Skip to main content
Normal View

Dáil Éireann debate -
Tuesday, 5 Feb 2002

Vol. 547 No. 3

Housing (Miscellaneous Provisions) (No. 2) Bill, 2001: Second Stage.

I move: "That the Bill be now read a Second Time."

As with other amending legislation in the housing code, this Bill ranges over a number of different areas. However, the principal driving force behind the Bill is the need to make statutory provision for a number of measures aimed at increasing social and affordable housing provision.

The priority afforded by the Government to social and affordable housing provision was clearly articulated in our Programme for Government and refined and updated in the Programme for Prosperity and Fairness and in the National Development Plan 2000-2006 and in other policy documents produced by the Government, most recently Action on Housing published in June 2000. This is the first Government to include targets for housing delivery in a national development plan. These ambitious targets include 41,000 local authority housing starts over the plan period and an increase in voluntary housing output from 579 in 1999 to 4,000 units per annum under the programme by 2006. In total, over the plan period, the housing needs of some 100,000 households will be met under the various social and affordable housing options.

Unprecedented progress has been made in meeting housing needs since the Government took office. In each of the five years since 1997 to 2001, successive record levels of housing output has been achieved. In total some 216,000 new houses have been built in the past five years representing some 18% of our total housing stock. We have also built up the local authority and voluntary housing programmes – the voluntary housing programme to levels never previously reached and the local authority housing programme to levels we have not seen for a generation. Last year's forecast local authority housing output of 5,000 units represents the highest level for more than 15 years. By the end of last year the Government provided more than 18,000 local authority houses since taking office, with a further 4,000 units in voluntary housing projects. My Department has also provided funding for more than 5,500 units under the shared ownership scheme. In the period 1997 to the end of last year, the needs of almost 50,000 families will have been met through the various social and affordable housing programmes.

The Bill adds to the wide range of legislative and policy instruments available to the Government in the housing area. In summary, it provides for a significant increase in the borrowing limit of the Housing Finance Agency to enable it to provide finance to local authorities for housing capi tal purposes and to extend the power of the agency to lend for additional purposes, including capital purposes under the Local Government Sanitary Services Act, the Waste Management Acts or other Acts prescribed by the Minister, and for lending directly to voluntary housing bodies.

The Bill places the affordable housing scheme on a statutory basis and makes provision for a clawback under this scheme and the shared ownership scheme. It introduces greater flexibility in relation to the administration of the new house grant scheme and provides an up to date statutory framework for financial assistance to organisations providing advice or research on housing issues. Provision is also being made for a number of other amendments to housing legislation and technical amendments to the Building Societies Act 1989.

I will now refer in some detail to the main provisions of the Bill. Section 6 provides a statutory basis for the affordable housing scheme, giving housing authorities and voluntary bodies clearly defined powers to build or arrange for the building of new houses for sale by them at an affordable price to eligible purchasers.

Our intention to crank up the volume of housing output under the local authority affordable housing scheme was clearly signalled in the national development plan. This scheme enables local authorities to construct new houses which will be offered for sale to eligible purchasers at cost price and, accordingly, at a significant discount from the market value of comparable houses in the area. The necessary funding to facilitate an output of 1,000 units per annum under this scheme has been provided for in the national development plan. The indications are that last year a total of 300 units were completed under the scheme, with 6,270 units under construction or planned at the end of September 2001. At least 150 units have been completed so far this year. Provision of new housing under the scheme complements activity under the shared ownership scheme, which achieved some 1,200 completions last year, exceeding the target in the national development plan. The improvements in output have been complemented by improvements to the terms of both schemes introduced in Action on Housing. These improvements include the introduction of a site subsidy of up to £30,000 in urban areas for houses built for sale under each scheme.

Section 7 provides for the payment by housing authorities of a mortgage subsidy to eligible persons who have received a loan from a housing authority, and that these subsidies may be recouped in part or all from moneys provided by the Oireachtas with the consent of the Minister and the Minister for Finance.

Section 8 requires each housing authority to establish a scheme which determines the order of priority to be given to persons to whom affordable houses are being made available for sale. The section also sets out the matters to which the housing authority shall have regard in the making of such a scheme. These include the accommodation needs and current housing circumstances of applicants, the period for which applicants have resided in the functional area of the housing authority and the distance of affordable housing from the applicant's place of employment. There is also provision for periodic review and amendment of the scheme of priorities by a housing authority.

