I move: "That the Bill be now read a Second Time."
Planning and Development (Amendment) (Repeal of Part V Leasing) Bill 2021: Second Stage [Private Members]
Deputies Cian O'Callaghan, Catherine Murphy and Cairns are sharing 20 minutes. I call Deputy Cian O'Callaghan.
I thank the Acting Chair, but I am sharing time with Deputies Gannon and Cairns.
That is fine. Proceed.
This day two weeks ago, I raised with the Tánaiste the sale of 435 apartments in Ashtown, Dublin 15, which were sold off to a foreign investment company that is based in Germany. I suggested this practice should be banned, and the Tánaiste stated I was being ideological. When my colleague, Deputy Shortall, raised the issue of international investment funds with the Tánaiste, he again accused us of being ideological, stating that he favours a practical approach to housing.
Let us be very clear. There is absolutely nothing practical about some of the highest rents in Europe being in our country. There is nothing at all practical about favouring build-to-rent schemes which are cheaper to build, more expensive to rent and impossible to buy. There is nothing practical about young people and, indeed, those who are not so young, being caught in a rental trap, unable to buy their own home as investment funds buy up more and more new housing. There is absolutely nothing practical about more than 120,000 households on housing waiting lists or in insecure HAP tenancies. There is nothing practical about more than 8,000 people and 2,000 children living in emergency accommodation. There is absolutely nothing practical about a child eating her dinner at the side of the street. There is nothing practical or inevitable about any of this. What would be practical would be the implementation of housing policies to ensure that people have access to the housing and shelter they and their families need, to rents that are affordable, to secure tenancies and to homes that are affordable to purchase and within reach. That would be practical.
Yet again, we have a situation where Fianna Fáil and Fine Gael are acting surprised at the outcomes of their own policies. Are we really to believe that they had no clue at all when they introduced tax avoidance measures for investment funds where they pay no corporation tax and no capital gains tax, and where they pursued policies where rents have run out of control, that they simply did not realise that this would lead to entire housing estates being bought out by these funds? Is the Government really just asleep at the wheel, completely unaware of the consequences of its own decisions and policies?
Comments from the Taoiseach and the Tánaiste over the last 24 hours have made it clear that while they have problem with suburban housing estates being bought up by international investment funds, they fully support global funds buying up apartments en masse. The Government still does not have any issue with that. According to the Construction Industry Federation, 95% of apartments in 2019 were bought out by institutional investors, leaving just 5% of apartments for everybody else. The Government has made it clear that it continues to actively support the buy-out of entire apartment developments by global funds. If this is not ideology, I do not know what it is. Are individuals and families who live in apartments to be excluded from the aspiration of homeownership and to be caught in a rental trap? What about our young people who live in cities? Should they not be able to buy a home?
There is a pattern here that we have seen before when it comes to housing policy. Developers lobby Government, making all sorts of promises, then when the inevitable outcomes of these policies materialise and the promises of the developers evaporate, we see Fianna Fáil and Fine Gael left scratching their heads, wondering where it all went wrong. We saw it with co-living. Developers promised a niche market, not unlike that of boutique hotels. Instead, what we got was 21st century bedsits where people are crammed into living spaces smaller than a parking space. We saw it with apartment standards. Developers promised that if apartment standards were reduced, apartments would be built that were affordable and within reach for people who could afford a home. Instead, we got some of the most expensive prices for new-build apartments in the world. We saw it with institutional investment funds. Developers promised that with tax avoidance measures for real estate investment trusts, we would see investment in a supply of housing that people could afford come on stream. Instead, what we got was entire housing schemes and estates and apartments being bought up by international investment funds with a view to keeping people trapped in a rental market while pushing up rent and house prices.
We now see it with the Government's plans for the shared equity scheme. Developers are promising more homes that are affordable. Instead, what we are going to get, and what we have gotten already, is price caps of €0.5 million for apartments in Dublin. We know from the UK experience that we will get inflated house prices and increased profits for developers.
Will Fianna Fáil and Fine Gael ever learn to stop letting developers write their housing policies? The Government is turning housing into an investment opportunity for vulture funds, driving up rents and housing prices for everyone. As part of this, the Government is turning social homes into an investment opportunity and commodity. Long-term leases, where the State pays off the full cost of building a home over a 25-year period and the developer retains ownership of the home at the end, are exceptionally poor value for money. Long-term leasing is a sweetheart deal for developers. The Bill that the Social Democrats are putting forward will help end this practice.
