Friday, 18 June 2021
Affordable Housing Bill 2021: Report and Final Stages
Before we commence, I remind Members that a Senator may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on it. Each amendment on Report Stage must be seconded.
Amendment No. 1 in the names of Senators Higgins, Ruane and Black arises out of committee proceedings. Amendments Nos. 1 and 10 to 12, inclusive, are related and may be discussed together by agreement.
I move amendment No. 1:
In page 8, line 3, after “sale” to insert the following: “, which for the avoidance of doubt, is a dwelling for which no contribution shall be required from a local authority or State body”.
I will be withdrawing amendment No. 1. It is one of my previous drafts from Committee Stage. My preference is to focus on amendments Nos. 10 and 11. This relates to a key concern I have. It was one of the last points we discussed before the Bill was guillotined on Committee Stage. My concern is that the Bill, as drafted, could be construed as suggesting, in respect of Part 5 affordable housing, that the affordable housing contribution could be financial. I know that is not the policy intent.
We had a discussion on this on Committee Stage and it is clear the policy intent across the House is the same. The goal would be that, in calculating the affordable housing equity share of local authorities, the amount of the affordable housing contribution in that sense would be used in the calculation of the equity share. My concern is that the Bill conflates a number of different kinds of affordable housing provision with the same definition of affordable housing contribution and, therefore, creates something of a tension and contradiction.
Affordable housing equity and affordable housing contribution have separate definitions. The definition of affordable housing contribution does not mention its function in respect of affordable housing equity and, crucially, the only thing it says in terms of the definitions of affordable dwelling contribution in the Bill is a reference to section 12(2) of the Bill. Section 12(2) states the affordable housing contribution shall be, "in the case of an affordable dwelling referred to in paragraph (a) or (b) of section 5, the difference between the market value of the affordable dwelling on the date on which an enforceable agreement is made for its purchase by the eligible applicant and the price paid by the eligible applicant".
The core question is on that difference between the market price and the price paid. Paragraphs (a) and (b) of section 5 are different forms of affordable housing provision. Paragraph (a) of section 5 refers to dwellings made available under section 6, which may include public private partnerships and arrangements with co-operatives and approved housing bodies. They may include circumstances, especially under the public private partnership arrangements, in which a housing authority may be making a financial contribution to bridge the gap or trying to take something in the market space and make it affordably priced by bridging that gap. Paragraph (b) of section 5 refers to "a dwelling to which a Part V agreement applies that is being made available for sale".In the case of Part V, it seemed to be the agreement and understanding of the House that if providing affordable housing is a condition of receiving planning permission, there should be no construction or sense that one will have to top that up in any sense to market. This is probably not the intention but because the same definition of "contribution" applies to a situation in which there might be a financial contribution and situations whereby it is effectively an amount for the purposes of calculation. I am concerned that the lines might be blurred. I raised this on Committee Stage. It is important that we have no ambiguity. This is not about the Minister's intent; this is about how the Bill might be construed. He will see that my amendments deal with, for example, "for the avoidance of doubt". That is what I am trying to address.
I support Senator Higgins. I was clear about what it was intended for after going through pre-legislative scrutiny of the Bill but some of my colleagues have a different interpretation of it, which is the same as that held by the Senator. I ask the Minister to examine this to make sure the language is legally tied up. I understand it to be a clawback as opposed to an equity share. I think that is the intention but there needs to be clarification of the language and a look at the drafting of it in more detail.
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.
I thank the Minister for walking us through the different elements of the matter. While the contribution is to the purchaser, under section 12(2), it is still defined as an amount. I realise that the later section on affordable housing and equity share makes it clear that the key use of that amount will be for calculating the share but it might be useful, in a belt and braces approach, to make it clear, within either the definition or section 12(2) that it is a contribution. Section 12 phrases it as the purchase of an affordable home being facilitated by means of a set amount but to whom that amount is directed is not spelled out. The definitions are separate and these items are treated as separate and are not intrinsically linked. The equity is linked to the affordable dwelling contribution but the affordable dwelling contribution, in its definition, is not confined to that equity function. Adding that to the definition might strengthen it further. However, it is very clear how it is envisaged that this will work and it will be very useful to have the Minister's policy intent in this regard clearly on the record. I am happy to withdraw the amendments but there may be an opportunity, as part of the new sections that are coming in Part V to tighten this up. While policy intent can be clear to everybody, we all know that any ambiguity in language can sometimes create opportunistic challenges. I thank the Minister for his response.
With amendment No. 2, I am suggesting that we include public-public partnerships in the different kinds of arrangements that might be made. These may be partnerships between a housing authority and a State body or another public body, or, in some cases, they may be partnerships between different public bodies such as two local authorities or housing authorities developing something in co-operation. Some of this issue has been addressed by Senator Warfield's amendment on co-operatives and so on, which was accepted by the Government. Perhaps the not-for-profit aspect has been addressed by that. This is going to be a key question because in the changed fiscal situation, public financing is often easier to access, is more accessible and affordable than private financing. While there is an emphasis on public-private partnerships, in the next two or three years there will be a change in our fiscal rules and access to financing, both at European level and more widely, and we will have opportunities for ambitious collaboration between public bodies at local and national level, as well as State bodies. I wanted to formally include them in the picture. Perhaps if my amendment cannot be incorporated at this point, it could be included when the Bill goes through the Dáil.
I support the amendment.It is a novel idea that would work well in addressing the housing needs of the Defence Forces. I do not know whether the Minister has visited the Curragh recently, but I went there to look at what used to be married quarters. I found in a dilapidated state what had been pristine properties when they were handed over to the State when we became a republic. There is a significant opportunity for organisations such as the Defence Forces, the Prison Service and, in some cases where young doctors move through on short-term contracts, HSE hospitals to provide housing. A public aspect is a brilliant idea and I compliment the Senator for putting it on the record. I would be interested in the Minister's reply.
I thank the Senators for their contributions. Senator Warfield's amendment, which was accepted, was mentioned and this discussion has been useful.
Amendment No. 2 adds public-public partnerships and not-for-profit arrangements to the existing arrangements, but Senator Higgins noted that I accepted a Committee Stage amendment to section 6 to include "arrangements with co-operatives, community housing trusts and other not for profit bodies" through which housing authorities will be able to provide affordable dwellings, particularly for purchase. We will use their expertise straight away on the cost-rental side to show proof of concept. They have been good at managing properties. They are good partners for us in the delivery of housing and I support them greatly.
The Senator's amendment requires some work in respect of the legal soundness of the definition. I intend to table a further amendment on Committee Stage in the Dáil and I will reference this amendment when I do so. I intend that the amended provision will encompass the totality of partners that we need to cover. For the avoidance of doubt, we must get the definition right. We are working on that.
In implementing this legislation, we want to ensure that whoever we partner with has the appropriate level of housing knowledge, skills and expertise. Since we have all that work done, we can start delivering affordable homes, including cost rentals and affordable purchases, this year. That is why it is important that we pass the Bill in advance of the summer.
In that context, I propose to consider this matter on Committee Stage in the Dáil. I will reference the Senator's amendment. Since she needs to do a little more work on the definition, I cannot accept the amendment in its current form, but I commit to addressing it on Committee Stage in the Dáil.
I thank the Minister. I will watch the Dáil with interest. As the State rebuilds its housing capacity and knowledge, one of the public partners used may be a housing authority. The Minister mentioned partners. Many of the partners we have discussed have housing as their main focus and they will become partners for a housing authority or something else. However, there is scope through a public-public partnership arrangement for partnerships between bodies that are directly involved in housing and, as Senator Craughwell said, State bodies that are strongly connected with housing need as well as housing provision. The Minister stated that bodies would need to have a certain housing expertise, but I am cautious in that regard. If a State body with lands has a housing need attached to it, for example, a hospital or our universities, perhaps one partner could have housing expertise while the other partner would not focus mainly on housing. I am feeding this point into the Minister's consideration of the definition for when he addresses the issue.
That is what we are doing with the LDA in respect of State lands. Senator Craughwell spoke about the Defence Forces. Nothing precludes the military from partnering with another body.Why I mentioned that expertise is required is because when we look at approved housing bodies we have a regulator. We do not want a proliferation of different bodies involved who do not have expertise in the area. The point is well made and well taken and I will come back to it on Committee Stage in the Dáil. I know the Senator will be watching and we will be doing it.
I move amendment No. 3:
In page 8, between lines 33 and 34, to insert the following:
"(6) In performing its functions under subsections (1) and (5), a housing authority shall— (a) prepare and publish plans relating to periods of three, five and ten years (in this section referred to as a “housing authority affordable housing plan”) which shall specify measures the housing authority shall undertake—(i) to make dwellings available for the purpose of sale to eligible applicants under affordable dwelling purchase arrangements, and(b) prepare and publish the first housing authority affordable housing plan within six months of the coming into operation of this section, and
(ii) to make dwellings available for designation as cost rental dwellings in accordance with section 31,
(c) conduct and publish a review in each year of the progress made during the preceding year in respect of the housing authority affordable housing plan.".
I welcome the Minister to the House. I know this is only one strand of his very important work on affordable housing in all its shapes and forms and I look forward to the Bill completing all Stages in both Houses. As the Minister has said, having affordable housing on offer this year is a strong strapline.
Amendment No. 3 was first tabled and withdrawn by the Minister's colleague, Senator Fitzpatrick, on Committee Stage. I have made only one change to it in the amendment I have tabled. None of this is my genius, it is Senator Fitzpatrick's. The only thing I did was remove reference to the date in September because it was very prescriptive.
I am a bit disappointed because every Member of the House spoke in favour of the amendment on Committee Stage and I will read some excerpts from their contributions because they are important. I understand the significance of the amendment. It is good and makes common sense. It is constructive that all parties recognise something that is good, in particular the amendment that Senator Fitzpatrick tabled. She has huge experience in housing and local government. She works very constructively on the committee of which I am a member also, as does Senator Cummins, with regard to housing, planning, local government and heritage.
This is a common sense practical amendment that will provide greater clarity and transparency on how our local authorities tackle the housing crisis so we can ensure we are operating with 100% efficiency. Housing authority affordable housing means plans so it is important. There was also talk on Committee Stage of an annual account to be given to the Houses of the Oireachtas and this is important with regard to our oversight role in legislation and being supportive. It is in the interests of the Minister and the Government to have cross-party support.
We all know we have a crisis in affordable housing. No one has a monopoly on housing. I am a person who has always said I do not care who is providing the houses or who is building them. I have no ideological hang-up about where the money comes from, where the construction comes from and who is doing it. Everyone has to make some sort of a profit and cover their costs in whatever they do in any walk of life in any business. Everyone has to put a crust on the table at some point in any work or project they undertake. I am very supportive of it.
When the amendment was discussed on Committee Stage, many people spoke in support of it. Senator Crowe asked that Senator Fitzpatrick's amendment, which he supported and agreed with, be accepted. Senator Cummins said he supported the thrust of his colleague's amendment and asked if the Minister of State could take on board the thrust of the amendment if not the exact words and that if this could be done on Report Stage it would be a great addition to the Bill. Senator Pauline O'Reilly welcomed the amendment. Senator Byrne, the Minister's colleague, said he strongly supported the amendment proposed by his colleague. Senator Casey supported the amendment. I am giving them all a name check, which is very interesting. Senator Seery Kearney supported the thrust and principle of Senator Fitzpatrick's amendment. Senator Higgins strongly supported what the Senator was saying. Senator Keogan supported the amendment. Senator Murphy strongly supported the amendment of his colleague, Senator Fitzpatrick, and said it was great. Senator Dolan also spoke. The Minister himself said he very much agreed with the amendment and supported the thrust of it.
I want to be constructive here today. I want us to get through our business quickly today and get to the point. We know where we are, each and every one of us. We know the positions we have on it. I hope I have made a strong enough case endorsing what the Senator and spokesperson on housing from the Minister's party has advocated. I hope that today in the Seanad, rather than in the Dáil, the Minister will agree to the amendment.
The case has been put very eloquently by Senator Boyhan and, indeed, by everybody. This was probably one of the points of greatest agreement right across the House and everybody supported it. In that regard, it is worth noting that a number of amendments, including some of mine, were withdrawn on the understanding and in the expectation that this amendment from Senator Fitzpatrick would be brought forward. During the course of the debate on the matter, I recall, in the context of some of my amendments, yielding on a number of points in favour of the perhaps more comprehensive approach taken in Senator Fitzpatrick's amendment, and in recognition of her extremely strong knowledge of the operation of housing authorities and the very good and important contribution local authorities can make. As I said, it is not simply that this amendment was supported, it is also the fact that much of the debate on it and on many of the other amendments was based on an expectation of it becoming part of the Bill. Consequently, I am surprised that it has not appeared as a Government amendment. I think we all expected that. If it is possible, it would be a good idea for the Minister to accept this amendment now, in the names of those who put it forward, with suitable acknowledgement of Senator Fitzpatrick. If, thereafter, nuance is required or if words need to be changed, let them be changed in this new section in the Dáil. However, let the Bill go to Dáil with a strong signal from every single party and group in the Seanad that we recognise the role and responsibility of and the important contribution that housing bodies and local authorities make with regard to affordable housing provision.
I thank Senators for their contributions, particularly Senators Boyhan and Higgins. I have discussed this at length with my colleague, Senator Fitzpatrick. It is purely a matter of timing. It genuinely is, and perhaps I can explain that. This is detailed legislation. It is the most comprehensive item of affordable housing legislation ever brought forward. What Senators Fitzpatrick, Boyhan and Higgins and others want to achieve, I also want to achieve. I will explain the rationale for not accepting this right now. It is a good rationale.
Senators will recall the amendment, which we have discussed, tabled by Senator Fitzpatrick on Committee Stage. I am conscious of the broad agreement across the House regarding the principle behind the proposal. The amendment was withdrawn on the basis that some further thought would be given to how best to move forward with the broad intent behind it. There is greater scope for this, even within the original amendment. I have informed Senator Fitzpatrick that once we get this Bill through, I would like to set a timeframe whereby we could come back and amend the Act by way of further legislation. Let me explain. After Committee Stage, my officials and Senator Fitzpatrick met to consider the matter and bring forward proposals. There is absolutely a need for local authorities to prepare and co-ordinate housing plans. There is no question about that. It is also clear that there must be a co-ordinated and overarching approach to include land planning, private purchase, rental and social housing, so all the different facets of housing. We are actually making a bit of progress in that regard. I confirm that it is my intention that local authorities will be required to prepare such plans, including a multi-annual profile and target-setting for affordable housing and other forms of housing. This will flow into the Housing for All strategy which the Government is going to publish next month and which will include a multi-annual housing plan, fully backed and financed.
I affirm that I want us to very quickly get to a stage where we have specific targets per area. This will require details of what housing will be delivered, when, where, what types of house, sizes of homes and so on. There is a lot to it. It is my intention the process will take it as a basis under the national planning framework, which provides for the housing need demands assessment. We discussed this matter at a meeting of the housing committee earlier this week. The housing need demands assessment is a really important tool for our local authorities and we have rolled it out in recent weeks. I think it was actually piloted in County Waterford and a couple of counties. It basically breaks down what housing is needed per local authority area and covers affordable, social, private rental and cost-rental. That tool is being rolled out right now to local authorities and all of them will have access to it. Local authorities are required to prepare housing strategies as part of the development plan process and, in doing so, are required to identify existing need and likely future need for social and affordable housing for purchase. I recently published the housing need and demand assessment, HNDA, as I have just mentioned. The purpose of that assessment applies to a couple of specific areas, namely: to assist local authorities in their long-term strategies in respect of housing needs across all tenures; to provide a robust evidence base to support decisions about new housing supply and wider investment in housing-related services; to inform policies about the proportion of social and affordable housing required; and to provide evidence to inform policies relating to the provision of specialist housing. Local authorities will use the HNDAs to inform policymaking through their housing strategies and plans, which form a part of the overall development plan. It is expected that they will conduct a HNDA during the development plan process. They all have access to the HNDA tool which estimates housing need across all tenure types, as I have said, and it can assist them in the process of policy formation.
Taking all of that into account, rather than progressing the amendment at this point, and based on the work I have done with Senator Fitzpatrick, I am inclined to extend the parameters of the amendment to consolidate our planning across housing tenures and to frame an all-encompassing requirement for housing plans and plans at local authority level. I want to expand it past what the amendment states. This may include a review of housing strategies linked to the county development plans and housing delivery plans by local authorities. I confirm that a measurable and time-bound action to complete this work will form part of the Housing for All plan I have just mentioned. It will be specifically referenced in that plan, which I intend to publish next month. This will allow us a little further time to consider the expanded scope of this proposal and Senator Fitzpatrick's proposal. There is absolute merit in the Senator's proposals, but I think we can go further. We must consider how it would be best framed in terms of the requirements placed on local authorities. It would also allow for the completion of the national development plan review and provide clarity on the funding availability over the coming years. That is what will be in the Housing for All plan. It will also allow for completion of the wider, nationally agreed strategic approach on local authority housing delivery.
This process will, of course, allow for the consideration of placing any provisions in legislation or regulation later in the year. We may need both regulations and legislation. There is a lot of merit in this and, as I have said to Senator Fitzpatrick, once we have this bedded down and we get into July with a plan in place, we can certainly look at this matter later in the year. I reiterate that I fully recognise and accept the merit of the amendment tabled by Senator Boyhan on foot of the amendment Senator Fitzpatrick had tabled. I hope Senators will understand and agree that I have laid out a suitable approach to deliver this objective. It is about where this measures sits more appropriately from a timing perspective for what we are doing with this Bill.
I have a lot of respect for the Minister but I cannot accept what he said. On Committee Stage, Senator Fitzpatrick said that she withdrew her amendment "on the basis that the Minister of State will incorporate it in the next Stages". This is Seanad Éireann. We do not deal with that much legislation and, as the Minister knows, this business is being guillotined today. This is the last chance for Senators to contribute on the Bill. I am going to put this amendment to a vote. There is nothing in this amendment that takes from anything the Minister said. He indicated that he wants to expand beyond what is contained in the amendment. He said he accepts the content of the amendment and that is on the record of the House. He said there is nothing wrong with the amendment but he wants to expand beyond it. He is the Minister, the expert, and has the advice of officials at his disposal. I fully respect that and have no doubt that he does want to expand on the content of the amendment. However, this is important and simple. There is not a word of this amendment with which the Minister could argue.
As I said, the Minister's colleague, his party's spokesperson on housing in this House, made a strong case for the amendment, as did many other Members of the House. We are either ad idemon a matter and believe it is worth fighting and pushing for or we are not. This is important but it is more important that people watching, including commentators on housing policy, understand where we stand.If we say a thing, we stand by it and if we believe in something, we go with it, pursue it and make a case for it. I fully respect the Minister. He made the point that he wants to go beyond this. Yes, he can go beyond it, and he will have another opportunity in Dáil Éireann. I will call a vote on this.
