Peter Burke (Longford-Westmeath, Fine Gael) | Oireachtas source

I thank the Senators for their important contributions as we move through our Affordable Housing Bill.

Amendment No. 19 seeks to add a condition to section 7, that a housing authority may only enter into an agreement for the sale of affordable dwellings "where the dwellings specified in the agreement meet such criteria of affordability", and to include a criteria that any such dwellings should be affordable to individuals on or below the national median income, "as may be set out in regulations developed by the Minister and laid before, and agreed by, both Houses of the Oireachtas". Amendment No. 20, similarly, provides that housing authorities should only enter into direct sales agreements "where the dwellings specified in the agreement meet such criteria of affordability, to include a criteria that any such dwellings should be affordable to individuals on or below the national median income, as may be set out in regulations developed by the Minister and agreed by both Houses of the Oireachtas". Amendments Nos. 21, 24 and 25, similarly seek to restrict direct sales agreements to dwellings that are affordable or meet the criteria of affordability.

Broadly, it is envisaged that dwellings made available by housing authorities under this scheme would have purchase prices available between €160,000 and €300,000. I have mentioned this a number of times in this debate. A home costing €160,000 is within the range of an applicant with an income of €29,000 gross for a single person, or €27,000 gross for a couple with two incomes, using the Rebuilding Ireland home loan. In the case of applicants using their bank mortgage, this unit is accessible for applicants with a gross income of €42,142. A unit costing €220,000 is within the range of applicants with a gross income as low as approximately €44,000 for a single person and €39,500 for a couple, using the Rebuilding Ireland home loan. In the case of an applicant using a bank mortgage, this unit is accessible for applicants with a gross income of €56,571. A unit that costs €310,000 is the upper end of the scale, which I have mentioned.It is accessible to a couple with a gross income of approximately €54,500 using the Rebuilding Ireland home loan or a gross income of €79,700 if using a bank loan or mortgage. The minimum price at which homes may be sold will be determined by the overall development of each particular scheme. This will take into account supports such as the local authority land value and the shared service sites fund, as well as the housing type, tenure and mix involved. I am satisfied that the dwellings of all types provided for will be accessible to people on low to moderate incomes and therefore, I do not propose to accept the amendments.

A number of Senators referred to affordability. I assure them that the macro-prudential rules are the cornerstone for our definition of affordability. Senator Boyhan referred to various metrics, including 35% of income being spent on a mortgage but under the macro-prudential rules, the proportion is generally significantly less than that. A single person with a 30-year mortgage, borrowing 3.5 times his or her income at 3%, for example, would be spending 21.4% of an income of €35,000, 23% of an income of €45,000 or 25% of an income of €55,000. The macro-prudential rules put sustainability at the heart of the market. They were devised to do just that against the background of the fractious situation we found ourselves in after the financial crisis. Sustainability is very important and provides a clear underpinning for affordability. Housing is unaffordable when people cannot purchase a home while taking account of the macro-prudential rules.

There is very little international academic support for a measure that concentrates exclusively on affordability in terms of a definition and averages because different groups can experience very different conditions. Accessibility, affordability and financial constraints on households are not best identified by rules of thumb or by asking "How much is too much?". Rather, we must ask "How much is too much, for whom, and in what circumstances?". That is the intention of the Bill.