Friday, 17 July 2015
Urban Regeneration and Housing Bill 2015: Committee and Remaining Stages
I move amendment No. 1:
In page 6, line 29, after “land” where it secondly occurs to insert “not owned by a local authority or publicly owned housing body”.As the Minister of State will know from the Second Stage contributions Sinn Féin Members made, we support the principle of the Bill regarding a vacant site levy and some other elements of the Bill. However, we feel the vacant site levy could be stronger and we do not support elements of Part 5.
Amendment No. 1 seeks to exclude local authorities from the vacant site levy. If the Government wants to force local authorities to pay a levy on undeveloped lands, it should on the other hand empower and enable them to build housing on these lands in the first place. Local authorities are not being given the funding to build on the land. If this were to go through and the levies were imposed on local authority land, it could force some local authorities to sell the land rather than pay the levy. That would create difficulties with social housing. One wonders if that is something the Government wants to do. In reality, the vast majority of people's housing needs are being met through the private rental sector anyway; there is very little evidence of local authority build. Even though the Government has committed to some extra developments in coming years, it is very little in comparison with what has been built in the past. The amendment seeks to exclude local authorities from the vacant site levy.
We will be opposing this amendment. The Government amendment means that all residential or regeneration land, regardless of ownership, public or private, will be subject to the levy if it meets the criteria for a vacant site as provided for in section 5 of the Bill. This will ensure that all owners of vacant sites will be treated equally. For example, local authorities will have the same responsibilities under this legislation as private landowners. It will also encourage the local authorities, which may be in possession of potentially suitable sites for the provision of housing, to develop those sites. In this regard I have considered and reflected on the comments and contributions from many Members during the Second Stage debate as well as in the Lower House. The removal of the exemption will allow for the application of the vacant site levy in a fair and equitable manner to all owners of vacant sites, public or private.
We must take the community view of this. Members of the public and those on housing waiting lists do not care who owns the site. We are trying to focus on sites of high potential in urban areas where there is a strong housing demand.
The Senator, along with other Senators, Deputies and councillors, has been critical that we are not responding to the housing crisis at the moment. This is a new power that we are giving to local authorities. It is appropriate for them to have that power because they are closest to the ground. They know their towns and villages, and have their county development plans.
There are strict criteria associated with the vacant site levy. The ultimate objective of the levy is to unlock these lands and get them back into beneficial use. It is logical to do that for a number of reasons. First, they are in urban areas and we need to have sustainable development in our urban areas. We need to bring footfall back into the centres of our villages, towns and cities. Second, existing public infrastructure already services these sites. Rather than having to invest large sums of taxpayers' money in developing new infrastructure, these sites are on streets already, lying vacant. It is up to local authorities to focus on them, regardless of whether they own them, and bring them back into beneficial use. We believe it will bring a new focus and impetus to get these sites back into beneficial use and, therefore, we are opposing the amendment.
I fully support everything the Minister of State has said in terms of what should happen. Of course, those lands should be used to provide housing. The problem is that on the one hand the Government is applying this levy on local authorities because they are not building housing. However, the reality is that local authorities need funding to build housing and they get that funding from the State. The local authorities would argue that if the Government is going to force them to pay the levy but will not give them the money to building housing, really it is just taking more money back from local authorities or forcing them to sell the land.
If local authorities have land that is serviced and could be used for housing, they should make an application for funding from the State. What happens if that application is turned down? In that case, on the one hand the State is refusing to provide money to the local authority, while on the other it is imposing a levy on the local authority for not building housing. That is the concern we have. Even if this goes through, I hope that common sense will prevail and the State will provide the funding to build the housing. We all want the same outcome and it is just a matter of getting that.
The Senator has made a fair point on funding. In recent years we did not have the capital funding to build the level of housing we wanted to build. Thankfully over the past year, the Government has managed to turn around the economy so that we can again make provision to see local authorities directly building houses again. The Government has committed almost €4 billion up to 2020, which is a substantial commitment of funding. We want to direct that funding in the most efficient way possible.
As the Senator will know, the legacy of the past is that local authorities, like individuals, were buying land banks that were unsustainable. We are trying to bring the focus back to the centres of towns and villages. Much funding is expended on delivering infrastructure for new housing developments. We are saying that money can be saved because this infrastructure is already in place. It is on streetscapes. Water, electricity and other utilities are already provided to the doorsteps of these sites.What we are saying is that we can ring-fence the funding and ask local authorities - the Minister and I have done so already - to prioritise sites that can be quickly turned around and are already serviced. I agree that we all want the same outcome. Unfortunately, we do not have time to wait for these sites to be developed, which is why this legislation has been brought forward. We want to stimulate activity on these sites and bring them back into beneficial use. I hope the Senator will understand my reason for opposing the amendment.
I move amendment No. 2:
My amendment seeks to apply the levy to all areas regardless of what is deemed to be local housing need. Some local authorities will say there is no strong housing need in their area. That stance may be right in terms of the people who live in the area or might be on the local authority housing list in that area. The problem is that a neighbouring local authority might have huge housing waiting lists. It would be beneficial if we made the levy applicable to all local authorities, regardless of housing need. Some local authorities may not have large land banks of vacant sites that are serviced and ready for housing, as the Minister of State has said. There are some such sites, but there may not be enough of them in the areas of local authorities that have a longer housing list. One may have vacant sites in areas that may not have, on the face of it, a housing need as deemed by the local authority. If housing was available, perhaps people from outside the local authority area might be encouraged to live in those areas, which would be better for social integration as well. The purpose of both amendments is to apply the levy to all areas regardless of housing need. Amendment No. 2 seeks to delete line 33 in section 5, which is on page 6. Amendment No. 4 seeks to eliminate the words "housing need".
In page 6, to delete line 33.