I will be brief. I thank the Senators for all their compliments. I appreciated the unanimous support I received when I brought forward the first amendment. I also thank the Minister and his officials. They met with me since the Seanad last met to discuss this important legislative measure. Everybody agrees with the amendment. Nobody is disputing it. Everybody accepts that there is a requirement to have targets for affordable housing, and not just affordable housing but also social housing, cost-rental housing and private rental housing.
It is entirely disingenuous for any Member to pretend and complain that the debate on this legislation is being guillotined or curtailed. It is not being curtailed. The Senator is curtailing it by calling a vote. It is a spurious endeavour at this moment. There is a clear commitment on the record from the Minister, and there is unanimous support in the House. This is a no-brainer. We all agree on it, but we are now going to waste 15 or 20 minutes by ringing the division bells and bringing Members to the House for a vote that the Senator will lose. We have a commitment and we believe the Minister is an honest man. We believe his intention is to deliver affordable housing, and not just affordable but also social housing, affordable housing both for purchase and rental and private housing. I appreciate the Senator's support, but I ask him not to obstruct the work of the House and the work of the Government. Let us move on and legislate to allow the local authorities to build affordable homes, which are desperately needed. Let us not prolong the debate.
It is interesting that I was told the very same thing from the Government benches, that this would be done and that there was no need to push for a vote, when debating my amendment on co-operatives and community housing trusts. I called a vote and it was passed.
Garret Ahearn, Catherine Ardagh, Paddy Burke, Jerry Buttimer, Malcolm Byrne, , Micheál Carrigy, Pat Casey, Shane Cassells, Martin Conway, Ollie Crowe, John Cummins, Emer Currie, Paul Daly, Aisling Dolan, Mary Fitzpatrick, Robbie Gallagher, Seán Kyne, Tim Lombard, Vincent P Martin, John McGahon, Erin McGreehan, Fiona O'Loughlin, Joe O'Reilly, Mary Seery Kearney, Barry Ward.
I move amendment No. 4:
In page 8, between lines 35 and 36, to insert the following:
“(7) In performing functions under subsection (1), housing authorities shall have regard to the appropriateness of the location of dwellings in respect of facilitating access to public transport, education services, health services, public amenities and intergenerationally accessible public spaces.”.
Amendment No. 4 refers to the setting of initiatives in respect of affordable housing and creating arrangements. When we discussed this Bill on Committee Stage one of the points was that many of these pieces of knowledge are what local authorities can put into the mix. The amendment seeks to create an explicit link in terms of housing or local authorities bringing that to bear, thus ensuring we have affordable housing initiatives that are located near playgrounds and routes to hospitals and facilitate the public transport and access goals of the Joint Committee on Environment and Climate Action, of which I am a member.
I hope that new social housing initiatives would look to these and as partnerships are formed it is important to make these points explicit. In a way, they complement the amendment I mentioned in terms of sustainability and sustainable development goal, SDG, 11 in terms of the idea of sustainable cities and communities. They are also relevant in terms of things like our obligations under the UN Convention on the Rights of Persons with Disabilities whereby there is an obligation and an onus on us to ensure accessibility, and that affordable dwellings are not created in a space that can become very isolated.
The amendment is really sensible and does not take from anything. It simply asks for the information that is already within local authorities be applied in respect of this new area of partnership and decision-making that they might engage with in terms of affordable housing. If anything, accepting the amendment would ensure that there was a clear moment of thought and decision thus ensuring, within each affordable housing proposal, an explanation of how these matters had been considered. Even the very fact of that being included alongside a new affordable housing partnership or initiative would have a very positive impact.
The amendment is positive and refers to "the appropriateness of the location of dwellings in respect of facilitating access to public transport, education services, health services, public amenities and intergenerationally accessible public spaces".
I appreciate what Senator Higgins seeks to achieve with the amendment but it is not necessary to include it in this section or in primary legislation because this is something that happens anyway. Local authorities that are engaged in Part 8 processes to develop units must consider everything that is listed in the amendment. The local authorities, the LDA and all of these of organisations readily engage with such information when they develop their plans to develop housing, in general, let alone affordable housing.
I agree with both speakers but what Senator Higgins has raised is important. To be fair, this happens anyway with proper planning and sustainable development.Our planners are exceptional across the entire planning sector in all of our 31 local authorities. They are keenly aware of these issues, as are the elected members. Do not underestimate our local authority members. They are on the ball, on the money and on the case. They live in these communities and they are the greatest advocates of them, as are other community groups.
It should not be about public, private, social or semi-private facilities. These facilities are standard issue for anyone in terms of sustainable communities and where we live. One need only go to Copenhagen to see it. Every corner of every street has some little swing, or interactive play or educational facility for children, teenagers and adults. One thing I have learned from Covid is how imaginative our local authorities are and I thank the Minister for the funding that has come from his Department in this regard. We have seen the public realm activated, animated and opened up. It is right beside us and we have never really thought about the possibilities for it. Now we see planters, parklets and seating areas. There are problems with some of it but on the whole it is good and it is the way to go forward.
It is important and it is always timely to raise this issue so I thank Senator Higgins for doing so. I also agree with Senator Cummins that these things are standard issue and practice. It is no harm to keep them on the checklist every time. Schools are a bigger issue because there are bigger funding issues there. Public transport is a particularly big issue because there are huge costs involved and we also have a national development plan that will cover a lot of these areas. I thank Senator Higgins for raising the issue but it is adequately covered in our county development, regional and local plans and it is Government policy.
I fully understand the sentiment from my colleagues and I will not repeat what has been said. We do not want this Bill to become a planning Bill. Our local authorities, An Bord Pleanála and so on are there to ensure that the appropriate location of dwellings is respected. I am confident that it will be. If we were to include this, we would run the risk that all other areas within the Bill would try to prescribe to this legislation things that we want done or that we know will be done. That is not in any way taking away from the sentiment of what Senator Higgins is saying. We all agree with that but I cannot accept the amendment.
I appreciate that this is good practice, that it is what should happen and that it is what often, although not always, happens. Bearing in mind that there are a number of routes to the provision of affordable housing, I do not have the same confidence in all of them because not all of that housing will be new build. Some of it will be repurposed and some of it will be done under Part V. I do not have full confidence that all of these factors are always in the mix.
We saw all of those good elements in the planning process for SHDs but the fact is that some elements of the planning process have been chipped away. That is a concern that I have. That is why I am trying to strengthen those points at every stage. I would like to have these matters in primary legislation. It may just be a checklist, which most local authorities and housing authorities will definitely meet in respect of most affordable housing, even though I do not know if the intergenerational public spaces are there for all.
The reality is that we still have housing developments with planning permission, which are not near public transport and which are not adequately provided for in education services. They also lack public amenities and intergenerationally accessible public spaces. Such housing developments exist and many of them have a Part V component. It is reasonable to ask that we would have this belt and braces in place. I appreciate that it probably strays into the area of planning for housing developments. However, considerable public investment is likely to be attached to the affordable housing in this area so I just want to make sure that we are placing it in the best way that will be supportive of our goals.
We all want to get to the same place.I am concerned there could be a distinction drawn between affordable housing versus other housing. Affordable housing is housing for families and there should be no distinction between affordable, social, or other types of tenures, such as cost-rental. It is housing for people. If we include specific defined additional measures in an affordable housing Bill – while that is not the Senator’s intent – it would draw a distinction between this type of housing versus another. That will not and should not be the case. I know that is not something Senator Higgins would want but it could potentially be an unintended consequence of what she is endeavouring to do.
I refer to the definition within the amendment. Anything that is put into primary legislation, the words and phrases, must mean something and be defined, particularly in terms of planning because this is a planning matter. The Senator’s amendment refers to “intergenerationally accessible public spaces.” Tying that in with my point, what does that look like and what is its definition? All those things come up. I understand what the Senator is saying. I have a further concern based on her additional contribution that, unintentionally, we would be separating out and putting additional distinctions on affordable housing, above and beyond what should be there. There should be no difference, and there will be no difference, between affordable, social and other types of housing. To reiterate, I cannot accept the amendment - I say that respectfully - and I will not be accepting it.
I move amendment No. 5:
In page 9, between lines 15 and 16, to insert the following: “(3) Notwithstanding any national regulations which may be set out, a housing authority may specify such additional criteria in respect of the determination of affordability as it believes appropriate and is necessary for the delivery of social and affordable housing within that local authority’s area before entering into an agreement under subsection (2).”.
I move amendment No. 6:
In page 9, after line 39, to insert the following: “(c) shall require that the dwelling specified meets any criteria for affordability as set out by the Minister or the relevant housing authority, and in setting out such criteria the Minister shall have regard to the median national income.”.
I move amendment No. 7:
In page 10, between lines 28 and 29, to insert the following:
“(2) The purchase of such open market dwellings may constitute no more than 15 per cent of the affordable housing purchase supported by a housing authority in any given year.”.
We had lengthy discussions on open market dwellings on Committee Stage and as to the question of their inclusion, but I do not intend to rehash that. A strong case was made by Senator Casey and others that there could be situations where there is not an availability of public land, where one would need to work with private partners, and where property may need to be purchased on the open market. However, it is important that we set some form of a limit or a cap in regard to affordable housing being purchased by housing authorities on the open market. I understand, and the case was well made, that there are instances of properties that are particularly suitable for this, in situations where social need suggests that an area needs affordable housing. It may be, for example, in a development adjacent to a major employer. Notwithstanding that, the purchase of open market dwellings is intrinsically more expensive for the State, in many cases, because open market competition and prices have to be factored in. The State does not get the property at a reduced rate, which we have discussed in relation to other mechanisms such as non-profit provision, direct-build, or Part V provision.It is appropriate that a ceiling would be set in respect of how much affordable housing would be provided through open market purchase. I have suggested what I think is a reasonable threshold, in that no more than 15% of the affordable housing purchase supported in any given year by a local authority would be on the open market. If we think about that, it also means no more than 15% of that affordable housing is being purchased at open market prices, which intrinsically have an additional element required. This is a reasonable threshold and safeguard.
It is less extreme than some of the discussion on potentially banning open market purchase altogether. It represents a reasonable accommodation and space for particular circumstances and situations in relation to particular properties and, potentially, particular eligible applicants to be accommodated. It provides a safeguard so that we do not move to a point at which the majority of affordable house provision involves local authorities purchasing large amounts of open market properties. It takes us away from the idea of the housing authorities supporting developers or investors and competing in that space with them.
It is an appropriate piece. I would like if the Minister would accept it. If 15% is not an appropriate threshold, the Minister may feel there is a different amount. I do not want to see a situation in which 15% of the affordable housing budget ends up going, at market prices, into the hands of larger-scale developers who have a wide other market in terms of individuals who may wish to purchase homes. This would ensure we do something a little bit different and would ensure best value for money for the State.
I welcome the Minister back to the House. I welcome his statement that affordable and cost rental will be in place this year, with the passage of this Bill. That is great news and the quicker we can get this Bill through, the better. It is great news to see that will be in place.
There were people who fell through the net before this. I refer to people who were working and did not qualify for social housing and were not earning enough for an affordable house. I hope and presume that with the passage of this legislation, this issue will be addressed. I notice from the Minister's indication that this will be the case. If that is the case, it is great news because there was a cohort of people out there who fell between the two stools. The Minister also mentioned the LDA and the changes which have been made to the Land Development Agency Bill 2021. How will the changes made to the LDA affect the passage of this Bill? Will there will be a different mix of social, affordable and private homes because of changes which will be made?
On developers and big developers, somebody has to build houses. Whether they are big or small developers, it is all welcome because a house is a house. Large developers built houses at the lower end of the market as well. That has to be welcomed. There is an abhorrence of developers. It is wrong, because we need developers. I see that we cannot get tradespeople at present. Developers are in an awful predicament in terms of getting the workforce of carpenters, plumbers and blocklayers. There is a huge shortage of them and this is putting an increasing cost on developers. Developers are coming out the poor relation of all of this. I have to say I have great sympathy for them in trying to get a workforce in place which is not there.It is a great credit to them for persisting and moving ahead in very difficult times. Covid has been very difficult for developers as well as everybody else.
I had a question on the open market dwelling last time. I would like the Minister to explain as clearly as possible what he means by open market dwelling. I am not being in any way hostile about this. The Minister of State, Deputy Noonan, did not clarify the term for me and there was a bit of discussion in the House. Can the Minister give us a concrete example in plain English of what an open market dwelling might look like in section 8? For example, is it where an affordable purchaser identifies a house that he or she can purchase through the affordable housing scheme with the serviced sites fund or does it mean something else because it is hard to understand from the original section? I asked about it the last time and no clarity was provided. I am asking for a concrete example of how it would work in practice so that we are fully clear about what an open market dwelling means under section 8.
I disagree wholeheartedly with this amendment. A person who has been allocated a social house does not care whether it is built by a local authority, a private developer, the LDA or an approved housing body. Saying that we must build houses, affordable houses in the case of this amendment, in a certain way is an ideological position. Some local authorities will be able to ramp up the provision of affordable housing more quickly than others. As Senator Casey said on Committee Stage, other local authorities may not have land banks on which to build affordable houses.
We must provide local authorities with flexibility when it comes to meeting the ambitious affordable housing targets the Government will set. I know the Minister has met all local authorities in the past couple of weeks regarding those targets, which will be published in July. Telling local authorities they can only acquire turnkey units at a 15% rate might be appropriate for one local authority but it will not be appropriate for all of them. We are setting down national legislation here and we must give local authorities the flexibility to be able to provide affordable housing by any mechanism possible. We should not try to restrict this in any way.
We really need to define open market dwelling. I share Senator Cummins's sentiments about housing but we must also have value for money and we cannot keep talking about targets. On the news last night, a reference was made to Rebuilding Ireland, a term we do not hear very much in this House. One of the parties has been in government for ten years. At one point, Rebuilding Ireland was in the news every evening and we were talking about targets but suddenly nobody is talking about Rebuilding Ireland.
Rebuilding Ireland is still the policy of the Government. That is the bottom line. That is what officials in the Department tell me. Rebuilding Ireland is Government policy. I put a question to the Department about it and asked a number of my colleagues to raise it in various debates in the other House. The Minister is nodding his head. If it is not Government policy, could he enlighten me in that regard because I would like to know?
The Minister has a policy and a great plan is coming down the tracks but it is not yet here. That is what we are talking about. Will the Minister define the open market dwelling aspect of it? Let us build houses but let us have value for money. If we are going to have targets for delivery, we need to empower local authorities, so let us end all the talk about empowering them. Each of them is different and has a different way of doing business. That is just the way the local authorities are structured. If we are going to have targets, we will have to measure and enforce them. Anybody who takes on targets and Government funding and supports must deliver.That, of course, ties in with what we said earlier about the opportunity, in both Houses of the Oireachtas, to analyse matters every year and see how we are progressing.
I thank Senators Higgins, Ruane and Black for the amendment they tabled. It gives us an opportunity to talk this matter through. I will deal very quickly with some of the questions that have been asked. I will deal with the proposer of the amendment first, however. I genuinely do not believe it is appropriate to set an arbitrary limit, whether it be 15%, 20% or 25%. Senator Cummins put that well. Right now, particularly in our war in respect of the affordability issue, we need to use all the tools and weapons in our armoury to tackle this. I know Senator Casey referred to this and it was discussed in some detail on Committee Stage.
Right now, some local authorities do not have the requisite land banks. It may be more appropriate that while they are building their own, they should be able to purchase properties out there and make those properties affordable. I believe that is also a good use of our funds.
I will get to Senators Warfield's and Boyhan's questions in a minute. First, I believe it is opportune to go back a little bit and tell Senators that I have instructed local authorities to buy additional land now to increase their land banks. We have changed how our local authorities are going to be reimbursed in the context of the purchase price. A complaint local authorities, particularly the smaller ones, had was that it took them a long time to get that money back into their accounts, which had a big impact on their capital budgets. That has been changed now. I want our local authorities to be the main deliverer of social and affordable homes, and they will be.
Consider affordable housing under the serviced sites fund, however, which we are going to allow flexibility on with the passing of this Bill. The serviced sites fund is a very good concept. It is conceptually excellent and many homes are planned within it that have not delivered on yet. We need faster delivery for our people. That is why the open market dwelling option, where appropriate, should be in place. To directly answer the question, effectively, that is where a local authority, in this instance, will actually purchase a new home or an additional home within an existing estate. It may be going above the Part V provision that is in place for 10% social housing. With the passing of this legislation, there will be provision for 10% affordable housing. It may be appropriate to go further on the affordable side to buy more. The affordable fund is currently the serviced sites fund. Under the Housing for All plan, however, we would use that fund to take the equity stake to reduce the price in that open market dwelling. The vast majority of these homes, however, will be delivered through our own local authority direct build affordable housing, the LDA and our enhanced Part V provision on new dwellings. We will also have our shared equity arrangements in place, however.
I believe this specific amendment would put in place an arbitrary limit. It could impose an unintended constraint. I visited local authorities, particularly in the Border and midlands area, where a big issue is that the only homes being built at all right now are public homes. There is no private market whatsoever. People will be aware of counties where a small amount of building is taking place. Even with a 15% cap, we could reach that level in no time. The measures included in this Bill are supply side measures, which will stimulate supply. As we move on, these things will evolve and the vast bulk of our homes will be delivered through the State mechanisms to deliver affordable homes. I will not, therefore, be accepting this amendment.
Senator Burke asked a number of questions about the link between this Bill and the Land Development Agency Bill 2021. The definitions within the Affordable Housing Bill 2021 will be transposed directly into the Land Development Agency Bill 2021. Under the latter Bill, I am increasing the proportion of affordable and social homes up to 100%, particularly in our two main cities of Dublin and Cork. That will, therefore, be 100% social and affordable housing. We are going to bring in a 50% base for affordability on all LDA sites, although this relates specifically to affordable housing delivery by our local authorities. In some instances, there will be a requirement or an opportunity to buy new homes on the market.We can then reduce the price by using our affordable fund and putting that in as an equity stake or taking an equity stake in that home. The local authority would take it on behalf of the State.
I agree that we should use all the tools in our armoury. That is why I have not sought to prohibit open market dwellings. The Minister is saying that the vast majority will be provided through these other means but there is nothing in the legislation to say that this will be the case. I will be frank. What I do not want is for local authorities to be delivering 40%, 50% or 60% of houses through the open market. This is not an ideological issue or me saying I do not like the market. I have no problem with the market existing. That is absolutely fine. However, it is more expensive and this is purely a matter of value for money. We must factor in profitability and we will be in a competitive situation because that is the nature of a market.