Shockingly, we see this Government pursue policies which seek to turn housing and social housing into profit-making opportunities for its developer and investor friends. Increasingly, we see the State signing up to these long-term leases with developers. There was a report last week of a social housing portfolio of properties in Finglas, Tallaght and Blanchardstown guiding at €21 million, a price guide informed by an annual gross rental income of just less than €1 million per year. The Irish Times reported that the prospect of immediate rental income, copper-fastened by the security of a 25-year Government lease, is expected to see strong interest from investors. Analysis by Killian Woods in The Business Post showed that of 11 Part 5 lease deals examined, there were deals involving long-term leasing on 384 homes, where the State is signing up to these leases instead of acquisitions. As part of these deals, an average rent of more than €20,000 will paid out for each home each year. This will equate to €181.6 million over the course of the leases. The State is in line to pay an average of more than €490,000 to rent each home - a price significantly above the sale market value of each home.
Long-term leases are exceptionally bad value for money, but the Deputies should not take my word it. A report from the Department of Public Expenditure and Reform has already advised that leasing property on a long-term basis in the current rental market represents bad value for money. The CSO estimates that a 25-year lease over which the investor will recover the full cost of delivering the home from payments from the State, covers only 31% of the economic lifecycle of a home, which it estimates to be about 80 years. Dermot Desmond has estimated that the outlay spent on long-term leases could provide about four times the amount of social homes if it was used to build homes rather than lease them. At the same time, we know that long-term leases will create a potential cliff edge of evictions when they expire in 20 or 25 years' time. Someone who is 40 now and is housed under long-term leasing, could potentially be evicted and uprooted from his or her community when he or she is 65 years of age.
This is a sweetheart deal for developers and investors. If the Deputies want evidence of this, they need look no further than the documents released to me under a freedom of information request, which show that the State has signed up to long-term leases with developers that are multimillion euro contracts, in some instances without carrying out any independent valuations and simply relying on the valuations provided by the developer. How could this be allowed to happen? I must ask whether the Government is asleep at the wheel on this issue. Why does it take the use of freedom of information legislation by an Opposition Deputy to discover this?
Long-term leasing artificially inflates rents. There is considerable evidence that some developers and investors of newly-built homes will leave them empty instead of dropping the price of rents to fill them. What happens when they cannot fill these empty homes? They look for a long-term lease from the State. This ensures that the drop in rents that should happen, does not happen. This increases rents for individuals and also increases the rents that the State is paying out. Analysis by The Business Post has shown substantial evidence of this rent-fixing taking place. Given that there are millions of euro at stake in terms of long-term leasing, it is something that the Government should be actively investigating and challenging.
If the Government continues on this path, our housing stock will be largely in the hands of international investment funds, long-term security of tenure and homeownership will be for the privileged few and the many will be stuck in insecure accommodation with too much of their hard-earned income paying out high rents.
I want to begin by thanking my colleague, Deputy Cian O'Callaghan, for bringing forward this Bill and for the leadership he has shown on this issue throughout his time in Dáil Éireann and beforehand.
The inability to access housing and a home is destroying lives in this country, and has done for more than a decade. This debate happens regularly in this Chamber, as it should as a point of conversation in national debate. Too often, that debate is defined by arrogance. That arrogance was encapsulated perfectly over the past couple of weeks in the forcing through of what has been referred to as the Affordable Housing Bill 2021, with a Minister who was unwilling simply to listen.
He was unwilling to listen to the experts who are telling him the Bill would increase the cost of housing and make it more unattainable for those who are already suffering. It is arrogance not to listen to experts, including those in the Central Bank and the ESRI who advise the Government, and academics such as Ms Orla Hegarty, Dr. Lorcan Sirr and Dr. Rory Hearne, who have dedicated their lives to advancing a more humane approach to housing in this country. We see the arrogance of the Government in its treating of the Opposition with disdain and its refusal to listen to members of the parties in government, including councillors who see the outcomes of these failed policies every single day in their communities.
There is arrogance in the bullish repeating of the same old mistakes of the past and in keeping going in the apparent knowledge that, weirdly, there is legitimacy beyond outcome. There is arrogance in redefining cost-rental schemes, as was done this week when the Minister, Deputy Darragh O'Brien, said the concept would be expanded to ensure it is not overly reliant on public funding. If it is not reliant on public funding, it will resort to being reliant on private gain and private ownership, which has not served us well. The Government had the arrogance to redefine the very concept of what it means to be affordable. An affordable home is not one that costs €500,000 in Dublin or €400,000 in Galway, as has been presented this week. To continue in that belief and with that system is arrogant. It is the same arrogance that once led Fianna Fáil in government to tell us we had all partied and, in a previous generation, allowed a Fianna Fáil Taoiseach to say the country needed collectively to tighten its belt. That arrogance has defined Fianna Fáil throughout its time in politics and made us all lesser for it.
