Tuesday, 16 November 2021
Saincheisteanna Tráthúla - Topical Issue Debate
I note that the Minister, Deputy Darragh O'Brien, is in the Seanad at present. That is probably why he is not here in the Chamber. I am aware the Minister of State played a role in the Rebuilding Ireland scheme and he was the Minister of State in the then Department of Housing, Planning and Local Government in the last Dáil, so he would be fairly clued in to this issue.
The cost-rental housing plan for the site at Emmet Road, formerly St. Michael's Estate, is due to go for planning in the first quarter of next year, so it is fairly imminent. This is a pivotal project in setting the terms and conditions for other such projects in the future given its scale and scope. Clarification and reiteration of previous commitments from Ministers and Dublin City Council that rents for housing in this project will be related to income rather than to the market rate are urgently needed. In early 2019 the campaign for housing on St. Michael's Estate organised a meeting with Vincent Browne, to which Deputies were invited, and put forward the cost-rental model. It explained what it is based on. It is for people whose income exceeds the limit to be eligible for council housing but who do not have enough income to build a nest egg to get a mortgage. This is really pivotal for the community. As has been mentioned before, it will be a game-changer if it works.
The residents and activists in the area have been going to the design meetings in respect of the size of the apartments and the storage and balconies they will have. The architects do not seem to know how much money they will have to build the units and so cannot design around those funds. The activists had a meeting with all four Dublin South-Central Deputies last Thursday and asked us to put down a question to find out exactly what is going on. The other Deputies did not get their questions in on time this morning but do support the residents in looking for this information.
It is really important that the Government is clear with the community as to what we are talking about. Rents of €1,300, or €1,500 for two-bedroom units, are not affordable for people on incomes of €35,000, €45,000 or €50,000. It is just not possible to pay such rents on those incomes. Under its Housing for All plan, the cost-rental model was recognised as a form of housing. What regulations are now being brought in to deliver cost-rental housing? The European Investment Bank committed to €100 million back in 2018. What is the figure now?
We know from the report issued today that housing costs are increasing. In Dublin, the average cost to buy a house is now over €430,000. We saw the Daft report last week which showed that rents have gone up all over the country again. They increased by 2.7% year-on-year in Dublin, by 6.9% in Cork, by 8.9% in Limerick and by 10% in Waterford. There is also a lack of rental property. It is really important that the cost-rental model begin to play a key and game-changing role in cities and the country with regard to affordable rents based on income rather than market rent.
I thank Deputy Joan Collins for bringing up this issue in respect of Emmet Road, previously St. Michael's Estate. It is a project I am very familiar with and which I had hoped would be further along at this stage. Covid and other issues have caused delays but this project should have started by now and I am glad we are nearly at the stage of getting planning permission because I had hoped we would be providing homes before now. At least the project is still intact and we are making progress. It is being developed on a cost-rental model, as the Deputy has said. It will be cost-rental housing. We are very much committed to that. The rents reflect the costs of developing it. The Deputy spoke about engagement with the design team. It is important that nobody gets carried away and spends unnecessary money on this. It has to be top-class, A-rated housing and that is what I expect it to be but it must be borne in mind that costs should be kept reasonable. I know the Deputy is not advocating otherwise but I remind the House that this is not-for-profit housing and we must keep costs at a level that will allow us to deliver rents at the right price.
All of us in the Government understand the importance of affordable housing. It was always going to be the second phase as we came out of Rebuilding Ireland and moved onto Housing for All. It is right that we focus on affordable housing. I believe the process for social housing has been fixed. We need to keep that process going and keep putting more money behind it. We now have to concentrate on affordable housing models. The Minister, Deputy Darragh O'Brien, is bringing focus to this issue with the legislation he brought through and with the publication of Housing for All. This project will happen and it will work. The Deputy asked me whether it will work. It will. I have no doubt that it will deliver housing at the right price.
On behalf of the Minister, Deputy Darragh O'Brien, who is stuck in the Seanad, I formally thank the Deputy and clarify that the site at Emmet Road - not Emmet Terrace like we have in Navan - plans for which are currently being brought forward for development by Dublin City Council, is significant for the development of cost rental in Ireland given its scale and city centre location. We recently had a meeting with the European Investment Bank which reaffirmed its desire to assist with projects like this, for which it has funding available. This is something it wants to do. It is part of projects all over Europe. There are great models all over Europe, involving a myriad of funding streams. We need to tap into all such streams to make things happen.
While the design of the Emmet Road development has not been finalised by the council, current plans propose 484 homes in total, of which approximately 375 will be designated cost-rental homes. The remainder will be provided as social housing. I believe the Deputy will agree with that proposal. I am advised that the council is currently preparing a Part 10 planning application, to include an environmental impact assessment report, for the Emmet Road development with the intent to lodge an application with An Bord Pleanála in the second quarter of next year. I am thankful that we are near the end of the process and ready to put in the planning application.
