Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank the House for affording me the opportunity to speak on the Derelict and Vacant Sites Bill 2017, proposed by a number of Senators, led by Senator Grace O'Sullivan. While the Bill is relatively short, it proposes to amend three existing Acts, namely, the Derelict Sites Act 1990, the Residential Tenancies Act 2004, as recently amended by the Planning and Development (Housing) and Residential Tenancies Act 2016, and the Urban Regeneration and Housing Act 2015.

The principle changes to the three Acts can be summarised as follows: to increase the levies applicable to derelict and vacant sites from the currently prescribed 3% of the market value to 5%; to extend the application of the vacant site levy to all vacant sites irrespective of size, including those below the current prescribed minimum threshold in the Urban Regeneration and Housing Act 2015; to bring forward the commencement of the vacant site levy provisions; and to provide that Part 4 private rental tenancies may not be terminated where the dwelling is a buy-to-let property and the landlord proposes to sell it.

Before I elaborate further on the main provisions of the Bill, I acknowledge the constructive and positive engagement that has already taken place between the Civil Engagement group, which proposed the Bill, and my office on the issues generally. I further acknowledge the good intentions behind the Bill, the general thrust of which I support in terms of its objectives, and the need to secure the optimum occupancy of the existing housing stock and vacant lands.

When one compares Ireland to our closest neighbour, for example, one finds we have a vacancy rate for residential properties of close to 10% – the figure is about 9.5%. The equivalent figure in the UK and Netherlands is about 2.5%. Most other countries in Europe are somewhere in between. It is an issue which needs a comprehensive response, given the other pressures in the housing market.

I want to highlight, in particular, the importance I and the Government attach to taking action on empty buildings and sites as a means of addressing and securing additional housing supply in order to assist in countering the current housing supply and homelessness situation. This approach to addressing vacancies will also simultaneously have the twin benefit of helping to breathe new life into many parts of cities and towns and villages where vacant sites are located. This priority is reflected in the Government's comprehensive action plan, Rebuilding Ireland, published last July. One of the five pillars in the plan, the fifth pillar is specifically focused on using utilising existing housing stock with the core objective of ensuring that the existing vacant housing stock throughout the country and across all forms of tenure is utilised to the optimum degree possible.

In this regard, action 5.1 of Rebuilding Ireland commits to the development of a national vacant housing reuse strategy, informed by census 2016 data, to inform the compilation of a register of vacant units across the country; to identify the number, location and reasons for long-term vacancies in high demand areas; and to set out a range of actions to bring vacant units back into use. To this end, the Housing Agency, which has been assigned responsibility for co-ordinating the development of the strategy, has established a working group, comprising senior representatives of my Department, local authorities and representatives from the Housing Agency, to inform the strategy. It is intended that the strategy will provide a targeted, effective and co-ordinated approach to tackling the problem vacant dwellings. Work on it is progressing and relevant stakeholders are being jointly consulted by the Housing Agency and my Department to inform the finalisation of strategy which, it is hoped, will be completed by the end of March.

Before going into detail on the provisions in the Bill, it is important to mention three significant measures which have already been activated under the fifth pillar of the Rebuilding Ireland plan to incentivise the increased use of vacant housing stock. The repair and lease initiative provides funding to the owners of vacant properties for their refurbishment and subsequent long-term leasing to local authorities for social housing purposes, and €140 million has been put in place for the scheme. Some €25 million in 2017 and €50 million next year will be provided for the buy and repair initiative, which enables local authorities to purchase and renew housing units in need of remediation in order to make them available for social housing use. Last year, we spent €203 million buying over 1,000 properties, the vast majority of which were vacant, to bring into use for social housing. It is not the case that we are not moving on these issues and spending a lot of taxpayers' money trying to address them.

The purchase by the Housing Agency of vacant buy-to-let properties on the portfolios of financial institutions and investors for social housing use is also under way.We have given a rolling fund of €70 million to the Housing Agency to get the process under way and about 200 housing units are already in the process and have been secured.