I oppose amendments Nos. 2 and 4. Amendment No. 2 seeks to remove the requirement for a vacant site to be located on residential land if the site is situated in an area where there is a need for housing. I oppose the amendment, as I did in the Dáil last week, because it would weaken the criteria to be used by a planning authority when determining whether a site is a vacant site in the case of such land. The criteria in section 5 set out the principles and policies underpinning the terms "residential" and "regeneration" land. As I have previously set out, the proposed amendment would remove an essential element of the criteria to be applied in determining what is and is not a vacant site. In the absence of such criteria, there is no justification for designating which sites in residential and regeneration land should be targeted for the application of the levy. These are important justifications that underpin the vacant site levy measure aimed at incentivising the development of suitable vacant sites in central urban areas for housing and regeneration purposes. The legislation is lacking without them.
I oppose amendment No. 4. The amendment seeks to remove section 6(4), which provides the specific criteria to be used by a planning authority, or An Bord Pleanála on appeal, for determining whether there is a need for housing in an area. The amendment was also proposed as the Bill progressed through the Dáil. As I outlined then, legislation must be underpinned by certain principles and policies. If the legislation does not have sufficient principles and policies underpinning it then there is a greater risk of a legal challenge.
The purpose of section 6(4) is to further elaborate and strengthen the definition of a vacant site consisting of residential land. The removal of this provision, as proposed in the amendment, would in my considered view diminish the legislation. It is also important that there is a defined and common approach in the criteria to be used by all planning authorities across the country when identifying vacant sites consisting of residential land, an aspect that is important in terms of consistency. It is on that basis that I oppose the amendment.
I move amendment No. 3:
While I expressed concerns about the vacant site levy on Second Stage, in principle, we should be taking action, and I support the logic of what the Minster of State is trying to do. Having said that, this amendment seeks to bring forward the implementation of the vacant site registry to 2016 and the vacant site levy charge to 2017. Perhaps the Minister of State will take the opportunity to outline why the date for the registry to be in place is 1 January 2017 while the date for the charge is 1 January 2018.
In page 7, line 17, to delete “1 January 2017” and substitute “1 January 2016”.
I am happy to outline and clarify the matter for the Senator. It concerns the property rights of citizens and related issues. We must follow due process in how we apply a levy. Citizens must be given appropriate time and processes to respond to proposed designations.
There has been extensive engagement between officials from my Department and the Office of the Attorney General in developing the proposals for the vacant site levy. While the Constitution allows the State in certain circumstances to delimit the property rights of individuals in the interests of the common good, such restrictions on landowners' property rights must be reasonable and proportionate to the ends that the legislation seeks to achieve. In particular, measures such as the vacant site levy must be introduced in line with the principles of fair procedures and administration. Therefore, the Bill provides the timeframe for key actions by the planning authority in the implementation of the levy as follows: a register of vacant sites shall be established by planning authorities beginning on 1 January 2017; annual notices to owners of vacant sites shall be issued by 1 June 2018; and the actual application of the vacant site levy shall commence in 2019. It is important to remember that this initial levy charge will be in respect of the year 2018.
The individual dates within the overall timeframe are set with a view to allowing appropriate time and notice for each key action. The deferment until 2019 of the commencement of the charging of the levy is intended to allow site owners sufficient time and opportunity to initiate development or sell their sites in order to become liable for the levy. While bringing forward the various dates by which specific actions shall be undertaken or commenced may, on initial consideration, seem to be justifiable, it is important that an appropriate degree of proportionality and reason be applied in the implementation of the levy provisions. Therefore, I am satisfied that the timeframes in the Bill as proposed are reasonable and balanced while allowing site owners the necessary opportunity to regularise their affairs before becoming liable for the payment of the levy.
In the process that will derive from this legislation, local authorities will be bringing a new focus to urban areas within their jurisdictions. That they are surveying and will engage with elected members and site owners before a designation of a site takes place will bring new focus and impetus to some of those sites.
We must allow for due process and time for site owners to respond with proposals for their sites. As we all know, construction, redevelopment and regeneration projects take time, and must go through the planning process, be funded, etc. The timelines as presented are fair while sending out a strong signal to landowners with sites of high potential that they need to do something with those sites as soon as possible to bring them back into beneficial use. If owners do not have the capacity to do so, they must allow someone else to do it for them, because we cannot afford to have such sites lying idle in our towns, villages and cities when our housing issues are so pressing. For this reason, we will be opposing amendments Nos. 3, 5, 7, 8, 10 and 11.
I move amendment No. 6:
There are a number of things to say about these amendments. In bringing forward any legislation and putting in place levies and charges, I understand the need for balance and appeal processes and we all accept that. However, in this case, property owners are offered an opportunity to prove the land is not vacant before and after being added to the register. The Minister of State has said several times that these are vacant sites in towns and villages that need to be made available for building and he has acknowledged the urgency of the matter. We know, and we might as well accept, that some landowners will buck against the levy. That is the reality. While I understand the need to have an appeal process in the legislation, there is already ample opportunity for landowners to prove before and after they have been added to the register that the land is not vacant. For those reasons we must avoid property owners appealing simply to delay the levy, without any real justification.
In page 9, to delete lines 20 and 21.
It is also worth noting that we have gone from one extreme to another. We had huge landbanks being made available during the rise of the Celtic tiger, which artificially inflated the prices of both domestic and commercial properties, leading to the property bubble. There were not enough levies and taxes on land then to dampen the growth of the property bubble. These levies are put in place for the right reason, because we have a shortage of land and we have these vacant sites, or land that is available for houses to be built, but just not being used. We also need to avoid a situation where once building starts again, as it will, we have huge landbanks being sold off again without sufficient taxes or levies in place. We could see a repeat of what happened in the past. We have to get that balance right. I know that is a somewhat different issue, but I wanted to say it again in the context of this section.
I am not at all opposed in principle to the levy. In fact, I would increase it. I have no difficulty with the levy being put in place. We do need to stimulate this area, as the Minister of State has said, but what these amendments seek to do is not to make it impossible for a landowner to make a case, rather to pre-empt the efforts of some landowners to stall and frustrate the local authorities and the process to their own ends and without justification. That is what we seek to achieve by deleting lines 20 and 21 in section 9 on page 9 of the Bill. A number of similar amendments are grouped, so I will not repeat the issues.
