are built, however, the houses become smaller and the prices become higher. Further planning applications then go in to change densities when people's eyes are off the ball following the original application. That is what happens when developers are allowed to control a market and affordability. The houses get smaller and the prices get bigger.
An affordable housing scheme must tackle that issue at the root and this proposal does not seem to do that. Concern about this aspect has been expressed by the Department of Public Expenditure and Reform and the ESRI, as well as the Opposition and other voices here and in the UK. Opposition to this scheme is coming from people who want to see an affordable housing scheme work, including the Labour Party, but who have genuine concerns regarding this proposal.
On the issue of wealth inequality, if people want to play the capitalist game and buy 1,000 shares in a multinational company on the stock market, then that is their prerogative. They can do that and deal with that decision themselves. Those people, however, are not taking 1,000 shares out of the pockets of young people seeking and needing to buy a home. When investors or people in the top 20% of those with wealth in the bank, having accumulated it in previous decades, go into a market and buy houses on that market at inflated prices, which only they can afford because the developer sets the purchase prices, the resulting intergenerational wealth transfer only serves to fix the wealth inequality.
According to the OECD, it will take five generations - that is, 150 years - for an Irish person descended from people in the bottom 20% of incomes just to be able to afford a home. It is two generations in Denmark. It should not take any generations. As the Minister said, people on decent wages should be able to afford decent homes. That is not the case now. The problem is if the affordable housing scheme does not work, and we think it will not, and we do not solve this issue, then we will be looking at the prospect of it being 150 years before those in the bottom 20% of incomes will ever be able to buy their own homes. In the absence of a local authority house building programme of any great scale, that is an incredibly bleak and grim prospect for people who just want and need roofs over their heads.
The Minister has staked his political reputation on affordable housing. He wanted this Ministry. As I do, he represents a constituency where people want and need to see an expansion of affordable housing provision. We want to support the provision of affordable housing and we will look at the merits of all legislation in this regard as it appears. However, we are genuinely concerned by what we see in this proposal.
Elements of this Sinn Féin motion must be examined. In fairness, this motion has articulated all the questions from the various actors in this State and abroad regarding genuine concerns about this proposal. We cannot go back to having a developer's charter. We must put the people who need houses first. We need a scheme which will deliver affordable housing opportunities for those people and their communities and tackle the existing wealth inequality rooted in home ownership. If that aspect is not turned around as soon as possible, this wealth inequality will only deepen and grow and have negative and damaging impacts on generations of Irish people.
People locked out of home ownership deserve a better quality of debate and better evidence concerning the types of proposals being discussed than we have had so far today. The Minister's contribution was largely an attack on the Opposition and was mostly rhetoric. He accused the Opposition of being hysterical and of being engaged in Trump-style politics.
The main hysteria in the Chamber thus far today has been in the comments of the Minister. There was a lack of the evidence in defence of his scheme. Most of the time, he was attacking the Opposition.
When the Minister did get to defending his scheme, a key part of his comments was that it would boost supply. All the experts, from the Central Bank to the ESRI and the Department of Public Expenditure and Reform, have said the opposite. All the independent commentators, from David McWilliams to Cliff Taylor and Eoin O'Malley, across the political spectrum and in different publications, said this will increase demand. Where is the evidence that it will increase supply? Apart from the comments of the Minister and of those from the developer and property industry who are lobbying for the scheme, no one said it will increase supply. Where is the evidence for that? To be fair, if the Minister said the scheme would increase supply, would he please show some evidence of that? When officials from the Department of Housing, Local Government and Heritage appeared before the Oireachtas Joint Committee on Housing, Local Government and Heritage, I asked them to publish their independent analysis of the scheme and further evidence. No evidence, analysis or independent expertise in defence of the scheme has been published.
Before today, the main evidence referred to by the Minister, which was ditched from his comments in this debate, was a report from the UK National Audit Office on the UK scheme. It is not surprising, therefore, that the Opposition would refer to the UK scheme because until now that has been the main example used by the Minister to say why the scheme might work. The comments made by the National Audit Office to which the Minister referred found price inflation of only 1% caused by the UK equity scheme. That, however, contradicts other sources in the UK on the UK scheme that show a price premium of between 5% and 20% paid by people who bought new-build homes under the UK scheme, as opposed to people who did not. Furthermore, the report did not comment on price inflation when it referred to that 1%. In fact, it referred to a price premium, which is very different. The evidence shows that since April 2013, when the scheme was introduced in the UK, and December 2018, prices for new-build properties increased by 41%. While that cannot be put down solely to this scheme, given that there are a number of factors for those home price increases, it is a factor.
The other part of the Minister's defence of this was to say this is just €75 million, or 2.3% of the overall housing programme and budget. That has been a principal defence of the scheme but let us be truthful and clear. In terms of affordability measures, this will constitute about 17% of the budget in 2021, a very significant part of affordability measures. Moreover, this will be the second largest part of affordability measures this year if it goes ahead, surpassed only by expenditure on the help-to-buy scheme. In contrast, only €35 million will be invested in cost-rental this year. The Minister asked what the viable solutions are and stated he does not hear them coming from the Opposition. The viable solution is, as he has referred to many times, to take the €75 million from shared equity and put it into delivering affordable homes and increasing the supply of homes instead of the demand. That could be done, as the Minister has noted, by investing in schemes such as that in Dun Emer in Lusk, where genuinely affordable homes are being built by Fingal County Council in partnership with Ó Cualann at prices that people on average incomes can afford to buy. That is the way to go on this.
As for the increased demand that the scheme will cause, I ask the Minister to publish any evidence or independent expertise or analysis to show this will produce supply and not demand.