The conversation around housing has been defined by arrogance and hypocrisy on the part of the Government. Two weeks ago, and again today in the Dáil, the Tánaiste responded to legitimate questions from Deputy Cian O'Callaghan and our party leader, Deputy Shortall, on REITs. They asked whether a method can be applied to stop REITs purchasing blocks of apartments en masse and if evidence-based approaches such as those that are working in Germany could be employed. The Social Democrats were told we are being too ideological. There is great hypocrisy in being told we are too ideological by a Fine Gael Tánaiste who adheres to the market at all costs. There is great hypocrisy in his not being able to see that it is this very adherence to market forces and laissez-faire economics that led to a housing crisis that has been detrimental to the very dignity of the people who are being locked out of being able to own or rent a home. There is arrogance and hypocrisy in all of this.
The housing crisis in this country is a consequence of the failed ideology of Fine Gael and Fianna Fáil. It is the result of Fine Gael's total faith in the market and deference to international investors. There is a massive hypocrisy in that approach. Next week, legislation will be brought before the Dáil that seeks to prevent the sale of concert tickets by touts. I am almost amused at how quickly that legislation is being forced through. It is welcome legislation that will deal with a situation where large multinational companies were buying concert tickets en masse and charging ordinary concert-goers a higher price for them. Why has the same logic not been applied to our housing market? When the exact same principles are being applied in the housing market, the Government has simply closed its eyes and turned away because it does not want to see it. However, in the case of concert tickets, the Government is willing to rush legislation through because it seems like a popular move. It is hypocrisy on the highest scale.
It is hypocrisy to say, even now that we all see the detrimental effect REITs are having on the housing market, that those REITs do not perhaps belong in suburbia but they might belong in our city centres. There is arrogance in walking out of this building, seeing the former communities where there are apartments everywhere and still refusing to acknowledge that people cannot aspire to live, own a house or apartment and raise families in our cities. Two separate sets of logic and understanding are being applied. There is hypocrisy, arrogance and false indignation when the issue of REITs is raised. When the problems are brought to the attention of Ministers, they clutch their pearls. The Taoiseach says somebody should do something about the problem. Of course somebody should do something about it. That is what we are elected to this House to do.
None of these issues is a new phenomenon. The idea of REITs is not new. In fact, they have been with us for more than a decade. The rising cost of housing, exorbitant rents, increasing homelessness and vulture funds are not new concepts. The Government has simply chosen not to do anything about them. The Taoiseach, the Tánaiste and the Minister for Housing, Local Government and Heritage have done nothing to address them. Now we are hearing that various Fianna Fáil and Fine Gael Deputies are clutching their pearls about these issues at parliamentary party meetings. It is this false indignation, arrogance and hypocrisy that has brought us to this position. We are no longer willing to stand for it.
Fine Gael Members had their chance to stop international private funds and say "Enough" when their party was adamant about privatising social housing and creating private rental markets that had investors drooling and rubbing their hands with glee. They chose to do nothing. Deputy Cian O'Callaghan and the Social Democrats have brought forward a Bill that has the simple purpose of taking back ownership of long-term leases. When Part V properties are rented from a local authority, the State will own those assets. The Government has said it will not oppose the Bill. We have an expectation much greater than that, that Fianna Fáil and Fine Gael Ministers will work with us to enforce these provisions in law and will no longer sit on their hands, as their parties have done for decades. It is a minimal request and we intend to hold the Government's feet to the fire to ensure it happens.
I commend my colleague, Deputy Cian O'Callaghan, and his team on all their work on this Bill and their constant determination to ensure greater access to affordable and social housing. Housing is one of the main issues raised by constituents. It is raised by families waiting on social housing lists for years and families trapped in a long-term renting system that was designed only for short-term letting. There is a whole generation of hard-working people who know they will never be able to own a home. This situation did not just happen. It is not an accident but, rather, a direct result of Government policy since the 1990s.
The block-purchased 135 family homes in County Kildare brought some of these issues to the fore this week. They are issues Deputy Cian O'Callaghan has been raising since being elected to this House. The news was greeted with shock and objections from members of the parties in government. I heard on the radio this morning that at last night's parliamentary party meetings, members of both Fianna Fáil and Fine Gael were blaming the current housing crisis on the policies of the other party. I reassure Deputies from both parties that they are equally to blame. Tax breaks and easy lending in the 2000s increased house prices. The real estate investor tax breaks introduced in 2012 facilitated vulture and cuckoo funds, not ordinary people. The housing assistance payment, HAP, scheme replaces the real solution of building social housing with a stopgap rental model that is directing hundreds of millions of euro in pubic money into investment funds.