I will first address some of the points the Senator rightly makes about the unsustainable development we have seen in the past. Much of that has to do with the zoning decisions that were made, causing urban sprawl and development in areas where there was no demand. It contributed to a property bubble that was never going to last. That is why we in Government have revised how sustainable planning is done. We have engaged a new independent agency, called the Housing Agency, which looks at the demographics of the country. It deeply analyses and researches where demand is rising and the information it brings forward is being utilised by my Department to inform policy in terms of sustainable planning and development. That is an important area of work. In addition, the national planning framework, which we are developing at the moment, will inform county and city development plans.
We are trying to learn from the past and bring development back to the core. Rather than having doughnut development and urban sprawl, we want to start utilising the assets we already have. A great deal of work is going into that. We do have to learn from the mistakes of the past and we certainly cannot go back to the boom-bust cycle, but at the moment we have a housing demand that needs to be met. It will not be met in any one way, which is why we are bringing forward this legislation as well as a number of other measures, like the social housing strategy, that will increase the supply of houses.
We are opposing amendment No. 6 because measures such as the vacant site levy must be introduced in line with the principles of fair procedures, administration and due process, as I have already outlined. Therefore, it is important for any process that a clear appeals mechanism is in place, because that strengthens the legislation. It makes it more robust and more able to stand up to potential legal challenges. This amendment seeks to remove the provision in the appeals mechanism whereby a site will not be entered on the register until the appeal is resolved. This provision is very important in terms of transparency and fairness to the site owner and the due process of the appeal. Weakening the appeals process would reduce the effectiveness of the Bill.
Regarding amendment No. 15, the amendment proposes that section 18 of the Bill would include a subsection allowing for a penalty to be applied to the owner of a site in the event that they appeal against the demand for the payment of a levy to An Bord Pleanála and lose the appeal. In this case, section 18 provides that at the time a planning authority makes a demand for the payment of the levy, the owner may appeal this demand to the board on two grounds: first, the site was no longer vacant on 1 January of the year concerned, and second, the amount of the levy has been incorrectly calculated by the planning authority. Again, this is a fundamental provision of a fair appeals process in respect of the payment of the levy and it would be contrary to the principles of fairness and transparency, the very reason an appeals mechanism is put in place. Therefore, we oppose this amendment.
I move amendment No. 9:
This relates to contaminated sites. If a site is contaminated, surely it is the responsibility of the owner to resolve this and to bring the land back into use. If this does not happen, the land should be considered vacant and charged accordingly, which is what our amendments seek to do.
In page 11, lines 34 to 38, to delete all words from and including “where—” in line 34 down to and including “itself” in line 38 and substitute the following:“where no market exists for the site”.
We oppose amendment No. 9. This amendment, which was also brought forward on Report Stage in the Dáil, seeks to amend the provisions in section 14 of the Bill which provides the criteria by which the planning authority or the tribunal may deem that a vacant site has a zero market value. The amendment proposes to delete the following criterion: "the site is situated on contaminated lands and the estimated costs of remedial works necessary in order to use or develop the site exceed the market value of the site itself".
This Bill is drafted in such a way as to ensure the levy provisions are fair, as outlined earlier, proportionate and reasonable. Here, the provision takes into account the difficult circumstances faced by certain individuals who may be the owners of such sites. In line with my previous opposition to this amendment, I consider that this provision of the Bill is needed for fairness and clarity. I, therefore, oppose it again.
I also oppose amendments Nos. 12 and 13, which amend section 16 by removing the provisions that a reduced or zero rate of the levy would apply in certain circumstances by inserting provisions that the levy be increased incrementally each year. As mentioned earlier, there has been extensive engagement between officials from my Department and the Attorney General's office in developing the proposals for the vacant site levy.The Bill provides that the levy be applied at a flat rate of 3% of the market value of a site with no subsequent yearly increases. This is to ensure that all site owners are treated equally and to ensure that the rate of levy applied is regarded as proportionate to the objectives of the measure. In certain circumstances, a reduced or zero rate of the levy will apply. These specific provisions were included to help alleviate the financial burden faced by owners of vacant sites which are subject to a site loan or where the loan is greater than the market value of the site and also where the site loan is greater than 50% of the market value of the site. Those site owners who purchase sites at peak prices in the boom years and which have since reduced in value, arising from the property crash, are examples of those likely to be particularly affected.
The intention of the provisions in section 16 in relation to the application of reduced or zero rates of levy is to ensure that the levy provisions are as fair and reasonable and proportionate as possible, taking account of the difficult circumstances faced by certain individuals who might have purchased the sites at very high prices.
I am satisfied that these provisions are appropriate to the application of the levy and I therefore oppose the amendments as they would diminish the fairness arrangements that have been incorporated into the Bill.
I thank the Minister of State for his response. I understand the need for the legislation and the terms of reference so that the levy is fair and robust. There is no doubt that potentially there may be legal challenges to the proposals by some landowners who will resist having to pay the levy. I understand why the Minister wants to ensure, as best as possible, that the provisions of the Bill are sound and robust and can stand any test in court. What will the Government do about contaminated land? In some of these cases, the land is contaminated because of the landowner. If there is no responsibility on the landowner to remediate the land, to bring it back to proper use and make it available for the purpose for which it was zoned, housing, should there be, perhaps, some provision to dezone the land? There must be an incentive, and-or some penalty so that the landowner does not just leave the land contaminated and nothing being done with it.
In the absence of the Minister of State accepting this amendment, what is the Government seeking to do, if anything, in relation to contaminated land and to ensure that landowners do not just sit on these lands and do nothing?
