Thursday, 18 November 2021
Saincheisteanna Tráthúla - Topical Issue Debate
I was reading back on interesting articles to do with the State's investment in property and housing. It is clear the State is one of the biggest players in the property market, but one would not think so, because State agencies and local authorities are renting and leasing properties back from the State. If one looks at the total investment by the State into the Ireland Strategic Investment Fund, which is basically to vulture and cuckoo funds, it adds up to €1.63 billion in the recent past. I say that to set the backdrop of the attempts by the community of St. Michael's estate in Inchicore to advance the development of 9.2 acres of prime land in the middle of Inchicore for the sake of that community.
For 21 years, the community around St. Michael's estate has been fighting to regenerate in a sustainable way. Thankfully, Thornton Heights was built, but there is a big chunk of land lying empty. There is now a designer talking to people on the regeneration board. We do not know what costs the designer is working with.
We need to find out here today where the regeneration of St. Michael's estate is at. Will a certain cost be made known to the designer, so that we can have good quality, affordable housing on that land? We do not just need good quality, affordable housing. The affordable rent should not be set at a share of the market or 25% below the market value. Rather, the affordable rent should be a proportion of the income of people who will live in those dwellings. This is an important point for the regeneration of St. Michael's estate. It should be publicly owned and funded in a way that the cost rental element will mean a proportion of the tenant’s income is paid on rent rather than set at 25% less than the market value. That figure is meaningless, because that market value is in a never-ending onwards and upwards scale. This would defeat the whole point of the struggle that community has engaged in for the past 21 years.
My colleague Deputy Smith and I are here to represent and raise the concerns of the St. Michael's estate community. They have been waiting and waiting for the regeneration. As Deputy Smith said, they have been fighting for 21 years for the regeneration of St. Michael's estate. They need clarity. They need certainty that the regeneration will provide housing that is affordable for that community, that they will be able to access it, and that they will not be priced out of it. There is a huge concern that the cost rental segment will be set at a price linked to market rate rents. Market rents are crazy at this moment. They are wildly fluctuating and will do so into the future. Housing for All says cost rental is to deliver at least 25% below market rents. The community needs certainty that the rents will not be based on the market rent. They need certainty that the rents will be affordable and that they will be based on what is actually cost rental and not connected to market rents. We need that clarity for the community. The community needs clarity that whatever is built there will be accessible to the community.
I thank Deputies Smith and Costello for raising this important matter around St. Michael's estate and on how the rent will be set. I am aware the Minister of State, Deputy English, responded to a similar query from Deputy Joan Collins on Tuesday, 16 November on this important cost rental development at Emmet Road. As indicated by the Minister of State, I can confirm that any rent levels for the cost rental homes to be delivered in the Emmet Road development will not be directly related to, or set based on, tenant income or the market rent for the area.
A central principle of cost rental is that the rent for the homes is a function of the costs incurred in financing, building, managing and maintaining them. There is now a clearly established legislative basis to operationalise this principle and for establishing the rent in a cost rental development. This can be found in Part 3 of the Affordable Housing Act 2021. These provisions were approved by the Oireachtas in July of this year by 101 votes to eight.
I would like to be clear that although cost rental will be public housing, it is not social housing. It does not use a differential rent structure. It is targeted at those individuals and families on moderate incomes and above the eligibility threshold for social housing who can afford to pay the cost rents. To illustrate this in practice, in terms of tenant eligibility, an upper limit of €53,000 annual household income, after income taxes, has been applied to the first cost rental projects. There is no lower threshold, though tenants would obviously be required to be in a position to pay the cost rent from their income. To reiterate, the rents for cost rental properties are not set by market rents but are in line with the criteria outlined in the Affordable Housing Act. Any references to market rent for cost rental homes simply serve as relative comparisons. They demonstrate how much more affordable these properties are for the eventual tenants when compared with what is available on the private rental market. Consideration of market rents can also help target State funding supports for proposed cost rental schemes at areas where they will offer the most assistance to tenants who would otherwise be facing comparably high rents.