Sections 9 and 10 recognise there is also a need to provide housing authorities with some degree of control on the resale of houses supplied under the affordable housing and shared ownership schemes, so that undue profit cannot be made by those to whom a house has been made available under either scheme. These sections, therefore, provide for controls, including a clawback of profit, on the first resale of houses purchased under these schemes in the event that houses are sold by the initial owners within 20 years of the date of purchase.

Section 10 specifically provides controls on purchase of the interest of the housing authority in a house within 20 years of the date of the shared ownership lease. The provisions in relation to the clawback on profit made on the first resale of a house under both schemes mirror closely the clawback provisions on affordable housing provided under Part V of the Planning and Development Act, 2000. In addition, sections 9 and 10 also provide that moneys accruing to a housing authority under these sections should be used by the authority in the provision of housing.

The social housing programmes remain the primary vehicle for providing access to accommodation to lower income households. The Government has committed itself, under the NDP and Action on Housing, to a four year multi-annual local authority housing programme of 25,000 starts, beginning last year and running through to the end of 2003. Consequently, local authorities are now building houses at a rate not seen for many years, to such an extent that, under the programme, there were about 7,000 starts in 2001 and 5,000 completions. As I indicated, this is the highest level of starts since the mid-1980s. The multi-annual approach, introduced to allow for greater forward planning and efficiencies of scale in delivering the increased local authority housing targets, is showing dividends.

To maintain this momentum under the various social housing programmes and give effect to the commitments in Action on Housing, section 17 provides that the borrowing limits of the Housing Finance Agency be increased from the existing limit of £1.5 billion to €6 billion. The present statutory limit of £1.5 billion has been in place since 1992 and will be reached by the agency by the middle of this year. The massively increased housing programme contained in the national development plan makes it both urgent and essential that the Housing Finance Agency's borrowing limit be increased. This increase to €6 billion will cover the agency for about eight years at predicted future levels of activity.

In recognition of the expanded role envisaged for the voluntary housing sector under the national development plan, section 17 also provides that approved voluntary housing associations may be afforded direct access to funding from the Housing Finance Agency, subject to terms and conditions which must be approved by the Minister with the consent of the Minister for Finance, including appropriate conditions to minimise exposure of the agency to risk resulting from such lending. Under the current arrangements voluntary housing associations only have indirect access to funding from the agency through the local authorities under the capital assistance and rental subsidy schemes and the sale of sites subsidy scheme.

Section 17 also provides that the powers of the Housing Finance Agency be extended to enable it to lend to local authorities for certain non-housing related capital expenditure purposes. These include funding to allow local authorities finance the up front capital cost of the commercial and industrial elements of new water treatment and delivery networks and waste water collection and treatment systems. These costs will be fully recovered over time along with relevant operational costs from commercial and industrial customers.

The voluntary housing sector, as I indicated, is playing an increasingly important role in the provision of social housing. The indications are that output by the sector last year was around 1,200 units, which is broadly in line with the NDP target and the highest level of output ever produced by the sector. There has also been a marked increase in the number of units of accommodation under construction and at various stages in the pipeline.

It is clear the sector must be supported financially to continue to grow. Last year we provided more than €1.1 million in grant aid to voluntary housing bodies specifically to assist with their administrative costs and in carrying out research. I am anxious to clarify the position in relation to the provision of financial assistance to approved housing bodies as current legislation is unsatisfactory in this respect. Section 12 brings together the existing provisions governing financial assistance to approved housing bodies by way of grant aid. This section provides powers to the Minister to pay grants to bodies providing research or advice on housing or promoting the provision of housing by voluntary or co-operative bodies. I have also taken the opportunity to clarify the aspects of housing research that may be grant aided. They include research on housing needs, standards, management, finance or other aspects of housing policy.

Section 14 clarifies the management functions of housing authorities in certain cases. It amends section 58 of the Housing Act, 1966, to provide that in cases where housing authorities purchase apartments in private developments and rent them to tenants, they may pass on the service or management charges to the tenants. It also pro vides that the maintenance of common areas is not the responsibility of the housing authority. These charges do not arise in most dwellings owned by local authorities and where they do arise, they should be able to pass them on to the tenant in whole or in part at their discretion. This is to ensure that local authorities are not held responsible for the upkeep and maintenance of common areas where management companies charge owners of all dwellings sharing those areas for such services. It is the management company not the local authority which should be responsible for this task.