Every group that has commented on this scheme, including the Economic and Social Research Institute, ESRI, the Central Bank and the Department of Public Expenditure and Reform, says that it will increase demand. Why on earth are we introducing a scheme that will increase demand in the current circumstances? Demand for homes is very high and there is pent-up demand arising from the, unfortunately necessary, closure of the construction sector, which will only increase. Furthermore, some households have increased levels of household savings and an improved ability to get a deposit together. There is increased demand so why, in those circumstances, is the Minister seeking to introduce additional measures in respect of demand rather than supply? How can he think that is a good idea or that it will somehow work?
This represents an unfortunate return to the bad old days of Fianna Fáil not heeding the warnings of experts and independent advice and instead implementing policies sought and lobbied for by developers and the property industry. It is incredible that we are back in that situation. There is total disregard for what economic commentators are saying and for basic economic principles which state that, instead of increasing demand, we should be increasing supply. This is unfortunately very much a return to the era of Bertie economics with regard to housing policy. People will look on aghast at the return to these kinds of Celtic tiger era policies being implemented when untold damage was done from Fianna Fáil's introduction of policy after policy to subsidise developers, mainly through tax breaks, the last time it was in government. These policies overheated housing prices and left thousands and thousands of families with unsustainable debt. We know of all the consequences of that.
With regard to this scheme, the Department of Public Expenditure and Reform has said: "Apart from the concerns we already voiced at [senior officials group] around the appropriateness of the shared equity scheme, which appears to us a demand-side measure which is unnecessary in a market like ours which is chronically undersupplied, it does not appear that the policy proposal has been sufficiently analysed." Again, I appeal to the Minister to publish his analysis of his proposal. Where is it? How could he bring forward a measure such as this without any proper analysis? The Minister has asked the ESRI to analyse other aspects of housing policy; why has he not asked it for analysis on this? If he has, why has he not published it?
The UK scheme that the Minister has, up until today, referenced quite heavily to defend his scheme has been critiqued by the Bank of England, the London School of Economics and the UK's National Audit Office. It has also been shown to have increased developers' profits very significantly. A study by Professor Geoff Meeks of the University of Cambridge found that, in the three years before the shared-equity scheme in the UK was introduced, the share price of leading developers increased in line with other share prices on the FTSE 350 index, while in the four years after the scheme was introduced, as share prices of companies on the FTSE 350 index rose by an average of 47%, the share prices of leading property developers rose by an average of a staggering 230%.
We need the Minister to scrap this scheme and instead to put the €75 million allocated to it into direct-build affordable homes to increase supply while not increasing house prices or developers' profits. If this money was put into the serviced sites fund, we could deliver approximately 1,500 direct-build affordable homes straight away. I ask the Minister to do so.
The Minister should stop trying to throw mud in people's eyes with his political attacks on the Opposition, which are designed to do nothing other than deflect from a deadly serious argument about an issue which is absolutely critical for vast numbers of people. Even if we set aside all that has been said about a return to Fianna Fáil's past with regard to developers and so on, at the most elementary level, the scheme the Minister has designed is thoroughly misguided.
The problem is that house prices are completely out of reach for 70% of people. It is not just about the €75 million in this scheme, which the Minister says is only a small amount of money which we should not be we worried about. It is about everything the Government is doing to address the housing crisis, which is based on the pretext of accepting market conditions. Instead of trying to make unaffordable housing genuinely affordable, the Government is trying to bridge the gap with a credit scheme which, as has been said, inflates the prices and makes sure that the developers who build the houses still make handsome profits on a totally dysfunctional, unaffordable market. That is what it is doing, instead of trying to make house prices affordable and deliver public and affordable housing. The only logic of that is to sustain the private property developers because it does not make sense from any other point of view.
It is shocking when one looks at the figures. Even the property people are amazed at what is happening in the property market at the moment. The value of residential property is now €536 billion, which is up €18 billion in the last year. The property market is already out of control. For example, in my part of Dublin city, the average house prices are €600,000. That means that about 90% of working people are priced out of the market. Instead of driving down those prices by delivering public and affordable housing on public land, the Government is trying to bridge the gap with the State essentially subsidising through credit schemes. That is absolute madness and it is a recipe for disaster in the future. We are saying not to do that.
It is not just about redirecting €75 million, because the LDA is based on the same misguided premise of following market conditions. We are going to move into the public land bank, which is the key to actually driving down the cost of housing, and we are going to marketise 50% of it or more. We will make a bad problem worse and throw petrol on the fire of a property market that is already out of control. This is utter madness. The Minister says we do not have a solution but we do. We have been arguing for public housing on public land and during the term of the previous Government, when it suited him, the Minister argued for that too. Does he know how many council houses the Fianna Fáil-led council built last year in Dún Laoghaire? One. This year, one house is going to be built. All the rest of the housing is being sourced from the private market in one shape or another. That is what is actually going on. I appeal to the Minister to stop putting mud in people's eyes, confusing them and trying to politicise this in a cheap way. The Government is making the same disastrous mistakes of the past instead of addressing the underlying issue and building, at scale, public and affordable housing on public land.
This shared equity scheme is good news for builders, developers, banks and land hoarders and is bad news for people who need affordable homes. Pumping up the demand when the supply stays more or less the same is a recipe for higher house prices. A similar scheme was introduced in England and Wales in 2013. The house price inflation for new houses, over the second-hand ones that were excluded from the scheme, was 3% per annum. The London School of Economics looked at the situation in London and said the scheme led to a 6% increase in house prices. The ESRI, the establishment's own semi-official think tank, came before the housing committee in the middle of February and said this scheme was likely to increase the price of housing. That is leaving aside the issue of negative equity. The State would be taking a share of up to 30% in stock which may well be devalued in the recession that will follow in the next few years, so potentially high levels of negative equity will be taken on by the State as well. It is good news for the builders and developers and bad news for the ordinary punters.
