Kevin Humphreys (Labour) | Oireachtas source

I welcome the Minister. We must put the housing crisis and where it started in perspective so that we do not make the same mistakes again. I am evidence driven. In the 2000s, the idea was that the market would resolve everything and there was an over-reliance on rent allowance, which was an emergency measure that became a housing policy. Much of this dates back to when one of the Minister's predecessors, Mr. Noel Dempsey, lost that Ministry. He was progressive and piloted a scheme of 20% social and affordable housing in the Dublin docklands before rolling it out in national legislation. Unfortunately, it was unwound by former Deputy Martin Cullen when he took over that Ministry. That is the heart of the problem in the Dublin area because we lost the 20% of all houses that were built during the boom. The decision was influenced by the Progressive Democrats ideology of market-driven solutions. Market driven does not supply. When the recession hit, we did not have the social housing stock we should have had, leading to us having to depend on the rent allowance. The story continues.

I wish to put in context the next part of my contribution. It is based on the work of the Oireachtas Library and Research Service, information on residential investment in all quarters during 2018, Hooke & MacDonald's investment report for 2018, Threshold's submissions to various committees and the Central Bank quarterly bulletins for 2017 and 2018. One of the reasons for going into this in such depth is because I have met many young couples and individuals who moved home after saving their deposits.They said they had looked forward to having an opportunity to purchase an apartment at 6 Hanover Quay in the Dublin docklands area where planning permission had been granted for 101 apartments. They had watched construction progress slowly but surely and looked forward to the apartments coming to the market. That project, which comprised 120 apartments, never came to the housing market because it was purchased by an investment fund for €101 million, with the price paid for some of the units above market value. This led to me to other research which shows that 2,000 apartments were completed in the Dublin area in 2018. The final figure may be slightly higher because it was not available at the time. The sales prices indicate that in the majority of cases, planning permission was given for individual owner occupiers, which means the units were for the market. The sales figures for 2018 indicate that more than 75% of these apartments were sold to the build-to-rent sector, however, which means only 25% of the units went to the market.

These findings led to further investigations. My initial expectation was that the build-to-rent market was buying these apartments at below market value because it was bulk buying. However, further research showed that the apartments were purchased above the market price. My conclusion was based on the investment yield which, at between 5% and 8%, strongly competes with yields in the market for office space. The funds also have preferential tax treatment with respect to rental income and capital gains.

There is an imbalance in the market. While we need professional landlords who can provide a good service, we must also ensure the market is regulated and balanced. Rents have an impact on home ownership and the pension fund that individuals build up. Home ownership stood at roughly 80% in the 2000s. This has declined rapidly in the past ten years and now stands at 70%, with all indications suggesting it will fall further. The Minister often states that we are moving towards the European model under which more people rent than purchase their home. What is the long-term impact of this for society and further financial risk? Obviously, pensions are at risk because if people pay between €2,500 and €3,000 in rent and retire at 67 or 68 years, their income will be reduced and they will be unable to meet their rental outgoings. That issue needs to be taken into consideration if we are moving towards adopting the rental model as the norm for society.

In 2018, almost €1 billion was invested in the build-to-rent sector. Is the Minister monitoring what is happening in that sector? I have analysed various documents such as those compiled by Hooke & MacDonald. Various investment reports indicate that €5 billion will be invested in the build-to-rent model in Ireland. Dublin is the leading location for such investment but there is also significant investment in Limerick, Waterford and Galway. We need all types of markets, including the build-to-rent sector. However, young people who want to purchase their own homes and get on the property ladder are being excluded from the market. We must, therefore, introduce wide-ranging policies to address these issues, including pensions. We are sowing the seeds for another crisis in the residential property market and in respect of pensions because there is no joined-up thinking between the provision of housing and people's earnings as they retire, including the possibility that they will be unable to meet the rental demands they will experience.

A yield of 7% or 8% is a good investment, especially if preferential tax treatment applies. I can provide more detail on the research available on these issues but, unfortunately, I do not have time to do so. As I stated, of 2,000 apartments built in the Dublin area last year, more than 1,500 were purchased by investment funds and young people were not given an opportunity to purchase them. Young people are being driven into the rental market because it is the only option available to them as they start their adult lives.

When will the Minister publish legislation on short-term lets? The build-to-rent model is showing signs that it will have the same impact on the market as the short-term lets sector was having when I first raised this issue three yeas ago. While short-term lets will not fix the housing crisis, they could release a substantial number of units in urban areas to the rental market. I ask the Minister to carefully consider the matter and publish regulations or legislation as soon as possible.

On a local matter, namely, the proposed 3,500 housing units at Poolbeg west, the Minister's predecessor, the Tánaiste, took a hands-on approach to this development. I had hoped that by this stage there would be cranes and bulldozers working on the site. Unfortunately, the project is still tied up with An Bord Pleanála. The closing date for submissions was early January 2019. However, no agreement has been reached on the 900 social and affordable units. If the issue is not dealt with before An Bord Pleanála makes it decision, the Minister's negotiation position will be weakened. I urge him to increase his efforts and that of the local authority in that area and reach a deal on 500 additional units because this project will have an impact on the south-east side of the city in terms of the availability of housing units. Many families living in three-bedroom units would be happy to downsize. If the development progresses quickly, it will have a range of positive impacts. I urge the Minister to get involved and ensure the negotiations on the 500 additional units are concluded.

I assure the Leas-Chathaoirleach that I am watching the time. I am about to conclude.