Even as regards new builds in areas at which we are looking for land development, I am concerned. Of course we want that land to be used for development but I do not want a local authority that is seeking to buy land for the purpose of directly building social or affordable housing to be competing with somebody who may buy that same land, develop it and then sell it back to the local authority at a higher price. There are supply side elements and incentives here but not all supply involves the same cost to the State. Not all supply has the same long-term benefits, such as secure ownership and control over a long period. Not all supply involves the same measures. We also need to address some of the pressures of the market because this is also about deflating the market. Supply on its own will not do if we create a dynamic whereby there is a form of supply that is more profitable and which we are subsidising because we will be in competition with ourselves, that is, the State. That is my concern.
There is a shift back into direct build and I recognise that. I am concerned, however, that going to the open market and buying a section of an estate or a new build will be seen as the easier option. I worry about what we need to do to build capacity and direct builds should be the easier or preferred solution. I set a cap of 15% on it but my worry is that open market dwelling purchases will become 40% or 50% of the housing that is provided at local level. If that is the case, the State will be getting worse value for money and will be competing with itself for all those developers, builders and suppliers. We will be competing with ourselves and that is a foolish move. I am not saying that we should not use all the tools in our armoury but certain tools are better. We need to give a clear signal of a hierarchy of mechanisms of provision that are better value, offer better control and can deliver better standards. We need to express preferences about the model of delivery. That is not to exclude the open market and it is not ideological. It is practical.
I move amendment No. 8:
In page 12, between lines 23 and 24, to insert the following: “(8) Notwithstanding anything in subsection (7) and (8), a housing authority may set out additional criteria for eligibility of applicants for a specific affordable housing purchase arrangement with respect to income and asset thresholds and any other dwellings held under an affordable housing purchase arrangement by the applicant, with regard to ensuring access to affordable purchase for persons from each income quintile within a housing authority area and such other matters as may be outlined under section 6(4).”.
I had intended to change slightly-----
I had intended to nuance this amendment further by robbing some of the language from Senator Boyhan's amendment No. 9, but I believe I resubmitted the same amendment as previously.
This amendment would ensure that housing authorities were able to set additional criteria for applicants in terms of income and asset thresholds. I had expressed a concern about people who did not have a property previously or did not have large incomes but who did have significant assets, such as stocks. Housing authorities could consider asset thresholds and other wealth so that they were not using income as the only eligibility criterion. It may be relevant in some situations and not in others. Certain housing authorities may have particular cohorts and needs. We have discussed how there is a little flexibility in respect of the input from housing authorities, but there is the caveat that it can be removed at the Minister's direction. I am trying to strengthen the input of the housing authorities' local knowledge.
The core point we made on Committee Stage was about linking the idea of affordable purchase to the person. Instead of the price of the property being tagged a certain percentage below its market value, its affordability would be based on whether the potential applicants in our communities could afford it. I have suggested that affordability be tied to each income quintile so that, for example, someone in the bottom 20% or 40% could afford it.
I am happy to withdraw my amendment, which approaches the same issues as the amendment from Senators Boyhan, Keogan and Norris, only not as well or as clearly. Theirs is preferable to mine. Mine speaks about each quintile, but there is a danger that one could focus on the top 20% of people who do not necessarily need affordable housing. Amendment No. 9 properly focuses on the bottom 40% of national income distribution, that is, the bottom two quintiles. Crucially, the housing cost would not exceed 35% of the applicant's net income. This is an appropriate measure. If we were able to achieve it generally in terms of housing, it would be to the benefit of society and the economy. Having that security would allow people to invest in other aspects of their lives and meet other household needs properly.
I propose to withdraw amendment No. 8 in favour of amendment No. 9, if that is acceptable to the House.
Although I am speaking to amendments Nos. 8 and 9, I will concentrate on the latter, having heard what Senator Higgins said. The Minister might say that of course I would say so, given that I am proposing it, but it is one of the most important amendments to the Bill.It is not something I dreamed up. It came out of a lot of discussion and engagement with a lot of housing advocacy groups, from listening as a member of the housing committee, and from rereading, rechecking and cross-referencing with people who made presentations to the committee and following up with them. This seemed to be the big issue and it sort of makes sense. This is the Affordable Housing Bill but nowhere do we define "affordable housing". The Minister of State made a very good argument on this the other day but it is very simple. We have to keep the language terribly simple. This is the Affordable Housing Bill 2021 yet nowhere in the legislation is there a definition of "affordable housing". I acknowledge the amount of work done on this by the Oireachtas Library and Research Service and the work of those who engage with the committee on this.
This is a vital amendment to the Bill. The committee had a lot of discussion on it. It struck me as odd that the Affordable Housing Bill could not provide a definition of affordability, as I see it and as people outside the Houses see it. Section 5 of the Bill merely speaks about ways in which homes can be made available. It mentions a dwelling made available by a housing authority under section 6, a dwelling to which a Part V agreement applies being made available for sale, and an open market dwelling. The Minister touched on his understanding of an open market dwelling. The Bill states any home made available through these avenues is an affordable dwelling. What use is the term "affordable dwelling" if it bears no meaningful legal resemblance to what those words are commonly understood to mean? Just because a home is made available to a person in a particular manner it does not make it truly affordable. The Minister cannot change this simply by introducing the Bill, passing it through the Houses and calling it affordable.
This amendment is proposed to section 10, which relates to the assessment of eligibility for affordable dwellings and purchase arrangements. It proposes a 35% cap on what can be charged for affordable housing with regard to an applicant's net income. The reality is that something is only affordable based on net income. I know there is the issue of seven bands and that some people are speaking about affordable housing in Dublin at €450,000.
I will wait for the Minister's attention.
The amendment proposes a 35% cap on what can be charged for affordable housing with regard to an applicant's net income. If people are paying over this amount each month to have a roof over their heads it is simply not affordable. I refer to the Minister's reference to the affordable bands and the suggestion of €450,000 for Dublin. This is not affordable housing and it is important to make this point. Somehow we have got lost in the idea of affordable bands. If it is not based on 15% of income it is not affordable. This is my view.
The amendment would benefit those who cannot afford a home at market rates and those in the lower 40% of the country's income brackets who simply do not qualify for social housing. It is a common sense amendment and a fair amendment. It is a pragmatic amendment. It has the support of many people who advocate on housing. The amendment would ensure that ordinary people would be able to afford the affordable housing the Government is offering. I hope the Government will take it on board. I do not believe it is that dramatic or unreasonable. It is fair.
I would like the Minister to accept the amendment because it is important. It is one we should clearly tease out. It is one on which we should make a decision. We should go on the record today on the decision we will take. For this reason I will call for a vote on this amendment because clearly I need to demonstrate. We are politicians and calling a vote is not obstructive. I take exception to anyone who suggests this.This is a bicameral Parliament. This is a democracy. This is where we do our business. This is where we debate and tease out issues like affordable housing and this particular amendment. Therefore, people should not get too het up about votes in a democratic Chamber. I am looking forward to hearing the Minister's response and to the engagement with other Members. I am also looking forward to seeing the Members come to this Chamber and how they will cast their vote on this matter.
I heard Senator Boyhan say he is lost. I want to help him find his way. I am genuinely concerned for him because I know he participates very actively in the joint committee on housing. I know he has the utmost respect and admiration for the Minister. I believe he understands that the intention of the Minister and the Government with this affordable housing Bill is to make housing affordable. I believe he understands that the reason the Government is legislating to make housing affordable is because it recognises housing is unaffordable. Senator Boyhan talked about housing at €450,000 in Dublin. The reason the Government and the Minister have called that out is that the Minister, the Government and the Government parties all recognise that €450,000 is unaffordable for people on modest and medium incomes, and they are the vast majority of our population.
However lost Senator Boyhan may be, I want him to know that we are legislating to have the State provide really affordable housing. Affordable housing, as the Minister and the Minister of State have advised the House on numerous occasions, starts at €160,000. That is a far cry from €450,000 and is the right starting point in my opinion and in that of the Government parties. We must make housing affordable because it is vital social infrastructure. You know this. You know we know this. You know we believe that housing is a basic human right and that the State should be taking the lead in addressing the housing crisis with respect to both affordability and supply. That you will again try to waste time in spurious arguments-----
I have great respect for Senator Boyhan but I am surprised at his contribution. I am not suggesting he was attempting to mislead the House in his contribution but the figure of €450,000 relates to the ceilings for the shared equity scheme. What we are actually discussing here, in this section, is the local authority affordable purchase scheme. Thus, any references to or utterances about that figure have no bearing on the section we are actually discussing. He might consider that in his reply.
The amendment, as written, says that for someone to qualify under this measure, they will have to fall within the bottom 40%. What the Government is actually saying, in terms of the drafting of the legislation, is that a person will have to get his or her maximum possible mortgage and if he or she cannot meet 90% of the mortgage, he or she will qualify under the scheme. It may be the case that a person is within the bottom 42% and absolutely needs the affordable purchase scheme. By putting in an amendment like this, we would exclude people rather than include them.It is for that reason I could not support the amendment.
I support the intention of the amendment. My preference and that of Sinn Féin is for a 30% cap and we will get to that amendment later. That would be incredible for ordinary people. It would be transformative that people could have roofs over their heads at a cost of 30% of their income. We need to put that wording in legislation.
I thank the Senators for the amendments. I believe amendment No. 8 is still live and has not been withdrawn. I have a couple of things to say about amendments Nos. 8 and 9. It is good that these matters are being teased out and I know they formed a significant part of the Committee Stage debate. I am going to give a more detailed response for the record of the House. Senator Cummins made the point that to follow the proposals in the new section 10(9)(b) proposed under amendment No. 9 would mean excluding people from affordable housing. I want those in the lower 40% to be able to access affordable housing. I want those in the lower 50%, 60% and as many people as possible to be able to get into affordable housing. I do not mean it in any derogatory way, but including a crude definition of affordability and an arbitrary percentage, while the amendment is obviously well-intentioned, would actually exclude a massive cohort of people who need access to affordable housing. I know that is not something Senator Boyhan wants to do.
I am not sure of the thinking of the groups advocating for this. I want broader eligibility and criteria for people out there. Tens of thousands of people cannot access housing or buy homes at an affordable rate. Some people may think that people with combined gross incomes of a certain level do not need affordable housing. Sinn Féin's original proposals would mean a couple on a gross income of €75,000 would be unable to access the scheme. The reality is that while some parties or individuals might think a gross, combined income of €75,000 makes that couple wealthy, in real terms and in the reality of Ireland, it certainly does not. They are the working people for whom we need to ensure affordable housing is available. Amendment No. 9 would restrict in a significant way the number of people who could access the affordable housing scheme. That is not something I could countenance. I do not think Senators Boyhan, Keogan or Norris intend to do that but that would be the effect of the amendment.
It is important that I explain, in response to the Senators, including Senator Higgins, that there is a desire among some people to include an absolutist indicator of what is affordable. There is little academic support for that because it must include flexibility, particularly in a country such as Ireland which has an acute affordability problem where people cannot access housing. The definition must be as broad as possible. Assessing affordability and the financial constraints on households cannot be identified by rules of thumb or by asking how much is too much. It is more appropriate to ask how much is too much for whom and in what circumstance. It must be targeted at the circumstances of an individual or couple and we must ask what is affordable for them. That is why this idea of a 35% affordability cap that we will debate further down the line, or the proposals in amendments Nos. 8 and 9, will restrict the scope of the affordability measures. The Government and I have structured, and will structure, the legislation and regulations that underpin it to define how much is too much for whom and in what circumstance. It is focused particularly on the applicant. As has been stated by my colleague, the Minister of State, Deputy Peter Burke, and me previously, the regulations that will be made under section 10 will effectively specify that a person cannot afford a unit if he or she is unable to obtain a mortgage from a bank or a financial institution for 90% of the market value. That is far better than the provisions in amendments Nos. 8 and 9 because it is far broader and allows more people in. It means we can help more people, which is what the Government wants to do. What a number of Senators may not appreciate or acknowledge is that it is not appropriate, and I do not mean this in a dismissive way, to take a one-size-fits-all approach. That will not work. There are different affordability thresholds and different levels in different parts of the country. Senator Cummins has dealt with the charge about the price cap, which is a different thing. However, they are caps, not targets.
There are different prices for different types of homes in Dún Laoghaire, south Dublin, north Dublin and Longford; there is not just one price. One does not set a price and say that everybody in the area must pay €400,000, for example. That is not what is being done. That has been a purposeful misrepresentation by some, although not by the Senator who made it and I am not suggesting he has, to try to scuttle the scheme before it has even got off the ground. However, we have stuck with it. What we propose will assess and define affordability by household and will accommodate each eligible household’s particular family need and financial circumstance. That must be far better; Senators must understand that this is far better than some arbitrary percentage or, even worse, under amendment No. 9 singling out a cohort of people by saying: "Your are in the bottom 40% so here are your houses". I doubt that Senator Boyhan would want that to be the case. It is something that none of us could support.
Amendment No. 8 seeks to amend section 10, which deals with eligibility criteria. I cannot accept it for the reasons I have outlined.
I have covered amendment No. 9. I cannot accept it. While I understand that both amendments are well-meaning, they would have serious consequences for the scheme. Whether they are intended or unintended consequences, and I take it that they are unintended, if the amendments were passed, they would greatly restrict the scheme. We want to focus on where an applicant is unable to purchase the dwelling at market value because she or he is unable to secure a bank or financial institution mortgage for 90% of the market value. The equity share to be taken by a housing authority, be that through the serviced sites fund, shared equity or, in this instance, the affordable fund, will bridge the gap between what the applicant can borrow under the current macro-prudential rules of 3.5 times the income and the market value of the dwelling. A couple could have an income of €100,000 and 3.5 times that is €350,000. The house price might be €390,000 and the couple might have a deposit of €30,000. That amounts to €380,000 and they would seek an equity stake of €10,000. The equivalent percentage would be what the State would take in. That would apply in that case. On the direct build affordable, as Senator Fitzpatrick said, we have launched schemes, coincidentally in my constituency in Lusk, north County Dublin, starting at between €165,000 and €265,000, where the local authority takes the equity stake through the serviced sites fund. I wish to clarify that for Senator Warfield as he asked that question earlier. That is how it works. It is not just the land cost, but the serviced sites fund contribution that is made. The equity stake is then taken in the home, but the sale price is between those two figures.
We can look at how the serviced sites fund is being used in the largest affordable, social and mixed development that has been passed in recent times by the main Government parties at local authority level, which is the 1,200 homes in Donabate. Some 238 are social, 238 are affordable and 150 are cost rental. Again, the serviced sites fund is funding the reduction in the sale price to ensure it is affordable, but the local authority is taking the equity stake. Basically, 650 families will have affordable purchase, cost rental and social homes delivered through that scheme. It was supported, to be fair, by Fianna Fáil, Fine Gael and the Green Party and opposed by other parties of the left, unfortunately, but, significantly, it was passed by 31 to nine. There will be many more of these. That is why the changes we are bringing forward in the Bill are absolutely necessary.
I will return to the affordability issue.It is crucially important that this is subject to the fact that there will be a minimum price below which the housing authority cannot sell the dwelling for, having regard to the cost of delivery or acquisition.
From a financial sustainability perspective, no applicant will be required to borrow more than she or he could obtain under the Central Bank's macroprudential rules. That is affordability. That is absolutely ensuring it and the other piece is not a second mortgage but an equity stake, so it is not debt led. Even if he or she is taking out a Rebuilding Ireland home loan and could borrow more than that, that would also apply. It is important to note that the effect of the macroprudential rules is that mortgage repayments are, generally, very considerably less than 35%.
The reason I am reading this piece into the record in some detail is because there are many other amendments that Senators will come to as they move forward. I want this information on the record of the House.
Based on a mortgage of 3.5 times gross income repayable over 30 years at an interest rate of 3%, the repayments as a percentage of net income for a single person would be 21.4% at a gross income of €35,000, 23.3% at a gross income of €45,000 or 24.8% at a gross income of €55,000. For a couple with two incomes, the repayments on such a mortgage as a percentage of net income would be just over 20% at a gross income of €50,000, just under 21% at a gross income of €60,000 and 21.4% at a gross income of €70,000. Accordingly, the amendments proposed under this part with regard to purchases of affordable dwelling to the effect that people should not spend more than 35% of net income on housing costs are not necessary in the vast bulk of these instances.
I have already covered the new section 10(9)(b) in relation to the 40%. The Senator may wish to look at that himself and may withdraw the amendment on that basis. I do not think any Senator would want to restrict an affordable scheme to just a particular cohort of people. I hope that has covered everything.
No. I will reply to the contributions. I do not know if I will withdraw the amendment because Senators have expressed concern about ensuring that each quintile would be represented. There was concern, for example, about only having the bottom two quintiles represented. My amendment addresses all quintiles. The amendment means the Government would think of affordability for each quintile in the country, including those in the bottom 20% of incomes, those in the next 20% of incomes and so on. My amendment addresses all of those issues and having spoken to Senator Boyhan, I know he is not tied to 40%. If it was accepted, it would take a small amendment from the Government in the Dáil to change the figure to 60% if it wanted to have the bottom three quintiles addressed.
I have to disagree with the Minister on one core point. He spoke of starting with families. The current model for affordability starts with what the market price is and then refers to how people are able to access that market. It starts with the market prices, then looks at the mortgage a person can get to try to reach that market price, and then tries to bridge the gap between the mortgage a person can get and the market price. It recognises the different circumstances of different people in that the gap between what they have and what the market price is may be different but the core point is that it begins with the market, rather than the person. That is why it is a blunt and variable measure. It leaves us with what is effectively a market access contribution and support, rather than affordability because it does not have a definition of, nor does it start with the question of, what people can afford in their life. That is why it is a reasonable provision.
There will be many cases where it will be met. That is why I do not understand the fear of a requirement that it be not more than 35% of income. If many of the affordable housing proposals are going to be 26%, 30% or 27% and fall within it, why not copper-fasten that principle? It would send a signal about how we expect people to live and how much we expect people's lives to be determined by service to a debt on property. That is a reasonable question.
Senator Boyhan is not lost. He is one of the most grounded Senators we have in that he knows and understands the realities of people and communities. He worked in local authorities for many years.I know he is speaking from the ground up. These amendments start with people and what they can afford. That might create more attention but it starts with what people can afford and that is important, otherwise we will continue to chase the market and let the market determine the market value.
I refer to the proposals on affordability and whether or not the Minister of State wants to nuance them. We debated the different perspective as to whether all quintiles should be addressed separately, whether the bottom two or three – those are the details. The core principal should start with people's incomes and the percentage of which they should be expected to be spent on a home. Affordability should be calculated upwards from that rather than downwards from the market. That is the core difference being debated here. I am clearly on the side of starting at the level of what is affordable to a person or household. In that sense, I support Senator Boyhan’s amendment and I will press my amendment as well.
I move amendment No. 9:
In page 12, between lines 31 and 32, to insert the following: “(9) Regulations under subsection (7) will have regard to:(a) ensuring that the proportion of the applicant’s net income represented by housing costs not exceed 35 per cent of the total, and;
(b) ensuring that the applicant’s income falls within the bottom 40 per cent of national income distribution but is above the Maximum Net Income Threshold, as defined by the Social Housing Assessment Regulations 2011 (S.I. No. 84/2011), that applies in the housing authority area in which the dwelling is located.”.