Deputies Hourigan and Costello have voiced concerns about this scheme. They have stated a preference for direct investment by the State in social and affordable housing. Will they vote for the motion or against the motion? Will they vote for the scheme or against the scheme? A time comes when Deputies must stop voting for legislation they do not believe in. There is a split here between the interests of the wealthy developers and the ordinary house buyers. Green Party Deputies, and those Deputies in particular, need to decide which side they are on.
The private developers say, "Jump" and Fianna Fáil asks, "How high?" It is still firmly the party of big builders and private developers, and this is just the latest proof. In recent weeks we have had the LDA legislation, which is potentially the biggest giveaway of public land and public wealth to profiteers in the history of the State; we have had an attempt, thankfully knocked back, to unsafely reopen construction at the behest of the Construction Industry Federation; and we have this shared equity scheme. As has been mentioned repeatedly, the consensus on the scheme is very clear with the people who are meant to be and are advising the Government, the ESRI, stating clearly that it will very likely lead to higher house prices. It is not necessary to be a genius economist to work that out. If more money, in this case public money, is chasing the same number of houses, the result is that house prices will increase significantly.
Many ordinary people could reasonably ask why the Government is so dead-set on doing this when everyone is advising it that the effect will not be to make homes more affordable for ordinary people, but to drive up house prices and line the pockets of private developers and big builders. The answer is staring us all in the face. It is because that is what Fianna Fáil wants to do.
Let us consider the origin of this scheme. It did not appear in the Fianna Fáil election manifesto. It was not a Fianna Fáil policy. It comes from policy papers published by Irish Institutional Property and Property Industry Ireland last year. The Irish Timeshas reported that one of the State's most senior officials warned that the building industry had lobbied for such a scheme "because it would increase prices". This is not the first time they did such a scheme. Similar logic lay behind the so-called help-to-buy, in reality help-to-profit, scheme of the previous Government, lobbied for by the CIF to try to increase prices to try to line its members' pockets.
It is supremely ironic for the Minister to accuse the Opposition of being blinded by ideology and so on. This is an intensely ideological position. The Government has the view despite all the advice it has been given that the best way to spend public money to resolve the housing crisis is not actually to build genuinely affordable and public houses for people. Instead the Government is adopting a supremely ideological Thatcherite view of basically trickle-down economics. The belief is that if we give a bunch of money to private developers, some of that will trickle down to ordinary people in the form of homes even though it is very clear that will not happen. Once again there is the happy coincidence of the ideology of capitalism and neoliberalism with the interests of those who form a core base of support, whom Fianna Fáil and the Government represent - the big construction companies, big developers and big builders.
The problem of affordable housing is complex, and no single measure can promise a comprehensive solution. Last July, when speaking on this topic in the House, I stated that there are certain risks with some proposals and there will be unintended consequences but we must take those risks in the interests of the thousands of families across the country that do not own their own home or do not have a roof over their heads tonight.
I accept that concerns have been expressed in many quarters that the shared equity scheme would push up house prices and none of us want to see that. However, on this measure we should not throw the baby out with the bathwater. The principle behind this shared equity scheme has significant merit and the Minister should be given the opportunity to develop a tailored scheme to meet our needs and then present them to the Dáil for approval.
As an initial pilot, the shared equity scheme should be about getting families out of our cities, where housing and services are in such demand, and instead supporting people to bring life back into remote rural communities. The scheme should be used to allow first-time buyers to purchase an existing property in a town or village with a significant residential vacancy rate. If this were implemented, it would encourage people to settle and live in regional areas, bringing life back into vacant homes and enhancing local communities.
The Minister will say that the Department has already made provision for such an approach through the repair-and-leasing scheme, and the buy-and-renew initiative. However, the reality is that is not happening in the communities with large vacancy rates because the local authorities claim they do not have demand for housing on their social housing lists and therefore will not purchase or refurbish houses in those locations. However, if we are to deal with the challenges of housing in our cities, in particular in Dublin, as well as the challenges of congestion, we must recognise that building more houses in Dublin alone will not solve our problem. While I accept that is needed, it is not the only solution because we need to bring about regional balance.
As well as building housing in high-demand areas, such as Dublin, we must consider taking immediate steps, including bringing families into established communities where the taxpayer has already paid for infrastructure such as broadband, schools, roads, water and sewage treatment facilities. Infrastructure like schools is already in place in many parts of the country but the big problem in these locations is depopulation and we do not have the students to fill those places. We need to address that imbalance and this scheme could be used as a tool to do that.
At present the Department of Housing, Local Government and Heritage is forking out €30,714 on average for a new serviced site in our cities, putting the infrastructure in place so that housing - mainly private housing - can be built. That money could be saved if we were to use the shared equity scheme as a pilot to bring life back onto the streets of villages and towns where a football has not been kicked for a generation, where high-speed broadband is already in place, where the schools have vacancies and where the infrastructure already in place is underused, instead of just putting fuel on the fire in our cities. While I accept spending €30,000 is important in putting the roads, water and wastewater facilities into sites in Dublin, it is then necessary to make the investment in schools and other infrastructure which is already in place in towns and villages.
There are 1.75 million homes in this country. It is conservatively estimated that 50,000 of them vacant, many in my constituency and other rural areas. The Minister should consider using this scheme to target those homes. Some of them are in areas of high demand but some are in regional locations, including my constituency.
I want to follow up on what Deputy Naughten has said.
The shared equity loan scheme is one of a suite of measures needed to provide houses at affordable prices. There will be risk attached to it and we will need to manage that risk as we go along. The scheme needs to be brought forward in a way that it can calibrated as we go along to make sure we do not cause inflation.