Section 14 also confirms that housing authorities can perform management functions, including the charging of rents, in relation to dwellings procured through arrangements such as a leasing arrangement between a local authority and owners of private accommodation whereby accommodation is made available for tenants designated by the local authority. This amendment is necessary because section 58 of the 1966 Act empowers them to charge rents only in the case of accommodation owned by the authority while local authorities will in future need to provide dwellings in a variety of ways, including leasing, which do not require the local authority to own the dwelling. The extent to which local authorities will be responsible for the management of such dwellings will be provided for in agreements with property owners. This is an important provision as local authorities increasingly use a wider range of ways for providing housing, including the purchase of apartments in private developments under arrangements provided for in Part V of the Planning and Development Act and otherwise.

Section 15 clarifies the liabilities of housing authorities following the sale of a dwelling under a tenant purchase scheme in terms of the provision of services and insurance of that dwelling. Following such a sale, it is the tenant and not the housing authority who is liable for any service or work charges in relation to common areas. Once the dwelling has been purchased it is privately owned and the owner becomes liable for all costs arising in up-keep and insurance.

Because of the additional functions being introduced for housing authorities under Part 2 of this Bill in relation to affordable and shared ownership housing, it is necessary to amend section 23 of the Housing (Miscellaneous Provisions) Act 1992, which provides for the definition of a housing authority and the housing functions of different categories of local authorities. The effect of the amendment provided for in section 16 is that county councils and city councils will have the full range of housing functions, including functions under this Bill. Borough councils and town councils will have the same functions as at present except that the borough councils of Drogheda, Sligo and Wexford and the town councils of Dundalk and Athlone are being given functions under this Bill.

The Bill also provides for a number of measures in the private housing market. Our commitment to addressing the imbalance in the private housing market was signalled early in the life of the Government with the publication of Action on House Prices in 1998. The measures contained in that policy document and other measures introduced subsequent to that have had the desired effect in terms of increasing housing output and moderating house prices. Last year housing output was more than 51,000 units, the fifth consecutive year of record housing output by this Government. House price increases have also come back to annual rates of around 5% to 6%, rates which are very closely aligned with movements in consumer prices.

One of the principal objectives of Government policies has been to afford greater access to the housing market to first time buyers who are now accounting for an increasingly large share of the market. Section 11 updates the general power of the Minister to pay new house grants. This updated provision will enable us to remove a small number of anomalies, in particular to ensure that following a legal separation applicants who are themselves first time purchasers will be eligible for a grant. Heretofore a grant could only be made available in these circumstances when the applicant could prove hardship.

It is also intended to provide flexibility for the payment of grants in the future, including provision for differential rates of new house grants to encourage, for example, more efficient use of energy, including the use of renewable forms of energy in line with the national climate change strategy.

The availability of accurate and comprehensive information on all aspects of the housing market, in particular trends in relation to house prices, is essential for the development of housing policy and policy instruments. My Department currently obtains and publishes average house prices on a quarterly basis for new and second hand houses in Dublin, in the other major cities and nationally. Given the importance of comprehensive house price data, my Department engaged the services of consultants to examine the house price information currently obtained by my Department and data otherwise available and to assess and recommend how to improve the use and analysis of the data. This work is now completed and the consultants have recommended that the existing data be augmented and improved information technology systems developed with the aim of providing a broader range of house price indices for statistical purposes. Provisions are included in the Bill to facilitate this.

Section 13 provides that anonymised data provided to the Department by mortgage lenders will be given appropriate protections and cannot be disclosed to any other person, except in accordance with arrangements made between the Minister and the mortgage lenders concerned or in accordance with the Freedom of Information Act.

Mutual building societies play a key role in the operation of the private housing market by con tributing to competition and diversity in the mortgage market. It is estimated that they account for about one quarter of the mortgage market. It is important that mutual building societies are able to compete with other financial institutions on a level playing field. The main body of legislation governing the operation of building societies is the Building Societies Act 1989. The environment in which building societies operate has changed significantly since 1989, most particularly in recent years with much greater competition in the mortgage lending market. Consequently, section 18 contains a number of largely technical amendments to the 1989 Act, including amendments intended to take account of changing accounting practices in relation to the preparation of annual accounts.

Consideration is being given to the inclusion of a number of additional provisions in the Bill on Committee Stage in the areas of Traveller encampments, consumer protection and possible further amendments to the Building Societies Act 1989.