I move amendment No. 10:
In page 13, after line 38, to insert the following:
“12. Where a dwelling is being made available for affordable purchase under a Part V agreement under section (5)(b), that dwelling shall be made available for affordable purchase according to such criteria of affordability as may be set out by the Minister in regulation or by the relevant housing authority, and there shall be no obligation on a housing authority or State body to provide any financial contribution above such an agreed affordable threshold.”.
On the basis of the engagement with the Minister of State on this, and that he will scrutinise how this issue can be clarified, I withdraw the amendment.
I move amendment No. 12:
In page 14, between lines 22 and 23, to insert the following: “(5) For the avoidance of doubt, the affordable dwelling contributions from a local authority or any other State body in respect of an affordable dwelling made available for sale under a Part V agreement as specified in section 5(b) or section 7(2) shall not be a financial contribution.”.
I move amendment No. 14:
In page 32, line 12, to delete “40 years” and substitute “50 years”.
I welcome the improvement on the repayment period of 30 years following the passing of amendment on Committee Stage, but I believe 50 years is better than what is currently in the Bill and what was previously in the Bill, going on a model. Going by the Vienna model, the longer the repayment period, the more chance we have of setting lower rents for the outset.My belief is 50 years is a better option and we should substitute 40 years in exchange for 50 years.
It is noted and has been mentioned in regards to Senator Moynihan in terms of the Committee Stage debate. It has gone from 30 years to 40 years. We have taken into account the views of Senators and the House and I hope this creates a good balance.
I accept 40 years is better than 50 years. I still believe the State should aim for cathedral thinking, in which we look to long-term thinking. It is one of the great prerogatives and opportunities we have as a State and it makes many things possible. I regret to see the amendment previously put by Senator Moynihan, which related to this issue, is not resubmitted at this point. I hope it might emerge again in the Dáil.
It stated that while 40 years may be fine in general, when it comes to situations in which grants have been provided for the creation of cost rental or when public land has been used in respect of cost rental dwellings, 40 years is inadequate. We should be looking to a 90-year or an unlimited period of time. It would be regrettable if we were to have public money subsidising things for a period of just 40 years, which then may migrate back into the market. At that point, we are subsidising investment, rather than having the returns.
Some 40 years may be reasonable as a general point, but in those situations in which the land or funding is provided by the State, we need to have a different timeframe and look to ensure the long-term benefits and social dividend from investment in cost rental returns to the State, albeit through an approved housing body or local authority. That is a fundamental point.
We will have a couple of amendments which come at that later, when I talk about reverting to public land ownership. I wanted to signal that and try to bring it up. As the Minister of State has appropriately taken on board Senator Moynihan's point in the generality, by moving from 30 to 40 years, I hope in those specific circumstances, the Government will look to a longer period of time. I hope the Labour Party reintroduces those amendments in the Dáil or that the Government brings its own version of them to recognise cathedral thinking. I keep using cathedral thinking, but that is what we need to think of, in that the 100- or 200-year vision is reflected where there is substantial public investment.
I will make one brief point which I mentioned on Committee Stage. What we are doing here is aligning the existing cost rental equity loan term, in terms of the finance and arrangement for the same, which is at 40 years. By moving from 30 years to 40 years, we have aligned the whole process. If we were moving to 50 years in terms of what has been proposed in this amendment, it would be out of kilter with what we have, in terms of the cost rental equity loan. However, it absolutely is the Government's intention, in terms of cost rental, to look at tenancies of indefinite duration. It is the desire of the Government to achieve that.
This group consists of Government amendment No. 15 and a series of amendments from Senators Higgins, Ruane and Black. Amendments Nos. 15 to 17, inclusive, deal with management costs for cost-rental homes so I will address this point before going on to address amendment No. 18, which concerns adaptation and retrofitting.
It is certainly not the intention that excessive management costs will be countenanced as part of cost-rental. Through the designation process, as set out in the Bill, all applications will be closely assessed to ensure they include only the costs that are allowable under the scheme. As such, the Minister will have discretion not to approve applications where the cost-covering rent is inflated by excessive management fees. It is for this reason that the Bill specifically empowers the Minister to press landlords for "additional and supplementary information" in order to investigate proposed costs. In addition, the provisions of section 30 empower the Minister to prescribe the format of an application for cost-rental designation, and the regulations governing this process will explain the "management costs" that are deemed acceptable. The allowable costs are, therefore, already subject to regulation by the Minister.
Senator Higgins outlined her views regarding management costs very clearly in the Committee Stage debate. The Minister of State, Deputy Noonan, then committed to looking further into this issue. While we believe the issues are sufficiently covered by existing provisions, to be constructive, I asked my officials to refer the amendment submitted by Senator Higgins on Committee Stage to parliamentary drafters in the Office of the Attorney General. It was determined that a Government amendment be moved today with the exact wording proposed by the Senator. This is amendment No. 15. I thank Senator Higgins for her contribution.
Since we are accepting Senator Higgins’s suggestion from Committee Stage, as checked with the Office of Parliamentary Counsel, I will not be supporting amendments Nos. 16 and 17, which are new amendments with new language. I do not believe these latter amendments are necessary, particularly in light of amendment No. 15.
I will now address amendment No. 18, which proposes to add "adaptation and retrofitting" to the category of maintenance costs, as submitted by the owner of a home when applying to the Minister for cost-rental designation. The issue of adaptation was also raised by Senator Higgins on Committee Stage. It was then taken to mean that the costs of adapting homes to make them more suitable for tenants with particular needs, such as due to disabilities or old age, might be included as part of the projected maintenance costs at the outset of a cost-rental project.
I appreciate the Senator's objective here but this would introduce a significant element of uncertainty into the model whereby landlords would struggle to plan for the costs of a series of potential adaptations that may, or may not, be required, decades into the future. As such, it would require the incorporation of substantial additional sinking funds in order to take account of this potential eventuality. This would add to the overall cost-covering rents from the very outset. Furthermore, funding for possible future adaptations, potentially many years after the modelling and setting of a cost-covering rent, may be available through other schemes. Adaptations to new homes at the point of completion, however, would be a known expenditure, which could be included as a capital development cost and factored into the initial setting of the rent. There may be interest from local authorities or approved housing bodies, for example, in fitting out a proportion of newly developed cost-rental homes to make them more accessible for persons with limited mobility or visual impairment. This can be done without any amendment to the legislation but I thank the Senators for raising the issue of how cost-rental can be made more accessible.
On the retrofitting point, it should be noted that all cost-rental homes will be subject to the current building standards, which are extremely comprehensive with regards to environmental factors. An application for cost-rental designation will include projected maintenance costs in order to keep the homes in good condition. This will not only take account of the replacement of things like windows and appliances on a case-by-case basis as they break or fail but also the planned upgrade at various points of windows, heating systems, lifts, roofs, etc., in order to extend the functional life of the homes. Any replacements of this nature will have to meet the energy efficiency standards in place at that time. This "life-cycling" will mean that new cost-rental homes should not require retrofitting years or decades from now.Trying to pre-empt this in legislation only creates additional uncertainty which we deem unnecessary.
I compliment Senator Higgins with regard to the original proposal on Committee Stage. The acceptance of the wording in this respect is further evidence that the Government takes very seriously the rents that will be charged at the outset under the cost rental model. It is our target to reduce the rents to the maximum possible, which is why we have spread the term over 40 years. That is why we are being specific under this amendment about what we are determining as maintenance.
As the Minister outlined, however, amendment No. 18 contradicts that. It could result in additional rents for tenants at the outset as a result of catering for something that may happen in the future. That would obviously result in significant additional costs in terms of modelling over a 40-year period if it were to be included.
For that reason, therefore, I could not support amendment No. 18. I am, however, very pleased that the Minister of State is introducing Government amendment No. 15 to be specific and targeted in what we determine as specific maintenance costs, and not a generality that can be exploited.
First, I thank the Government, as Senator Cummins said, for accepting the principle of and using the exact wording of my amendment on Committee Stage. It is an appropriate caveat to add because it is an area in which we have seen some abuse. It has been exploited as a loophole at times. In recent editions of the Dublin Inquirer, for example, we have seen cases where service fees etc. are being added to rents and used as a loophole to get around the rent freeze or the limiting or capping of the increase at 4% and effectively there is something like a 10%, 20% or 30% increase in rent or more. I believe 70% was cited in one case. This is through service fees, car parking fees and the creation of new cost streams. It is crucial, therefore, that we pay vigilant attention to any loopholes.
The fact I worded the amendment differently in resubmission is a natural fact of having pressed the amendment on Committee Stage. A revised wording is required that addresses it from a different perspective. While, of course, I will be delighted to support the Government's amendment on this, I hope the points I am addressing will also be addressed by the Government without necessarily needing the extra language. I refer to the idea that there are appropriate maximum thresholds. I am hopeful that in its interpretation of "necessary and appropriate", the Government will be able to identify that idea of maximum thresholds.
Another effect of certain votes having been taken on Committee Stage is that I am not able to reintroduce the amendments on the removal of limited equity. When we look to the costs and, quite rightly, as Senator Cummins has mentioned, to how we minimise the costs, the two concerns I have are management fees, which could indefinitely expand, and equity return. I have a very strong concern about that because, be it is set at 3%, 4% or 5% per year, nonetheless that is a very substantial extra cost to the State or to the individual, potentially over 20, 30 or 40 years. It is effectively a subsidisation of a market investment, which is not necessary when we provide cost rental directly. If you look to how that adds up, 4% per year over a 40-year time span is an extraordinary additional cost which has been added in a situation where all our efforts are for the minimisation of costs.Unlimited equity return should not be part of that.
I am concerned about the management fees for the same reason. I am tying these issues together because they relate to certain actors whose goal is the maximisation of return for an investment, because that is their fiduciary duty. That is the problem. It is not a problem of private investment in principle but of the cost because it would be servicing a set of fiduciary expectations and a barrage of additional costs. Some of these practices have been used by private investment funds that have invested in build to rent. One of the big concerns when Part V is part of a commercial development is around the management fees, the service fees and access to the shared and public amenities.
The Government will introduce a new amendment, based on my language, around the necessary and appropriate management fees. Where within that can we ensure that, if there is a Part V affordable component within a commercial apartment building, it incorporates access to the same services and basic facilities, such as a gym, lobby or shared public space? There have been issues with Part V social housing tenants in such cases, particularly within apartments. It seems to be particularly common for them to be told that because they are not paying the commercial management fees they cannot access the shared amenities. That goes against the principle of Part V, which is about building communities with a diverse social mix, in which people cross paths and connect and have similar experiences. I am packing these issues in. I am delighted that the Minister of State is bringing forward this amendment. He has recognised management fees as a dangerous area if they are not properly identified. When this Bill is being debated in the Dáil, he should also look at what we get for those management fees. We do not want inflated management fees but we also do not want them used to exclude residents from full enjoyment of the same amenities as others within a building. That is the core point.
I will finish on the issue of equity because I will not get an opportunity to discuss it fully and it ties in to this matter. I strongly support the idea of cost rental but my greatest concern is that we may have left the door open for a certain component of that cost rental to become an investment product. Dividends might be promised for 40 years, the property may migrate back to a private owner at a later point and loopholes could be exploited in the service of shareholders or for fiduciary benefit. That is my concern. Cost rental, which is a wonderful model, would then effectively end up as something closer to the leasing model we have at the moment. We have to do everything we can to avoid that.
I am happy to withdraw amendments Nos. 16 and 17 in the context of supporting amendment No. 15. However, there are a few more issues to unpack following that.
I move amendment No. 16:
In page 32, line 26, after “dwelling” to insert the following: “as is necessary and appropriate and which will be subject to appropriate maximum threshold as may be set out by the Minister in regulation”.
I accept the Minister of State's bona fides regarding the concerns, but perhaps the issue of a universal design for cost rental needs to be considered. He mentioned sinking funds or planning, but we need to plan for 18% of the population having a disability.
Senator Higgins made a valid point concerning those with disabilities. We are working on an update in the Department. Our new strategy for people with disabilities will be incorporated into the Housing for All plan. The model will be reviewed, but we want to prove that it works in the first instance, which is a significant consideration. There have been 1,600 submissions to the new disabilities strategy, one quarter of which have come from people with lived experiences. It is within my remit and I am keen to progress it.
Universal design will be a key challenge for us to embrace. From speaking to people from different countries, I have seen that the Irish model has moved on a great deal. There is more to do, but we are well ahead of many countries. I would love to work with the House on the issue of universal design.
I move amendment No. 19:
In page 35, between lines 24 and 25, to insert the following: “(4) Without prejudice to subsection (5), no rent shall be defined as “cost rental rent” whereby the total amount of such rent would exceed 35 per cent of the applicant’s net income as determined by a housing authority.”.
I wish to make three points. I am conscious of the order of the House today, so I will be brief because many other Senators have tabled amendments.
Amendment No. 19 has been tabled in the same spirit as my previous amendment, which was amendment No. 9, in that it ensures that the cost to the person availing of housing is affordable. Affordability is a key issue, which Senators Moynihan and Higgins discussed in great detail on Committee Stage. The amendment allows for rent to vary from person to person, providing more flexibility and mixed income communities, which are important and something that the Government supports fully. I am favourably disposed towards cost rental. It works and is a good mechanism and I support it. I believe in cost rental in the truest sense of the term. By "affordable", I mean that the rent is no greater than the building, management and maintenance costs of the property. Those are the key planks underpinning my proposal. This would eliminate the speculative aspect of housing and reinforce the idea of homes as a social good and, indeed, a social necessity. Perhaps a nice house has been built somewhere but its cost is a bit higher than normal. This amendment, which ties cost rental to the income of the applicant, would allow for someone who wanted to pay a bit more to get a bit more. That should not pose a problem. At the same time, it also allows people on lower incomes to get a cost rental home at a rent that is affordable.Clearly this is what everyone is trying to achieve. I would like to think this amendment is acceptable. I do not think it is controversial. I am conscious this will be my last time speaking in the debate and I am fully behind what everyone is trying to do. It is important that we tease out these issues. People have varying perspectives and views and it is important to respect those views. I thank the Minister of State and the Minister. I look forward to hearing what the Minister of State has to say.
There is a lot of logic in what Senator Boyhan has said. It makes sense. I am interested to hear the perspective of the Minister of State on the amendment. To speak briefly on the amendment tabled by Deputy Higgins-----
The percentage of the population that will, unfortunately, have a disability in future will increase significantly. I very much welcome the review of the disability strategy in the Department. It is heartening to hear the number of submissions. The strategy will be a roadmap to provide essential housing for people with disabilities.
This comes back to some of the arguments we made earlier regarding arbitrary figures and points. Cost rental is defined as the cost of building, financing and the necessary and appropriate management costs. This is defined. It is what it is and it does not change regardless of whether a person's income is X or Y. This is the definition of cost rental. If we were to include the provisions suggested here, we would be looking at something different from cost rental. I am not saying there is anything wrong with looking at something different but we would not be looking at cost rental because the definition of that is the cost of building, financing and necessary and appropriate management fees. It is important to make that point.
A whole chunk of renters pay 60% of their salary every month for rent. It was mentioned that we do not need arbitrary figures. We do need a figure. In Sinn Féin's view, we need to put in the Bill the figure of 30% of what people earn and ensure that rent would not exceed this. This is the definition of affordable. That would be incredible for ordinary people. It would be absolutely transformative. Every week, people would have a roof over their head for a cost of 30% of their income. We need to put this wording in legislation.
I want to address the issue of cost being cost. The cost over a period of 20 years is much different from cost over 40 years, 60 years or 80 years. I prefer the term "affordable rental", which is rent that is affordable for people on median incomes. This is at the heart of Senator Boyhan's amendment. All of the experts in the pre-legislative scrutiny stated affordable rental for people is approximately one third of the value. We need to work to try to make sure that what we are calling cost rental, but which is affordable rental, is linked to this.
I remind the House that what the Government has in the Bill is not cost rental. It is cost plus profit. The Government is saying it might be a reasonable profit but it is cost plus profit. This is what the Government is including and allowing in the Bill. Germany and Austria have in place limited profit associations, which are legislated for and which we do not have.There is nothing stopping a housing association or a private ethical operator coming in here and charging cost per profit under current legislation, guidelines and market policy. However, this is putting cost plus profit into the Affordable Housing Bill. When we talk about cost being cost, end of story, we must remind ourselves that in this Bill cost is not cost, but cost plus profit, and we must ensure what this is costing is affordable. If that means extending the term loans then so be it, but it must be affordable for people in this country who earn median salaries.
Senator Moynihan has put it very well. There is a point I should have made earlier when we were discussing the previous amendment from Senator Boyhan that referenced the bottom 40%. The Minister of State might note that given we are only reserving 10% for affordable housing under Part V, it would be very reasonable to have 10% of developments affordable to the bottom 40% of earners in this State. It seems a very reasonable provision. It is similar where the median income is concerned. When he spoke earlier, the Minister spoke of €75,000 being not very much but the fact is it is still two median incomes, effectively, combined. We are therefore looking at the bottom 50% of earners in the State and that is the cohort for whom the cost is likely to represent a larger proportion of their income. That is why it is relevant there.
I must point out those concerns about the 40% do not apply in this suite of amendments. These three amendments do not talk about 20% or 40%, they just talk about the proportion of income. However, it is those below the median income, those in the bottom 50% of the population who are finding 50% or 60% of their income is going. These people are then having to make choices and sacrifices in respect of other life opportunities because of the amount of their income that rent takes up and because they do not have reserves, other assets or other streams of revenue. Consequently, they are making choices about whether or not their child will have extracurricular opportunities, whether or not they will access health treatments they may wish to access but cannot otherwise, or whether or not they will take the risk of returning to education. All of those are choices a person makes.
When we talk on a practical level, it is not an arbitrary figure. When any household or family sits down and looks at their finances for a week, a month or a year they look at what they can afford; they ask if they can afford this or not. We want to ensure that discussion is about two thirds of their income rather than more than that. We want only 30% of their income taken out. Various Senators have variations on that. I have 33%, I think Sinn Féin has 30% and Senator Boyhan has 35%. All of these begin with the key point that affordability should begin with what is affordable for the individual, what is affordable for the household. That is the policy purpose of cost rental. If we cannot achieve cost rental being 33%, 35% or 30% - effectively one third of people's income - then we should extend it and have it become 60 years or 80 years. We are confusing the priority point here. The priority point is the experience of people paying rent and that they pay it at a rate they can afford and their household can afford. That is the policy goal we have as a State. Then the mechanisms around that, be it the idea of looking to a longer period of time or a longer way of spreading costs, those become the mechanisms to achieve it. My concern is we have begun with the mechanisms but then we are not willing to commit on the outcome, when in fact the outcome should be the priority.We have built-in reviews that would happen every few years, which we will come to in a minute. Some of these amendments tag affordability to an individual's income but even if the Government did not want to do that, it could tag it as a percentage of median income or a percentage. Term times and scales can be adapted accordingly if we begin by asking what people can afford. That is important. We have added profit in, as Senator Moynihan has said. We have accommodated the needs or desires of a private market and private investors in this regard. They want a limited equity return and want to know there is a guaranteed return. We are accommodating that. I do not see why we would not accommodate and make as a priority the needs of the person concerned.