I have heard people speak about the problem with housing and the political nuances about Fianna Fáil, etc. I do not buy into that. Housing is above politics. We need to provide housing. There are a few facts, namely, that the private housing market is dysfunctional and that developers are not building houses because the cost of building has increased enormously. This is due, in part, to the increased building regulations in terms of heat loss and the requirement to bring a house up to a passive standard. This is all very fine but it is adding cost to building a house and, therefore, the developer of the house needs to get a return on his or her income. I am not advocating for developers. Rather, I am saying to the Minister that we need to look at how the costs are arising. The cost of connection of utilities to a house and the application for planning permission has increased because of the requirement for more surveys, studies, assessments and screenings. These are all adding to the overall cost of a house.
There is also a lack of infrastructure. I heard a Deputy say that the price of a house in Dublin is €600,000. In my constituency, it is possible to purchase a family home in an estate for €250,000. The problem is more houses cannot be built because of a lack of infrastructure. Irish Water has let us down. We do not have the necessary wastewater treatment schemes in our towns and villages to enable regeneration. There is other housing that is derelict but there is no incentive for young people to buy and turn these properties into homes where they can live and raise their families and add to communities. There has been much talk about the town and village renewal scheme. We need to incentivise and encourage people to buy a second-hand property that is derelict. There is nothing wrong with doing that. We seem to be fixated on the build of new houses.
The Society of Chartered Surveyors in Ireland, SCSI, produced a report recently which states that 75% of the space over ground floor level in Dublin city is vacant. We have all of this space but we are not developing it. This begs the question, "What are we doing wrong?" There is a way to do this right. We need to look at all of the options and the political response must be multifaceted. We need to look at incentivising first-time buyers, who would be ideal candidates, to buy and refurbish existing houses in towns and villages, provided the sewerage infrastructure is in place. Irish Water is totally underfunded such that whatever funding it is getting, which is a great deal, it is spending it in the areas of population. We need investment in the growth centres such as Craughwell, Corofin, Abbeyknockmoy, Adrahan and Labane, where there are people who want to build housing but are being prevented from doing so. I have said so many times that An Bord Pleanála is refusing to grant planning permission owing to a lack of wastewater treatment plants. It is important that we do something, other than reports and reviews, to make sure this happens.
I have heard many people giving out about the relevant legislation. As politicians, we have to ensure there is one piece we can control and also that the benefit goes to the people who want to purchase. We have much work to do in the area of rejuvenation to ensure one of our major assets, vacant and derelict sites, are brought back into operation in terms of the provision of housing for the future and thus regenerate the towns.
There are five speakers, inclusive of Deputy Danny Healy-Rae. I do not want to stand up here and be critical of what the Minister is trying to achieve with regard to housing. I want to support him if what he is doing is right and if it will mean people will be able to purchase a home and attain home ownership, which is something we all want. I am sure it is something the Minister wants as well. However, I do not want mistakes to be made. I do not want us to base our business on the English model because, to my mind, it has been proven to be a failure. Across the water, people are paying 100% of the cost of a house in which they have only a small proportion of ownership. I ask the Minister to look at the mistakes made across the water with a view to ensuring they are not repeated here.
I also want us to look at other sources of housing in a positive and proactive way. In every town and village in this country there are many vacant houses. It is a scandal. Can we put in place incentives to encourage purchase of these houses? We are all aware of the cost of purchasing a new property. We need to encourage the purchase of second-hand houses in our towns and villages, which might be beautiful places and a safe environment for young couples to live and rear their families. With remote working and the availability of high-speed broadband we should be encouraging people to live in rural Ireland. Rural Ireland is a beautiful place for people to live in but we must put in place the services and incentives to support them.
We need to look at why the cost of building has increased. The cost of timber, steel, blocks, cement and mortar has gone through the roof and is being passed on to young couples who are trying to get on the property ladder. We need to look at the whole problem. Unlike other people, I am not going to stand up here and knock the Minister and say things like "to hell with you, you're only for the developers", because that is not true and it is not fair to do that.
On the face of it the shared equity scheme looks like it would be very welcome in the market. Anything that will help first-time buyers is welcome. I have been involved in construction all of my life. I can see the failure for many generations of not supplying houses in Limerick and the surrounding areas. When speaking to the Minister, Deputy Ryan, last week I told him that 60% of the towns and villages in Limerick have inadequate water supply and 73% have inadequate sewerage systems. I have previously mentioned Askeaton, which is 30 years waiting for a sewerage plant. Oola is ten years waiting for a plant. None of our towns and villages can be built up owing to a lack of infrastructure. All of the Land Development Agency's land holdings are city based. There is no land holding outside of the cities. We need rural development funds to be used to rebuild our towns and villages.
I have heard Deputies speak today about houses that cost €600,000 to build. The Limerick 2030 plan was put in place to support the county council to build houses. Up to now, the county councils have not been able to provide houses for people. Many have spoken here today about the failure of them not being able to do it. They do not have the capacity to do it and so we need to look to developers to build houses quickly and efficiently in order that we can get people into houses. We need to build houses, but that build cannot all be city-based. We need houses in our towns and villages because without them our schools, hardware shops and GAA facilities will close.
Regrettably, home ownership has become less attainable for a growing number of people, especially those in younger age groups. Shared equity home ownership, in its many guises, has been promoted by many, including banks and large commercial property developers, to provide a solution to this problem, making home ownership a realistic option for those who currently cannot afford it and providing opportunities to trade up, even when in a position of negative equity.
However, people are seeing that the Government's policy on shared equity, and housing generally, is akin to a sort of back-of-the-envelope strategy, crafted in some car park with a few bankers and property developers. The policy is not sustainable or equitable and it is not thought out properly.
As I have said several times in this House, planning in rural Ireland is in absolute disarray. Young people who would love to build in their own community are being met with a seven-year residency rule and are being told there is a problem because a site is a couple of feet outside a local boundary. I spoke to a young fellow last week who was turned down for planning permission. He has been in his community for many years and has done a great deal of community voluntary work. It is scandalous that he was refused planning permission because of a rule or regulation that is no help to the environment or anything else.
