Darragh O'Brien (Dublin Fingal, Fianna Fail) | Oireachtas source

All the amendments in this grouping relate to the situation where an affordable dwelling has been acquired under agreement under Part V of the 2000 Act. I do not think the Senator is going to move amendment No. 1 but I will respond to all four amendments in detail because it is an important point and people should be very clear about where we are. As previously confirmed, Part V provisions are being drafted and will be brought forward via a Dáil Committee Stage amendment. I flagged this on Second Stage some time back. This is just a sequencing piece because we have two important Bills, one of which is this Bill while the other is the Land Development Agency Bill, and we must cross them over as well because the definitions of "affordability" in the Land Development Agency Bill will be taken from this Bill so that is another consideration.

Following on from previous proposed Committee Stage amendments similar to this and those tabled on this Stage by Senator Higgins, my officials have been in contact with the Senator to provide some further clarification relating to the provisions and the effect of the provisions, which is important. I can confirm that we have considered the Senator's concerns and I have discussed them with officials regarding the provisions of the legislation as drafted. I am convinced that they are suitable. However, I will take a bit of time to expand on the specifics so that Members are clear and try to allay any concerns that are there.

There may be a small misunderstanding regarding the affordable dwelling contribution, which is the one referred to in section 12. Section 12 provides that where a housing authority facilitates the purchase of an affordable dwelling, it does so by making a contribution - the affordable dwelling contribution. In the case of dwellings provided by a housing authority pursuant to section 6 or affordable dwellings provided under a Part V arrangement or agreement, the contribution is stated to be the difference between the market value of the dwelling and the price paid by the eligible applicant. That is important. That is where the purchaser cannot afford to purchase the dwelling at its market value but is nonetheless facilitated to do so by way of the equity piece - the gap referred to by the Senator. This is because the dwelling is being sold to him or her at a price that is lower than the market value. The housing authority is, therefore, deemed to be making a contribution. That is the contribution to the purchase of the dwelling. The contribution will be equal to the difference between the price paid by the purchaser and whatever is the agreed market price of that dwelling. Section 12(5) provides that the housing authority is entitled to an equity share in the dwelling.This is important. We have also outlined that it shall be the proportion that the affordable dwelling contribution bears to the market value of the affordable dwelling. I will give a real example of a dwelling with a market price of 300,000. The price fixed by the housing authority to be paid by the purchaser is €240,000. The housing authority, therefore, is deemed to have made an affordable housing contribution to the purchaser of €60,000 towards the purchase of the dwelling. Senators will note that in this instance there are no deposits or such. We are doing this purely for ease of explanation. The affordable dwelling contribution of €60,000 is 20% of the market value of €300,000. The housing authority would, therefore, have an equity stake of 20% in the dwelling. That is explained in very clear terms. Hence, that is the contribution.

There is no implication or any requirement that a contribution will be made to a developer who is providing dwellings for a housing authority under the Part V agreement. There are none. The contribution is to the purchaser. Effectively, the contribution is that the purchaser is buying the dwelling for a price that is less than the market price. The price to be paid by the purchaser will determine the amount of the affordable dwelling contribution and, consequently, the amount of the housing authority's equity share. They are equal, effectively. That will be fixed by the housing authority. That is actually being done already in some of the schemes that are up and running, even in advance of this legislation.

Where the affordable housing has been provided by a housing authority relevant to section 6, including arrangements through approved housing bodies, AHBs, or public-private partnerships, the minimum price at which homes may be sold will be determined by the overall development cost of each particular scheme. This will take into account supports such as the local authority land value, which is really important, and the serviced sites fund. We are also going to be allowing flexibility within this affordable housing Bill, when it passes, to allow a more efficient use of the serviced sites fund, particularly in areas where there is an acute affordability issue. The other element of that is the supports such as the local authority land, the serviced sites fund and, obviously, the housing type and tenure mixture within it.

Where an affordable dwelling has been provided under a Part V agreement, it will normally be sold to a purchaser for the agreed Part V price. As Senators will be aware, under Part V, the developer is entitled to be paid normal construction costs. Site costs are paid at existing use value only, however. The housing authority will pass this Part V discount on to the purchaser. This enables that further reduction, as occurred with many Part V affordable dwellings sold during the 2000s.

In the future, it might be the case in some schemes that the housing authority will be in a position to offer a further reduction in the purchase price to an applicant over and above the Part V reduction, for example, if my Department was to provide additional funding to reduce the price and make it even more affordable. In the situation where there is a direct sales agreement for the sale of the dwellings by the builder to the purchaser, Section 7 provides that the difference would be paid by the housing authority to builder.

Consider, for example, a developer who is building homes with a market value of €320,000. In this example, because it is designated as affordable, the agreed Part V discounted price would be €280,000, which is the price the housing authority will effectively pay the developer for the units. For argument's sake, however, let us say the housing authority is in a position to provide another €20,000 per unit. In this case, the direct sales agreement would provide that the developer would sell certain units at the nominated purchases for €260,000 but the authority would pay the developer €20,000 for each affordable dwelling he sells for €260,000. That is, therefore, how that would work.

I have almost concluded but this covers all these amendments. Section 7(8) provides for the reverse situation. In that instance, it would be the price specified by a housing authority to be paid by the purchaser is greater than the agreed Part V price. Here, where there is a direct sales agreement, the developer would sell the units to the purchaser for the price specified by the housing authority but would return the difference to the housing authority. Accordingly, it is clear under this section that the developer would be paid exactly the Part V agreed price, at the amount it is entitled to receive under Part V of the planning Act, and no more or no less. There is no question of any additional contribution.These are important amendments but there is no question of any additional contribution being paid to a developer providing affordable units under a Part V agreement. The affordable dwelling contribution referred to in section 12 is a contribution to the purchaser to facilitate the purchaser purchasing a dwelling for less than market price, which would be subject to the housing authority taking the equivalent equity stake. Hopefully that has explained the situation. I thank Senator Higgins for tabling these amendments because they are useful for teasing the issue out further but I will not accept them.