Regarding the Private Members' Bill, sections 1, 2 and 6 are standard type legislative provisions relating to expenses, the definition of terms used elsewhere in the Bill, the Short Title and its proposed commencement. Accordingly, there is no reason to address these sections in my comments. Instead, I will focus on the three remaining sections.

Sections 3 and 5 provide for proposed amendments to the Derelict Sites Act 1990 and the Urban Regeneration and Housing Act 2016, respectively. These two issues are somewhat inter-related and any proposed measures impacting on private property owners require detailed consideration and scrutiny, having regard to the provisions of Article 43 of the Constitution and its associated legal complexities.

Land is a finite resource, particularly in urban areas. Therefore, it is important that it is used in the most efficient manner possible and put into the most productive use in the interests of the common good. The derelict site levy and the vacant site levy are two instruments that have been specifically introduced to incentivise the development and use of empty or under utilised sites in urban areas.

The development of the relatively recent vacant site levy provisions in the Urban Regeneration and Housing Act 2015 was a particularly complex exercise, having regard to the legal issues involved. I do not think that I am disclosing State secrets by saying the following as I think it is already on the public record, but the original proposal by my ministerial predecessor, Deputy Alan Kelly, was to apply an initial rate of vacant site levy of 3% of the market value of the site, increasing incrementally by 1% per year thereafter, as Senator Coffey will remember, up to a maximum of 6% of the site's market value. This measure was to ratchet up the pressure if people are doing nothing.

It was also initially proposed that the levy would come into operation earlier than is now provided for in statute. The legal advice received from the Attorney General at that time was that having regard to the potential impacts on the constitutionally protected rights of property owners, arising from the levy proposals, the legislative provisions needed to be appropriately balanced and fair, while also being reasonable and proportionate, having regard to the objectives that the legislation sought to achieve.

The specific advice of the Attorney General on the vacant site levy provisions, also having regard to the principles of fair procedures and administration, was as follows: the levy should be limited both in its financial amount and size of the properties to which it should be applied; the rate of levy should not exceed the 3% rate applicable to derelict sites since 1990 on the basis that it was considered reasonable without being overly punitive; and sufficient time should be allowed before the coming into operation of the levy provisions to enable affected property owners to regularise their affairs, by way of selling their properties or initiating development of their sites, before becoming liable for the levy. In other words, if one is going to tax people for inactivity, one must give them due opportunity to ramp up activity through a planning process, securing finance, etc. If one does not do so, then one will have acted unreasonably, be open to a legal challenge and lose. That was the concern. Many people, including myself, were impatient to try to disincentivise the sitting on land or the speculative nature of some of the land ownership in Dublin that is zoned, and in some cases has planning permission. We must make sure that we remedy the situation in a way that will stand up to legal scrutiny and challenge.

The proposals in Senator O'Sullivan's Bill that the vacant site and derelict site levies should be increased from 3% to 5% of site market value, and that the application of the vacant site levy should be brought forward by a year, run counter to the legal advice provided to my Department. The proposals would, thereby, increase the risk of constitutional challenge while also undermining the existing statutory provisions.

The Bill also proposes that persons who have moved into residential care, and whose properties have become vacant as a result, would be exempted from the derelict site levy. It should be noted that the derelict site levy provisions apply to sites that detract from the amenity, character or appearance of land in the neighbourhood, having regard to the existence of dangerous structures on the land or the deposit of litter or waste on same. Although not explicitly excluded from the provisions of the Derelict Sites Act, persons who have moved into residential care would generally not be targeted by local authorities for the purposes of the levy on the basis that the properties in question, which generally are not dangerous or structurally unsound, would not come under the definition of a derelict site.

The Bill further proposes that local authorities be empowered to acquire, by agreement or compulsorily, derelict sites within their area. Local authorities already have these powers so an extra provision is unnecessary. Legal experts will know more about this matter than me but a compulsory purchase order for a property is not straightforward. An order is often legally challenged, which means the process takes quite some time. The provision exists for local authorities to use that power should they choose to do so.