Dr. Rory Hearne of Maynooth University, who has written a book on these issues, explained yesterday that the Government has created an unaffordable system that is focused not on delivering homes but delivering housing as an investment asset. Our Bill is a direct and specific response to this appalling situation. Social homes should not be an investment opportunity for vulture funds. It is crucial that we stop the completely unsustainable rise in rent and house prices. There has been a 62% increase in rent prices in Ireland over the past ten years. Meanwhile, there was a corresponding 15% increase in the rest of Europe. I have many friends and family members who would love to move home to Ireland but simply cannot. When will this end?
Instead of seeing any kind of end in sight, we are seeing an increase in social housing obligations being met through leasing. Instead of buying properties, councils are entering into long leasing deals whereby the State is paying mortgages for investment funds while people are living in properties they will never be able to own. The repeal of Part V of the Planning and Development Act will prevent this. It will directly help to provide more affordable and social housing. Ultimately, as we all know, tackling the housing crisis requires the State to build and deliver affordable social homes. However, we learned this week that under the new Government housing Bill, a cost of €400,000 for a home in Cork is considered affordable. People are outraged by the absolute ignorance of reality on the part of the Government. Our Bill is a proactive response to the reality of the situation people are facing. It is a focused measure to ensure more families can have homes, be part of a community and feel safe and secure. This is the type of public policy we need.
I thank Deputy Cian O'Callaghan for bringing forward this Bill. I can confirm that the Government has agreed not to oppose it.
As we all know, due to Covid-19, the past 12 months have been very challenging for the housing sector, with delivery impacted by restrictions introduced to protect public health. However, despite the challenges brought about by the onset of Covid in 2020, construction proved resilient and the year finished with the completion of just over 20,000 new dwellings. A total of 7,827 new homes, including 5,000 new builds, were delivered in 2020, representing more than 70% of the target for the year.
Covid-19 will, unfortunately, have a much bigger impact on the housing supply in 2021, with most residential construction having been stopped for more than three months at the beginning of the year. There is no question but that in many local authorities, units that were expected to be ready for tenanting in 2021 are now, unfortunately, likely to be delayed until 2022. Every home not delivered in 2021 represents a household that does not come off the waiting list this year. It is essential, therefore, that we take every opportunity to maximise delivery so as to provide as many homes as we can. With that in mind, we must ensure that any changes to current housing policy are carefully considered in the context of their impact on the overall housing delivery.
The Part V housing supply provisions in the Planning and Development Act came into effect in November 2000 and contained a radical new approach to the supply of social and affordable housing in Ireland. While, originally, Part V required developers to ensure that 20% of land zoned for residential and other uses was reserved for social and affordable housing, in practice many developers availed of an option of making a cash payment in lieu to the local authority instead of building social and affordable housing. Part V was amended in 2015, following a review by the Housing Agency and public consultation. The overall requirement was reduced to up to 10% of units and the option of a cash payment was abolished. The Affordable Housing Bill 2021, which was approved for publication on Tuesday, provides for an extension of Part V to set those requirements at 20% in every local authority area, with a minimum 10% requirement for social homes and up to a further 10% requirement for affordable homes, where required. Where not required, the additional percentage may be used towards social housing.
Part V leasing has been an option for Part V delivery since 2015. The option allows for circumstances where a local authority does not have the capital available to purchase the housing units. This option has been used on a very limited basis and only 16 units were leased in 2020 under this mechanism. It is also important to note that there is no obligation on housing authorities to deliver Part V obligations through leasing. In fact, the advice, through circulars and ministerial guidelines, clearly states that the preference for housing authorities is to acquire units on-site in order to comply with the relevant Part V conditions. The decision on how Part V obligations are satisfied is one for the local authority, to be made in line with its own housing strategies.
The Part V lease option gives housing authorities flexibility in certain circumstances to lease a dwelling on a long-term basis, rather than to acquire it. There may be instances where it is more practical to enter into a leasing arrangement for Part V units, or where the overall objectives of a local authority housing strategy would be better served by doing so. This is particularly true where the transfer of other units within the functional area is not available as an alternative option. For instance, in the case of build-to-rent apartment developments, Part V options for the acquisition or transfer of completed units may not be practical, given the long-term rental nature of such developments. In other instances, the local authority may be in a position to secure the long-term lease of more units than the baseline Part V requirement, which could be significantly more than 10% of the units. In such circumstances, this will result in more units being available to the local authority for the purposes of social housing and the subject lands could, therefore, better satisfy the objectives of the overall housing strategy. Each individual local authority needs to assess this on a case-by-case basis, having regard to offers from a number of proposers, individual housing needs and provisions of the planning Acts. Most important, the Government is clearly shifting away from leasing towards direct build and has provided the financial framework to achieve it.