There are instances in my constituency where more housing is needed but it is being blocked. There is a massive issue in Clonakilty, for example, with a huge number of people looking to live there who, sadly, cannot because of the lack of water services. In Ballinspittle, Ballineen-Enniskean and Goleen, sewage issues are blocking people from developing those areas. All of that is leading more people to look to social housing, where there is a lack of provision. If people are not allowed to build at home and cannot get a mortgage, they are all funnelled into one scheme. That is a very unfortunate situation.
Finally, the reopening of construction is hugely important. Many people have had their homes destroyed because they had to stop construction as a result of issues that arose during the Covid crisis. Those issues have been overcome in a lot of places and construction should recommence immediately. I plead with the Minister to ensure that happens.
I am glad to speak on this motion. Before taking office, the Minister spent four or five years alongside me on the housing committee in the last Dáil. We talked so much that we could have built castles out of talk. There are logjams and blockages in the system and, as previous speakers referred to, a lack of infrastructure. Any scheme that will help with those problems is welcome, but I want it to focus on rejuvenating our rural villages and towns. In my constituency, I am talking about the centres of Clommel, Tipperary town, Carrick-on-Suir, Cashel, Cahir and, in north Tipperary, Nenagh, Roscrea and all of those places. To bring those towns back to life, two actions are needed. First, the planning charges and fees must be cut out and, second, something must be done about VAT. The Government needs to fast-track the system and allow the closed businesses and shops in those places to be living spaces again. If we stop the dereliction, we will have living towns, with people back on the main streets from which they were hunted. The Minister must examine the problem with logjams and do something about it.
I could not believe it when I heard on "Morning Ireland" earlier that the newspapers today are reporting that NAMA offered houses to almost every county council in the country but many of them, including my local authority, refused them. We need to get stuff moving and be shovel ready. We can bring in all the schemes we like but they will not work if the infrastructure is not there.
Planning permission cannot be got in rural Ireland. The 2040 plan is not helping with the huge issues in this regard and nor are the different regulations. The cost of building is another problem. If one takes VAT, taxes and other charges together, they account for nearly 60% of costs. The Green Party's policies are putting extra costs on timber. There is a lack of forestry timber being cut and there are issues with the importation of different materials from abroad. I am appealing to the Minister to ensure the logjams are broken in order to allow people to build houses in rural Ireland, especially those who have the wherewithal to get a loan to do so.
I am pleased to have an opportunity to speak on this very important housing matter. There is a large cohort of young people in Kerry who cannot get planning permission to build close to their family homes because of a thing called an urban-generated pressure clause. That clause is there to prevent people from coming out from towns and building in rural areas, but it is affecting people in rural areas as well. If one is not a son or daughter of a local, one cannot buy a site. People cannot get planning permission next door to their family home if the land is not owned by their family. That is a serious issue.
Levies are now so high that they have become an exorbitant cost. In the case of the county council levies, rural people are being asked to pay for amenities in urban areas. That is wrong. The levies being imposed by Irish Water and the VAT charges are making up more than one third of the cost of building a house. This is ruling many young couples out of being able to build their own home, which is what they want to do.
It has been mentioned before that many of our towns and villages do not have sewerage schemes or do not have adequate schemes. In my county, Currow has no sewerage scheme, and Scartaglin, Brosna and Caherdaniel are some of the many places in trouble in this regard. Even if somebody wanted to build a development in Kenmare, it would not be possible to do so because the sewerage scheme is not adequate.
I wonder if the Minister has heard the joke about the members of Fianna Fáil who claim that affordable housing is a core party value. Apparently, after a recent meeting of the party's internal housing committee, a committee member told a journalist that housing policy is to Fianna Fáil "what cycling is to the Greens and Palestine is to the far left". The party hopes that the delivery of affordable housing will be seen as a key Fianna Fáil achievement in government. Fianna Fáil, we are to believe, is to be the purveyor of affordable housing. That might be the case in a land of unicorns, flying pigs, rainbows and bubbles. Back in reality, we all remember the Fianna Fáil-created property bubble. That bubble well and truly burst, leaving homeowners in huge negative equity, in defective buildings such as those in my constituency in Donegal affected by mica, in apartments buildings with inadequate fire safety and in unfinished housing estates.
I remember when, in 2002 or 2003, a Fianna Fáil Government raised the amount of the cost on which people could get mortgage assistance when buying a new property. That had the effect of raising the price of houses overnight. I recall, in particular, how a person I knew was selling a house in Mulhuddart in west Dublin that was worth approximately €270,000. Fianna Fáil in government increased the price of that house to €320,000 overnight by increasing the amount that people were able to pay for houses. The homeowner in question was advised by estate agents and others to up the asking price and, lo and behold, she got it.
The Government is doing the same thing again with the scheme we are discussing today. It will increase the price of houses for the benefit of nobody except property developers. People will be screwed by having to pay a higher asking price because they are desperate to get on the property ladder and own their own home. That is what the Government is setting out to do. The Minister said that the affordable purchase shared equity scheme for first-time buyers will account for only €75 million of the entire budget and that it means nothing in terms of overall housing provision. In fact, that €75 million will bump up house prices and cause problems for buyers. Even if nobody wants to use the scheme and nobody takes it up, it will bump up prices, which seems to be the Minister's intent.
I welcome the Sinn Féin motion on this aspect of the affordable housing Bill 2021. There is no doubt at all that we want affordable housing. There is also no doubt that the reality of affordability and the skewed ideas of Fianna Fáil and Fine Gael in this regard are miles apart. In a surprising turn of events, a number of Dublin City Council Fine Gael councillors have apparently written to the Minister urging him to scrap the shared equity scheme. These nine Fine Gael councillors, one of whom works with the Minister for Finance, have warned that this Fianna Fáil "demand-side measure" risks a "return to failed housing policies of the Celtic Tiger era". It is not just Opposition Deputies and Fine Gael councillors who are opposed to the Minister's shared equity scheme. That is a sentence I never thought I would have to say. The Central Bank has also expressed concerns that this ill-advised scheme could increase property prices and foist unaffordable debt on mortgage holders. There is more. The ESRI has said that the scheme will likely lead to price increases, mainly because of the significant dearth in supply.
