Dominic Hannigan (Labour)

I welcome the Minister of State. It is widely accepted that the real economy began what was initially a slow decline in 2002 or 2003 some six years ago. It is common to hear the lament that instead of investing in the real economy we simply built and sold more houses to each other since then. While this is undeniable, it is somewhat bizarre that the Government of a small nation such as ours could devote itself so wholeheartedly to the promotion of the most unsustainable construction programme in the history of the State and still manage to emerge on the other side with a housing crisis.

The housing and economic crises are intrinsically and tragically linked. As early as 2006, the warning signs indicated the market was becoming seriously over-heated. Despite those warnings, the Governments could not bring themselves to shout "Stop". During this period, the notion of a house as a home became secondary to the idea that a house was a commodity. As we continue to adjust to the new economic realities it is vital that we challenge that notion once and for all, because the right to a home is a basic human right. It is an essential aspect of our social economy and of the ability to live a decent and secure life. Despite this, Focus Ireland points our that Ireland compares very poorly to other European Union countries when it comes to housing rights. For example, Spain, Holland, Belgium, Sweden and Greece have enshrined in their constitutions the right to housing. Countries in which this right is not constitutionally guaranteed, but in which it is guaranteed in law, include Austria, France, Germany, Luxembourg and the United Kingdom. Ireland has an established policy guide for housing provision, but no constitutional rights or no legally established right to housing.

We now face a period in which all the problems of the boom period are retained. There is still homelessness, poverty and social exclusion. However, we now face the additional crises of negative equity, mass unemployment and an affordable housing scheme that is no longer affordable.

Compounding these problems is the reality that our housing policy framework is no longer fit for purpose. A recent report stated that the number of affordable units should be approximately 6,000 units by the end of this year. However, given that there are almost 30,000 people on local authority housing lists throughout the country, it is difficult to comprehend that there could be a demand problem, but that is exactly the situation we now face. The affordable housing scheme was never designed to accommodate the notion of rapidly decreasing house prices. As a result, it is now only marginally cheaper in some local authority regions to buy affordable housing rather than buy homes on the open market. I am aware of cases in which the price of affordable housing units from county councils are higher than housing units on the open market. This creates very significant problems in the provision of mortgages, which is not an easy task at the best of times, but in the current environment it is harder still. The net result is that some local authorities expect to end up with up to 50% of the current stock still on their books because it is basically impossible to sell under current market conditions.

It is often suggested that the State is too slow to respond to issues in the context of the economic crisis. It is, therefore, vital that the Department of the Environment, Heritage and Local Government acts on social housing as quickly as possible. The prospect of brand new housing units lying idle while 30,000 people are seeking homes is simply unacceptable. Different areas will have different sets of priorities and local authorities should be given the freedom and support necessary to exercise area-specific solutions whether it involves re-categorising affordable units under the rental accommodation scheme or using the properties as social housing solutions, options which have been suggested by some of my colleagues. Either of these options is infinitely preferable to leaving housing units empty while many people are in need of housing. It is economically and morally unacceptable to allow that. Creativity is essential and could help to avert a full-blown housing crisis in the country in the coming three or four years. Policy leadership is required and there must be a recognition that there are several flexible solutions beginning to emerge, most of which come from the private sector.

I was struck by an article I read recently in The Bray People which discussed the case of a young couple who made use of the rent-to-buy scheme. The couple is now investing in a reasonably priced home close to their place of work and family. If they sign to buy after 11 months, the rent already paid will be offset against the overall asking price of the home. It is a classic case of a family which might otherwise face a difficulty in terms of purchasing a home in these times. If such a case could be replicated throughout the nation, it would go a long way to ensure the housing crisis could be somewhat mitigated.

We must also consider issues related not only to people trying to buy new, affordable homes, but to the affordability of homes. Mortgage rates have come down recently which everyone on a tracker or variable mortgage welcomes. We need a debate specifically on the issue of fixed-rate mortgages. Let us use the word "encouraged" rather than a stronger word for now, but many young couples were encouraged to take fixed rate mortgages at a rate of 5% or 6%. Such people have not benefited at all from the recent interest rate reductions. As a result, it is more difficult for such people to afford their repayments, especially if people are losing their jobs. Last week, I spoke to a young couple in Duleek who have not seen any reduction in their mortgage repayments. Unfortunately, their personal economic circumstances have deteriorated in the past year. They now have a difficulty paying their mortgage. We all acknowledge that breakage fees must be paid, but mortgage providers must examine the possibility of including breakage fees on top of the capital repayment of the mortgage, of changing mortgages to variable rates and, in the process, make it a good deal more affordable for young people to make mortgage repayments. The last thing we wish to see at the end of this economic crisis is people driven from their homes onto local authority housing waiting lists because we did not support them in trying to ensure they could continue to pay their mortgages.

The affordable housing scheme must be reformed urgently to meet current realities. Some 30,000 people are in need of a home and housing solutions must be found if they are to be accommodated. There is a very substantial over-supply in the market at present. One positive aspect of the crisis is that at least a buyer's market now exists. Economies of scale and the upper hand of the purchaser could be used by the Government to invest in a national housing stock that could accommodate those who require housing. I am pleased to see the Minister of State indicated the Department is committed to working and collaborating with his partners. I urge him to engage with those in Focus Ireland, the Simon Community and Threshold to hear their views on how the housing crisis could be improved. The Labour Party is willing to engage on this issue at any time. I have said many times that if sensible solutions are produced by the Government we will certainly support them.