I thank Senator Cullinane for raising this interesting point of debate. As the Senator knows there are various reasons and legacy issues associated with many contaminated lands. They might have been brownfield sites from industrial or manufacturing plants or just contaminated land. To reassure the Senator, other environmental legislation is already available through the powers of bodies such as the Environmental Protection Agency, and European directives where responsibility lies on the owners of land. Indeed the local authorities have substantial powers of enforcement, in terms of environmental legislation as well as the powers of CPO. To be fair, we have to be realistic in how we approach brownfield sites. As the Senator knows, we have some in Waterford, and the North Quays is a perfect example, where major infrastructure of a different era is located. It is costly to regenerate that site.
Local authorities have a role in terms of enforcement and planning and working with all of the stakeholders to turn those sites around. In Government we believe that if a site is contaminated, the owners are already liable for the remediation of that site and that in itself brings a large cost and affects the market value of the site. We recognise that contaminated sites are difficult sites already and by putting an additional levy on them, both the Government and I feel that it will not resolve the matter that we are trying to resolve. We need to give due recognition to that. For those reasons, we will oppose the amendment.
I move amendment No. 13:
In page 12, to delete lines 18 to 33 and substitute the following:“(2) Where a site stands entered on the registry and remains vacant or idle after 12 months of the commencement of the levy an additional 1 per cent shall be added to the levy based on the existing market value listed in the registry.
(3) Where a site stands entered on the registry and remains vacant or idle 24 months after the commencement of the levy a further 0.5 per cent shall be added to the levy based on existing market value listed on the registry and a further 0.5 per cent will be added to the levy for each 12 month period for which the site remains vacant after this date until it reaches a cap of 5 per cent of the total market value.”.
I move amendment No. 14:
Change of ownership only exempts sites from the levy for the year of change and not, as previously, the preceding year also.
In page 12, line 37, to delete “, and for the preceding year,”.
Currently a site is exempt for the year preceding its sale and the year of its sale. We believe this is too much and to include the year before the sale is unreasonable. If a site is vacant it should be charged, in our view. For that reason we are proposing the amendment.
I oppose amendment No. 14, which seeks to amend section 17. The proposed amendment would set the levy at zero for the year of ownership change only. The overall purpose of the vacant site levy, as we have said is to incentivise the development of the suitable vacant sites in central urban areas. Section 17 provides an incentive for landowners and purchasers of vacant sites that where the ownership of a vacant site changes, no levy is payable for both the year before and the year of its sale. This provision will encourage a landowner who is unable or unwilling to develop a site to sell the land in order to reduce their levy liability. In addition if the change of ownership of the land is brought about through the death of the landowner the financial burden on the new owner is reduced. The proposed amendment would diminish this financial incentive and would be at odds with the overall purpose of the vacant site levy. Also the provision of the zero rate of levy applying in the preceding year is to take account of the fact that the levy is charged annually in arrears. To remove it would mean a new owner would be expected to pay the levy for a year that he or she did not own the site. We feel that would be unfair. Therefore I oppose this amendment
I move amendment No. 15:
In page 14, between lines 14 and 15, to insert the following:“(6) Where the board determines an appeal against a demand was not justified upon completion of the appeal, an additional 0.1 per cent will be applied to the levy for that year based on the existing site market value entered into the registry.”.
I move amendment No. 16:
In page 14, between lines 23 and 24, to insert the following:“(2) Any fine resulting from the committing of the offence outlined in section 20(1)# shall be allocated for the purposes of housing provision in the local authority in which the site the fine was accrued from is situated.”.
Sections 20 and 22 provide that it is an offence to provide false or misleading information, for example in a submission to a planning authority and to forge or alter documents, or a certificate of discharge. Committing such an offence can lead to a class A fine or imprisonment, or both.
Amendment No. 16 seeks to insert a new subsection to section 20, requiring that any fine resulting from that section, for example, where a person is fined on conviction of providing false or misleading evidence, shall be allocated for the purpose of housing provision in the local authority in which the site of where the fine was accrued is situated.
Similarly amendment No. 17 seeks to insert a new subsection to section 22, requiring that any fine resulting from that section, for example, where a person who is fined on conviction of issuing forged or altered documentation in relation to the levy, shall be allocated for the purpose of housing provision in the local authority. The payment of any class A fine that a person may be liable under either of these sections, is a matter for the courts and is governed by the fines Act 2010. Therefore it is not appropriate for this Bill to amend the manner in which court fines are administered under different legislation and it is for that reason I oppose amendments Nos .16 and 17.
I move amendment No. 17:
In page 16, between lines 15 and 16, to insert the following:"(6) Any fine resulting from the committing of the offences outlined in this section shall be allocated for the purposes of housing provision in the local authority in which the site the fine was accrued from is situated.".
I move amendment No. 18:
This section of the Bill allows the revenue from the levy on local authority land to be spent "on the provision of housing" in the local area. However, it fails to specify that the levy can be used for social housing. If we are going to impose a levy, it would make sense to allow the proceeds to be used for social housing as well as other forms of housing.
In page 16, between lines 22 and 23, to insert the following:"(c) on any local authority owned land in the area on the development of social housing.".
Section 23 of the Bill outlines how the proceeds of the vacant site levy are to be used by the planning authority. It essentially ring-fences the proceeds to be solely used for "the provision of housing on residential land" or for "the development and renewal of regeneration land". The legislation states that the proceeds "shall" be used in this way. The proposed amendment would insert a new paragraph in section 23(1) of the Bill to provide that the proceeds of the levy may be spent "on any local authority owned land in the area on the development of social housing". Section 23 currently provides that the proceeds may be used for "the provision of housing on residential land in the vicinity of the site" or for "the development and renewal of regeneration land in the vicinity of the site". This gives the planning authority wider scope in the use of the levy proceeds, including by using it to provide housing on local-authority-owned lands in the area, thereby providing greater benefit to the overall local area in which vacant sites are located. I consider that the provisions as they stand in the Bill enable the planning authority to use the proceeds of the levy in the most appropriate way. Therefore, the amendment that has been proposed is unnecessary. I oppose it for that reason.
I move amendment No. 19:
This amendment would insert a requirement for consultation with the relevant Oireachtas committee.
