Dáil Éireann debate -
Wednesday, 15 Dec 2004

Vol. 595 No. 3

Housing (Miscellaneous Provisions) Bill 2004 [Seanad]: Committee and Remaining Stages.

NEW SECTION.

Mr. Morgan

I move amendment No. 1:

In page 3, before section 1, to insert the following new section:

"1.—(1) Section 5 of the Housing (Miscellaneous Provisions) Act 2002 is deleted and replaced by the following section:

‘5.—In this Part —

"cost-price house" means a house made available for sale in accordance with this Part by a housing authority at a price equal to the cost price of the construction of that house and "cost-price housing" shall be read accordingly;

"shared ownership lease" means a shared ownership lease granted by a housing authority under section 3 of the Act of 1992.'.

(2) The Housing (Miscellaneous Provisions) Act 2002 is amended by the deletion in each place where it occurs of the term ‘affordable house' and the insertion on each occasion of the term ‘cost-price house'.

(3) The Planning and Development Acts 2000 to 2002 are amended by the deletion in each place where it occurs of the term ‘affordable house' and the insertion on each occasion of the term ‘cost-price house'.".

This Bill was published late last week but Deputies did not have an opportunity to see it until Monday of this week. In my case, it was 7.30 p.m. on Monday, when I got home, that I first saw a copy of the Bill. Given that I had to rush to a meeting at 8.30 p.m., the time available to study it was restricted.

On a number of occasions, in the course of being corrected by the Ceann Comhairle, I have been reminded by him of the long-standing traditions of the House. Sometimes one might think one was on the Garvaghy Road with these long-standing traditions. However, I understand there is a general rule of thumb that ten days should intervene between when legislation is published and its introduction in the House. This affords Members of the Opposition an opportunity to research the Bill, prepare amendments and examine the implications of the legislation. That did not occur on this occasion, which is most unfortunate. The amendments were required to be submitted by 11 a.m. yesterday so preparing them and examining the Bill in such a short time meant burning the midnight oil for myself and Caoilfhionn Ní Dhonnabháin.

The second issue is the rushing of this legislation through the Houses. A number of speakers mentioned this. Rushing legislation through the House is one thing but doing so at the behest of a bank is something else, particularly when there is a substantial number of Bills awaiting scrutiny in the House. The ground rent Bill is one meritorious example.

The implications of this legislation are enormous. The Bill will encourage people to borrow beyond their means. That is fine in the current low interest rate environment. However, what will happen if that environment changes quickly and substantially? There is the prospect of homes being repossessed. The banks, as we know, are merciless in this regard. We have recently seen how they behave. At least where people borrow for their home from local authorities, some humanity and consideration for the family needs are shown in that situation. Unfortunately, however, the banks will move mercilessly.

Let us consider the consequences of that. Consider the number of court cases that will arise. The courts will be clogged with banks taking proceedings to repossess homes. Where will the occupants of those homes go? It will not be to social housing given that there are 48,000 on the waiting lists at present and 6,500 people are homeless. It will create an enormous difficulty. At present, people in that situation are housed by local authorities in bed and breakfast accommodation. The Minister will have to start a programme of rapidly building bed and breakfast accommodation if that is the means of dealing with this problem. There is already insufficient bed and breakfast accommodation to cope with the current situation.

I tabled this amendment because of the ambiguity surrounding the term "affordable". What does "affordable" mean? The use of the term is extremely misleading. It can mean different things to different people. The Minister suggested that a house is affordable if it costs less than the house next door. That is some description. The Minister is shaking his head but that is what he said. It is the Minister's thoughtful reflection on what "affordable" means. Perhaps he will accept this amendment and deal constructively with the issue.

Let us consider how local authorities deal with affordable housing. Dún Laoghaire-Rathdown County Council recently made a scheme of so-called affordable houses available for qualifying people. The price range for the houses started at €200,000 and rose to €345,000. That is what is described as "affordable". The question the Minister must answer in responding to this amendment is to whom those properties would be affordable. It is certainly not working people in this State.

