I move: "That the Bill be now read a Second Time."
The primary purpose of the Bill is to amend Part V of the Planning and Development Act, 2000 which deals with housing supply. The Bill will also make other miscellaneous amendments to the 2000 Act and certain amendments to the Housing (Miscellaneous Provisions) Acts, 1992 and 2002 and to the Housing Finance Agency Act, 1981. The Bill will make two separate and important changes to Part V.
First, it will restore the life of the planning permissions of some 80,000 houses, subject to the developer paying a levy in respect of each unit concerned. Under the 2000 Act, these were due to expire early, after only two years instead of the normal five years, starting from 31 December 2002. The other change I propose to make to the planning code is to give new options for local authorities and developers as to how they comply with the social and affordable housing requirements.
I stress that the Government is committed to making Part V work. The changes now proposed are designed to make the system operate more efficiently and effectively, eliminate the rigidities that were slowing down supply and bring more social and affordable housing on stream more quickly while continuing to promote social integration. There was never any question, even though some thought I would and wanted me to, that I would set aside the requirement on housing developers to make a contribution to the provision of social and affordable housing. My aim is to remove obstacles and make Part V work to ensure a continued good supply of housing. This is the only way to ensure that affordable housing will be available for house purchasers in Ireland.
The Government has a proud record of achievements in delivering housing to date. Since 1997, our efforts have brought a substantial rise in output, with a consequent moderation in the increase in house prices. Some 52,602 houses were completed in 2001, another record year, and 2002 is shaping up the same way, with a projected 55,000 units by the end of the year. The strong performance was particularly marked in the Dublin area with over 10,000 units constructed in 2002. The overall objective of the Government is to continue to maintain these record levels of output in order to satisfy the projected housing demand.
The Government, therefore, decided to review Part V to ensure that it was meeting its objectives in terms of delivering social and affordable housing. The review was initiated mainly because complaints had been received, not only from developers but also from local authorities, that the system was overly bureaucratic and appeared to be slowing down supply, the opposite of what was intended. The review, which was conducted with all key stakeholders, reached some interesting conclusions on which there was a fairly general consensus. There were two key points. First, there was no support for a complete repeal of Part V. The provisions in relation to making housing strategies, and the requirement to zone sufficient land for residential development in particular, were regarded as positive. However, stakeholders also argued for increased flexibility and less bureaucracy in the operation of the provisions of Part V. A number of stakeholders also raised the issue of the provision which causes certain planning permissions to wither after two years. This provision was not viewed as helpful in terms of increasing housing supply. The changes announced in the Bill are specifically designed to meet the concerns about bureaucracy and flexibility and the withering provision expressed in the review and thereby boost housing supply.
The Bill will replace section 96 of the Planning and Development Act, 2000. The purpose of the new section is to give new options as to how an applicant for permission for development can comply with the requirements of Part V. Agreements are currently confined to providing land within the proposed development for the local authority or providing houses or sites within that development. In addition to these existing options, the applicant for permission will now be able to reach an agreement to reserve land or provide houses or sites at another location. Alternatively, developers could make a payment to the local authority which would be used for the provision of social and affordable housing. However, I intend to convey to local authorities my view that financial compensation to authorities, while an option, is the final option. All other aspects will have to be exhausted.
Local authorities will have to negotiate with developers to ensure that each agreement delivers the best possible result in terms of social and affordable housing supply for their area. In considering whether to make an agreement as an alternative to reserving land within the site, which will remain the primary requirement, the authority will have to consider a number of important issues. The most important will be the need to counteract undue social segregation in the area.
I am determined that this new flexibility in Part V will not lead to builders providing new estates at the edges of communities with no social links and no infrastructure. I will be setting firm guidelines for local authorities as to the types of alternative arrangements that will be acceptable in terms of social integration. The agreement's potential contribution towards achieving the objectives of the housing strategy and how quickly housing is likely to be provided as a consequence of the agreement will also be considerations for the local authority. These changes to Part V are all about delivery of housing more quickly and efficiently. Local authorities will also have to ensure that any agreement they reach is in accordance with the provisions of the development plan. The new provision will not lessen the obligation on developers. Any agreement under the Bill must result in a contribution of an equivalent monetary value to the reservation of land within the development. In practice this means the equivalent of whatever the local authorities would have saved if they were acquiring the land within the development at existing land use value instead of market value. Any alternative arrangement must be of equal benefit.