The effect of the Bill will be to repeal the amendments made to Part V in 2015 so that housing authorities and developers will no longer be permitted to enter into lease agreements to satisfy Part V obligations. I understand the motivation behind this Bill where the local authority or approved housing body does not own the house at the end of the Part V lease term. Acquisition of Part V units can involve significant capital expenditure and there is an opportunity cost associated with this expenditure. However, it remains the case that leasing should not be the priority option for housing authorities in securing Part V units and that, in most cases, the priority would be the acquisition of Part V units by either housing authorities or approved housing bodies.
The Government has committed to increasing the social housing stock by 50,000 social homes, with a strong emphasis on new-build units. In 2021, the total funding being made available for the delivery of housing programmes is €3.3 billion, the single largest housing budget ever with the most ambitious housing targets on record. This includes funding to deliver 12,750 social homes through build, acquisition and leasing. Subject to the impacts of the Covid shutdown of construction, a major component of this investment is a delivery of new build, with the overall target of 9,500 new social homes.
In respect of the market generally, the measures accommodated under the Affordable Housing Bill will, in the near term, improve market access for first-time buyers, stimulate and increase the number of new homes being developed and provide State-supported rental housing at a more affordable price. This includes the cost rental equity loan which provides funding to approved housing bodies to deliver homes for rent in 2021 at a minimum of 25% below market rent. The Bill also includes provision for an affordable purchase shared equity scheme, which will help alleviate housing affordability challenges for certain groups in the short term and stimulate supply by providing confidence in the viability of future private housing developments. These new policies, particularly as they relate to affordability, will reshape delivery of housing in Ireland and deliver on the Government's commitment that everybody should have access to good quality housing to purchase or rent at an affordable price, built to a high standard and offering a high quality of life.
Work by the Economic and Social Research Institute, ESRI, recently commissioned by the Department, estimated that we will need approximately 33,000 houses a year, across all tenures, to keep up with population growth and demand for housing. This summer, we will publish a new housing strategy, Housing for All, to set out our ambitions on how we can achieve these targets. The delivery of more affordable and social homes will be a key focus of the plan. It will also set out measures to address homelessness, both through the delivery of new homes and also the provision of supports that many homeless people need, particularly in the areas of mental health and addiction. Supporting our most vulnerable citizens will be a key objective of the plan and the main focus will be to deliver new build homes to reduce reliance on the private market and put local authorities back at the heart of our housing delivery.
I acknowledged earlier that there are some valid concerns about Part V leasing and I appreciate the spirit in which the Bill has been introduced. However, it is also my belief that it is essential that any change in current policy is carefully considered in terms of its implication for social housing delivery in the short to medium term. On that basis, the Government is not opposing the Bill at this stage, but will commit to examining the current policy in the context of the Government's Housing for All strategy, due to be published in July.
I thank all Members for their comments. I note some of the inaccuracies that have been put forward. One Deputy compared one of the biggest crises in our State to the ticket touting Bill, introduced by my colleague, former Deputy Noel Rock, in 2017. I do not know how that is considered to be rushed legislation in 2021. There was also reference to the historical fact of different taoisigh tightening their belts. The Deputy needs to look at the record in connection with that. We need to work together to solve this crisis by responding as a team into which everybody has an input. Using emotive language and calling people "arrogant" every day in this House will serve no purpose and not provide a solution to the housing crisis.
I thank my colleague, Deputy Cian O'Callaghan, and his team for drafting this legislation. The Minister of State indicated the Government is not opposing the Bill at this time.
That is disingenuous if it is intended not to assist with passing this legislation.
The Minister of State spoke about inaccuracies. I wonder who wrote his speech with regard to the 16 social housing leases last year. Even the reply to a parliamentary question I received last night said it was 1,440. I believe that is very much understating it.
Let us talk about what is really happening. We are at a pivotal stage in terms of a point of no return when it comes to leases. This includes a shift in policy from the State acquiring homes under Part V by way of lease as opposed to purchase at cost price. It is not happening by accident. It has all the hallmarks of a favoured policy that is being pushed by the Minister of State and the Custom House. It is hard to imagine a more expensive way of providing social housing. It will absorb huge amounts of the housing budget with little left for the more cost-efficient direct builds.