The issue of encroachment on public and private lands by Travellers has been an issue of much genuine concern recently, particularly in those areas where large scale encampments were involved. Such unauthorised encampments raise issues wider than accommodation matters proper to the Housing Acts, such as issues of public order, intimidation and trespass. I have taken this issue up with my colleague, the Minister for Justice, Equality and Law Reform, with a view to exploring whether this type of incident may require to be dealt with on a broader front.

The Minister for Justice, Equality and Law Reform has requested the committee which has responsibility for monitoring and co-ordinating the implementation of the recommendations of the 1995 task force on the Traveller community to consider the issue of trespass by Traveller dealers and traders. That committee has in turn set up a subgroup consisting of representatives of the social partners and Traveller organisations and officials of my Department and the Department of Justice, Equality and Law Reform to examine the issue. I also understand that the group is being assisted by representatives of the Garda and of local authorities in their task.

Its terms of reference are to produce, by a consensus approach, a report on the issue of trespass by Traveller encampments and what can be done to minimise the negative impact of large scale movements of Traveller groups. My Department has also requested that the contents of the Housing (Miscellaneous Provisions) Bill 2001, which is a Fine Gael Private Members' Bill proposing to provide for new powers in this area, and introduced in Dáil Éireann on 14 November last, be examined in the context of the committee's consideration of the issue. The report of the committee should be completed within the next two weeks.

If the Government decides in the light of the committee's report that amending legislation is necessary, I anticipate that it would be done either by way of a Committee Stage amendment of this Bill or in a Bill to be sponsored by the Minister for Justice, Equality and Law Reform, as appropriate.

Consideration is also being given to the need for certain consumer protection measures for new house purchasers. These include measures aimed at addressing gazumping in relation to the purchase of new houses, and measures aimed at protecting house purchasers from demands for excessive stage payments. I am concerned in considering these complex issues that there is no undue or disproportionate interference with the operation of the housing market and the long established contractual procedures for house purchase while at the same time ensuring that individual house purchasers are adequately protected.

This Bill addresses a wide range of issues but the urgency of some of its provisions mean that it is not as comprehensive as I would have liked. I have indicated a number of areas where further measures may be introduced on Committee Stage. The Bill, nonetheless, provides additional legislative support to the efforts being made by the Government, local authorities, voluntary housing associations and other actors in the housing area in the delivery of much needed housing. I look forward to a positive and constructive debate on the Bill and I commend it to the House.

I thank the Minister of State for producing this Bill. I listened to what he had to say with interest, particularly the issues which are not in the Bill but which may appear on Committee Stage. Gazumping is one of the issues that I intended to raise. I am pleased the Minister of State is examining that area and that some provision may be brought forward on Committee Stage.

I welcome also his remarks on the intention to examine the issue of large-scale, unauthorised encampments. I am not sure I agree with the Minister of State that this is more properly a matter for the Minister for Justice, Equality and Law Reform. Most of the problems in respect of Travellers that have come to our notice increasingly in recent times have arisen from inadequacies in the Housing (Traveller Accommodation) Act, which was brought forward by the Minister for the Environment and Local Government. The Minister of State will remember that I raised these issues at the time because I foresaw the difficulties that could arise with the open-ended provisions of that legislation, but I welcome the fact that it is being considered by the committee and I look forward to whatever suggestions the Minister of State puts forward.

I am glad also that my Bill is being considered, although I said at the time that I was not in any way protective of that Bill. I want a solution and if the Government can come up with either the same or different ways of tackling the problem, I welcome that.

On first reading the Bill I thought it was fairly innocuous and did not contain anything of great substance, although it gives a statutory basis to many of the measures with which we have now all become familiar in the housing area, particularly in the area of affordable housing. On my second reading, however, I discovered a major infrastructural policy change to which the Minister of State hardly referred or, if he did, he did not refer to the intent of the provision. I am talking about the provision of additional borrowing powers for the Housing Finance Agency to fund capital infrastructure previously grant-aided by central Government to the local authorities but which now, apparently, is to be borrowed by local authorities, the cost of which borrowing is to be passed on to the consumer. That is a fairly new departure by any standards and in view of the massive increase in investment required in waste management and water and drainage infrastructure, quite apart from the housing, which I welcome, represents an enormous increase in charges on the consumer, particularly those in rapidly developing counties with growing populations. Members of the public have had experience of operational charges, but incorporating the capital cost into the charges is a totally new departure.