I get frustrated by the point about limited equity because there is predictability there for the investors. They can plan, based on that 4%. We simply want for those who are renting to be able to plan based on knowing that the amount concerned will only be a percentage of their income. If the cost is the cost and people's incomes change, we want to provide flexibility and variability to reflect that and carry them through those periods of time.
This is a fundamental point and I hope it can be addressed. I worry that a failure to have a proper definition of "affordability" may be the scuppering of the success of some of this cost rental.
I thank the Leas-Chathaoirleach. I will now address amendment No. 19 as tabled by Senators Boyhan, Keogan and Norris, amendment No. 20 as tabled by Senators Higgins, Ruane and Black, together with amendment No. 22 as tabled by Senators Warfield, Boylan and others. Following on from the discussion on these points on Committee Stage, I certainly understand the positive intentions behind these amendments, which aim to limit rents to a certain proportion of an income, be that 30%, 33% or 35%, of a tenant's net monthly income. These are often used as rules of thumb for housing affordability, and are admirable aims.
However, as was stressed during the debate on Committee Stage, the proposals suggested in these amendments simply cannot form part of a sustainable financial model in which rents cover costs. That the rents charged cover the costs of provision of the homes is the core principle of cost rental, for which there seems to be a remarkable degree of support across the political spectrum. To put it simply, detaching rents from actual costs and linking them instead to income metrics absolutely is not cost rental. Rents that are linked to income, be it at 30%, 33% or 35%, introduce a fundamental uncertainty about whether the rents paid by tenants will actually cover the costs incurred in providing the homes. We have seen the sustainability challenges this presents in the case of differential rents for social housing. The cost rental model only works when landlords who provide the homes have a significant degree of certainty that the rents they are permitted to charge will cover the costs.
To move to an income-based rent would move away from the essence of what cost rental actually is. It would either see landlords make a loss on the provision of homes or require the State to commit to funding the difference between an income-linked rent and the actual cost rent on an open-market basis into the future. It is intended that the majority of cost rental developments will be State-supported by means of upfront one-off capital subsidies, such as the cost rental equity loan or the serviced sites fund, and-or the provision of State land at no cost.
The requirement for an ongoing, current State subvention to the cost rental sector, which would depend on the varying income of the individual tenants, would create a requirement for additional State funds to be used to subvent these homes on an annual basis. This would be directly contrary to the self-financing element of cost rental, which will allow the model to be scaled up to deliver homes for a significant number of households. Simply put, accepting these amendments would require the ongoing commitment of additional State funds on a variable basis, in addition to the already significant capital funds planned at the outset.Given the additional financial commitment, this would constrict the amount of cost-rental homes that could be developed and therefore reduce the impact that the sector will have on the overall rental market. For these reasons, we cannot accept the amendments.
I will add a few more points in response to what the Senators said. With regard to Part V, I should point out, in reference to 20% on all public lands, that under the Land Development Agency Bill there is a minimum of 50% designated affordable on public lands plus 20% social and affordable. That amounts to 70%, and the Minister has said he will have power under that Bill to increase it to 100% in many areas, including Dublin. That is on the record.
Second, we all know that the only way to increase affordability, reduce rents and give everyone a chance to get a home is to increase supply. The Government is keenly focused on getting far more high-quality, sustainable homes onto the market. Obviously, it is key that first-time buyers can access them. The State is delivering them through the LDA, as has been discussed many times. Many people quote the example of Austria. In Austria, the debt financed on cost-rental by the banks is quite significant for new homes. The Minister has spoken about the limited return. We have heard Deputy Ó Broin and others say that they want to get low-risk pension funds that can plan a modest return into the market because that will deliver more quality, cost-rental homes which are sustainable and whose rents are reasonable at below 30% of market value. That is the target; that is what we want.
The Minister is on record that in the first instance, and this is where people are missing the point, there will not be a huge amount of private sector investment in this because the methodology is not yet proven. We are trying to provide the best legislation to give cost-rental in this country the best chance of success, learning from the pathways on which other European countries have embarked. If the State can prove that this model works and can deliver high-quality, affordable cost-rental homes below market value, then potentially other investors or low-risk pension funds may come into the marketplace. That is what we want to increase the number of units on the ground, because the State cannot take everything on its shoulders. It has so many demands. We have a record budget for housing, but we can only go so far, so there is a great urgency to do that.
This will be reviewed. We are at pains to make that key point. Once we can prove that this model works, and the State will be key in doing that, people will feel the benefit of it. The key point is that it is starting this year. There are homes on the ground this year that families will have keys to and can have certainty about cost-rental.
Okay, but there are other amendments to be dealt with, and they are clearly set out in front of us.
I thank the Minister of State. I differ from him but I respect him. He is part of the Government and, regardless of what we say on this side of the House, the Fianna Fáil, Fine Gael and Green Party Government has a massive majority and can do what it wishes in terms of policy. That is the reality, and the record speaks for itself. However, I thank the Minister of State for his consistency, the respectful manner with which he always conducts himself and for making his response. That is all we can do. Ultimately, when we leave the Chamber today or the media discuss us in the newspapers tomorrow with regard to this Bill or we go out and explain to the city and county councillors, members of the public or housing associations, at least we will be able to say what we argued for, believed in, what we could stand over and the Minister's response.
I love the theme today that we will have affordable houses for affordable purchase and rent this year. Remember, this is June. It is very ambitious. I absolutely wish the Government all that success. Nobody would be happier than I would be if there was more affordable housing. I thank the Minister of State. I will not argue with him, and it is nothing personal. There are difficulties and I do not believe it is as easy as people think. I am not suggesting the Minister of State thinks it is easy either, and I thank him for his engagement in this debate.
I thank Senator Boyhan for his intervention. I am at pains to point out that I value what Senators say in the Chamber, and we have accepted amendments through this process when Senators have convinced us that the amendments they put forward were required.We must strike a balance between what we do and advice, but I assure Senators that everything they say, as we review this legislation, is taken into account.
I move amendment No. 20:
In page 35, between lines 24 and 25, to insert the following: “(4) Without prejudice to subsection (5), no rent shall be defined as “cost rental rent” whereby the total amount of such rent would exceed 33 per cent of the applicant’s net income as determined by a housing authority.”.
Amendment No. 21 is in the names of Senators Higgins, Ruane and Black. It arises out of committee proceedings. Amendments Nos. 21 and 23 to 25, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.
The amendments address the mechanisms whereby rent may be changed over a period. It is in that context that I note that there is provision in the Bill for rent to change over a period. Rent is not set and does not remain the same. There are provisions for the changing of rent. For this to work consideration must be given to the previous points made about affordability, which we have discussed. I suggest that a way to blend that is for the Dáil to look to a period, if we are find that rent in cost rentals exceeds 35% and hits 40%, 50% or 60% of peoples' incomes, at that point there may be a mechanism to trigger an extension of the period from 40 years to, for example, 50 or 60 years. That may well be a way of combining the concerns that were expressed in the previous discussion.
I have another concern. The Minister mentioned that landlords will not be guaranteed a return. If those landlords, housing authorities, public bodies, AHBs, non-profits or co-operatives that do not have a responsibility to deliver a profit, they are able to be more flexible and, for example, work on extending the financing provision and the period of repayment and thereby exert downward pressure on the cost of the rent where that is needed to meet the criterion of affordability. That is the flexibility that one has when the actors with whom one works are not required to have a big payout and a certain number of years for an investment fund. In fact, they do not serve two masters but solely serve the social goal of achieving a short-term and medium-term provision of secure and reasonable affordable rent and, indeed, the long-term benefit of improving the rental stock.
The Minister of State, in his response, made the case for why there is a danger of a particular kind of landlord playing a key role. I am not impugning their character as they have completely reasonable motives but they simply have different responsibilities. Therefore, they are not as free to be flexible when their core social need requires further flexibility.
My amendments address that same question of flexibility.I am reasonably confident that this was not the intent in the drafting but I am concerned with the way that section 34 is drafted. Cost rental could be construed as having upward only rents. The devastation and damage caused by upward only rent reviews in Dublin city was notable. They were a plague on businesses in Dublin.
This is a small set of reasonable amendments. Where the Bill states "plus", I seek to insert "or minus" afterwards. If we are providing for the rent to increase in response to changes in, for example, the harmonised index of consumer prices, we should also provide that the rent might decrease in relation to same. My greatest concern regarding this issue is section 34(4)(c). That goes to the nub of this problem. The initial cost rental price in section 34(4)(a) is the initial maximum rent plus "an amount, calculated ... to take account of any change in the Harmonised Index of Consumer Prices". Then section 34(4)(c) prescribes that in a subsequent setting of a rent with a review, the new rent will be "the rent set by the previous setting of the rent by way of a review, plus" an amount calculated in relation to the harmonised index of consumer prices. Effectively, each subsequent review only provides for going higher and for adding to rents based on previous reviews.
There are the original costs, albeit they might need to more flexible. Amounts are added by a review that looks at consumer prices and a few years later, there is another review. This review does not simply look at the cost plus the current situation with consumer prices but looks at the cost, the previous increase, another increase and so forth. That goes to the point that, effectively, at each review no flexibility is allowed to move downward, even if we might have a whole set of reviews that are taking place in a period of time when the harmonised index of consumer prices has been deflationary. I hope we see deflation in some consumer prices, certainly in the areas associated with housing.
This is effectively upward only rent. It can be added to but not subtracted from. I am not suggesting that the original core cost rent should be subtracted from but I am saying that amounts that have been previously added under different reviews cannot be subtracted. I hope and expect that is not the policy intent. Perhaps it is simply a matter that in the drafting there was an assumption that prices will always continue to rise but it is what is provided for in the legislation.
My amendments are simple. They simply seek to insert the term "or minus" after "plus". They do not require that rents be reduced but they give the scope for a reduction if that is what is indicated by the harmonised index of consumer prices. This is a sensible set of amendments that addresses an unforeseen consequence that may arise. The amendments do not require a reduction but provide the option of a reduction. They do not impinge on the original core prices but they allow flexibility. If, for example, we have an artificial spike at a point in one review period, that artificial spike would not then carry on having a consequence for the next five, ten, 15 or 20 years.
I hope the Minister of State will be able to address this and I hope he can accept these amendments. They are sensible and reasonable.
I will be interested to hear what the Minister of State says. The points Senator Higgins has made are valid.The protection of the core price, the initial part, is not necessarily in the amendment being proposed, which is a flaw. Perhaps we can take account of what has been said in this Chamber, and that when this Bill is debated in the Dáil we ensure we protect the original core set-price rent, because that is the cost of building, maintaining and financing. Those costs are set and we cannot go below that for fear of making the model unviable. The amendments, as proposed, mean that one could potentially go below that. I know that is not the intention of what the Senator said in her contribution. I accept the points made but as the amendments are framed currently, they are problematic. I ask the Minister of State to take that on board.
I will now address amendments No. 21 and 23 to 25, inclusive, tabled by Senators Higgins, Ruane and Black. These amendments are concerned with how, over time, rents will be allowed to rise to a limited extent. The gradual increase in rent, over time, is a fundamental element of the cost-covering model, which is cost rental, as we all know. This model may seem counter-intuitive, but it is an important element. The starting rent for a cost rental home is the end result of a calculation which takes into account the total rent paid over 40 years, including a projected increase in rent in line with consumer inflation, and should meet the projected overall costs of providing the home.
Under the model, the rent paid by tenants should not increase over the long term in real terms, adjusted for inflation. Indexation gives cost rental landlords the confidence to set an appropriately low cost-covering rent at the outset, but it should be remembered that landlords, therefore, take on the risk. The assumption that future consumer inflation, translated into indexing of the rent, will ensure rents cover costs is just that - it is only an assumption based on projections. This level of risk would be higher if cost rental landlords were required to factor in potential reductions in rental income. This could mean significantly higher starting rents, thereby making cost rental far less affordable for tenants on the first day of renting. Whereas in the private rental sector, a landlord may be able to increase rents well in excess of inflation to compensate for years when rents fall. This option is not available to a cost rental landlord who is, quite rightly, restricted by the level of consumer inflation.
Restraining rent increases in line with inflation brings significant benefits, as the years pass, which has been referred to as the maturation of the cost rental sector. This should make cost rental more competitive in relation to market rents over the long term, amplifying the sector’s restraining impact on the wider rental market. The proposal of enforced rent cuts in periods of negative consumer inflation would be problematic for the sustainability of this model. Although downturns in the consumer price index are expected to be rare and temporary, it still introduces a significant risk in that landlords would be forced to lower rents below cost-covering levels. Cutting rents might be fine if landlords were taking a significant profit margin and could, therefore, afford to take a temporary dip, but cost rental is funded and founded upon having a minimal margin, just enough to cover the unavoidable risks and to reassure lenders about loan repayments. The possibility of enforced reductions in rental income will not help attract landlords, such as approved housing bodies, into the new housing sector, nor will it encourage lenders to make loan funding available at sufficiently low interest rates over long periods of time. I alluded to Austria earlier in the debate, which many Members refer to.
I appreciate the thinking that with a period of negative consumer inflation, management and maintenance costs should reduce, allowing the overall rent to be reduced.The costs which could potentially fall, the management overheads and routine maintenance jobs, are projected to be a relatively small share of the overall costs. Repayment of initial capital costs and planned capital expenditure on life cycle works form the majority of the cost base in the first rental projects supported by the Government. In fact, planned works to extend the functional life of homes, such as replacing kitchens, bedrooms, windows, lifts, or even roofs, may well not form the cost base, even if consumer inflation turns negative.
We only have to look at recent history. The consumer price index fell year on year during each month from April 2020 to February 2021, due to the Covid-19 crisis. However, the cost of renovation works on homes has significantly increased in that time due to a complex mix of factors, including Brexit-related supply disruptions and limits to the sector capacity exacerbated by additional lockdown delays.
For the legislation to hold a maximum rent level temporarily flat in periods of negative inflation is one thing, but the possibility of enforced below-cost rents, when money still needs to accrue in sinking funds and cover life cycle works, not to mention the repayment of loans, could only mean one thing, namely, a significantly higher starting rent at the outset to hedge against this uncertainty.
I should also emphasise we are discussing the caps on rent increases. A cost rental landlord is always free to charge below the limit and overall economic conditions may influence this. If market rents fall significantly, reflecting a general economic downturn, a cost rental landlord may need to forestall any rent increase or even offset a slight reduction in order to keep homes occupied and ensure rental income covers costs. Local authorities, approved housing bodies and other landlords will enter the cost rental sector with their eyes open, but they must have some confidence they will not be forced into running deficits.
It is for these reasons we oppose the aforementioned amendments.
It is interesting when we speak about landlords to ask who is envisaged and imagined in that. I am glad the Minister of State envisages housing authorities and affordable housing bodies being part of that landlord piece. Nonetheless, some of the narrative around what is needed in terms of security and so forth seems to be framed from the perspective of thinking of the central provider - the imaginary central provider for a long time in the State - as the private landlord who is seeking private financing in respect of a private investment.
We need to be clear when we are talking about local authorities and housing authorities, as well as housing bodies which receive funding via the State, that the State is accessing 0% financing on this. There is a huge flexibility in many cases. We have access to that financing so that does not create as stringent a constraint as framed. It is available. The core goal and the message from Europe is to provide housing and cost rental. We need to build in a little more space and flexibility on that.
My amendments give the Minister flexibility. They do not require rents to be cut at such a level. My amendment proposes to add the words "or minus" after the word "plus", in the text, "plus, an amount, calculated in such manner as the Minister may prescribe, to take account of any change in the Harmonised Index of Consumer Prices". The Minister of State mentioned potentially high renovation costs, which is a major input for landlords to pay, and noted that while the general consumer price index may have deflated, certain items may have continued to be highly priced. All of those factors can be accounted for under the phrase "calculated in such manner as the Minister prescribe, to take account of any change". I am not saying a plus or minus figure will automatically apply. I am saying there is scope for a reduction and ti should be an option.
We talked about the impact of Covid-19 and the sudden deflation that has happened.If it was a clearly artificial dip in the harmonised index, the caveat provided for in section 34(4)(b)(ii) would allow the Minister to say he or she is only going to take on board 10% or 15% of this dip because he or she regards it as temporary. That flexibility is already there. However, if we had a crisis of some other kind that led to a spike and an artificial inflation in prices or if there was inflation over a five or ten-year period followed by a five or ten-year period of deflation, my amendment simply gives flexibility. If we looked at it with regard to amendment No. 23, which talks about the review following a review following a review - multiple reviews along - I do not believe this will necessarily impact on the core cost piece. If the Minister of State wants to caveat this so that he specifically and explicitly says that the amount cannot go below the core cost piece, so be it. He should bring in a provision that caveats that but what I am concerned about is an amount that was added by means of a review becomes permanently embedded and cannot ever be reduced. It is not the core base. It is about how the amount that was added in a first, second, third or fourth review cannot then ever be reduced. The Minister of State can certainly protect the base if he wishes and if he wishes to have a new version, he can do so but he should give himself flexibility because 40 years is a long time and a lot can happen during that time. When we had upward-only rent in Dublin, there was a lot of logic at the time about why that was needed but when we hit the recession, upward-only rent in Dublin really caused problems. This is not a requirement; it is an opportunity and the Minister of State should look to this in the Dáil and look to build in that flexibility because he may well need it at some point in the next 30 to 40 years.
To compare a sustainable housing tenancy in cost rental to an upward-only rent review, which is a contractual relationship on a commercial property, is to completely misunderstand what we are trying to do here. It concerns me that the Senator could make that comparison. A commercial property on Grafton Street where a tenant is commercially obliged to meet upward-only rent reviews over a period of time right through to the Commercial Court is completely different to what we are doing here.