It was the same with the housing assistance payment, HAP, which was introduced in 2014. In common with others, I predicted that unless it was accompanied by a significant social housing build, it would absorb a huge amount of the social housing budget. That prediction has proved to be absolutely right. What was supposed to be a short-term policy has become a dominant housing support. At the time, it was all about pretending that the housing list was being addressed.
We are at another crossroads. Long-term leasing, usually for 25 years, is now becoming a more typical, if not dominant, means of the provision of social housing. It is a golden ticket; it is the winning lottery number and it is Government policy. We are told that it is part of the social housing mix. I believe the number of housing units being acquired in this way is seriously understated, however.
In my constituency, several housing estates, which were under construction by private developers, were snapped up by the council or an approved housing body, AHB, under long-term leasing. I will refer to three of them by way of example. In Johnstown in Naas last year, 49 houses were snapped up by the council. There was a good deal of local interest to purchase them and the expectation was that it would be possible, once that estate was complete and offered for sale. The expectation was that 10% of this estate would be acquired for social housing.
Exactly the same thing happened in Naas with the development of 125 houses. This was also long-leased. A large housing development was built in Leixlip, where 10% was to be acquired for social housing under the terms of Part V of the Planning and Development Act 2000. Sixty-one houses will not now be purchased. Instead, they will be long-leased for 25 years. Typically, the houses are leased for just below market rents with a four-year rental review. After 25 years, they are refurbished before being handed back. Despite the outlay, there is no asset at the end. It is effectively the same as paying the mortgage of the developer or the lessee for 25 years and then handing the property back in pristine condition. It begs the question of what happens to the tenant at the end.
There has been a promise of direct builds by local authorities and AHBs. The perception is that these are separate to the housing output by the private sector. I can see very few direct builds happening in my constituency. Essentially, I am seeing turnkey housing and long leases. There is also a complete lack of transparency on what is occurring. One file I checked last week had a blank Part V form. We have no idea, therefore, how the 10% social housing obligation is to be satisfied on that development. Replies to parliamentary questions on the numbers of long leases completely understate what I can see is occurring but we only will know when the transaction is complete.
I refer to an excellent article in The Currency on 27 April, which details three different types of institutional investor. It is well worth a read. I want to quote from part of this article:
Right now, the leasing of social housing is still a relatively small part of the overall residential property market. But it's growing quickly. And industry players agree, a wave of money is on the way. ... One senior lawyer is expecting “an explosion of deals later this year". [A property lender stated] “We get probably 20 social housing projects in a week, and we probably get one private housing development in a week”. ... “Things have changed” said Dublin City Council's deputy chief executive Brendan Kenny. ... [He] has seen the long-term leasing market change and grow in recent years. Where before it was smaller players coming to them with portfolios of older homes, now it's institutional money buying newly-built stuff. “We prefer dealing with the big funds, even though they might be greedier and more expensive. They just want to collect the money.” ... [He went on to say] “Since Covid we have 800 units at various negotiation phases with developers.”
The international funds are, therefore, offering already-built housing units to Dublin City Council under the nose of the Minister of Finance in his own constituency. He seems to think that their only involvement is building them. The headline of The Irish Times article of 28 April mentioned by Deputy Cian O'Callaghan reads, "Dublin social housing portfolio guiding at €21m". The piece goes on to state:
the vendors have not provided a precise breakdown of the portfolio’s composition, it is understood the properties comprise an equal mix of houses and apartments distributed across residential schemes located in the main in Finglas, Tallaght and Blanchardstown.
It further states, "The vendors, Allied Irish Property, specialise in investment in the residential sector throughout Ireland and in the provision of social housing to local authorities." The article shows very clearly that social housing has now become a tradeable financial product.
I raised this issue with the Taoiseach several weeks ago and quoted an article from the website of Hobbs Financial Practice, which I will quote again. The article, with the headline, "The new property market", states:
There is no requirement to deal with tenants, as local councils (or housing agencies) are your lessees. This is a hands-off situation with no risk of vacancies or the usual tasks associated with managing property lets. The cash comes directly from local government into your bank account, there is no intermediary.
Build a portfolio of approved social housing units, houses, and apartments that will be rubber stamped by local councils and housing agencies for long-term leases. Sleep peacefully without worrying about stock markets! Your obligations stop at buildings insurance [and] ... property tax.
It goes on to outline the key benefits, such as the average yield of 5% per annum, which is significantly above the Government bond, no vacancy risk, no advertising, no calls from tenants and that monthly rent payments will arrive into one's bank account like clockwork. That is the reality and the Minister of State need to brush up on it.