Yesterday, the Joint Committee on Housing, Local Government and Heritage undertook a process of pre-legislative scrutiny of the affordable housing Bill. The committee is looking at all elements of the Bill, including the cost rental proposals, and heard yesterday from representatives of the Housing Alliance and others. Regarding the shared equity scheme, ESRI researchers said in their submission to the committee that the "constrained" state of our housing sector means that the scheme "will very likely lead to higher house prices". That is no surprise because it is what the Government wants to happen. It is okay as far as the Minister is concerned. "Constrained" is certainly a restrained way of describing our housing supply. I was looking on daft.iethe other day and there are zero properties to rent in my home town of Killybegs. In fact, there are just 40 properties listed for rent in the entire county of Donegal. While house prices are not off the scale like they are in Dublin or other urban centres, Donegal had the third highest average increase in house prices across the country.
Real Estate Alliance published information in September last year. Highland Radio reported that the alliance said houses are taking an average of three weeks less to sell across the country and that this is driven by a combination of low supply and highly motivated buyers, representing a shift in market behaviour that the sector has not experienced in the past decade. Donegal also has the lowest disposable income in the country, with high rates of forced ownership and other living costs that must be factored into the housing and rental market there.
I have recently asked a number of parliamentary questions about the current state of housing in Donegal. I was informed that the total number of households qualified for social housing support in Donegal in 2019 was 926. Yet, at the end of quarter 3, 2020 there were almost 1,900 people in housing assistance payment properties and an additional 510 in active rental accommodation scheme tenancies in the county. In a reply to one question I was informed that the 2020 social housing assessment report was delayed due to the Covid-19 pandemic but that work is ongoing and the summary report of the 2020 assessment will be published in due course.
The motion states that the origins of the scheme lie in two policy papers published by Irish Institutional Property and Property Industry Ireland in March and May 2020, respectively, and that the scheme was not included in Fianna Fáil's election manifesto or previously stated as Fianna Fáil policy. This makes me wonder who has the ear of the Minister and Department colleagues. Who is planting these ideas? A cynic would think those in Fianna Fáil want house prices to continue to rise. God forbid, we would not want that.
The scheme has been tried and tested in the UK and it resulted in higher house prices. The motion outlines numerous examples of this failure in England. For example, in 2020, a report published by the centre for economic performance at the London School of Economics found that in London the shared equity loan scheme led to a 6% increase in house prices. I am always amazed at how we seem to mimic and follow everything that happens in England. Then, years later, when they have already decided that the measure does not work we actually start implementing it here. Maybe we should cop on and actually look at the outcomes and, when things do not work, decide not to implement them.
In September 2020, officials in the Department of Public Expenditure and Reform expressed concern that a shared equity loan scheme will push up prices. The then Secretary General of the Department, Robert Watt said: "The property industry want an equity scheme because it will increase prices."
The Government must row back and remove the affordable purchase shared equity scheme from the general scheme and final version of the Affordable Housing Bill 2020 before it comes before the Dáil. The €75 million allocated to the scheme should be redirected to the serviced sites fund for local authorities and approved housing bodies to facilitate the delivery of affordable homes to rent and buy.
The reality is it is not a matter of the €75 million bill expended on the scheme but the message it sends out that house prices will go up and push up. That is what is happening and that is what the Minister intends to do. That is obviously what those in government want to happen or what those in Fianna Fáil want to happen and they will make it happen. They should simply say that rather than keeping up the farce of doing it to reduce house prices.
I do not believe the electorate will allow Fianna Fáil to try and make a joke of them once again by lining developers' pockets under the guise of providing much-needed housing. What the Government needs to do is build and provide housing and forget about their friends, the developers. Let them look after themselves.
I am unsure who will speak first in the next group. There are three speakers. Is it the Minister of State, Deputy Peter Burke? An Teachta Emer Higgins is on my list as is the Minister of State, Deputy Noonan. Tell me how the time will be divided.
I have two minutes. The number one issue for people my age is access to affordable housing. This Government will change that through four new initiatives: the shared equity services scheme; building local authority affordable homes; the first ever cost rental long-term leasing initiative; and the extension of the Part V clause to include 10% affordable housing.
Last year, housing supply was less than 60% of what was needed. That one statistic is why so many families are going through such trauma right now. It is why 35 is now the average age of first-time buyers. It is why we need to stimulate supply.
That is exactly what this shared equity scheme will do. It will take less than 2% of our national housing budget and invest it in a short-term measure that will increase supply and enable young people, young couples and young families the opportunity to own their own homes.
Right now, there is planning permission for 40,000 homes in Dublin alone. Yet, planning permission is no use to house hunters. They need planning permission applications turned into actual homes. That is what this aspect of the Bill aims to achieve.
It is easy to sit on the sidelines and criticise. It is easy to oppose measures like the help-to-buy scheme, a scheme that has enabled over 19,000 to get a foot on the property ladder. It is easy to tweet soundbites. What is not so easy is to put together complex plans that will boost housing supply and bridge the affordability gap for young people.
I do not believe public housing is the answer. I believe that a combination of social and affordable and private housing is the answer. No scheme will ever be perfect but waiting on the sidelines and opposing every Government idea will not deliver a single new home. Instead, we need to look at devising, investing in and implementing different initiatives with different intents. These include initiatives like the help-to-buy scheme for first time buyers, the Rebuilding Ireland home loan for those struggling to get a mortgage, cost rental provision for those who want secure long-term affordable leases and, crucially, affordable housing for all the people my age who want to be able to aspire to own their own homes. That is difficult and complex but it is what this Government's Affordable Housing Bill and the Land Development Agency Bill will do.