Any rent levels for the cost-rental homes to be delivered at Emmet Road will not be directly related to either tenant income or the market rent for the area. It will be related to the cost. It is cost rental. That is generally reflective of the needs of the tenants the Deputy is aiming for because, in many cases, rents may be delivered at half the market rate, which is what the Deputy is trying to achieve. As is the central principle of cost rental, the rent for the homes will be a function of the costs incurred in financing, building, managing and maintaining them. That is why it is so important to keep costs low and not unnecessarily high. This is consistent with the provisions of the Affordable Housing Act 2021 approved by the Oireachtas with its full support earlier this year.
Our cost-rental model follows European examples to ensure that a financially self-sustaining sector is developed that delivers more affordable homes for people to rent on a long-term basis, with the homes being retained to become even more affordable over time. This explicit link between the rent and the cost of delivery of the homes means that the homes at Emmet Road will, by necessity, be affordable, efficiently designed and easy to maintain. Dublin City Council is committed to the idea that the design should reflect this with regard to the site layout, unit design, building materials and landscape finishes. Project capital and operating and maintenance costs will be carefully monitored and all decisions will be reviewed throughout each stage of the project to ensure affordability is maintained, which is only right.
Cost rental is not social housing as we know it. It is targeted at those individuals and families on moderate incomes who are above the eligibility threshold for social housing. I believe the Deputy agrees with that idea. An upper limit of €53,000 in respect of annual household income, after income taxes, has been applied to the first cost-rental projects, thereby giving an indicator of the cohort at whom this sector is aimed.
I thank the Minister of State. I note that no copy of his speech was given out. Perhaps one could be sent over to me. The suggested rent of €1,300 for a one-bedroom apartment and €1,500 for a two-bedroom apartment, which is the concept in some areas in Dublin, is affordable only to the top 30% of households. That is not what we are looking for or what we need in respect of cost rental. For 40% of households, their income means that rent must be €800 a month or less to be affordable. The Minister of State has said that rents have to be based on the cost but is the Government looking at introducing differential rent with, for example, tenants paying 15% and the difference being paid through a housing assistance payment, HAP, type scheme? We pay HAP to landlords. Are we looking at that type of thing in respect of people on incomes which are low but above the eligibility threshold? We have to think outside the box if we are to ensure that people on such incomes can get this housing. I would like to hear the Minister of State's position on that. Is he saying that rents will be in and around €1,300 for a one-bedroom unit and €1,500 for a two-bedroom unit? If that is the case, this housing is not affordable nor is it based on people's incomes.
I do not know anything about them because we never put out any figures in respect of this scheme. I am not saying anything. I want to be very clear on that. The rents will be reflective of the cost. I did not think I would ever hear the Deputy advocating the use of the HAP scheme. I say that in jest.
I know the Deputy does not and she is not advocating its use as it is. The HAP scheme was only ever meant to be a short-term housing solution for people as they moved to more permanent housing.
Without the HAP scheme, 60,000 families would not have houses. I acknowledge that the Deputy and I will never agree on that, but it is the reality. There should only ever be a short-term need for HAP as the recipient moves on to a permanent home, which can be delivered on the Emmet Road site through a cost-rental project and through social housing. It is always the intention that HAP is not a long-term solution and that is as it should be.
These cost-rental model houses are not aimed at the top 30% of households. They are aimed at those who are just above the threshold for social housing and who cannot qualify for it. They might be in a job that pays them the average wage or thereabouts, resulting in a take-home income of €53,000. We are aiming at that cohort of people, and if the project is developed correctly, we can do that.
It is about keeping down costs. One of the methods to ensure cost-rental homes are affordable to this moderate income cohort relates to the use of direct State support. We can subsidise and reduce these costs in the home's construction. This can include the provision of public land at no or low-cost, upfront capital grants from the Executive and State assistance with loan financing, as well as the European Investment Bank reducing the cost of borrowing. All three of these methods have been made available by the Department to support this project, with the provision of land by Dublin City Council, the approval of a serviced sites fund grant from the Department of €18.7 million, the full funding of the social housing homes within the development and the potential assistance of the European Investment Bank and the Housing Finance Agency in helping to facilitate a long-term low-interest loan to fund the remainder of the development costs. Already, therefore, many of the costs have been reduced. It is important that from here on we keep those costs to a minimum in order that we can deliver this project for the cohort in question and ensure it will be affordable to them. I reiterate that they are not aimed at the top 30%, as I am sure the Deputy will appreciate.