The Housing (Miscellaneous Provisions) Act 2002 defines affordable housing as follows:

"affordable house" means a house made available for sale in accordance with this Part by a housing authority at a price less than the market value and "affordable housing" shall be read accordingly.

Anything short of market value, according to the statute, is what defines affordable housing. Imagine the case, therefore, where a house has a market value of €600,000. If the builder offers it to the local authority at a price of €580,000 or €590,000, it qualifies as an affordable house. When one sees the nonsense of such a situation, one sees why the definition of "affordable" must be examined. I hope Deputies will reflect on the nonsense that currently prevails with regard to the concept of affordability. The inadequacy of the definition is at the root of the problem we face. I propose, therefore, to insert the term "cost-price" in place of the word "affordable". My amendment seeks to provide that "cost-price house" means a house made available for sale in accordance with this Part by a housing authority at a price equal to the cost price of the construction of that house and "cost-price housing" shall be read accordingly;". I invite the Minister of State to reflect on which is the more realistic option for dealing with the issue of affordable housing. Is it the bland, daft provision which currently obtains or is it the specific, tight wording of my amendment?

Acting Chairman

The Deputy has exceeded his time.

Mr. Morgan

Do we have only a few minutes? I thought on Committee Stage one could——

Mr. O’Dowd

Talk rubbish forever. One cannot.

Acting Chairman

Deputy Morgan has not confined himself to the amendment. He may continue to make his point.

Mr. Morgan

I heard Deputy O'Dowd say he thinks we are talking nonsense.

Mr. O’Dowd

Absolute rubbish.

Mr. Morgan

Clearly he is happy with the current affordability scenario and the blandness surrounding it.

Mr. O’Dowd

I am not.

Mr. Morgan

Part of the difficulty we face is that the two main parties in the House agree to the current level of nonsense. It means we will always find it difficult to make significant progress on this issue.

In the context of affordability, we all place a reasonable level of emphasis on Part V and the provisions thereof. The scenario was much better before the previous Minister came in with his scalpel and tore it apart. The most effective way to make the issue of affordability relevant to Part V is to introduce the idea of cost-price housing. Affordable housing is different from social housing, although one would not think so from the figures the Minister of State outlined earlier. He referred to 240,000 units and 60,000 units, but he failed to deal with the issue of affordable housing. He informed the House that the affordable housing initiative under Sustaining Progress and the Part V mechanism were major elements of the Government's strategy for the provision of affordable housing. If that is the case, little difference will be made.

The issue of affordable housing was touched on in the NESC report which was published today. While the report states that a high level of ambition is appropriate for social and affordable housing, such ambition is invisible in the current Government strategy, which is most unfortunate. The report finds that the major contraction in the provision of social housing from the late 1980s to the early 1990s is a significant contributing factor to soaring house prices, the great numbers on the social housing list and the chronic shortage of social housing. I welcome the recommendations in the report as their adoption would lead to a more proactive approach to the acquisition of land and the provision of compulsory purchase powers to local authorities to enable them to provide social and affordable housing. Unless that is done, there is no possibility we will truly deal with the issue. The Minister of State referred to the ninth progress report of the All-Party Committee on the Constitution, which dealt specifically with compulsory purchase powers for local authorities. If the Government wants to address the issue of affordability, it should address the recommendations in the reports.

Mr. Gilmore

I am conscious of the time and know colleagues want to contribute to Committee Stage. I will not speak for very long. I record my dissatisfaction that Committee Stage is being taken immediately after Second Stage with no interval. I am also dissatisfied at the short time provided. I am not opposed to the general aim of the Bill to allow banks and private lending institutions to make loan finance available to people who want to buy affordable housing. There are advantages in the provisions as the interest rates charged on local authority and housing finance agency loans are considerably in excess of those charged by commercial institutions.