This issue will become particularly onerous in the area of the provision of water. If local authorities are to borrow over, say, a 20 year period for a water scheme and pass the cost on to the user, by law the only user they can pass it on to is the commercial sector. Is this the kind of provision that the Minister makes by stealth in a Bill and not by way of a significant announcement? This provision will increase the cost of business considerably and, ultimately, that increase will be passed on to the consumer. At a time of growing inflation these issues will be viewed seriously by the business community, particularly against a background where local authorities are increasingly dependent on commercial charges, be they water or other charges.

I am not philosophically opposed to the concept of charges, nor is Fine Gael. It is clear that, for whatever reason, there has been much squandering of our Exchequer surpluses in recent years as money was thrown at every problem. Those surpluses are now gone and any future Government will have to find alternative and innovative methods of financing vital infrastructure which no one would deny we need. That cannot be done, however, by subterfuge or shunting some provision into a housing Bill in the hope that nobody will notice but which will be visited upon us in the future. The explanatory memorandum does not mention the intent of this provision, yet it is the most significant departure in the entire Bill.

The outcome of the Nice treaty referendum is an indication of how cynical the public has become about local, national and European politics. They do not see anything coming down the tracks because nobody is ever honest with them. If we are not open and honest with members of the public they will fight everything, including toll charges, etc., and it behoves us as politicians to be honest when we are making major changes like this one.

There are many aspects of the Bill which I welcome. I particularly welcome the provision opening up eligibility for the new house grant to separated couples, which did not affect many people but represents an equitable change. I also welcome the possibility of incentives to encourage better energy use in housing, which is urgently needed. Energy saving in house building is still far below what it should be, and it is often better in local authority houses than in the private sector, but this may be a vehicle that could be used in the future to encourage the provision of better energy protection in houses.

What strikes me about the Bill, welcome as many of the provisions are, is that it has failed to tackle most of the critical issues surrounding the current housing crisis. I accept that the housing crisis is cyclical and that it is a different crisis every other year, but the vital national issue to be addressed now is the tragedy that an increasing proportion of the population has no possibility of providing for their own accommodation needs, whether that be by home ownership or renting. Much of the blame for that lies with the Government. I listened to all of the boasting from the Government about increased output in 2001, but I would point out that the private output was down. I welcome the fact that, overall, output is up but that is as a result of planning decisions made at least five years prior to that. It is the decisions being made now and the current environment, which has existed over the lifetime of this Government, which will impact on us in the future in terms of housing supply.

Since coming to office the Government introduced a whole rake of policy changes but, within a number of months in some cases, it reversed them. Every one of those policy changes was entirely inappropriate and produced the reverse effect to that intended. Stamp duty is only one of them, although that is not a particularly useful incentive, or disincentive, in terms of manipulating buyer or seller behaviour, but to change it five times in as many years is a nonsense. It does not inspire confidence in the industry in terms of the buyer or the seller, and it is not an environment that can ensure continuity of supply, which is vital.

For most people the option is to place themselves and their families on a council list. That was meant to be the vehicle for the provision of housing to people on lower incomes. It is now becoming the only vehicle available to the majority of the young population and, as the Minister of State said, the majority of the house-buying population are first-time buyers, given our demographic spread.

I cannot emphasise enough that the only option for many people is not a housing one, but simply to go to the town hall to put themselves on the housing list. Most applicants do not have a realistic opportunity of receiving a council house, which is a source of misery and stress for many young people. Huge family and social costs are associated with three or four families being raised in the same house. It can be damaging to mental and physical health and can lead to homelessness or young people dropping out of education. Huge social destabilisation will result if we do not tackle this major problem.

Homelessness, which is an increasing phenomenon, is one of the most visible results of the housing crisis. While I accept that it is not always caused by difficulties in finding accommodation, the homeless suffer most during a housing shortage. There is no doubt that homelessness can be attributed in part to the fact that people whose parents and grandparents bought houses cannot afford to buy them. The effect of this change ratchets right down through the market, so that those who ultimately suffer most are those at the bottom of the pile, such as the homeless, the elderly, single people and those living in rented accommodation.