In page 17, line 8, after "Minister" to insert "with the approval of the Joint Oireachtas Committee on the Environment, Culture and the Gaeltacht".
I am opposing this amendment. Section 25(3) of the Bill already provides that "every regulation or order made under this Part shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation or order is passed by either such House within the next 21 days on which that House has sat after the regulation or order is laid before it, the regulation or order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder". This means there is a requirement for every regulation made under this Part of the Bill to be laid before each House, and either House may make a resolution to annul a regulation made under this Part within 21 days. I consider that this provides for sufficient legislative oversight of the making of regulations by the Minister. Therefore, the additional requirement proposed in the amendment is unnecessary. I oppose amendment No. 19 for that reason.
I move amendment No. 20:
These amendments are proposing the removal from the Bill of subsections that would allow for reductions in developers' fees. We oppose the subsections in question.
In page 18, to delete lines 19 to 37, and in page 19, to delete lines 1 and 2 and substitute the following:" "(3A) Where a permission which includes conditions referred to in subsection (1) has been granted under section 34 in respect of a development and the basis for the determination of the contribution under subsection (1) has changed where the development is one to which Part II of the Building Control Regulations 1997 (S.I. No. 496 of 1997) applies and a commencement notice within the meaning of that Part in respect of the development has not been lodged, the planning authority shall apply that change to the conditions of the permission where to do so would reduce the amount of the contribution payable.
(3B) Where the planning authority applies a change in the basis for the determination of a development contribution under subsection (3A) it may amend a condition referred to in subsection (1) in order to reflect the change.".".
The Construction 2020 strategy makes it clear that the viability and affordability of housing is an issue in this country. The provisions in this section of the Bill would permit reductions in development charges on existing planning permissions that have yet to be activated. This section also provides that the new lower development contribution scheme shall apply to any unsold housing units in a development. This change, together with other changes to the development contribution provisions in section 30 of the Bill, should help to reduce costs for developers and make developments more economically viable. It is hoped that it will cause developments to be completed sooner and at a lower cost than might otherwise have been the case. Obviously, cost is a critical issue in improving the supply of affordable and sustainable housing. The effect of the amendments proposed by Senator Cullinane would be to remove the provision that will make reduced contributions payable where a development has commenced but contains unsold houses. The purpose of the drafting of section 29, which includes this provision, was to ensure equitable treatment for permitted housing developments that have yet to commence and for developments that are complete but have unsold housing units. I cannot accept any amendment that would remove the inclusion of such housing in such an eventuality.
I move amendment No. 22:
This amendment proposes the removal from the Bill of the change that the Minister of State is seeking to make to reduce the social and affordable housing requirement to 10%. Perhaps I will speak in more detail on this matter when we reach the next amendment, which seeks to deal in their totality with the changes that are being made to Part V of the Planning and Development Act 2000. It is fair to say that after the Part V legislation was first introduced, a successful attempt was made by some developers to force the previous Government to make changes to its provisions. Part V was initially supposed to ensure that 20% of housing would fall into the social and affordable category. That was a very good policy because its aim was to secure social integration. I supported it.
In page 19, to delete lines 33 to 35.
As we know, some local authorities across the State were better at implementing the Part V provisions than others. In fact, many local authorities took advantage of the successful attempt by some developers to force the previous Government to change the Part V intentions to allow developers essentially to buy out their commitments by giving a cash sum to the local authority, as opposed to meeting the 20% social and affordable housing requirement as originally intended. That weakened the Part V provisions. Part V originally provided that any development of five or more houses had to make provision for 10% social housing and 10% affordable housing. The intention was that developers would offer homes to the council at cost price, which then could be rented as council houses or sold as affordable housing.
It seems that in this legislation, the Government is trying to say that social housing can also be social leasing. That presents problems for me because, as I mentioned earlier, we are seeing the slow creeping privatisation of social housing. I am sure the Minister of State gets as many representations as I do on housing. The vast majority of people's housing needs are now being met through the private rental sector. If one makes representations for people who are on the housing list and want to be housed by a local authority, one will find that the vast majority of such people are told, by and large, that they will have to participate in private rental sector schemes such as the rent supplement scheme, the rental accommodation scheme or the housing assistance payment scheme, which is possibly the best option now for many people. It is certainly the one that most people are being steered towards. The use of the private rental sector is creating all sorts of difficulties. As we know, many people are unable to find properties because landlords simply will not let to them. There can be difficulties with rent caps, etc. There is already a big difficulty here as things stand.
I would say that in the last five or six years, the social housing needs of very few people who have ended up on local authority housing lists or in housing need have been met through local authority housing. I would love to know what the percentage is. I expect that very few people have had their needs met in this way, because we are simply not building any more housing. We almost have the perfect storm because, on the one hand, the State is not building, and on the other hand, private development has dried up completely. Not many units are coming back under Part V anyway. The fact that developers can avail of opt-outs is also relevant in this context. I suggest that we are weakening Part V even further by providing for developers to avail of further opt-outs and to look at social leasing. I wonder what the logic of it is. It is certainly not something I support. I have tabled this amendment for those reasons. Maybe we need to come back to this issue. When we come back after the summer recess, we might have an opportunity to have a debate in this House on social and affordable housing, Part V, the role of voluntary housing associations and the role of the local authorities.The Minister of State spoke about the new build by local authorities over the coming years because of extra funding he has made available but it is still not enough to meet people's housing needs. It does not reverse what is seen as the privatisation of social housing. The majority of people's housing needs are being met through the private rented sector. The State is subsidising private developers and private landlords with huge amounts of money being spent there. The State does not own a brick of those properties at the end of it. This simple reality will continue unless there is a serious policy change. Today is not the day to do it. We are heading up to the recess and Members are looking to get back to their constituencies but it is something I hope we can come back to after the summer and hopefully the Minister of State will make himself available to be part of that debate. The amendment is specific and I have already spoken on that. I will press the amendment as necessary.