We have not been given an opportunity to examine the provisions of the Bill in detail and the Government will have to take responsibility if it transpires in due course that there is a flaw in the legislation, whether technical or unintended. I would like the Minister of State to inform the House in his response when the Government came to the conclusion that the Bill was necessary and to explain why it was felt necessary to take all Stages immediately. Why was it not possible to deal with the legislation in the normal course of parliamentary business?

Acting Chairman

Before I call on Deputy Cowley and while I hate to mention it at this stage, the last two speakers went outside the scope of the amendment.

Dr. Cowley

I congratulate Deputy Morgan on being able to table amendments to the Bill. It was a wonderful achievement given the guillotine which has been imposed and the short time available for discussion. We have seen an increasing number of guillotined Bills, which is not in the interests of democracy. I question also the wisdom of rushing Bills through in a rapid sequence of Stages. No good can be achieved by the process beyond the simple passing of legislation for whatever reason.

The notion of cost-price housing as set out in the amendment seems a great deal more logical than the notion of affordable housing. To speak about a cost-price house is more specific. People assume the term "affordable house" refers to a house they can afford, which is how it should be, but that is not always the case. A house which is affordable is better than a house one cannot afford. The problem is that people cannot buy houses at present despite the Irish ethos of house ownership to which everyone aspires. It is in that context that affordable and social housing is valuable.

There has been a significant failure to realise the full potential to provide such housing. A defined revenue funding scheme for housing for older people has long been sought. There have been difficulties in funding social housing and an inability to provide adequate supports to keep people out of nursing homes. A number of reports have demonstrated recently the value of maintaining people in their communities. The provision of social and affordable housing is the way to achieve that goal. There was an increase in the amount of money available for social and affordable housing this year, bringing it up to9%, which is welcome and necessary. However, the money available for other projects such as the community facilities fund has increased by only 3%, which is much less than what is required. The capital assistance scheme has been used for the provision of special needs housing but that figure must be increased. It is hoped that will allow the national development plan target of 1,625 units under the capital assistance scheme to be realised in 2005.

There appears to be competition between the local authorities and the voluntary housing movement because it is often difficult to get house starts in the voluntary sector. That potential will be realised if the defined revenue funding scheme is introduced. I hope that happens because it will allow the full potential in terms of social housing to be achieved and ensure that people are kept out of profit-driven and non-community nursing homes. There is nothing wrong with that but the community sector deserves attention also and that potential must be realised. We have a low stock of rental accommodation here compared with other EU countries and there is potential in the defined revenue funding scheme to address that problem.

As regards Part V, greater potential could have been achieved in that respect if a buy-out clause had not been included. I will not delay the House because time is of the essence but every obstacle appears to have been put in the way of communities getting together and taking these initiatives because of planning problems and the difficulties in the system which appears to favour private rather than community developments. It is time that ended. The national bidding agency should be a source of revenue for the voluntary housing sector but there appear to be obstacles in the way of that happening, which is regrettable. I am sorry there is not more time to debate this important Bill.

Acting Chairman

I remind Deputies that they are expanding the scope of the amendment.

Aengus Ó Snodaigh

In terms of cost-price housing, which is the subject of the amendment, some might express concern that developers would not be interested, but whether it is affordable or cost-price housing, developers make their profits on the rest of the scheme. In this case we are trying to ensure that the part which is supposed to be affordable is affordable but there is nothing affordable about a €500,000 home. There is a concern that young couples are over-extending themselves and are being facilitated by the banks in a fraud. How can young people afford to spend €200,000 or €300,000 on a home unless they each earn €70,000 or €80,000? Banks give a mortgage of three times the salary of the principal earner and the amount of the salary of the second earner. The banks facilitate that yet these are the same institutions which have been involved in many scandals and have ripped off the State time and again. The same goes for the developers but we are not taking away the profits of the developers in this measure. I wish that were the case. We are taking away the profits to be made under the Part V measure to make housing more affordable.