One of the Government's attempts to address the housing shortage involved the removal of interest relief on mortgages on properties for rental accommodation. There are two sides to the argument, but I believe fundamentally that it was the wrong thing to do. While I understand that the Government was trying to reduce prices, its primary objective should have been to increase supply. Investors were pushing up prices because of the housing shortage and if they did not ultimately pass on higher house prices, builders would have done it anyway. The reality is that investors can only avail of mortgage interest relief if they rent out their properties, but the initial objective was to provide accommodation. It does not matter if it is owned or rented, as long as decent accommodation is provided.

The reason I mentioned the Government decision was to point out that it highlights official attitudes to renting. Implicit in the treatment of tenants by society is the belief that they are not as worthy as home buyers. If tenants are not the most popular people in the world, I assure the House that landlords are seen as on a par with, if not worse than, child abusers. This is reinforced by public policy and the fact that the tax system entirely discriminates against tenants and in favour of home buyers. We need a thriving rental market. Many more people would be far happier to rent if we had a proper rental environment. Those who rent are not only those who cannot afford to buy, as many people choose to rent. A solid rental market is economically critical, as mobility of labour is essential. Many workers have to move to another town as part of their employment and it is important that they are able to find rented accommodation. The role of the State in this regard is not to make it difficult for people to find somewhere to live, but to encourage the availability of rented accommodation. We should be able to choose between purchasing and renting as equally viable long-term options.

When restoring interest relief, the Government made a big mistake by not introducing the promised residential tenancies Bill, which is critical if we are to achieve the desired effect of increasing the supply of rented accommodation. A much more professional basis is needed in this area, perhaps by introducing institutions who will be in for the long haul and who will provide the option of long-term renting. A larger scale of provision is also needed. I do not mean to be pro-tenant or pro-landlord, but legal protection of rights and clarification of responsibilities are essential. We will not have a thriving rental market until legislation is introduced. I recently read that landlords own one and a half houses each, on average, so we are not talking about the type of landlord of old, for the most part. I am sure there are bad landlords, as there are bad tenants, but the reality is that most landlords are ordinary, decent people trying to make a living. They are as vulnerable as tenants in many ways and both groups need to be protected. Somebody recently said to me that in the European rental market, which is vastly different to the Irish market, to have a long-term sitting tenant is regarded as an asset when selling and increases the price of the property. The situation in Ireland is precisely the opposite, as a long-term tenant is seen as a liability, but we can aspire to emulating the European model.

Generally speaking, we have to facilitate renting for a variety of purposes. Those living in bed and breakfast accommodation are just as homeless as those sleeping on the streets. People who are dependent on supplementary welfare are almost as badly off as the homeless, as they do not have quality of life as tenants, security of tenure, choice or mobility. Worst of all, they have no way out, as they will lose benefits if they take up employment. It is a poverty trap which needs to be overcome. We have spent a great deal of time talking about removing property tax from the tax system and I am pleased that many such taxes have been removed, but we have to find a solution for this important social issue.

Many anomalies have arisen as a result of various Government interventions in the market, but they all go back to fact that there is a shortage of housing, which in turn stems from a lack of zoned, serviced land. The "stop-go" nature of land supply leads to uncertainty. The promised national spatial strategy gave me hope that this crisis would be eased, but the strategy has been kept a secret for some reason. It is urgently needed if we are to plan the use of land in the long-term and if there is to be continuity of supply. Development plans would be informed by the strategy, which consequently would inform local authority plans for servicing when demand is sufficiently high.

We need to address the manner in which land is serviced, zoned and brought on to the market, to guarantee supply and to take housing out of the realm of speculation. When we talk about speculation, we think of developers and the Flood tribunal, but we all tend to think of a house as a capital asset, rather than as a form of accommodation. Houses are seen as capital assets instead of social assets. The Irish psyche has its speculative side, perhaps as a result of our history. It is not easy to change such an attitude, especially as it is fed by a shortage of zoned, serviced land and uncertainty regarding the value of lands and the value of existing houses. The fact that developers hold land for up to 20 years, even if it is not zoned, pushes up the cost of land. One can be sure that the cost will eventually be carried by the consumer. We need to take the cyclical frenzy out of the housing market because it results in panic interventions which are usually counterproductive. We must try to get back to an orderly supply of land which will accommodate an orderly supply of housing to meet demand. Another advantage of a longer planning and zoning horizon would be certainty as people would know in advance where developments would take place. It might reduce the level of planning objections which hold up supply.