These changes to Part V will introduce a flexibility into the system which will give local authorities a variety of choices in deciding how social and affordable housing requirements of their communities are met. These changes are firmly within the principles of Part V of the Act – to integrate housing supply fully into the planning system and to require applicants for permission on residentially zoned land to contribute towards meeting the existing need for social and affordable housing. This new flexibility is similar to the system in Britain under which developers are required to make up to 30% of larger developments available as social or affordable housing. The aim of the British policy is also to achieve mixed communities with a balance of housing types and tenures. The difference is that, through their more flexible system, they are delivering a greater volume of low cost and social housing. Developers negotiate with local authorities on the level of social and affordable housing provision and on whether to build those houses either as part of the development or at another location, as part of the normal course of the planning process. This is what we are doing, building in this same flexibility and trying to ensure that Part V becomes a settled part of the planning process in Ireland.
The review of Part V also signalled problems with the provision under which certain permissions withered after two years. This withering provision was introduced to put all planning permissions on an even footing as soon as possible in relation to social and affordable housing. It is estimated, however, that it would cause thousands of permissions to expire. As it is critically important to ensure continued supply in the next two years, I propose to insert two new sections into the Planning and Development Act, 2000.
Section 96A reverses the impact of section 96(15) of the 2000 Act, which provided that permissions for residential development granted after 25 August 1999, but before a housing strategy was included in the relevant development plan in accordance with the Act, and to which Part V of the Act would have applied if the housing strategy had been incorporated when the application was made, would last until 31 December 2002 or for two years from the date of granting of permission, whichever was longer. Section 96(15) provided that planning permission would expire for houses within the development for which external walls had not been built by the relevant date, but the new section 96A provides that the normal rules concerning the duration of permission will apply to such permission. Per missions are not subject to Part V requirements because they were applied for before the requirements came into force.
It is consistent with the principles on which Part V was based that developers of the houses in question should be required to contribute to the cost of social and affordable housing. I considered retrospectively applying Part V to these permissions but, in addition to the legal difficulties in doing so, I saw practical obstacles which would seriously delay the construction of these houses. There would undoubtedly be a legal challenge to such a move, suspending the operation of Part V to those permissions, which could have the effect of preventing construction. If such a challenge were dealt with quickly, developers and local authorities would have had to renegotiate agreements for all the affected permissions, a process that would have taken many months. Construction under these permissions would have had to wait until the agreements were negotiated, which could have seriously obstructed construction of the houses. I have decided instead on a more robust solution that will allow developers to build on the basis of the permissions without delay. In return for extending the duration of permissions affected, developers will be required to make a once-off contribution to funding social and affordable housing.
Section 96B provides that a levy must be paid in respect of each house for which permission would have expired if this Bill were not passed. I emphasise that it is not a levy on all houses to be built, just those where permission is being restored. The levy, which will be 0.5% of the cost of a house worth less than €270,000, or 1% of the cost of a house with a value equal or greater than €270,000, will be paid to local authorities to put towards the provision of social and affordable housing. Setting the levy at this level should not discourage developers from building. It will be an incentive to set the price of the houses that are built at an affordable level. Payment of the levy will be a condition of the planning permission for each house and will be the responsibility of the developer. There may be concerns that the cost will be passed on to the purchasers of the houses but this section prohibits this. It provides that if an agreement of sale includes a requirement on a purchaser to pay the levy, that term of the agreement will be void and the money, if paid over, can be recovered.
I brought forward two important amendments during the passage of the Bill through the Seanad. The first inserted a new subsection (7) in section 96B to require local authorities to issue a receipt once the levy has been paid. This receipt is evidence for purchasers and their solicitors that the levy has been paid and that the condition of the planning permission has been complied with. It is another protection for purchasers. The second amendment inserted a new section to amend the rules concerning small housing developments which are not subject to Part V, under section 97 of the 2000 Act. That section provided that an exemption certificate may be sought in relation to small housing developments, that is those of four or fewer houses, or on land of 0.2 hectares or less, which is about half an acre.