I wish to make it clear that housing is a priority for this Government. It is one of the most challenging issues facing society at the moment but it cannot be resolved overnight. We have inherited a position where we have come through the worst economic crash that this country has ever experienced. The whole construction sector has been devastated and wiped out. When one brings all those elements together, as the Senator has said, we have a perfect storm. There is light at the end of the tunnel and there is good solid work being done to address the housing shortage. There is no one solution to this and a multifaceted approach is required.
Construction-related projects take time as they must come through concept, design and planning before the construction phase. It is not correct for the Senator to say that no local authorities are engaged in house building. This Government, for the first time in a generation, is allocating more than €1.5 billion of public funds over this year and the coming two to directly build social housing in local authorities. If Sinn Féin was in power in the morning, I can assure the Senator that no more would be done than what this Government is doing. We have already given the green light to and approved prioritised projects in local authorities nationwide many of which are already going through Part 8 in the planning process and we will see tenders and contracts going out for those projects.
I agree with the point that housing is not being delivered soon enough but what do we do in the meantime? The number of vacant houses owned by local authorities is unacceptably high. The Government has prioritised the voids - the vacant housing units in stock carried by local authorities - and additional funding is provided to local authorities to bring these houses back into use. More than 2,000 of the units were brought back in 2014 and we expect an additional 1,000 vacant units to be brought back in 2015.
The Government feels that approved housing bodies also have an important role to play in meeting the housing challenge. They have experience and track records and they can raise funds off balance sheet in order to access and leverage new funds into the housing area.
There is no single solution to this but I assure the Senator that it remains a priority. It is correct to say that many of our social tenants are in rent support because we have not built houses for many years. Rent supplement was supposed to be a short-term measure but has become a long-term one. The Rental Accommodation Scheme, RAS, and the Housing Assistance Payment, HAP, were introduced so people could transfer from the rent supplement scheme to a more appropriate, sustainable scheme such as the HAP, managed by a local authority. The HAP is working well but we need to see it ramped up substantially.
I am happy to debate the housing issue and to continually evaluate it. We need to challenge ourselves in how we will deliver for citizens on housing lists but there is no magic bullet solution. If there was it would be used. Finance is now being put in place to deliver but it is not just a matter of finance. It is also about bringing the construction sector back to sustainable levels of activity. This Bill will enable the unlocking of sites that already have services on them which will then get the construction sector back, in order for housing output to rise.
I oppose amendment No. 22. We are reducing the Part V obligation from 20% to 10% in order to address the economic viability of projects. If projects are not viable then there will be no construction on these sites. One might have the greatest of aspirations for the sites but unless they are viable and builders and developers can bring them forward, then construction will not happen. I have often said that 20% of zero is zero and that is what we have delivered over recent years from Part V so we are reducing the obligation to 10% to address economic viability. To support that approach we are also making it more robust and strict by not allowing the cash in lieu. That policy was a mistake in the past as it allowed developers to buy out their obligation to social housing. We are now insisting that the housing units are provided.
The Part V leasing element is a built-in flexibility mechanism where, if the capital funding is not available, the local authorities can continue to take out long-term leases to deliver sustainable housing over periods of ten to 20 years and which can be renewed for housing applicants. To remove the leasing aspect would cut off another vital source of housing which is something we would not want to do at this time. These are the reasons I oppose amendment No. 22.
Section 33, amendment 23 in the name of Senator Cullinane, is a new section. Amendments 23 and 24 are physical alternatives so amendments 23 and 24 may be discussed together by agreement. Agreed? Senator Cullinane?
I move amendment No. 23:
I wish to respond now to the Minister of State's previous contribution rather than responding to a section that was relevant only to the 10% social and affordable housing. This amendment seeks to restore the original 2000 version Part V when it was brought in during 2000, of 20% social and affordable housing with no buyout clauses. The Minister of State indicated that there was no silver bullet solution to the housing crisis, but there is a simple solution. This is one of the few areas where we can point to easy solutions. We have debates on child care, health care and public services where it is much more complicated. Housing is actually very simple - we need to build more housing. The Government's commitment to start building 1,700 units by 2018 is not enough. There are over 2,000 people on local authority lists just in Waterford city and county. That is only one of 26 counties.
23. In page 20, between lines 4 and 5, to insert the following:
“33. Section 96 (inserted by section 3 of the Planning and Development (Amendment) Act
2002) of the Act of 2000 is deleted.”.
The Minister of State's commitment does not go far enough. He accepts that there has been no local authority house building for seven or eight years. There has been some building and some money made available for house purchases in emergency situations or for people who are disabled or where there is serious overcrowding and where a bid could be made to the Department. Serious building has not happened in the public or private sector and that is why we now have a crisis and a Bill which is at least trying to do something in relation to vacant sites, but it also changes the Part V requirement.
I do support some of the Part V changes. I agree that the policy of cash in lieu was a disaster. It was a strong-arm tactic used by some developers to lobby the previous Government to get out of their commitments. To be fair, and we may as well admit it, when Part V was first floated there was an element of social snobbery coming from some circles, from some in the political system and from some developers who did not want social and affordable housing in private housing estates. I do not share that view. I believe social integration is a good thing and social and affordable housing in private housing estates can benefit everybody. However, the reason for that former opt-out clause being put in place were obvious.
We will get back again, at some point, to building in the private sector. I hope it will not be as unsustainable as it was in the past and that we will have a Government in place which is mindful and watchful of the housing and property market so we will not reach the crazy levels of the past.However, there has to be some development. We need to increase the amount of development but it will be a mistake when that does happen to have reverted to a 10% requirement and to have reduced the potential for social and affordable housing under Part V. I am not at all convinced that what the Minister of State is planning to build will go any way towards making up for the absolute lack of new builds over the past six or seven years from a social or affordable housing perspective or that it will meet current demand.