I find the 20% provision in section 6 intellectually attractive as it involves a legitimate windfall gain tax. Another advantage of the proposal is that it encourages social integration. However, I have serious reservations about the proposal and I do not think it will work. These reservations may involve the manner in which the proposal is being implemented, but the matter must be examined carefully. Some local authorities are flexible and some are rigid, but this proposal is slowing down the planning system. Negotiations in some local authorities continue endlessly – first in the housing department, then in the planning department and so on. This is consuming precious time in planning and housing departments.

The resistance to the 20% provision which manifests itself in the slowdown in supply does not come from builders, who feel they can live with it provided they have certainty. The resistance comes from buyers and that is the reason for the slowdown in the housing market. If buyers will not buy, builders will not build. I do not know how to solve this problem as the proposal has an intellectual appeal which makes it hard to do away with as an idea. The 20% social housing provision is attractive, but 20% of nothing is nothing. Builders are mobile and can go and build in London or Barcelona, but this will not solve our housing crisis. To the extent that it is interfering with the supply of housing, we have to be careful with this provision.

The Minister of State is reluctant to resort to off-site provisions, land swaps and so on, but he mentioned circumstances in which it is necessary to allow for this option. I am referring to situations involving a single apartment block. I cannot see the provision working in such instances because of the 80% element. People will not buy in those circumstances so we will not achieve social integration and the local authority will end up buying the entire apartment block. This pro posal has an appeal, but I do not think it will work and must be kept under careful review.

On the provision regarding the two year withering of permission which was inserted to prevent a flood of applications prior to the introduction of the 20% provision, this did not happen to any great extent and some local authorities operated a voluntary provision of 10% or 15%, even outside the period in which the provision became mandatory. If this provision is implemented across the board it will have a detrimental effect on supply for the next five years. Many of the applicants who will be affected have not even obtained permission as applications have only been lodged. In some cases it could be another three years before they have been through An Bord Pleanála and so on and another two years before the measure takes effect. This provision will reduce supply and must be examined by the Minister of State. He does not have to throw the baby out with the bath water, but builders who have permission and who have demonstrated a genuine attempt to deliver their houses should be exempted from this provision. I have less sympathy for those who lodged applications the week before the provision became mandatory.

The element of the provision involving the external wall stage does not relate to the manner in which building sites operate. For example, an enormous town centre is being built in my area, but, even with the best will in the world, there is no way in which it could be constructed within two years. Those involved will have to go back to the planning process for the housing element of the project and there is nothing to be gained from this. This process is costly, it is clogging up the planning system, causing delays for everyone and reopening the process to appeal, thus holding up the rest of the development. The real reason for dealing with this provision is that it will slow down supply at a critical time.

On the problem of affordability, in his speech the Minister of State outlined that the thrust of Government policy is to make housing affordable. This approach has been successful in some counties, but not in others. This problem involves the shortage and cost of land, but the parameters of the scheme are missing the target in urban areas. The income limit in some cases is too low to allow those who need to participate in the scheme to do so, while those who fall within the limit are not sufficiently well-off to do so as they cannot afford the repayments. The income limit eligibility has to be increased significantly if people are to be able to afford a house in urban areas, particularly in Dublin. The subsidy for this scheme must also be increased. This will involve a cost, but I do not wish to contemplate the social implications of not providing a real alternative and opening up shared ownership to many more people. Getting on a housing list is not an option and is not desirable as the main solution to the housing issue.

I raise the issue of controlled rents which will take effect in July, but which is not dealt with in this Bill. This provision will result in successor tenants losing the protection of controlled rents in July. The Minister of State said that about 600 families or individuals will be affected by this provision. I suspect the number is larger as the Minister of State depended on people who registered with or answered letters from local authorities. For months I have been asking the Minister of State to outline how he attempts to deal with this problem. People who have enjoyed low, controlled rents cannot be exposed to the full rigours of the market literally overnight. In fairness to those involved, the Minister of State should make an early decision and let people know how these matters will be dealt with. July is not too far off and many matters may intervene, not least an election. Many of the tenants involved are elderly and it is only fair to them that the Government announces how it intends to deal with this matter.

I have raised the difficulties in An Bord Pleanála with the Minister, Deputy Dempsey. These problems are holding up supply. The Minister of State insists that these problems have been solved, but that is not the case. I do not know whether the problem is at board, administrative or planning level, but I ask him to examine this problem.

Debate adjourned.
Top
Share