I wish to make three points. The first relates to the actors doing this. The State will be the key actor delivering this product and it has to prove that it can do that. Second, in terms of periods of recession, if rent does drop drastically, it is in the interests of the State to keep its housing stock full. Obviously, if there are market reductions, it is important that the State tries to frame it. We want to get low-risk investment funds in. Deputy Ó Broin and others talk about getting low-risk investment funds in. Under the Austrian model, which has been pointed out at every point in time in this House, funds come in from banks to give prime financing to deliver these units. If we are providing for a reduction in rent every time the consumer price index dips down and turn it into not cost rental but a loss-making model, who is subventing that loss? Who will pick up the tab for it? If the LDA, which will provide a significant amount of cost rental, provided a significant proportion of a site in cost rental below the market value, which it will be, it will still be washing its face. In other words, it is covering the cost of the property. If it did not do that and gave further reductions, another landlord could say that this is a clear infringement of state aid rules. The State would be distorting the marketplace because it would be providing a product that is not washing its face in competition with the private sector.We must, therefore, be careful what we are suggesting here. There are so many pinch points to get through. We are providing below-cost 30% sustainable rental tenancies for families. The more numbers we get up and the more units we get on the ground, the more stabilised the housing market will be. That is what we are trying to do.
I move amendment No. 22:
In page 35, lines 28 to 31, to delete all words from and including “to” in line 28 down to and including “prescribe,” in line 31 and substitute “that is up to 30 per cent of the net income of the proposed tenant”.
Amendment No. 25 in the names of Senators Higgins, Ruane and Black arises out of committee proceedings. It has already been discussed with amendment No. 21. Does Senator Higgins wish to move the amendment? It has already been discussed.
We can perhaps show the Senator latitude later when she can bring the point up again. We must, however, abide by the rules or else everyone will want them broken. Is that okay? I greatly appreciate the Senator's co-operation.
I move amendment No. 25:
In page 36, between lines 13 and 14, to insert the following:
“(8) A tenant may request a rent review, including a downward review, to reflect a change in the harmonised index of consumer prices and other such circumstances and the mechanisms for making such a request shall be set out by the Minister in regulation.”.
Amendment No. 26 in the names of Senators Warfield, Boylan, Gavan and Ó Donnghaile arises out of committee proceedings. Amendments Nos. 26 and 27 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 26 refers to page 36 in the Bill and relates to a rent review notice. The Bill states that it shall, "be served not earlier than two weeks before, and not later than four weeks after, the date on which the setting of the rent by way of a review is to take effect".The standard for the Residential Tenancies Act is 90 days for a review. I firmly believe that two weeks, especially for people on an income that qualifies them for cost rental, is not enough time for notice to be given for a rent rise. We want 90 days before for a rent review, not just two weeks. That provision would then be similar to other rental policies.
Amendment No. 27 is a strong protection to ensure rents are not increased just like any other rental property in the private market.
I support these amendments, which are extremely reasonable. One of the concerns is that there will be for-profit actors who are required and motivated to maximise the return for their investors in this area and this model is designed for them to be inserted into it. That is a pity because it creates a conflicting tension. In that context, it is important that there be full transparency about how those rents are being calculated in a new review. A very short notice period would have a financial impact on people who have qualified for affordable housing and therefore do not have easy access to financing from the banks. They would have had to prove they do not have such access in order to get the affordable housing qualification in the first place. A two-week notice period would be very damaging for them. Aside from that, a two-week period is not a reasonable period for challenging that review, looking at the household index and questioning how this new amount was arrived at. A 90-day period would be in line with policy in other areas. I was rebuked by a member of the Government at one point for suggesting that affordable housing would be treated differently from other areas. Those in cost rental should expect the same basic provisions, protections and decency of notice as those in other forms of rental accommodation. Changing the period to 90 days would be an appropriate alignment with other areas and would allow people to make contact with the Residential Tenancies Board to seek advice and comparisons or, indeed, simply to get their finances in place. These are both very reasonable amendments. Amendment No. 27 relates to transparency and allows people to challenge or question a matter. Amendment No. 26 seems to be a basic provision to allow appropriate due process to be given.
I thank Senator Warfield for his amendment and Senator Higgins for her contribution. Amendment No. 26 would require cost rental landlords to give three months’ notice of any rent increase. It may well be that this amendment uses the provisions of the Residential Tenancies Act for the private rental sector as a reference. However, this does not take account of the ways in which the cost rental model set out in this Bill is fundamentally different. A tenant in private rental accommodation faces the prospect of a landlord imposing a rent increase any time after 12 months from the previous rent setting. The tenant must wait and see what the landlord will do and cannot predict the level of the rent increase, only knowing that it can be up to 4% if the property is in a rent pressure zone. In contrast, a cost rental tenant will know the exact date on which any rent increase will take effect. It will also be set out in the tenancy agreement, the key terms of which will be prescribed by the Minister in regulations. A higher rent will always have effect on the same date each year, that is, the anniversary of the commencement of the tenancy, so an increase cannot catch anyone by surprise.The tenant also knows that any rent increase will be limited to the change in the published consumer inflation index and that the document notifying the rent increase will give him or her the information necessary to check that the increase is within the allowed limit. Since the Minister is empowered to prescribe in regulations the form that this notification document takes, amendment No. 27 is not necessary. The Minister can already prescribe that this calculation be shown in the rent review notice.
A cost-rental tenant will also know the cut-off point after which a landlord cannot notify him or her of a rent increase for that year. If no notice is received by four weeks after the anniversary date of the tenancy, the tenant can rest secure knowing the rent cannot be increased until the next year. Tenants will go into cost-rental homes with their eyes open, enjoying the benefits of the sector but also prepared for the possibility of a clearly limited level of rent increases, linked to inflation, in accordance with their tenancy agreements.
There are consequences of a three-month notice period. If rent increases are limited to the change in a clearly defined index, what about the change in that index during those three months, which constitute a full quarter of the year? Furthermore, the index information may only be available in arrears. These are the kinds of complexity that are provided for in the Bill as currently structured.
The Bill also provides notice and safeguards for a cost-rental tenant being notified of rent increases. Having been aware all along of the date when a new rent could take effect, a tenant will have at least four weeks' notice before he or she needs to start making monthly rent payments at a higher rate. Moreover, any rent increase will be suspended if a tenant believes the increase is not within the allowed limit and refers the matter to the Residential Tenancies Board, RTB, for adjudication. A tenant can make such a referral, taking advantage of the RTB's online portal, within four weeks of receiving notice of a rent increase, which is a reasonable period, given that the prospect of a rent increase cannot surprise the tenant.
It is for these reasons that I do not propose to accept the Opposition's amendments.
I do not buy that all. The Bill says in black and white:
A rent review notice shall— (a) be served not earlier than two weeks before, and not later than four weeks after,
I do not see how this amounts to a tenant having his or her eyes open as regards a rent review. Standard practice under the Residential Tenancies Act and the RTB is that a tenant needs to get at least 90 days notice of a rent review.
I will press the amendment in order for us to progress the debate.
Senator Mullen is being good to me today.
There is a concern that the owner can seek a revocation of the cost-rental designation once the minimum cost-rental designation period comes to an end and that the Minister must revoke it, given the mandatory meaning of "shall" in section 39. The minimum period is at least as long as the cost calculation period of 40 years, which we have debated and in which respect amendments have been accepted. The provision in the Bill builds in what is essentially an automatic end to the cost rental designation. For us, this raises a number of concerns.
I have with me a note from Threshold, which I would like to cite for the record. It states:
The process of mandatory revocation upon application undermines the long-term benefit of cost rental. It means the occupants, over the 30 years, will pay off the cost of the building for the owner and no further tenants can benefit from this, either in the form of lower rent or investment of the rent in further cost-rental projects. Cost-rental is its most effective when done over an extended period of time and across multiple sites. Building in this revocation undermines the cost-rental project.
Essentially, I propose that we delete section 39.
This goes to the core of the issue. It is one of the tests and it is sensible. Not to go back to previous amendments but with regard to the 90 days and the idea that tenants would be well aware and go in with their eyes open, I presume landlords will also do so. It should not be too much trouble for landlords to give 90 days' notice if they know the date. It would be reasonable to put the onus on the landlord to give people 90 days' notice if the date is so predictable. Certainly, landlords are more likely to be dealing with multiple properties. This is their work versus many people who may not have the same availability of time and may have to seek advice from friends on how to engage with the Residential Tenancies Board because it is not automated or to hand for everybody.
This section goes to the core of the question as to whether we are really doing cost rental. There are two strands and two reasons for doing cost rental. One is that we provide rent at an affordable cost over a period, meet the short and medium-term need for rent and have a longer period to facilitate it. The other is the outcome of the long-term piece for the State, which is that we keep cost-rental provision. The moment the costs have been paid is the point at which we get the dividend for society. This is when we are at a point at which the costs have been covered, and if rent continues to be paid, it will be in a way that continues to benefit society, where it is paid to local authorities. This will provide capital funding for future housing.
I believe that in the Vienna model such dividends as may come generally feed into the provision of more affordable housing and this is meant to be the virtuous circle that would be created. If we allow for revocation as soon as the costs are covered, we break the virtuous circle and the benefit. Effectively, this is the key. This is the difference between cost rental and leasing. If we are simply paying the mortgages on a whole set of properties plus a percentage dividend every year, which is a limited equity dividend that is more than any investor would ever get from any bank, then we are effectively saying we will pay the mortgage as well as an extra little limited equity return every year along the way and, at the end, people keep a house, home or dwelling that has been paid for and that should then be available for the public good. The costs having been paid, it becomes an asset again for trading on the market.
This is the model we currently have with leasing, whereby we have 25-year leases on whole new housing estates. The State is paying the mortgage for these 25 years and, at the end, the investor walks away with the property, sometimes with a 4% increase in rent per year. It is very similar to what we have with leasing. It is a 40-year period versus a 25-year period but if we allow investors to cash out on cost rental at a certain point, then we are in that space of leasing. I know this is not what is envisaged with cost rental but by allowing for revocation in this way, we are facilitating and incentivising it.I will come to my own amendments later as there are additional concerns in such a scenario, if we have situations where, as well as paying the mortgage, as well as paying an equity return every single year, we may also be giving a massive capital asset to developers in the form of land. That is an additional concern I will come to in the next set of amendments. However, on this general question of revocation, I find it hard to see why we have this model in the Bill. If it is approved housing bodies, our non-profits and co-operatives that are entering this area, and they are entering with the goal of housing provision, why then would they seek revocation? If it is the State or housing authorities which are entering this area with housing provision as their goal, why would they be seeking revocation? Again, I worry this is yet another example of when really good housing policies are adapted and have loopholes inserted into them just to ensure they serve the needs of one particular kind of housing provider, namely, the commercial investor. That is the kind of body which will be seeking revocations in this model and that is yet another argument against this provision. If the Government wishes to have commercial investors or investment funds in it, then so be it but the Government should not create loopholes in the law to serve them. If they wish to be part of this let them be part of it, let them take the dividends they get, let them continue to take the rent at cost-rental after the costs have been returned but the Government should not allow commercial investors or investment funds have a revocation where these homes move straight back into market pricing.
I thank all the Senators for their contributions. I will now address Senator Warfield’s opposition to section 39 and his amendment No. 28. Section 39 of the Bill provides for two ways in which the cost-rental designation of a dwelling may be ended. The first is when the owner of a property explicitly opts out of the cost-rental sector, which they will be entitled to do when the minimum period specified in the initial designation of the dwelling has expired. The Minister must consent to the revocation of the cost-rental designation in such circumstances.
The second route to the removal of a cost-rental designation from a dwelling is when the Minister is "satisfied on exceptional grounds that it is in the public interest". It is not envisaged that this power would ever be used in the normal course of events, but it is provided for in the legislation to deal with extraordinary cases, such as unforeseeable critical structural damage to a dwellings. This is an obviously sensible safety valve provision, at a time when cost-rental is only just being established in Ireland and I would hope that this emergency provision need never be utilised.
The first route to removal of a cost-rental designation, at the request of the owner of a dwelling after an agreed minimum period has expired, deserves some consideration. A number of Senators have raised the issue that the Bill does not guarantee that in all cases homes will be subject to cost-rental regulations in perpetuity. It is true that the owner will commit at the outset to a property remaining in the cost rental sector for a certain minimum period. This will be at least as long as the period over which the financial model spreads the initial capital costs, which will be at least 40 years, but it may be considerably longer. I should stress that this 40 years is an absolute minimum, and is envisaged only in cases where there is no public investment, no State-backed lending, and no subsidy. However, any project which receives public support will require a very long-term commitment. This will be set out in the funding agreement. Government and local authorities need the flexibility to set appropriate conditions for the varied ways in which the State can support cost-rental. Where, for example, our local authorities and the Land Development Agency deliver cost rental homes, I envisage their committing homes to the sector effectively in perpetuity and never requesting revocation of cost-rental designation. It is for these reasons that I must reject the Opposition amendment and the opposition to this section.
I still believe this undermines the long-term benefit of cost-rental. I am worried about the tenant who may have been in a property for 40 years. What will happen after that period?Will they face a market rent or, worse, eviction? Senator Higgins has spoken about international investors. There is no obligation on them to act in the interests of tenants, in contrast to AHBs. What will happen then? Will the local authority have to provide alternative housing? I regret that the Minister will not accept the amendment.
I move amendment No. 29:
In page 40, between lines 35 and 36, to insert the following: "41. When there is public land which is made available for the purposes of the development or provision of cost rental dwellings then such dwellings shall revert to public ownership following the termination of the cost rental period or any extension thereof under section 28.".
As previously discussed, we are talking about a model whereby investors are able to cash out when the minimum period has expired. A recent article in the Business Post looked at the fact that Ireland has done a lot of work to, effectively, de-risk the market for investors. There is probably no safer investment than that of an investor who knows that tenants are, effectively, guaranteed. A rent level is guaranteed, as is an additional equity return. A 40-year contract ensures the costs will be covered and at that point an investor might walk away with an asset. That is a concern and it is close to the leasing model we have seen around the country. However, where that takes place on public land, we go past a point whereby we are protecting from risk, guaranteeing returns and, indeed, that the costs will be covered, and we go to a point where we are, effectively, transferring public benefit to investors.
The Minister mentioned the expectation that the period when there is a public contribution would be longer than 40 years and would, effectively, be in perpetuity. However, I do not see that in the Bill. It needs to be in the Bill in the stronger sense of it. I am only dealing here with the issue of land. My amendments are a way of enforcing that sense of in perpetuity as it relates to public land. They suggest that where public land is made available for the purposes of the development or the provision of cost-rental dwellings, such dwellings should revert to public ownership following the termination of the cost-rental period, whatever that period would be, or any extension thereof.
I welcome that the Minister has mentioned that where there is any public contribution, there will be a guarantee of a longer period which could stretch in perpetuity. I would welcome more detail on how it will be enforced. My amendments are a means of ensuring that where cost-rental properties are built on public land, they return to public ownership. That way, the State benefits and, therefore, the people and the public benefit from the long-term period of return from the asset that emerges. We would have a social benefit in the rent paid during a 40-, 50- or 60-year period, whichever of those is legislated for, and we would also have the social and State benefit of the property being paid for and ending up in ownership of the State.It would be useful to accept this amendment. It would send a useful signal in respect of public land because that is one of the concerns. We will be discussing the Land Development Agency Bill, and there is and has been a concern that public land may effectively end up being made available for private investors to build cost-rental units and if they choose to leave after a set period, there is a question about what will happen to the properties and the public land.
Amendment No. 30 is quite similar. It is simply a different way of framing it, but it is about the property reverting to public ownership. The Minister of State signalled that he was open to and intent on the idea of ensuring the availability of cost-rental dwellings in perpetuity where there is public intervention. I am hoping that he will indicate that he is open to accepting either amendment No. 29 or amendment No. 30 or, perhaps, if he has a version of them which he might include. The core issue is that we should not find ourselves, after a set number of years, in a worse situation where there is less public land available for public housing provision. We do not want a situation whereby we bequeath future housing problems to the next generations. We must bear in mind both our responsibility in terms of the immediate housing needs and crisis we face and our responsibilities to future generations in the State. In that regard, we must have caveats that ensure the State will be in a position to provide for its housing needs after the minimum periods of cost rental have expired.
I welcome the Minister of State. On Committee Stage I raised the issue of tenancies in perpetuity and the importance to the Green Party of ensuring that if somebody takes up a tenancy at 20 years of age, he or she is not out on his or her ear at potentially 50 years of age, as was the position at the time. With the acceptance by the Minister of extending the period to 40 years, we also do not want to see a difficulty when somebody is 60 years of age. Certainly, the Minister of State, Deputy Noonan, indicated that it is the intention that the majority of cost-rental tenancies would be in perpetuity. I ask that it be examined from the point of view of including something in the Bill. I am not entirely happy with some of the language in the Bill. I believe we could expand it beyond public land and have it where there is State intervention. Some assurances were given on Committee Stage, and I am happy with that. However, I wonder if the Minister of State would consider putting it into the Bill.
Amendments Nos. 29 and 30, tabled by Senators Higgins, Ruane and Black, propose to require that all cost-rental homes developed on public land automatically revert to State ownership at the end of their designation as cost-rental dwellings. The current policy is that the best way of ensuring that cost-rental dwellings developed on public land or with State financial support remain within the cost-rental sector is by requiring that they be designated as cost-rental dwellings for a very long period. This would, in practice, equate to their retention within the sector in perpetuity for the functional lifespan of the homes. This requirement would be set out as a condition of the land transfer or in the funding agreement.
The Government and local authorities need the flexibility to set appropriate conditions for the varied ways in which the State can support cost rental. Where, for example, local authorities and the Land Development Agency deliver cost-rental homes, I envisage their committing these homes to the sector effectively in perpetuity, given the functional lifespan of the homes. If an entity such as an approved housing body has accessed State lands to deliver cost-rental homes, it will have been responsible for all costs relating to their construction and ongoing maintenance for the entire period, with the exclusion of any land cost being passed on as a benefit to the tenants in correspondingly lower rents.It is the individual tenants themselves, and not the State, who will have been paying rent to the AHB for the duration of the cost-rental period. The State may have made no additional financial contribution to the development of the homes bar the initial access to the land. As such, requiring that all properties built on State lands in this manner would revert to the State, even if no State funds had been used for their construction, would appear extremely disproportionate, and would likely dissuade entities such as approved housing bodies from seeking to access State land to develop this cost-rental model. Approved housing bodies have a core role, which is enshrined in legislation, to deliver social and affordable homes.
It is for these aforementioned reasons that I oppose these Opposition amendments.
I am concerned about a phrase used in the response regarding the access to the land being the value that the State has contributed at the beginning. That signals to me that this is envisaged as being the giving of access to public land. The State's relationship with the land is envisaged as being solely at the beginning of the cost calculation. I do not believe that approved housing bodies would be like that. If they are approved housing bodies whose goal is the provision of social and affordable housing in the long term, then they are questionable.
In addition, with all of the costs of the AHBs covered, including all of their management costs and other costs that were built into the model, that they would require that the ownership of an asset at the end period would incentivise them to decide to go into this area. If they go into this area to provide social and affordable housing and seek to have their costs covered, which the Bill provides, then the idea that the land moving back into public ownership at the end would be a disincentive to them would lead me to question whether their goal is to provide social and affordable housing.