The Minister of State also spoke about the rent supplement. When that was first introduced, it was meant to be a temporary measure. We have moved, with the introduction of the rental accommodation scheme and the housing assistance payment, from it being a temporary measure to a permanent solution. Rather than resolving the issue, the Minister of State is cementing these schemes as the cornerstone of this Government's social housing policy. The housing assistance payment is tacit acceptance that only a small number of local authority houses will be built and that not much will be done in terms of Part V any more. Less social housing is going to be produced and the vast majority of those who need it will be told to get their accommodation in the private rental sector. The big winners will be private landlords who will get huge amounts of taxpayers' money. They will be subsidised by the taxpayer but at the end of all the lease, we will not own a single brick.
Many people find it difficult to get accommodation under the housing assistance payment scheme or the rental accommodation scheme because landlords will not sign up to them for whatever reason. In the future, we will have huge social mobility, which will be a difficulty. People will be moved because they will have five or ten year leases. What happens when these leases are up if the properties are to be sold? People who will have built a home for themselves close to schools and their families will be told to move elsewhere. People will be constantly on the move rather than building homes for themselves in communities. We are storing up huge problems for the future. The changes to Part V in this Bill are a mistake. Nothing even close to what is required in relation to social housing is being done. I accept this Government is doing more than the previous one. We are being told we are coming out of recession, there is a recovery and there is extra money about the place. If there is extra money about the place, we need to prioritise key areas of public service provision, and housing is one of those key areas.
I appreciate the Government has taken some positive steps. The Minister of State will want to defend his and his Government's record. Having said that, we have an obligation and a responsibility to hold the Government to account. The Minister of State made the political charge earlier that things would not be any different under another government but I contend it could be radically different. Sinn Féin would not be making the changes being made today. We would make the additional funding available to build the social housing units necessary to meet the housing needs of citizens.
The Senator has made broad ranging points in terms of the wider housing debate. I agree with him on some of them but disagree with him on many others. We are coming from slightly different perspectives and yet we are still dealing with the same problem and issues.
It is reasonable in any society for people to have the expectation of owning their own homes. If people have that legitimate expectation, we need to have a supply of reasonable, sustainable and affordable housing units. Unfortunately, we do not have that at this particular time because of the economic circumstances and the crash. This Bill is trying to incentivise and stimulate development in core areas in our towns and cities. It is adopting a carrot-and-stick approach to help that process along. The carrot is reduced overheads for development and the Part V change is one of those reductions. The other is the reduction in planning permission development charges. The stick element of the Bill is the vacant site levy, which is just one aspect of how we are addressing the housing challenge.
Sinn Féin's amendment, if accepted, would eliminate the Part V contribution mechanism. I pointed this out to Deputy Ellis in the Lower House. It is ironic that if the amendment was accepted, the whole Part V mechanism would be entirely removed from the Statute Book. It is, therefore, a mistake to table the amendment in the first place because it is at odds with Sinn Féin's earlier amendment proposing to retain the higher limit of 20%.
Having said that and going back to the wider housing issues, the allocations have already been announced for the shovel-ready projects in local authorities throughout the country. That is the first allocation. Over the coming weeks, both the Minister, Deputy Kelly, and I will be making a second round of local authority allocations. There is also the capital assistance scheme which relates to the approved housing bodies. Much work is in the pipeline and we will start to see these sites and, as a result, more housing units coming on stream. It will never be enough, which is why it is essential we have access to the private housing sector as well. We are, therefore, putting in place flexible options to assist local authorities through the HAP scheme. If we did not have the HAP scheme or if were to eradicate all of the private housing element, as bad as the situation currently is, imagine the serious crisis we would then have. We need an interim measure until we get our social and private housing output up.
I know, as does the Senator, that Sinn Féin councillors on the ground are welcoming some of these housing developments in their communities. I see that in our constituency of Waterford. I welcome that because they are beginning to see those schemes starting to come through but we need to see more of them. That is my objective and I am determined that we will see more of them. Since both the Minister, Deputy Kelly, and I came to office, one of our priorities was to ring-fence substantial funding for housing but it takes time to get that from the concept stage, through the design and planning stages and out the other end to the construction stage. We will see over the coming months a vast improvement in that area.
This amendment would remove the whole Part V arrangement, which is unacceptable and, therefore, I am opposing amendments Nos. 23 and 24.
We seek to remove this section which allows leasing agreements to be used in place of the provision of social housing under Part V, which we have discussed already. I will not hold up the Minister of State or the House because we are getting to the end of this debate. However, one of the points I meant to make earlier, and I will make it very briefly now, is that I held a public meeting on housing in Waterford city a number of weeks ago. We had speakers from a number of voluntary housing associations, all of whom made the same point. What we need to do in this State is move to a more continental view of housing. Social housing should not be just for what in the past was seen as a certain class of people. Social housing should be available to everyone if they want it. We have a philosophical or ideological hang-up about owning properties in this State and see social housing as being for people who cannot afford to buy their own property. That is not how they do it in continental Europe and in other countries. While we may not want to go fully in that direction, we should explore opportunities in that regard.
I will not go into the matter in detail because I have said to the Minister of State that it would be interesting to have a more broad ranging debate on housing when we come back in September and to look at all those issues in more detail. I wanted to put it on the record today but it is something which would merit a fuller debate in the future.
I appreciate the point the Senator makes. It probably is a matter for a wider debate. My Department, the Minister, Deputy Kelly, and I have regular engagements with the approved housing body associations. We have a monthly social housing strategy oversight meeting when we bring all the stakeholders together, including those bodies, the local authorities, Department officials and the Housing Agency. Those meetings are directly chaired by either the Minister, Deputy Kelly, or me, during which we monitor progress on the social housing strategy. That is ongoing and will continue. On the private housing side, unless we address the whole housing output and supply issues, affordability, rent and everything else are affected.That is where the determination is the moment. It is interesting to note some statistics from planning applications. The figures for the first quarter of this year are up 30% on the same period last year. There are substantial projects in the pipeline that we expect to see coming to fruition in the coming period. It is important to note that if the economic recovery had not taken hold, we would not be seeing this type of activity. When this Government came to office we were literally fighting a rising tide with one hand behind our backs, essentially trying to stabilise the economy and the public finances in the first instance. Thankfully, we managed to do that under difficult circumstances. We were able to bring ourselves to a position in which we can now start reinvesting in critical infrastructure such as housing. The fruits of that will be seen.
