Thursday, 18 May 2023
Ceisteanna Eile - Other Questions
82. To ask the Minister for Housing, Planning, and Local Government how he is financing the construction of affordable apartments under cost rental; and if he will make a statement on the matter. [23641/23]
This question concerns affordable cost rental. The matter of affordable housing was raised, as has cost rental in its own right. As the Minister will be aware, in my constituency of Dún Laoghaire, ground has finally been broken and progress made at Shanganagh Castle, which comprises nearly 600 units, and 42 units are under construction in Loughlinstown, to name but a few. However, many middle-income earners are obviously hard-pressed. Will the Minister outline the financing arrangements for affordable cost rental?
I thank the Deputy for his question and his support of Government in its rolling out of these measures. As he knows, cost rental did not exist 18 months ago. We have rolled it out and well over 1,000 tenancies have been approved. The Deputy referenced Shanganagh Castle, which is a very important and significant site, where ground has been broken. It is the largest social and affordable housing site in the country.
Rents for cost rental are a direct function of the costs of constructing, financing, managing and maintaining the development. Exchequer funding is being used to assist in reducing the cost of construction of cost-rental apartments making the rents ultimately more affordable. Support is provided to approved housing bodies, AHBs, through the cost rental equity loan, CREL, and local authorities through the affordable housing fund. The CREL scheme provides AHBs with loans of up to 45% of the cost of a development or acquisition. Local authorities are now able to avail of capital grants of up to €150,000 per unit for cost-rental delivery under the affordable housing fund. We increased that from €100,000 to €150,000. The remaining capital costs are financed through long-term borrowing and preferential rates to local authorities by AHBs from the Housing Finance Agency.
Cost-rental apartments are also delivered by the Land Development Agency, LDA, through Project Tosaigh, which is designed to unlock planning permissions that are not yet developed in the private sector.
I expect to make significant announcements in the coming weeks in that space which will be pertinent to the Deputy's own area and to the cities. Funding to acquire these homes is sourced through access to €1.25 billion of capital funding from the Ireland Strategic Investment Fund, ISIF, and commercial borrowing.
Following the recent Government decision, I will also bring forward a cost-rental viability measure that will apply across the board where schemes are designated cost rental. We basically said that would also be a subvention or equity of up to €150,000. We have high financing costs and we want to reduce that to keep the rents low. This has been successful so far but I will bring forward further change and I expect that to be in place from the start of July.
I thank the Minister for that reply. He mentioned the rents for cost rental and it is a very attractive prospect for many people. For instance, I have been contacted by a number of individuals who are at the higher end of the social housing threshold. They are eligible for social housing support but they are really keen on the cost-rental model. Can flexibility be given to the local authorities to try to ensure those individuals can avail of cost-rental housing? As the Minister said, 18 months ago the scheme did not exist. People are now finding out about it, are very interested and want to avail of it. Can he outline the prospects for Dublin, in particular, but also some information in respect of the rents, which he mentioned earlier on? The cost-rental rents are very attractive.
We have been specifically discussing cost rental but there has also been a significant expansion in the first home scheme for first-time buyers. As I referred to earlier, one in two new-built homes bought last year was bought by a first-time buyer. Between help-to-buy and shared equity, the average equity we are providing is between €69,000 to €100,000 to first-time buyers and to households to buy their homes. At the end of the first quarter we had just short of 1,400 approvals under that scheme. We have more approvals in the first three months of this year than we had since the inception of the scheme last July. I expect that the further changes I will make on cost-rental viability will unlock quite a significant portion of additional developments where planning permission has already been granted and they have not yet been able to start.
Development funding is constrained at the moment, rates are high, so measures like this are required to be able to make these schemes viable.
Cost rental has been very popular. We have seen most of our schemes more than ten times oversubscribed with long-term, secure, State-backed rents with minimum tenures of 50 years and we are absolutely determined to roll this out further this year.
I thank the Minister for all that information. In particular, he mentioned the first home scheme. I am aware of constituents coming to my office regarding the various new schemes, including, first home and help-to-buy. All those initiatives that have been reformed over the past while are helping.
Returning to the original point on the cost rental, it is very welcome and necessary that those schemes are proceeding across Dublin, and the country as well, so that people can avail of cost rental.
Before the Minister contributes again, I have two more contributors who wish to speak. I am conscious of Members who have tabled questions and are waiting patiently so I ask the Deputies to be brief. I call Deputy Ó Broin.
I have a technical question. In a response on this issue earlier, the Minister indicated that the cost -rental subsidy would be available to approved housing bodies. He has not said that before so is that the case?
Second, does the Government envisage on certain projects a combination of the cost-rental subsidy and, for example, the affordable housing fund, AHF, or the CREL to increase the subsidy? I am thinking, in particular, of Poolbeg. Is that in the Minister's thinking in respect of the cost-rental subsidy scheme?
There are a couple of issues I wish to raise with the Minister which, again I believe, are practical suggestions. We need a portal where people can get the information about cost-rental and affordable housing. Many people just do not know what is out there, where they go for it, how they apply for it, and all that kind of stuff. A one-stop shop where all of the cost-rental and affordable information would be available would be a good idea.
The other matter I wish to raise is that given that some people are in homeless accommodation for a long period and others have been knocked off housing lists, notwithstanding the lookback where some people still got knocked off housing lists, I ask that the Government give a little priority to people who have been waiting a long time through some scheme where some of them could have a first shot at some of the cost-rental schemes, rather than it just being a completely random lottery? That should be considered.
The cost-rental viability measure will be available to AHB and across the sector. It will also be available to private developments if they are designated as cost rental and part of the condition will be that they will be designated as cost rental on an open book basis. We are working through those changes with the AHB sector also. It will apply and that is absolutely the intention.
On the question of the portal-----
Yes, we are looking at that and I believe they can work together. We have done that with regard to the AHF funding that local authorities can access at the moment. For example, with regard to South Dublin County Council and a new scheme we have started there, that is just about viable and we can get that out there. We will look at the combination of both and how that can practically work.
The other thing we are doing in the next number of weeks is making the first announcements on Croí Cónaithe cities, which are apartments to purchase in our cities. We have the first number of schemes out on that, which are again a subvention to make them affordable and to bridge that viability gap. That raised some hackles in the Opposition at the time but that will provide real homes for people.
To answer Deputy Boyd Barrett's question, he is correct in that there are many schemes out there and there can be a great deal of confusion around them. They are good schemes. There will be an affordable housing portal and it is being worked on right now and has been for the past number of months.
In conclusion, because the Deputy was not present earlier, I want to mention where we talk about good suggestions. We have now received the first approvals for tenants who have received notices to quit on the cost-rental in situscheme who are above the social housing lists and who now have cost-rental in situprovision. To be fair, the Deputy has raised this proposal on a number of occasions. We have listened to that suggestion from him, and from other Deputies on the Government and Opposition sides, and we have now the first families being able to secure their homes through that.