Friday, 4 June 2021
Affordable Housing Bill 2021: Committee Stage (Resumed)
Alice-Mary Higgins (Independent)
I will not speak for very long because I thought this amendment was grouped with a previous one so I spoke to it then. The core issue is still my concern about the motivation of the State, local authorities and approved housing bodies in engaging in cost rental as a vehicle for the provision of housing in the long term. It is a totally legitimate motivation, but it is based on returns for shareholders, for example, in a pension scheme or fund. It brings a different dynamic and imperative into the scheme. That is why the limited equity returns piece is a concern.
I am not saying we only want the State to build houses. I want everybody to build houses. The point that was made in the report is not that the State will take 20 years but, in fact, that the State explicitly has the next two years when fiscal rules are suspended. It has been asked by the European Union to invest in housing and to use the period when it does not have a debt balance sheet requirement on it, as we have had in the past. Right now, that does not apply. We do not have to move the pieces around so projects are off balance sheet. Right now, we are allowed to spend for the next two years and we can do it with financing of 0% or less. The next two years are crucial in terms of State investment.
It is the private market area that is sluggish, which is why I am concerned that the focus is on it. I see limited equity returns over a 40-year period. What I see is that houses will be built, because the builders are the ones who build houses. We will pay their mortgage for 40 years because cost rental means effectively the costs have been covered. However, as well as paying the mortgage of some investment fund that has a set number of properties, we will also give them 2%, 4% or 7% extra, something one would not get from any bank in the country as a dividend. We will give them a limited equity return every year as well as paying the mortgage and then at the end they get the asset.
That is what does not look great to me. I would much prefer that we would have an arrangement whereby the cost is going towards an asset for the State, a local authority or an approved housing body. I do not know if we will get to it, but the big concern I have relates to private investors building on public land for the provision of cost-rental housing. That is why I liked amendment No. 66. For one thing, it referred to a grant being provided by the Housing Agency. If there is any question of public land being used, it needs to be very clear that this is not a giveaway. If the Government insists on including a model where there are private actors, that should not extend to public land. It would be ideological if were to say we need to have the private actors rather than the State build on public land when the State can do so. I want to make sure that, if we are paying the mortgage and a little bit of an extra dividend every single year, we are not also giving away an asset at the end on public land.That relates to my later amendments. Again, there is nothing wrong. There is a great role for private actors, funds and everybody else to do things but I want to be sure the State does not become their business model. That is what we may need to improve.