We have seen the negative effects of the crisis and the recession. Housing is one of the areas that has been affected, because construction was literally wiped out, as I said earlier. Unfortunately, because of the time lags with construction-related projects and the time involved, it is a slow process and not something one can simply throw money at and improve overnight. There are often planning and infrastructural issues as well as staffing issues in local authorities. Local authorities had to be resourced again because, to be fair, they had been denuded. More than 350 staff have been allocated by my Department to various planning and housing authorities throughout the country in order that they can meet the rising demand.
Section 34 is being opposed but we are against that. Obviously, we want to see the section included. The question of providing local authorities with the power to enter into long-term leasing and rental arrangements is critical. It is critical that we do not exclude this mechanism for addressing the housing challenge that exists. We need to have available all flexible options to local authorities and approved housing bodies. To remove any one of these would remove access to further housing and for that reason we are in favour of the section.
Without wishing to hold up the House, I echo the sentiments of Senator Cullinane. The Minister of State said we should consider the whole package. NAMA estimates that in south County Dublin, development levies of €60,000 per house are imposed by the local authority. I had thought the object of having property taxes that were levied annually was to allow us to move away from those once-off items which seriously destabilised the Exchequer in previous times. There is even an extra development levy for houses built near the Luas. I would have thought the object was to help people to live near the Luas. I hope that the continued reasoning for these levies will be considered as the property tax picks up, because they represent a deterrent. Dr. Ronan Lyons from the economics department in TCD has written extensively on the subject. He estimates that there are tens of thousands of euro in the form of taxes and levies included in the price of a house, something we do not need at present as we tackle this housing problem.
The Leader has pointed out repeatedly the problem of low turnover of local authority houses. They go through a period of no occupancy and vandalism before they are eventually passed on to new people. We have a high rate of refusal by local authorities of houses from NAMA. I gather this has improved a little but this housing problem really needs to be tackled. We also have a housing cost problem. Over a decade the price of a house went from two and a half times a person's income to as high as 12 times a person's income. We must not join the cheerleaders for higher house prices, as property pages and supplements in our newspapers do. We want to get those prices competitive. All of that interfered with our ability to house people and our international competitiveness.
The wider perspective to which Senator Cullinane has referred and to which the Minister of State has responded is relevant as well. When we come back in the autumn we need to look at some of these things. Interestingly, Bob Kitchin in NUI Maynooth has found that the local authorities with the most vacant stock in 2006 were those which then went on to build more. They subsequently built the most new empty housing. They have the highest levels of surplus stock and the most land rezoned for future use. This should be for people to live in, not so that others can secure vast capital gains and then go and live in Shrewsbury Road or Ailesbury Road. We almost need to get back to the days when the builder of an estate had one house for himself and built all the rest. They did not aspire to the kind of glamour that the construction industry had in Ireland when it was becoming completely uncompetitive and a massive burden on the economy. If they do come back, let us have it on the customer's terms. The building industry exists to serve people in regard to housing. The craven attitude towards the construction industry, which contributed so much to the problems in the past, must go. If local authorities are part of the reason housing costs so much in this country, I hope the Minister of State will tackle that problem as well.
Senator Barrett raises some pertinent points. I thank him for raising them because they are part of the wider housing debate in terms of affordability and the whole economic feasibility of housing in this country. We have to take into account everything I said earlier, including land costs, infrastructural costs and the need to deliver vital public infrastructure. On top of that, we have the whole concept of design standards. We need to ensure that we have adequate and robust standards in terms of safety and good-quality homes. That is all important.
We are trying to address the feasibility issue in terms of this legislation. We are reducing retrospectively high development charges which we believe are an impediment to some projects going forward to construction. This will reduce the overheads and encourage developers to get building on these sites again. It will give the power to local authorities to do that.
The Senator quite rightly raised issues around infrastructural development and the associated costs. This is added to the billing costs and it goes towards the ultimate cost of the unit for the house buyer. We have to try to address that. There are a number of other impediments, including the development levies, to which I have referred already. Access to credit for builders is a major issue in this country at the moment. We are working to try to find other ways to assist builders to get back onto sites in order that they can start building houses again. The Government is looking at further initiatives in this regard in terms of how we fund infrastructure in future and how we fast-track infrastructure to unlock lands that are in high-demand areas. We will be looking at the issue of credit as well.
Generally speaking, these are debates that we will have to revisit and continually evaluate. Planning feasibility is another issue. The Minister, Deputy Kelly, and I were criticised recently for writing to one of the Dublin local authorities. At the moment the authority is formulating the county development plans. We asked the authority to take account of feasibility in terms of planning. We all have high aspirations and objectives in terms of standards for our houses. However, some local authorities were going for the full belt-and-braces approach, well beyond the EU standards. Those responsible are entitled to do so, but we were simply asking them to be mindful of the cost element, because if we cost ourselves out of the market then we will not deliver the units. We need to be aware of that. We have been criticised as being mouthpieces for the construction sector. That is not the case. We are simply looking at feasibility and a holistic approach to providing housing. If it is not affordable, they will not be built. If we are not building, then this housing crisis will continue. We need to address it on a number of fronts.
The Bill before the House today is only one way of addressing the problem. The social housing strategy is another way. The role of the approved housing bodies and the private sector is yet another way. Ultimately, we are all trying to achieve a sustainable housing market in the country, a normalised housing market with a recovered construction sector. We are trying to do that at what is possibly the worst time in our economic history. However, the good news is that we are starting to make progress now. In order to give hope to those people on the housing list, the momentum needs to continue. The Government is committed to giving this objective the focus, resources and determination it needs. This is where my focus remains and will remain as long as I am in this office.