I wish to support many families in this State who are currently locked out of the housing market. We must be realistic about the complex nature of what is required in terms of the policy to solve the housing crisis in this country. The scheme being proposed is proportionate and time bound. The aim is to try to make a key intervention to ensure we reframe the supply of housing for starter homes. We have seen the Rebuilding Ireland home loan scheme. The ESRI fully backed this as a targeted intervention. We have seen the help-to-buy scheme, which has assisted 22,000 families in the State to get on the housing ladder. People should be aware that those 22,000 families would not have got assistance on the basis of the policies of Sinn Féin. Sinn Féin policy would deny them the key supports and the chance to own their own homes.
This Bill is about trying to achieve a balance through various supply mechanisms, including increasing the Part V mechanism by 20% for affordable and social homes. Another mechanism is establishing the Land Development Agency, which I believe will be a game changer in the market in terms of increase in supply of public and affordable homes. Other measures are crucial, like our affordable scheme led by our local authorities. All these different schemes come together as a suite of measures. It is curious to hear that this scheme will have a negative impact in the marketplace when we see that it amounts to less than 0.68% of the €11 billion mortgage market in the country. It will assist people who are marginally over the threshold to gain their own home through either the social housing list or the rules that currently exist. It will give those families a chance to get home ownership. Many are paying 35% more in rental income than they would pay servicing a mortgage. It will assist in unlocking the 80,000 planning permission applications in the State which we want to help increase supply.
In the past five years we have increased supply threefold in this country. We have come from a low base after the economic crash and built up our construction sector again. That is what this is about. It is not about the populist rhetoric of singly stopping housing as we have seen with the Oscar Traynor scheme in Dublin. The citizens of the capital city were denied a chance of 853 homes that would have been a mixture of affordable and social homes. It is easy to let ideology trump this debate. What people want is a supply of affordable high-quality homes to service the citizens in our State. I believe the Government will ensure that continues to happen and that supply will continue to be ramped up. We have seen supply increase. One of the key measures the Government is focusing on is the increase of supply.
I welcome the opportunity to contribute to this debate. We need to debate housing policies vigorously to ensure they are fit for purpose. There is so much at stake when we are faced with our housing crisis. It is incumbent on every party to put forward solid ideas that will deliver on the ground. Our national housing crisis demands a major response and this Government has stepped up to the mark, as pointed out by my colleague.
The largest housing budget in the history of the State and the largest targets on record is the kind of scale of action required. The affordable housing measures also mark a major leap forward. It is a combination of measures which, taken together, can have a real impact on this crisis. This is clear from the affordable housing Bill and the LDA Bill.
I am particularly excited by the development of our first-ever national cost-rental scheme. While the scheme has been discussed since 2015, this Government will deliver the first 440 units this year alone. This is the foundation of a massive expansion in conjunction with the LDA driving on large-scale developments. The proposed expansion of Part V to include affordable housing offers a further opportunity to ramp up supply of these badly needed cost-rental units. The €35 million should be expanded soon in order to build on that foundation. This is the kind of innovative new policy we need to revamp our housing system. The restart of direct affordable housing by local authorities through the serviced sites fund, SSF, is a welcome measure. I understand the Minister is to bring forward significant reforms to the SSF to help unlock further development and cut through delays and backlogs. Local authorities have a central role to play in directly building affordable homes. The equity scheme under discussion today must be discussed in that context. We must throw the kitchen sink at this crisis. We should adopt a variety of policies, as has been said, rather than a silver bullet approach.
I support the affordable housing Bill and the need to ramp up our ambition in affordable housing. This is an exciting development with the potential to transform affordable housing in this country. The legislation is an opportunity to reshape our housing system for the better. Parties have the chance to use Committee Stage to improve elements of it such as the equity scheme but it is premature to reject elements of the Bill which have not been published yet. It is not a helpful or holistic approach to our national housing crisis. We need to show real imagination and commitment to turn the tide of the crisis and I hope all parties across the House can work together to achieve that.
There should be alarm bells ringing about the shared equity scheme and the effect it will have on house prices and debt levels for borrowers. Senior civil servants in the Department of Public Expenditure and Reform, the ESRI and the Central Bank have all expressed concern at this scheme. The Minister is ignoring the advice and carrying on regardless. This is reckless and bears all the hallmarks of how Fianna Fáil did business when last in government. The Celtic tiger has taught us that if mortgage credit is increased, it increases house prices. When Fianna Fáil was last in government it very regularly ignored the advice of experts and regulators, which it is still doing today with NPHET and the response to Covid, by the way.
The €75 million the Government proposes for the shared equity scheme would be more productively spent on the delivery by local authorities and approved housing bodies of affordable homes to rent and buy than on feathering the nests of developers and vulture funds. There has been too much pandering to lobby groups and vested interests. It is about time we had a Government that stood up for ordinary working people and their families. Sinn Féin's proposal would see homes built on public land and rented or sold at cost. It looks to me like the construction industry is writing the Government housing policy. This needs to change. Last year a lobby group called Irish Institutional Property, IIP, published a proposal for a shared equity scheme aimed at bridging the housing affordability gap. IIP is the self-confessed voice of institutionally financed investors, with significant international backing, in the Irish real estate market. Its members manage close to €14 billion worth of Irish property. The CEO of this group is a former secretary general of Fianna Fáil and former chief executive of the Irish Banking Federation. The current CEO of the Banking and Payments Federation Ireland is a former Fine Gael Minister of State at the Department of Finance and former MEP. The cosy relationship that saw Deputies mix with former RTÉ presenters, developers and unnamed guests of the CEO of the Banking and Payments Federation Ireland at the infamous Clifden golf dinner needs to end now. There must be no more of the cosy cartels we have tolerated for far too long.