The Government's cost rental scheme is already delivering long-term homes to families at affordable and stable rents. Using upfront capital subvention from the new cost rental equity loan, CREL, scheme, approved housing bodies, AHBs, are charging cost-covering rents at Taylor Hill in Balbriggan of €935 per month for two-bedroom homes, and up to €1,150 per month for four-bedroom homes. A further 50 homes at Enniskerry Road in Dún Laoghaire-Rathdown will be tenanted next month for €1,200 a month for modern two-bedroom apartments, with more to follow, including at Barnhall in Leixlip, County Kildare. These rents are affordable for the target cohort above the social housing income limits.
It is anticipated that similar capital subventions will be utilised at Emmet Road to make the resulting cost rents as affordable as possible, including the provision of public land at no or low cost, upfront capital grants from the Exchequer and State assistance with loan financing through the Housing Finance Agency and the European Investment Bank.
The Minister of State said the provision of public land would be of no cost. I would assume it would be of no cost because it is public land. It should not add to the cost of building homes on it. I want to go to the Minister of State’s figures. There is a maximum threshold of €53,000 to qualify for affordable housing. A combined income of €53,000 in a home where two people work would mean they would both have to be on just above the minimum wage to meet that threshold of €53,000. This makes a joke of what is being attempted.
I remember in 2008 when Bernard McNamara, the previous public private partnership developer who was to develop St. Michael's estate pulled out of the scheme. The people protested at City Hall saying, “greed, greed, how much do you need, Mr. McNamara?” Here, we have to be very careful. When we look at what is affordable for ordinary people on low incomes, we have to take into account their lives, their ability to pay and the sort of communities they want to live in, not the profit margins of the developers. This is why I quoted those figures at the beginning. The State has a fundamental role in financing such developments so that people can live quality and rooted lives in their communities.
The disconnection from market rents is a positive aspect. It is the sort of thing that needs to happen. Yet, we need to factor in the tenant’s ability to pay. Otherwise, we are still creating properties that will be unaffordable for a huge number of people. The reality is that the threshold at which social housing becomes unavailable to people is far too low. It has not been reviewed in a long time. The threshold needs to be raised. As that is raised, the upper threshold for cost rental also needs to be increased.
I welcome the Minister of State's statement about subventions by the State to keep the costs low. Ultimately, the rents will only be made affordable if we keep the costs low. Loans from the Housing Finance Agency and the European Investment Bank need to be of a sufficiently long term to reduce the cost and to keep these rents affordable.
The four local Members and the community will not stop fighting. The community has been fighting for 21 years. They will not stop. We will keep pushing to ensure these rents are affordable. However, as I say, we need to look at the threshold for social housing and for cost rental and increase them, because they are far too low as they stand.
I thank Deputies Bríd Smith and Costello for raising this important matter around St. Michael's estate and how the rents will be set. Within the past year, the Minister for Housing, Local Government and Heritage has developed an entirely new policy framework to enable the development of cost rental housing in Ireland, culminating in its inclusion in the Government’s Affordable Housing Act. The Minister has also rolled out funding for cost rental through the cost rental equity loan schemes for approved housing bodies, AHBs, and the affordable housing fund for local authorities.
The Government's Housing for All plan included a number of significant improvements to the affordable housing fund for local authorities above and beyond the previous serviced sites fund, under which Dublin City Council had been approved for €18.7 million in funding. These changes include allowing the funding support to exceed the previous maximum €50,000 per affordable dwelling on a step scale up to €100,000, based on location and density. This could assist a reduction in rents at this important site even further. When this capital subvention is combined with utilisation of local authority land and the long-term low-interest finance available from the Housing Finance Agency and the European Investment Bank, the level of financial supports will have a real impact on the resulting rents that can be charged for these types of homes. These will not be linked to the market or tenant income and will be financially sustainable cost rents, as set out in the Affordable Housing Act.
The Department of Housing, Local Government and Heritage fully supports the cost-rental development and will continue to work with Dublin City Council to achieve its realisation.