We are talking about cost-price housing. We should not facilitate the banks in terms of the affordable housing market. Why did we not amend the legislation to allow local authorities have more scope in this area and ensure that we provide cost-price housing rather than super-affordable or affordable housing, which is the terminology being used? There is only one way of making housing available and that is to reduce the building costs.

Mr. J. Higgins

The Government insults the Dáil and the tens of thousands on housing waiting lists or who are priced out of the housing market by coming before Dáil Éireann with this legislation as if it were a major contribution or even a contribution to the problems we face. It beggars belief, especially in a week when we see the outrage of the orgy of speculation in which the pillars of the establishment indulged in Stillorgan and from which they made a profit of €53 million having simply sat on land for four years. There is a conspiracy of silence about it in the media and elsewhere. It should be seen as a despicable, anti-social bout of profiteering and speculation that will be hung around the necks of hundreds of young first-time buyers who must buy the houses on that land in mortgages for the next 30 years. The Minister of State comes into this House and presents this legislation as some kind of contribution to the problems we face.

I want to make it clear that I support anti-profiteering measures but those measures are already included in the local authority clawback schemes. I fully supported those schemes and I was one of the first people in Fingal County Council to demand that they be included as part of the schemes planned years ago when these ideas first came about. To say that the affordable housing market is now opened up to private banks, as if that will make a major contribution, is an insult.

Acting Chairman

Does Deputy McCormack want to make a contribution?

Mr. McCormack

I want to make a contribution relevant to the amendments.

Acting Chairman

We are debating amendment No. 1 which seeks to insert a new section.

Mr. McCormack

In my Second Stage contribution I asked the Minister about the registering of the charge against a property. Will that be retrospective in terms of people in affordable houses under their current mortgage regulations or if they had to remortgage the house for any purpose?

Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern)

On amendment No. 1, I spoke earlier about the definition of affordable housing. I cannot accept the amendment which effectively seeks to change the definition of the housing units sold under the 1999 affordable housing scheme and the housing units provided under Part V from affordable to cost-price. The amendment would severely limit the ability of a housing authority to adapt, where necessary, the sale price of the housing units in line with the incomes of persons on their affordable lists to reflect their ability to repay. Under current law, the local authority can sell the affordable houses to different clients at different prices if they so wish. Changing it from affordable to cost-price, which appears to be a reasonable idea in some cases, would deny them the flexibility to sell to different clients at different prices.

Aengus Ó Snodaigh

They would never sell them under cost price.

Mr. N. Ahern

Under the current arrangements, authorities may reduce the sale price of housing units below the cost price by way of site subsidy under the 1999 scheme and by use of moneys received in lieu in respect of those housing units provided under Part V. We give site subsidies of up to €38,000.

Aengus Ó Snodaigh

There is not one affordable house under cost price.

Mr. N. Ahern

They have that flexibility. To answer Deputy Gilmore, the position is that, until now, the charge was registered against the mortgage deed, which allowed the local authority, as lender, to enforce it. There was no particular problem. Under the new set-up, where the housing authority is not the lender, it would have to pursue the purchaser directly for payment of the clawback, which would be difficult and expensive. This only came about when we made the arrangement with the financial institutions. We saw that the clawback could not be protected. It was different when it was a local authority loan. I regret that I cannot accept the amendment.

Acting Chairman

As it is now 7 p.m., I am required to put the following question in accordance with an order of the Dáil of this day: "That the sections undisposed of and the Title are hereby agreed to in Committee and the Bill is accordingly reported to the House without amendment; Fourth Stage is hereby completed; and the Bill is hereby passed."

Question put.

Deputies

Vótáil.

An Ceann Comhairle

Will the Deputies claiming a division please rise?

Deputies Cowley, Crowe, Ferris, Joe Higgins, Gregory, Finian McGrath, Morgan, Ó Caoláin, and Ó Snodaigh rose.

An Ceann Comhairle

As fewer than ten Members have risen, I declare the question carried. In accordance with Standing Order 68, the names of the Deputies dissenting will be recorded in the Journal of the Proceedings of the Dáil.

Question declared carried.