If an approved housing body wishes to continue to provide social and affordable housing then it is important to mention that the minimum cost-rental period is a minimum period. My amendment No. 29 stipulates "any extension thereof under section 28". Therefore, there is nothing to stop, for example, an approved housing body to look for an extension to continue providing rent at the level set under the cost-rental model for an extended period following the expiration of the cost-rental period. They can continue to provide and, indeed, they may make an arrangement with the State in respect of continuing to provide. If we are talking about a public asset, which is land, and stating that we do this as part of lowering the costs at the beginning and then leaving State and public ownership, we will do a disservice to future generations.
I welcome what has been said about tenancies in perpetuity and I am thinking about those individuals. I do believe that tenancies in perpetuity should be imbedded into the Bill. I am concerned not simply about the tenants now, in ten years and 20 years over their lifetime but about the new 25-year-olds in 50, 60 or 70 years' time and the State's capacity to provide for them.
The Minister of State talked about the lifetime of a housing development or a development. If it is the fact that in 50 or 60 years' time a particular cost-rental housing development has seen out its life in terms of that belief then maybe that site will become the site of the next hospital, school, addresses the new childcare needs or becomes part of our State energy provision. Public lands are the greatest resource that the State has to meet the public's needs so it is reasonable that we would allow anybody engaging and partnering with us to meet all of their costs. In fact, we provide for them to meet all of their costs and make a dividend to make a profit. However, it is not reasonable that we would hamper our ability, as the State, to meet the public's future needs, be they housing or other needs, on public land by creating this kind of vulnerability. Therefore, I will press amendment No. 29.I am not assured by the phrasing with regard to access to land or with the cost of the land being deducted at the beginning. That sounds like a giveaway to me and we need to avoid that. Let us make sure to address the needs of the public both now and in the future. The Minister of State can and should secure that. Most actors in this area, including housing authorities, approved housing bodies and co-operatives, the key providers of cost-rental accommodation through this model, would be very happy to work with him on that basis and would be happy to know that the land may revert to public ownership in 40, 50, 60 or 80 years. I do not believe that would dissuade them from engaging with cost rental.
Garret Ahearn, Jerry Buttimer, Malcolm Byrne, , Micheál Carrigy, Pat Casey, Shane Cassells, Martin Conway, Ollie Crowe, John Cummins, Emer Currie, Paul Daly, Aisling Dolan, Robbie Gallagher, , Seán Kyne, Vincent P Martin, John McGahon, Erin McGreehan, Eugene Murphy, Joe O'Reilly, Pauline O'Reilly, Mary Seery Kearney, Barry Ward.
I move amendment No. 30:
In page 40, between lines 35 and 36, to insert the following: “41.When there is public land which is made available for the purposes of the development or provision of cost rental dwellings, following the termination of the cost rental period, such property will revert to public ownership.”.
I move amendment No. 32:
In page 43, between lines 25 and 26, to insert the following: “(4) Where there is a more than five per cent inflation in the price of dwellings in the State recorded in any given year, this section shall be suspended for the following calendar year.”.
Nonetheless, I will speak to my amendment. The other amendments were looking to avoid the mechanism of shared equity. My amendment is a compromise in which I am seeking to insert an internal break mechanism within this portion of the Bill on shared equity. With regard to the idea of shared equity and of the State taking an amount and paying an amount to bridge the gap and allow persons to meet market prices, the concern is this does not deal with the core issue of the intense inflation of market prices.
The prices in Ireland on housing and their increase are not natural or appropriate and are absolutely out of line with any other areas of increase in life. Wages are not going up to match this. No other provisions are going up. It is in an upward inflationary spiral. The concern is the shared equity component and proposals under this Bill will contribute to that increased inflation and it will become a matter, not that we are allowing people to meet the prices, but are allowing prices to rise because the gap is being filled and guaranteed. That is not my opinion, that is the opinion of almost every economic expert who has looked at this issue.
The Economic and Social Research Institute, ESRI, has highlighted there is a danger of an inflationary impact. The Central Bank has highlighted this can have an inflationary impact, increasing the price of houses and driving them up. Robert Watt, in his former capacity with the Department of Public Expenditure and Reform, has highlighted this could lead to the inflation of house prices. We are getting red flags from every possible quarter about the impact of this measure. I am not doubting the need people have in terms of housing and there is an intent to meet it, but the question is whether this tool will be the best way to meet it or will it increase the costs.
There are valid arguments which have been made in respect of this. I will not rehash them further but if the Government wishes to proceed with this route and if all the warnings do come through and we see an increase in inflation - and maybe the Minister of State is right and these other experts are wrong and maybe prices will not rise - my amendment gives us a break mechanism or an internal break. The amendments states if prices do rise and if there is an inflation of "more than five per cent inflation in the price of dwellings in the State recorded in any given year", that this section would be suspended for the following year. It implies if we see it heating up, we will apply some measure of cooling down, so if there is a danger this shared equity is heating the market up further, we will take a year's break and review.
This does not stop this section proceeding, but it protects us and gives us a way of responding to adverse consequences, if they do emerge. It is a reasonable mechanism. I do not want to call them unforeseen consequences, because the potential consequences have been very much foreseen, foreshadowed and fore-signalled, but if we do have inadvertent consequences, which are not the intention of the Minister of State, we will be able to apply a cooling-off period to assess if shared equity has been contributing to the inflation without having to go back to the drawing board in terms of new primary legislation or anything else.
My amendment does not assume shared equity has been the driver of inflation, even though it seems it is the likely driver. It suggests one would have a 12-month period in which to assess whether this part of the Bill is working out as was envisaged and hoped, or whether it is contributing to inflation.It seems a sensible and precautionary measure. Given this involves a substantial amount of State finances, it seems reasonable that we have this measure to ensure we take timely action, if we need to.
I opposed the section on Committee Stage. We tabled the amendment and I opposed the section. This time, we were told by the Chair, the deletion of the part would conflict with the principle of the Bill. It was ruled out of order, in accordance with Standing Order 154, as it is in conflict with the principle of the Bill as read a Second Time. I accept that but I said it seems ironic-----
-----given what we are being told, as Senator Higgins has outlined, by officials from the Department of Public Expenditure and Reform, by the ESRI, by the Central Bank and by a host of economists and given that we know from experience in London that it drives up prices, the shared equity scheme is in conflict with the objectives of an affordable housing Bill. It should not be in this Bill at all. I and Sinn Féin will support the Bill today but I clearly state Sinn Féin's absolute opposition to this shared equity scheme.
My support for cost rental and other measures in the Bill should not be seen as any kind of tacit support for this developer-led shared equity scheme. It will be open to first-time buyers and those who lost their property due to a relationship breakdown. They will eligible for a secondary loan from the new State agency, to cover up to 30% of the value of the home or a maximum of up to €100,000 on a property sold, for up to €400,000.
Borrowers will start to pay back the secondary loan after five years, at an interest rate of 1.5%. I already said this should never have been allowed into this Bill in the first place. We are warning that this provision will drive up house prices, which will result in more profits for developers. The origin of this proposal lies in two documents which were developed by Property Industry Ireland and Irish Institutional Property. These two groups are in favour of co-living and lobbied the Department not to introduce a ban on co-living.
The London School of Economics, referring to that upon which this scheme seems to be based, stated it has pushed up house prices in London by 6%. There are a serious of price caps for the scheme, such as €500,000 for a Dublin city apartment and €450,000 for a house in Dublin city. I should not have to come in here to say these prices are not affordable and this policy - I will say it one last time - has no place in an affordable housing Bill. It is not just Sinn Féin saying it will push up houses prices.
This is pro-developer, old-school Fianna Fáil policy at its very worst. Shared equity loans will not make homes more affordable.
I have listened to Senator Warfield and Sinn Féin talk about the shared equity scheme, prior to the Bill even being published. They had written off this scheme and said it would do X, Y and Z, before the Bill was even published. We keep hearing the references to the London School of Economics. What one will not hear Senator Warfield referring to is the UK's audit office, the equivalent of our Comptroller and Auditor General, which stated it increased supply in London by 14% with only 1% inflation. One will not hear Senator Warfield or Sinn Féin referencing that.
The shared equity scheme will bridge the gap between what an individual or a family can afford under the macro-credential rules and the cost of the unit. We all know those people. They are our family, friends and neighbours.This Government wants to assist them by bridging the gap to what the market is charging and helping people to get a foot on the ladder. It is not surprising that Sinn Féin wants to oppose that because it is against home ownership. We are in the business of assisting individuals and families in getting onto that ladder. We make no apology for that. It is worth noting that when the ESRI was before the joint committee addressing this issue, it stated that demand without supply-side measures might result in inflationary pressures. It did not comment on the fact that we were going to increase the number of affordable purchase homes under Part V by 10%, which the Minister will introduce on Report Stage in the Dáil, nor did it comment on the local authority affordable purchase scheme, which is also a supply-side measure. I argue that the shared equity scheme is a supply-side measure but that is a debate which we will not agree on. This scheme will be availed of by many individuals and families and it will assist them in getting their foot on the ladder. That is what we are about as a Government. Just like the help to buy scheme that has assisted 22,000 individuals and families to purchase their first home, which Sinn Féin also opposes, this scheme will deliver for individuals and families and we make no apology for that as a Government.
I fully support this measure to deliver home ownership. It is one of a number of such measures. We should put it in that context, that it is a short-term measure to provide an option for people to buy their own home. It is limited to €75 million, which is less than 1% of an €11 billion mortgage market. The words "could lead" and "can lead" have been used, which are not definitive. To say that something which equates to less than 1% of the market will have a significant impact on inflation of house prices is a stretch of the imagination.
Some €75 million could provide 2,000 families with the opportunity to own their own home this year through this legislation. Let us not forget that we are trying to provide avenues to home ownership. It is not the only thing in this Bill. We also have the local authority affordable housing section, Part V housing, and cost rental. It is not the sole method of delivering home ownership. Sinn Féin keeps referring to the developer-led old Fianna Fáil. Who in Sinn Féin builds houses? Are they magicked out of somewhere where we do not need carpenters, chippies or bricklayers? Who builds houses? It is people. I do not know about the reference to this being developer-led. Perhaps the wizard of Hogwarts will magic the houses out of nowhere because I do not know how Sinn Féin will build houses. We are here to try to provide affordable homes for families. This is the first significant affordable housing legislation that has been brought to this House, with four avenues to deliver home ownership. Since Sinn Féin focuses on one and says that it rejects that, I cannot wait to see how it will build houses without builders.
I thank Members for their contributions. I know they have valid concerns about this initiative and I can see them. The Minister, Deputy Darragh O'Brien, has committed that this scheme will be reviewed after one year, including in his discussions with the Department of Public Expenditure and Reform.If there are any unintended consequences, those will be watched closely. I will bring the Senators' concerns back to the Minister. Senator Casey quite rightly put into perspective the share of the market and possible adverse consequences, which are difficult to see with the size of the scheme.
A few other points are sometimes missed in the debate. The ESRI was honest and open that it did not assume any increase in supply when adjudicating on the scheme. That is why this Bill and the Land Development Agency Bill have a significant number of supply-inducing measures. The Land Development Agency will increase the supply of social and affordable homes by up to 100% in the Dublin area, with a minimum of 50% in other areas, but it will be higher than that. The provision of Part V affordable homes will increase from 10% to 20%.
Senator Cummins referred to the help to buy scheme, which helped 22,000 families to get keys for their homes for the first time. The ESRI has welcomed the Rebuilding Ireland home loan and stated that it is a good initiative because it is a targeted measure to incentivise provision of homes. This may reconfigure the marketplace to create better output of three-bed semi-detached starter homes that need to be produced because there is a significant market and there has been a substantial delay. When people are removed from the rental market, with many paying 35% or more to service their rental payment than they would to service their mortgage, that frees up a property for the marketplace, which could potentially happen through this scheme. That should not be discounted. I know that it should be time-limited and monitored, and I concur with those remarks.
Any intervention that we make needs to be watched closely. For people who are in touching distance of getting their own home under macroprudential rules who cannot quite get there because of the affordability measure, the options are to do nothing and wait for these schemes to have an impact, which will take time, or to take action, which we are trying here, to give people the opportunity to get their own home in the marketplace. The National Audit Office in the UK stated that such a scheme helped to increase supply. There are many other measures and this has to be seen in a broader context. If this was the sole measure, I would be concerned, but the fact that it is a measure coupled and compounded with a suite of measures to try to increase supply mitigates it. I appreciate and understand the concerns. We will keep an eye on it. The Minister has said that it will be targeted and time-limited, and will be reviewed after the first year.
On the question of who builds houses, the answer is not real estate investment trusts. I live in the city centre and see their offices. They are not building houses. Builders build houses but sometimes that middle tier is what we mean when we talk about developers. In many cases, we are talking about investment funds. I see many things being built. When we are driven by the policies of developers and investors, although I am not suggesting that about anybody here, they will go for where the best investment is. That is why we have so many empty office buildings all around the city. The investment and development returns from empty office buildings are good, so there are thousands of square feet of empty open-plan office spaces all over the city, because it makes sense for developers and investors. Builders build houses. There is a dawning spirit of returning to the State being the developer and having that direct relationship with builders.That is something everybody wants. Sinn Féin wants it and Fianna Fáil is speaking about it also. We want local authorities to be able to work with builders. We do not necessarily need international financial instruments and the financial market to be required when local and housing authorities can access the finance themselves and can be supported in doing so. I will come to my amendment on that a little later. We have the builders with the necessary skills. We do need to examine apprenticeships and skilling up. We also need to consider investing and the concept of the State being a good employer of, and a good guaranteed source of income for, builders in the provision of public housing. That would be really positive. I would imagine everybody wants that.
With regard to the provision under discussion, I welcome the fact that there is a review. It is because there has been a fuss about this section in advance of the Bill being published that some of the dangers have been averted. It was therefore useful and constructive that there was a fuss in advance, and that is why we are seeing a built-in review. It is why we are seeing a monetary limit set at €70 million. This will help. These will be key measures. I do not assume the market will automatically inflate because the section of market influence will be relatively small. Nonetheless, we do need a mechanism for responding. The Minister of State mentioned that there will be a review. What happens if the review tells us something we do not like? How do we exit? What will be the cooling-down mechanism? I have been trying to suggest an appropriate response if we find that the legislation has a consequence. It may not be that the overall market will inflate but that the deflation we hope we might see from supply-side measures will be less than it might be because of this measure.
It is key that we move towards recognising that one of our policy imperatives should be reducing the cost of houses. That should be an active goal, not just increasing supply. We should actively consider the question of how to reduce the price of houses. I am very happy for the 22,000 families who have got a home but I worry about the next buyers under the scheme having a large amount of debt. They will be in debt based on a housing cost that is unreasonable because the cost of houses in Ireland right now is unreasonable. It is great that they can access mortgages but they are choosing between an unreasonable purchasing cost and an even more unreasonable rental cost. They are torn between two unreasonable situations in accessing a home. I worry that they will be carrying more debt because the prices of houses are set at such a high level. It is a case of the frying pan and fire for many households. I really feel we need to take the heat down on both of those.
I hope that when the Minister of State examines the review mechanism, he might consider in the Dáil what will happen after the review and on the basis of it. If he cannot accept the amendment at this point, he might consider a similar set of tools for the Government to have in response to a review if we have unwanted consequences from this measure.
I hear the views expressed. There will be a review and the Government will take action if there are unintended consequences or if some of the developments articulated come to fruition.
I was very lucky in life to have been elected to the local council in 2009. In the period 2009 to 2012, I remember sitting in the council chamber and so many of my colleagues being so frustrated with the director of housing and director of finance. They asked the director of housing why houses were not being bought, saying houses were available for €40,000 to €50,000 in Mullingar. There were three-bedroom, semi-detached houses representing incredible value. One could not contemplate building them for that amount. The director would rightly respond the council was saturated in debt and did not have the capacity to purchase.I mentioned in this House before that Westmeath and Dublin city were piloted for the mortgage to rent scheme because all the affordable houses and mortgages offered at the time were unsustainable. The whole system had no capacity. There were thousands of ghost estates. When the Senator mentions local authorities building houses, she should note my party absolutely believes in local authorities building houses. When people make contributions, they should note that the facts do not back up the case that we are not building houses. From 2012, we have increased social housing supply by 300%. I refer to direct-build housing. We have built 34,000 social homes since 2016. I want to be very clear about that; that is the record. I acknowledge that it is not enough and that there are thousands on social housing waiting lists who are frustrated. Families I deal with every Monday morning in my clinic are very frustrated that everybody cannot be accommodated but we are trying. We did try very hard and we did reduce the social housing list by upwards of 30%. When Senators are making contributions, they should always note the State was locked out of the markets and that borrowing meant an interest rate of 14% or more. The State had no capacity to deliver social housing or embark on a capital programme. We have to be clear on that. We are picking up the pieces.
By any reasonable analysis, two thirds of construction workers have left. We see this after Covid. I was at a site last week in my home town where the builder was saying that if I had the money for him to double the output, there would be a huge challenge because the skills he needs do not currently exist to meet the capacity. That is why we are trying to bring more apprentices into the market. The Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, is working so hard to deliver on that and to increase our capacity to deliver at scale.
Working with the Minister, Deputy Darragh O'Brien, I, as Minister of State, am so committed to delivering high-quality, social and affordable homes. It is not about ideology; it is about homes for families on the ground who so badly need them right now.
I move amendment No. 33:
In page 44, between lines 22 and 23, to insert the following:
"Amendment to Urban Regeneration and Housing Act 2015
45.The Urban Regeneration and Housing Act 2015 is amended—
(a) in section 5(1), by the insertion of the following paragraph: "(a) the site has, under its present ownership, been the subject of a grant of permission by the planning authority for the development of three or more houses on the site, and that the development has not yet commenced,", (b) in section 5(2), in the definition of "site", after "means" to insert: "any area of land exceeding 0.05 hectares or, for the purposes of section 5(1)(a) and/or section 5(1)(b),", (c) in section 6, by the substitution of the following subsections for subsection (2): "(2) The owner of a site which has been a vacant site pursuant to section 5(1)(a) for 12 months or more shall apply to a planning authority, in such form as may be prescribed by the Minister, to enter on the register a description of the site including a map thereof.
(3) A person who contravenes subsection (2) shall be guilty of an offence and shall be liable on summary conviction to a class A fine.", (d) in section 7(1), by the deletion of "Before entering a site on the register a planning authority" and the substitution of the following: "A planning authority may of its own initiative enter a site on the register pursuant to this Part, but before doing so", (e) in section 15(1), after "site" by the insertion of the following: "which is situated in an area where there is a need for housing", and
(f) by the substitution of the following for section 26: "Prosecutions
26.(1) An offence under this Act may be prosecuted summarily by the local authority in whose functional area the offence is committed.