Section 4 proposes amendments to the Residential Tenancies Act 2004. The recently published strategy for the rental sector sets out a range of measures under the headings of security, supply, standards and services. The measures seek to address issues affecting the supply, cost and accessibility of private rental accommodation.

The subsequent Planning and Residential Tenancies Act 2016, which this House knows all about, was enacted prior to Christmas. It gives legislative underpinning to certain measures in the rental strategy. These include the introduction of rent pressure zones to slow the rise in rents in areas of the country where rents are high and continuing to rise; the extension of the duration of tenancies from four to six years; and the limiting of landlords' rights to terminate ten or more tenancies at the same time in a single development on the grounds of sale, which is known as the Tyrrelstown amendment.

I acknowledge the merits and intentions of the Private Members' Bill in the context of the development of the residential rental sector. However, Senators will appreciate that the security of tenure proposals that the Bill seeks to address have already been discussed and addressed by the Oireachtas during the passage of the recent legislation before Christmas. The rental strategy is supported by 29 actions. It is premature to revisit these issues at such an early stage in the implementation of the strategy and of the Planning and Residential Tenancies Act 2016, which was only signed into law on 23 December.

I agree with the Senators' concerns regarding the number of buy-to-let mortgages in arrears. The consequent risk that repossession by the lender and subsequent sale of these properties may result in tenants having to leave their homes as well as properties leaving the rental sector, precisely at a time when we need them most to bolster supply. That is why, in the rental strategy, we have committed to encouraging banks and landlord borrowers to agree sustainable solutions to buy-to-let arrears so as to protect tenancies and limit the loss of dwellings in the sector. My Department is also in the process of establishing a working group to explore the scope for the responsibilities of landlords to transfer to receivers where appointed to buy-to-let properties. The measure will be a big change in the system. We have committed to completing a report on the matter by the end of the first quarter of this year. Given the complexity of the issue and the law involved, this group will involve the Departments of Justice and Equality, Finance, and Jobs, Enterprise and Innovation, as well as the Office of the Attorney General. They will report by the end of March. I cannot support the proposal put forward as it is too broad and does not take into account the legal complexities involved. However, I am committed to finding other ways of addressing this issue.

I fully understand and appreciate the genuine motives and intentions behind the main proposals in the Private Members' Bill. I also share the same general objectives as the Senators in terms of many of the issues that have been raised. However, as I have outlined, the proposed amendments on derelict and vacant site levies run counter to the legal advice received during the development of the vacant site levy provisions and, accordingly, I cannot support them. In my view, the focus should be aimed at ensuring that the vacant site levy provisions, as currently constituted, are actively implemented by local authorities with a view to incentivising the development and use of under utilised sites and delivering on the objectives of the provisions.

I accept that the implementation of the derelict site levy by local authorities has been somewhat patchy over the years since its introduction.In this connection, my Department proposes to proactively engage with local authorities in the coming months with a view to ensuring that a more effectively enforced and applied system is in place in the future. With regard to the proposed amendments to the Residential Tenancies Act, I believe I have made my position clear on that.

There have been calls by some Senators for less talk and more action. To be fair, I do not think I could be accused of not introducing lots of new initiatives. We practically introduce one a week at this stage. We have introduced legislation in an urgent way and have really tested the Oireachtas's capacity to pass legislation quickly in an effort to do that. Therefore, there is a sense of urgency coming from my Department and from me. However, it would be irresponsible of me to support a piece of legislation that I honestly believe has real legal problems in terms of its constitutionality and which revisits issues that we debated only a few weeks ago. I will happily work with the Senators and the group concerned on practical issues. We are about to table some new initiatives dealing with vacant properties. We will be very open about that process and I will happily return to the House to go through how that is going to work and how effective it can be.