I believe the remit of the Land Development Agency, LDA, urgently needs to change. Currently, the remit includes using public land for private development, which unless stopped could produce more long leasing. Incredibly, it is using State assets at a time when all the evidence is that direct building is much more cost effective. The LDA needs to be changed to a project management remit where the land is used to build mixed communities with mixed tenure types including for sale, cost rental and social housing. We set that out in a policy position in 2016 and brought it to the attention of the then Minister with responsibility for housing, the Minister for Foreign Affairs, Deputy Coveney.
Affordable housing to buy or rent is key to people's affordable lives. We need to look at the available State resources that are going to be deployed on these long leases. We need to ask the question of whether we are using up all our ability to build houses with the HAP and now long leases. That is a really bad return. The Minister of State really has to look at this speech he gave and ask the person who wrote it where he or she got that information. It is so wide of the mark that the Minister of State is making a fool of himself by repeating it.
I commend Deputy Cian O'Callaghan on introducing this valuable legislation today. I thank his Social Democrats colleagues for making way for the Bill in Private Members' time.
The Minister of State, Deputy Peter Burke, urged us not to use emotive language. He said it was unhelpful. I will use some straight language. Long-term leasing of social housing in Part V developments is the stupidest way to deliver social housing that I have ever come across. There are so many reasons this should never have been on the Statute Book and should be removed as a matter of urgency.
There are three reasons this is a bad policy. First, it does not guarantee social housing tenants lifetime security of tenure. The great value of social housing is that the family gets real lifetime security of tenure and can embed roots in the community. Even better, if they pass the property on to their children, we get intergenerational security of tenure which produces sustainable communities. Long-term leasing of Part V social housing units prevents all of that.
Second, it defeats the purpose of Part V legislation in the first place. Part V was designed not only to provide social housing but to ensure no housing development could be 100% private. Yet, we have a situation where a developer can lease out the units for 25 years then revert them back to private, resulting in the whole purpose of Part V being actively undermined.
Every time I hear a Minister talk about social housing ghettoes, the patronising tone sends shivers down my spine. Apparently, it is okay to have rich ghettos of 100% private housing as facilitated by this legislation.
The third reason this is the stupidest way to deliver social housing in the history of the State is because it is so damn expensive. For example, the average cost of the Part V leases approved to date this year is €18,000 per unit per annum. Per unit of accommodation, that is a total cost of €451,000. The most expensive long-term Part V lease was approved by Dún Laoghaire-Rathdown County Council in 2019. It came to an astonishing €28,000 per unit. In total, €700,000 of taxpayers' money was used not to own the social house for life but to lease it for 25 years. In some senses, this is the children's hospital of social housing. It is hardly surprising that it happened under Fine Gael's watch. So bad is this mechanism, it is even more expensive than standard long-term leasing. The standard long-term lease average price this year is €15,000. It is actually €76,000 more expensive to long-term lease a Part V unit.
This Bill is timely because, while Part V long-term leases have been a tiny portion of overall leases for a number of years in double digits, so far this year over 100 have been approved. Deputy Cian O'Callaghan and his colleagues have informed the House that private investors and developers are now actively seeking this out as a way of increasing their yields.
Sinn Féin wants this Bill to proceed to Committee Stage as a matter of urgency. We want the Government to change the law and ensure that no more long-term leases of Part V developments proceed. I was concerned by what the Minister of State told the House. The Government has no intention of proceeding with this legislation or honouring the democratic will of this Chamber when we approve it later on. It just wants to make it seem that it supports the principle. Then, of course, because it has a majority on Committee Stage, this Bill will never see the light of day, like so many other good Opposition Bills over recent times.
Not only do we need to scrap long-term leasing of Part V, but also long-term leasing itself is a bad way to deliver social housing. It does not provide a security of tenure or good value for money for the taxpayer. It should be stopped. The sooner we get to large-scale delivery of public housing on public land led by local authorities and other not-for-profit agents, the better.
It is unfortunate that the Minister of State is not here. Earlier, he said the Government is now going to prioritise the direct delivery of local authority homes. Last year, long-term leasing produced more homes than those directly delivered by local authorities. There were 1,500 long-term leases but only 800 directly delivered by local authorities. The Government really needs to get its act in order if it is going to meet that commitment. I suspect, however, like so many other aspects of its housing policy, it is a promise soon to be broken. The Government hopes people will forget. The Opposition, however, will be united to ensure that its broken promises and failed housing policies will not be forgotten. The public will be reminded of them at every opportunity.
I welcome the opportunity to speak on this Private Members' Bill from the Social Democrats. I commend Deputy Cian O'Callaghan on his timely debate to repeal Part V leasing.