A number of urban local authorities argued that under my Department's residential density guidelines the exemption allowed developments of much more than four units to be built without any social and affordable housing element. In relation to town and city centres where small infill sites of this size are found, the guidelines recommend that, in principle there should be no upper limit on the number of dwellings that may be provided. A site of 0.2 hectares in a town or city centre could therefore accommodate at least ten to 15 units. Requiring the reservation of some of these units under Part V could supply a number of units where they are most needed and supply is most limited. Therefore I brought forward an amendment to reduce the limit to 0.1 hectares and this was endorsed by the Seanad. Deputy Gilmore has raised this issue on more occasions than anyone else and I acknowledge his important contribution to the Bill, as I did when I was in the Seanad.
This Bill does not just deal with Part V. In preparing the Bill, a number of amendments to the Housing Acts were included to facilitate the supply of housing. The opportunity was also taken to make a number of miscellaneous and mostly technical amendments to the Planning Act, 2000. Part 1 contains the standard citation and definition sections, Part 2 contains the provisions to amend Part V of the Planning Act which I have already outlined and Part 3 contains the other amendments to the 2000 Act. These are technical amendments to the 2000 Act for the most part, although some are more substantial. Sections 8 and 9 amend the provisions dealing with local area plans to clarify that land may be zoned in a local area plan. A second public display period will be provided where it is proposed to make material amendments to the plan following the first display period – this is similar to the requirements for development plans.
Section 13 will permit a decision by a local authority on a declaration in relation to a protected structure to be referred to An Bord Pleanála for review. This will be similar to the procedures where a local authority makes a declaration on what does or does not constitute development, or exempted development, under section 5 of the Act. Section 15 amends section 262(4) which provides that certain regulations made under the Act are subject to a requirement to get positive approval. This removes the requirement to get positive approval for procedural regulations in relation to development by State authorities, while retaining the requirement that regulations determining the types of development approved under the special procedure will be subject to the positive approval requirement. The same rules, therefore, will apply in this case as, for example, apply in relation to local authority development.
Part 4 makes amendments to other legislation, namely the Housing (Miscellaneous Provisions) Acts, 1992 and 2002 and the Housing Finance Agency Act, 1981. These amendments are designed to ensure a continued supply of housing. Sections 16 to 19 amend the Housing (Miscellaneous Provisions) Acts, 1992 to 2002, to introduce measures to facilitate the provision of affordable housing. The amendments complement the changes to Part V. The changes will allow approved housing bodies to provide affordable housing for sale, in addition to providing houses for rental. The voluntary and co-operative housing movement wishes to become involved in the provision of affordable housing and these amendments will facilitate such involvement by enabling approved housing bodies to provide houses under the affordable housing and shared ownership schemes and by providing that persons granted a shared ownership lease by an approved body will be eligible for subsidy on their rent on the same basis as under the local authority shared ownership scheme.
An important change is that the terms of the shared ownership scheme will be amended, in so far as the scheme applies to approved housing bodies, to allow the bodies to retain part ownership of the houses and so ensure that they remain within the affordable housing market. This was welcomed by all Senators. Under these amendments, a person granted a shared ownership lease by an approved body will not be required or entitled to eventually purchase the interest of the body in the house. The lessee will, however, be entitled to eventually sell his or her interest in the house to a person who meets the eligibility criteria applicable to the scheme.
I hope the House agrees that the amendments to the existing schemes provided for in these sections represent a reasonable balance between the right of the lessee to purchase an interest in a house and the retention of a social equity in the house. I am satisfied that this will help avoid undue social segregation in housing projects which the sector provides by enabling approved housing bodies to provide a mix of social rented, shared ownership and affordable houses.
Section 20 amends section 10(a) of the Housing Finance Agency Act, 1981, as inserted by the Housing (Miscellaneous Provisions) Act, 2002, to correct a technical error in the section in order to permit the National Treasury Management Agency to borrow on behalf of the Housing Finance Agency. While the error was technical, it could have prevented the NTMA acting on the HFA's part when borrowing money. I reiterate that this Bill is primarily about improving housing supply and promoting social integration. The new flexibility will speed up agreements and free up resources. Agreements will be concluded more quickly and more social and affordable housing will come on stream more quickly. The level of contribution required from developers remains the same, there is no reduction, and the agreements allowed under the Bill will ensure that it continues to support the objective of social integration.
I commend the Bill to the House.