The solution to the housing crisis is to build houses. That might sound simplistic but it is the essence of what is required. The decisions of previous Fianna Fáil Governments to effectively stop building council houses is essentially the source of the situation that has resulted in the reality wherein most Irish people aged under 30 years watching this debate will probably never own their own home, provided Fianna Fáil and Fine Gael remain in power.
What Fianna Fáil has pursued is essentially an outsourcing of housing policy. Thus when we hear Members from the Government side talking about investment in housing they do not mention that billions of euro of that investment has actually been spent on subsidising private landlords through rent supplement and housing assistance payment, HAP, supports rather than through building houses, such that rent interventions actually cripple other renters because they push the cost of the rental market up. That in turn forces house prices to increase, meaning those people who are renting private accommodation cannot save for a deposit, or even if they are managing to save something, they will never be able to afford those ever-increasing house prices.
Sinn Féin's solution is to actually build houses, supporting those who need access to council houses and providing real affordable housing schemes. This will contribute to easing rents in the private market and ensuring house prices return to a realistic and sustainable level. Fianna Fáil's solution through this shared equity mechanism is yet another developer-led scheme. It has been rightly criticised by everybody who has objectively analysed it because it will increase the cost of housing. Only Fianna Fáil could come up with an affordable housing scheme that actually makes houses less affordable. This is the type of developer-led project that must stop now. The Government must see sense and adopt the policy provisions that have been put forward by Sinn Féin and start building houses.
At the start of his contribution the Minister said the policy of this Government represents a fundamental change but that is patently untrue. The social housing targets are exactly the same as they would have been were Fine Gael leading the Government. There is no extra funding in this year's budget for the serviced sites fund beyond what Fine Gael already committed. The Government has added a miserly amount of money for affordable cost-rental. It is going to continue with the former Minister, Deputy Eoghan Murphy's flawed and failed Land Development Agency proposal and use public land for unaffordable private housing. The help to buy scheme, which Fine Gael Deputies have lauded, has pushed up house prices and more than 40% of it went to households who did not need it as they had sufficient mortgage finance to buy their own home.
The shared equity loan scheme is the only housing policy Fianna Fáil has brought to the table of this Government. I heard a number of Members, including the Minister of State, say it is a tiny part of the overall mortgage market. However, it is in fact a very large part of the first-time buyers' mortgage market in areas where supply is constrained and prices are very high. In actuality, the Government is currently trying to double the size of that fund by involving the private banks directly in the shared equity loan, pushing it up to €150 million. What the Government is not telling people is what the interest rate will be. Will it be 1.5% from year six or 3%? What will it rise by over the lifetime of the loan? While the Minister is saying there is no obligation to pay down that shared equity loan over its lifetime, if the home buyer does not then the interest rate will rise. If he or she does not then their level of debt will increase, alongside the expanding shared equity itself, where house prices increase. Therefore, nobody availing of this product will know exactly what level of debt they are taking on at the outset. If that is not reckless, I do not know what is.
The Minister said we are wrong to criticise the scheme because he has not published the details. However, he has leaked so many details to the press that we have a fair idea. Conversely, if the Minister is telling us that the scheme is substantially different from what he has proposed already then I have a simple proposition for him, namely, that he withdraw it from the affordable housing Bill. Let us progress with cost-rental and local authority-led direct delivery of affordable housing through the serviced sites fund and then when he has finally negotiated the terms of the shared equity loan scheme with the Banking and Payments Federation Ireland and has published the details of the scheme he can bring forward a separate legislation and people can judge the scheme on its own merits.
What we know is that there will be no income threshold for eligibility. Thus, for example, households earning more than €100,000 would be able to avail of this scheme even though they will not need it. We also know there will be regional price caps but in Dublin it will be €400,000.
The idea that that will somehow constrain house price inflation is bizarre in the extreme. Deputies are aware that the equity stake can potentially rise as house prices rise. Likewise, if there is a property crash, the taxpayer will take the hit. We know that the interest rates will rise, which will increase the liability on the buyer over time. Another thing the Minister is not telling people is that it is unlikely that the Central Bank will be in a position to make a decision on the scheme until November. That is another reason to remove the scheme from the affordable housing Bill and bring it before the House as a stand-alone proposition.
The Deputies on the Government side who have spoken on the motion are wrong to dismiss the very serious criticism from a range of sources. I am very surprised at Fine Gael and the Green Party. They seem to be at sixes and sevens. Some Green Party Deputies are supporting the scheme while others are criticising it; some Fine Gael councillors are criticising the scheme while others are supporting it. The reality is that neither of those parties likes this idea. Members are aware that the Minister for Finance, Deputy Donohoe, was not keen on including it in the budget. It was a political decision rather than one based on sound financial or housing policy considerations.
Listening to the contribution of Deputy Higgins made me laugh. She was the leader of the Fine Gael group on South Dublin County Council who not only opposed 8,000 new homes in the Clonburris strategic development zone, 3,000 of which were to be social and affordable homes, but appealed the decision to An Bord Pleanála and delayed it for more than a year. She should tell that to her constituents in Dublin Mid-West when she is explaining to them why there is a housing crisis. The Minister of State, Deputy Burke, who is present, does not seem to know the latest developments in respect of the proposed development at Oscar Traynor Road. Last night, his party abstained on a proposal to ensure that every single home on that site will be genuinely affordable or social housing for working people.
The shared equity scheme is a bad scheme. It puts home buyers at risk. It should be scrapped and the money should be transferred to sensible schemes to deliver homes for working people at affordable prices. The only dogma I am hearing today is that coming from Fianna Fáil, Fine Gael and, unfortunately, the Green Party, which are allowing housing policy to be dictated by developers to the detriment of working people. That is a shame and it is why I am proposing this motion.