(2) Notwithstanding section 10(4) of the Petty Sessions (Ireland) Act 1851, summary proceedings for an offence under this Act may be instituted not later than 2 years from the date on which the relevant planning authority forms the opinion that there exists sufficient evidence to justify the institution of proceedings for the offence concerned, but in no case shall such proceedings be instituted after 6 years from the date of the alleged commission of the offence.
(3) Where an offence under this Act is committed by a body corporate and is to have been so committed with the consent or connivance of any person, being a director, manager, secretary, or other officer of the body corporate, or a person who was purporting to act in such capacity, that person, as well as the body corporate, shall be guilty of an offence and shall be liable to be proceeded against and punished as if he or she were guilty of the first-mentioned offence.
(4) Where a person is convicted of an offence under this Act, the court shall order the person to pay to the relevant local authority the costs and expenses, measured by the court incurred by the relevant local authority in relation to the investigation, detection and prosecution of the offence, unless the court is satisfied that there are special and substantial reasons for not so doing.".".
As the son of a recently deceased builder, I feel the need to speak up for builders from time to time although I recall that it is not just in this House that there can be suspicion about builders. In "The Naked Gun", Jane asks a guy called Vincent Ludwig how he could have done something so vicious. Ludwig says: "It was easy, my dear. You forget I spent two years as a building contractor." Word seems to have got around.
The amendment I propose is an improved version of one I proposed on Committee Stage but which fell when the Bill was needlessly guillotined by the Government along with around 30 other amendments on 4 June last. I will not stop saying the Government needs to stop seeking the guillotining of legislation in these Houses, especially in this House and on Committee Stage. There is no excuse for it. I ask Government parties to stand up to whoever gives the orders and not let this happen. It is bringing our politics into disrepute. Given the scale of the housing crisis facing the State and its citizens, it strikes me that it would not have added to the problem to have allowed a few extra hours of debate. I will leave that aside.
This amendment is about the vacant site levy as it currently stands under the Urban Regeneration and Housing Act 2015, as amended. Clearly, the levy is not working as intended. The main problems are that it is not raising significant revenue for local authorities and is not being applied uniformly across the country. In fact, there may even be a question as to whether it is even possible or realistic to try to apply the levy in a uniform way. That is a much greater question going beyond the scope of this proposed amendment. It is not at all clear that the levy is succeeding in its overall aim, which is to encourage the freeing up of development land so it may be used to develop housing and to address the issues of homelessness and the shortage of new homes, which we are all concerned about.I note in passing the significant progress that has been made in some of the more severe aspects of the housing crisis. That has to be acknowledged, but there is a need for more adventurous steps to address this national crisis.
Details released under the Freedom of Information Act show that there were 359 sites on the vacant sites register as of last December. These are spread across 22 local authorities. It is estimated that these vacant sites have the potential to hold between 18,000 and 21,000 residential units, with 4,700 potential units in Dublin city alone. There are about 65,000 households on the housing lists at present, so this puts into perspective the dent that could be made in the housing crisis by the development of vacant sites. Nine local authorities have no vacant sites registered, including the local authority in my own county of Galway.
Following an amendment which came into force in 2019, the rate of the vacant site levy is currently 7% of the market value of the land, but the amount of money being raised through the levy is still low. As I understand it, just €419,000 was collected by local authorities last year: €882,000 was received, but €463,000 of this was paid by Dublin City Council to itself because three sites on the register are owned by the council. Therefore, councils are only bringing in an average of €20,000 per annum from the levy, which is nothing to write home about and is certainly very little return for what is a very significant administrative burden on councils. There is €1.7 million in cumulative fees left unpaid across the 22 local authorities, even though the Act requires payment within two months of a demand being issued by a council. This raises huge questions. Why are councils not pursuing this money? An outstanding levy is a simple contract debt and its recovery can be pursued in the courts in the normal fashion.
Councils have consistently raised issues about the drafting of the Urban Regeneration and Housing Act 2015 and have said it is difficult to interpret. They feel they are understaffed and swamped by administration when trying to implement the levy. Many of the councils that have no sites registered have said there is an issue with how exactly they should assess whether there is a housing need in their functional areas. Others have not done so because of delays in formulating their county development plans. Several councils have said it is difficult to establish ownership of sites. Another problem is that An Bord Pleanála seems to apply a different interpretation of “housing need”, and how to assess it, from that of local authorities. This has led to over 200 sites being struck off the register on appeal in the last couple of years.
The Department has perhaps unfairly pointed the finger at councils and councillors. I know that one principal officer apparently commented in writing that his sense was that some local authorities would go soft on the vacant site levy "because they don’t want the blow-back from their councillors." I do not think this is a very fair reflection on the reality on the ground, because the problems with the operation of the levy are not the making of local authorities. Several councils which have registered sites, such as those in Donegal and Sligo, have expressed doubts about how realistic it is to expect development on those sites in future, on the grounds of demand both from developers and from prospective buyers. Again, this raises a question as to whether a uniform scheme across the country is realistic or appropriate.
The biggest question in my mind is the one that underlies this amendment. Are there large numbers of vacant sites out there which are not being captured by the levy, and which there is no incentive to develop at present? Are there landowners out there who know they own a vacant site, but are sitting on their hands and keeping schtum in the knowledge that the council does not have the means, the manpower or the inclination to place their property on the register? The cumulative problems faced by councils, and the very patchy application of the levy, seem to suggest that these problems exist.
I now turn to the amendment on the Order Paper. We need to know that the vacant site levy is based on residential land in areas where the council identifies a need for housing and where the land in question is suitable for housing. That is the basis on which councils add vacant sites to the register and the levy is taken. My amendment seeks to add an element of self-assessment by imposing on a property owner who has received planning permission for a development of three or more houses, thereby excluding any possible family developments, a duty in law to apply to the council for the registration of that vacant site if the development has not commenced within 12 months, mirroring what is already there in legislation.It would then be a matter for the council to levy on the basis of its test which includes that it is in an area of housing need and that the land is suitable for housing.
There is a slight discrepancy between the amendment as submitted and the amendment as it appears on the amendment list. It is simply the omission of the word "or". That could be easily cured if the Minister of State is minded to accept the amendment. It is not the case that the amendment would make it a requirement to be a vacant site that planning permission has been granted, it is and-or. If planning permission has been granted a person has a duty to seek to register that, in addition to the existing situation where the council can register properties where it has identified that it is in an area of housing need, it is residential land and is suitable for housing.
The amendment changes the definition of what qualifies as a vacant site to include any site which has been the subject of planning permission for a development of three or more houses at any time under its present ownership. Under the terms of the 2015 Act, such sites would qualify to be placed on the vacant site register after 12 months without development commencing. One-off family houses, or small family developments on family land, would not qualify here, since it will only apply to sites where permission had been granted for three or more houses.
The amendment introduces an element of self-assessment to the levy. Instead of relying solely on councils to identify and register vacant sites, it would place an onus on the landowners themselves who own the lands which have been subject to the grant of planning permission to self-assess, and declare their own vacant sites and apply for them to be added to the register. Only those sites which qualify as being in an area of housing need would then be subject to the levy , but the failure to properly register the land would be an offence, which could be prosecuted by the council. On conviction, this would attract a class A fine of up to €5,000.
Given that the vast majority of the population are law-abiding and civic-minded people who do not want to find themselves in court, this should lead to an increase in the number of sites overall being registered voluntarily. Most people will choose not to take the risk of not registering their vacant sites. The remainder of the operation of the vacant site levy under the 2015 Act would remain unchanged. Councils would retain the ability to place sites on the register on their own initiative, and it is important that we continue to expect them to do so. The explicit inclusion of planning permission as a factor in the analysis of what is and is not a vacant site is an important change, because it would penalise the hoarding of land which has been the subject of planning permission, with the intention of selling it on later at a greater profit. Because the vacant site levy appears not to be effective, revenue is being lost, land with potential for development is not being developed and there is a potentially inequitable situation where some people who have land that would be eligible for the levy not being hit by it simply because it has not been registered by the council where others are. There are many defects that require remedy. The amendment would allow councils to more easily identify vacant sites, since councils will know which properties in their functional area have been granted planning permission. Again, I think this would be a more logical approach and allow the levy to operate more smoothly, and to allow more vacant land to be identified.
I hope the Minister of State will find the amendment acceptable. It would make more effective the vacant site levy with which there are problems and would increase the amount of available land for housing. I urge the Minister of State to support the amendment and invite colleagues to do likewise.
I wish to thank my colleague, Senator Mullen, for putting forward this amendment. It is an excellent amendment. That is why I am supporting it. However, the issue is perhaps even more complex than Senator Mullen outlined. He touched on it when he mentioned the local authorities. I have many concerns about the Land Development Agency. However, one of the issues of note concerns the new master land register. It is quite extraordinary that local government auditors are constantly challenging local authorities, in their audit reports, about registration and balancing their properties and registered properties. Some local authorities have properties of which they are not aware. I know of one local authority here in Dublin which believes that it owns some land that it does not own. It is subject to a major legal challenge. It is a very substantial piece of land. I will not even mention it here, for fear of another bunch of vultures looking at it. It is in a very affluent place by the coast and is worth billions of euro. There are many issues there in relation to it.
Our planning authorities have the registers and the maps. Senator Mullen touched on the issue and spoke on it very well. He mentioned a number of local authorities that do not even have active derelict site registers. We know that there are derelict sites that are not used and are vacant. We know that local authorities have sites all over the place that are not utilised. We know that harbour and port companies have lands that are underutilised. We know that Irish Rail has very substantial lands from Wexford all the way up to Drogheda that could be utilised or are underutilised. Therefore, there is a whole range of issues. Of course, we know the other side of the issue, wherein local authorities will assert that they cannot do anything about it because when they challenge it, it goes to the board or through a judicial process that costs a fortune. From following some of the cases, we know that local authorities often lose the case. It is costing local authorities to chase them up and they are becoming disheartened.
There are many issues. However, there can be no excuses, particularly in cases where local authorities have lands that they have done nothing about. I can think of many places where local authorities have protected structures on substantial pieces of land. Of course, a protected structure is within the curtilage of the attending grounds of that building. There are limitations to that, so what do they do? They do nothing. That is really unacceptable. As the Minister of State is aware, the Land Development Agency is currently devising its masterplan. We are now in a situation whereby permission has been granted in respect of a lot of land, it has been hoarded, it is not being developed, there seems to be no penalty and there is no appetite within the local authorities to do anything. I suggest that part of that is because they have done nothing about their own issues and problems.
The Minister of State made a really strong case and articulated his points well. I hope that he will be supportive of this amendment in principle, because it is an important piece. We know it, but it has not been as well articulated as it was by Senator Mullen.
I spoke about the vacant site levy on Committee Stage. I spoke about how it is critical that we have a functioning and proper vacant site levy or a similar mechanism. I think everybody in the House will agree that what is in place at the moment clearly is not working. Senator Mullen has identified the various differences across counties in how it is applied and other issues. However, a mechanism similar to a vacant site levy or something to replace it is required. However, there is no point in having it if it is not aligned from the top down. We can start with our national planning framework policies, align the critical infrastructure to build on those policies, zone the land around that and then have a working practical vacant site levy. It is the ideal model. There are parts of it that are clearly not working at the moment. For me, it is not about the revenue that councils are losing out on because of the vacant site levy; it is the fact that we are not building houses where we should be, which is more important to me than the levy itself. It must be all about building houses.
I have spoken to the Minister for Housing, Local Government and Heritage on the issue. Perhaps the Minister of State can comment on it in his response. A review is under way of the vacant site levy, how it is implemented across counties and the various differences. I welcome that. We all agree that it is not fit for propose. I am not disagreeing with the Senator's amendment. I am saying that I can provide an example of a meeting that I had with Irish Water today at which we discussed the cases wherein people get planning permission and agree pre-connection, but when they go to build, Irish Water informs them that somebody came in ahead of them and the capacity that was there previously is no longer available and they cannot build.There are get-out clauses, even in what is being proposed by the Senator today.
While I fully support the Senator's points and the thrust of the amendment, I think the vacant site levy needs a complete overhaul. For the levy to be successful, it has to be aligned with the infrastructure, zoning and the national policies. Unless they are all singing in harmony, nothing is going to work. I support and trust what the Senator is trying to do.
I wish to state that I support the amendment. It is immensely sensible. We had previous debates on the issue. One of the first Bills brought forward by the Civil Engagement Group and a Green Party Member at the time concerned the issue of vacant sites. We sought to increase the vacant site levy at the time. We were told that it was not possible on the advice of the Attorney General, but two years later, exactly what we had suggested was implemented. It is always good to remember that the advice of the Attorney General can change and can be wrong. That is always worth noting.
However, the key issue is that the levy is not being effectively implemented. I agree that things need to be aligned in respect of wider policy, but we also need to begin by implementing it as it is currently in place. There are huge questions in respect of the local authorities and their resources, but in respect of the measure suggested by Senator Mullen to make it a requirement to register a vacant site, I think it is reasonable to place some of that administrative burden and obligation on the owners of the vacant sites for them to register it. That is a very good starting point. The Senator is not speaking to new sites and the question of what areas and land will be opened up for particular purposes. The amendment speaks to land in respect of which planning permission has been granted. Planning permission is both an asset - and land is treated as such in the case of land hoarding - and it is a responsibility. If planning permission is granted and an applicant has, through the planning permission process, effectively auditioned to be part of a town, city or a county, the permission has been granted because the applicant has made the case that he or she wants to be part of that planning. That comes with the responsibility to follow through and build ideally. It also comes with a very reasonable compromise responsibility, that is, the responsibility to register the planning permission and to set out the relevant period of time. It is completely reasonable.
I wish to add briefly that one large cohort of planning permission has been granted in respect of strategic housing developments. Sometimes there is a narrative that it is the wait for planning permission that stops things from happening. We must remember that there are strategic housing developments, many of which have not only been given planning permission, but have been able to skip the local authority stage and have been given fast-track planning permission because, as we were told, they were so keen and ready to deliver. Over 50% of those strategic housing developments that have received full planning permission have not commenced. It is vital that they pay the vacant site levy. I also ask that they be required to meet the new first-time buyer purchase requirements under the approved changes that are coming through.
I thank Senators Mullen, Keogan and Boyhan for putting forward the amendments.
The primary objective of the levy is to act as a mechanism to incentivise the development of vacant and unutilised sites in urban areas for both the provision of housing and the development and renewal of land, thereby facilitating the most efficient use of such land and sites, and enabling them to be brought into beneficial use rather than allowing them to remain dormant or undeveloped. This amendment will allow both the exclusion of certain undeveloped sites from the vacant site register as well as the removal of existing sites from the register on the basis that permission was not sought in the past five years. Furthermore, I wish to highlight that under the current provisions, the granting of planning permission does not prohibit a site from being included on the vacant site register, as simply implying having planning permission alone is not to define an indicator that works can commence on a site. A site can only be removed from the register when works have commenced. The next element of this amendment proposes that the owner of the site should notify the planning authority that his or her site is vacant and that there should be a fine associated with not doing so, while also allowing the planning authority to enter the site on its own initiative. The Act provides that a planning authority is responsible for administering the levy, provisions for the functional areas by establishing and maintaining the vacant site register, identifying vacant sites consisting of residential and regeneration land on the basis of the criteria outlined in the Act and applying the levy charge as appropriate. It could not be expected, nor is it likely, that individual site owners would undertake the consideration of their own sites and determine whether they are vacant sites in accordance with the criteria set out in the Act. It is the planning authority or An Bord Pleanála on appeal that is in the best position to make the determination.
The final part of the amendment, to limit the timeframe for initiating and prosecuting offences under the Act, imposes offences on individuals who acted on behalf of a body corporate and imposes local authority costs for prosecuting an offence on the individual if he or she is found guilty of the offence. Offences under the Act are liable to a class A fine. The payment of any class A fine that a person may be liable for under the Act is a matter for the courts and is governed by the Fines Act 2010. It is appropriate that the Act to amend the manner in which the court fines are administered is done under different legislation.
I mention this because Senator Casey noted that the Department is reviewing this legislation in the Department. It would be more appropriate if this amendment were to form part of that review. Valuable points have been made in the debate in connection with the vacant site levy and vacancy across the system. There are large differences between how the 31 local authorities operate in their functional areas . The Law Reform Commission is also analysing and assessing compulsory purchase order, CPO, laws. Its report on the matter should be very interesting. Some local authorities are way ahead of others in the area of vacant properties. Louth County Council, for instance, has adopted a progressive role in this regard and other local authorities have fallen behind. County Waterford accounted for 45% of the total take-up of the repair and leasing scheme. There are, therefore, significant disparities.
We are working on the issue of vacant sites and putting together a strategy that may require amendments to change the current Act. We would prefer to take that approach, if that is agreeable to the Senator, than to accept an amendment right now. I assure the Senator that we will take into consideration the matters he and other Senators have raised in that context.
I thank the Minister of State for his reply. Nobody could have any objection to his taking this matter into wider consideration in the context of looking more comprehensively at the vacant site levy how it is working or perhaps not working. That said, tempus fugitand people are waiting. My concern is that when things are being looked at, it can take a long time to look at them. People need housing. There may be an inequity as matters stand between those who are being nabbed for the levy and those who are not. There is a possible incentive in certain cases for people to sit on land. This is a matter of some urgency.
As I said this morning, I may introduce this amendment in the context of the planning legislation, which is also before the House. I ask that the Government consider whether there is enough substance in the amendment for it to pass muster without prejudice to the ongoing and necessary wider examination of the operation of the vacant site levy.
I assure the Senator that we appreciate the urgency of this matter. Unfortunately, I cannot accept the amendment at this point. If something is not working, we must respond quickly because we know we are in a crisis. We will attend to this matter in the Department and I will raise the Senator's concerns with the Minister, Deputy O'Brien, as he makes his decisions, especially in the context of his housing for all strategy.
I move amendment No. 34:
In page 44, between lines 22 and 23, to insert the following:
“Report 45.The Minister shall, within six months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining supports that are available to local authorities, the Housing Agency and other State bodies under national or European Union financing mechanisms for the purposes of obtaining financing for the development or provision of dwellings to be designated as cost rental dwellings under section 31.”
This amendment addresses the fact that the fiscal context has changed, as we have been flagging for a long time. More financing is available to the State, other public actors and the European Union.This is a question of finance from the European Union and from others. A number of my amendments suggesting specific mechanisms that might be used were ruled out of order. This amendment provides that within six months of the passing of the Act, the Minister lay before the Houses of the Oireachtas a report outlining the supports that are available to local authorities, the Housing Agency and other State bodies under national or European Union financing mechanisms for the purposes of obtaining financing for the development of cost-rental dwellings. Six months is a reasonable period given that much of the information is in the public domain. This key role is the missing piece at the moment.
I apologise for interrupting. As it is now 5.30 p.m., I am required to put the following question in accordance with the order of the Seanad today: "That amendment No. 34 is hereby negatived; Fourth Stage is hereby completed; the Bill, as amended, is hereby received for final consideration; and the Bill is hereby passed."