It needs to go because when it comes to housing our people, a 25-year lease is about as prudent as taking truckloads of public cash and setting fire to them on a public green. With so many houses being snapped up by long-term leasing, it looks like public money will be piled high and set ablaze, like in Mullen Park in Maynooth in my constituency in north Kildare. What will be at the end of these bonfires? There will be piles of public ash but no public assets.
Leasing is not about public housing and its good and proper place in society. It is not about looking after families and individuals, giving them a chance to build a life and a future in a community in a forever home. It is a shallow political fix for a deep societal problem caused by too much Fianna Fáil and Fine Gael, along with their co-dependents, the market hawks, vultures, cuckoos and developers. It is a shallow political fix with deep financial and social consequences. A house is no longer home. It is a commodity. When people cannot afford to buy, they face mutant markets. Their hard work, salaries, savings and mortgages are useless against the war chest of London and New York. My hard-working constituents in north Kildare saw this in Mullen Park in Maynooth.
Public housing is seen as easy spending with the transfer of public cash to private investors. We see housing, especially public housing, as being about the public good and about investment in our people. As it stands today, the public pays the lease for the term, be it 20 years or 25 years. The public also pays for the refurb at the end of this lease, yet the same public, in the form of the local council, walks away from this transaction with nothing to show for it. It is a case of one arm as long as the other. There is nothing to show for hundreds of millions of euro of citizens' hard-earned cash with no houses or assets.
When it comes to public housing, leasing is not just the developers' cash cow. It is the entire financial herd. Fianna Fáil and Fine Gael expect the public to put up the hard cash to cover the risk for these financiers. The State is basically allowing these global investors take no risk whatsoever. The Government cannot treat the public as cash cows for global financiers. It cannot serve two masters. Do Ministers have any idea how frustrating it is for the public to hear them saying that this is unacceptable when they created the problem? They were warned about the problem but continued to accept it. It is absolutely disgraceful.
I thank Deputy Cian O'Callaghan for bringing forward this Bill.
Fingal County Council plans to lease 159 units in Hansfield SDZ, strategic development zone, under the Part V lease scheme which will cost between €60 million and €74 million. We do not know the real figure because it is shrouded in secrecy and it is impossible to get it revealed. The council is preparing to sign a contract with a private developer for these 159 units at a cost of over €384,000 for a one-bedroom unit over 25 years and €438,000 for a two-bedroom unit. Fingal County Council only recently announced its own affordable housing scheme, however, where a one-bed unit costs only €166,000.
It seems Fingal County Council is willing to sign this deal that will see a leased unit cost 2.5 times that of an affordable housing unit. This is an incredible waste of money. It is essential that an immediate stop is put to any attempt to sign this deal. It is a bad deal for taxpayers and for tenants.
It is astonishing the council can support spending of upwards of €74 million for this deal yet we have Churchfields in Mulhuddart, a development that was announced in 2017, on which only a handful of houses have been built so far. On Part V, and this is really important:
As units leased may revert to the developer at the end of the lease period, and hence be removed from the local authority’s social housing stock, the aims of Part V, and of the Government’s social housing policy, will be better achieved by the acquisition of houses, rather than leasing. Accordingly it is recommended that where capital funding is available, including through AHBs, the local authority should seek the acquisition of houses on the development site.
I ask the Government to support the motion to end this absolute waste of money and call on the Minister to act in his own constituency by calling the chief executive of Fingal County Council and to end this absolute waste of money.
I thank Deputy Cian O’Callaghan for bringing forward this important private members' Bill to repeal Part V leasing. We are in the depths of a housing crisis and have been for many years. I see the reality of this crisis every day across the communities in Dublin Bay South. There is a chronic shortage of affordable housing for first-time buyers. Public housing such as Glovers Court, Bishop Street, Cuffe Street and Mercer House are all within 500 m of Leinster House and have all been condemned as substandard by the European Committee of Social Rights. I do not know of a single flat complex across the constituency that could be deemed good, liveable and safe accommodation. There is public housing with extreme mould and dampness. Raw sewage flooded over a public area in Canon Mooney Gardens in Ringsend over the weekend. Rat invasions are an everyday issue for tenants living in flats. There are dangerous electrics and regular flooding within the flat complexes themselves. The list is endless and it is not acceptable to expect families to live in these conditions.
We have vultures funds swooping in and buying up new houses in bulk that should be homes for first-time buyers. We facilitate these vulture funds and let them enjoy generous tax breaks and avoid paying corporation tax or capital gains tax and the full rate of stamp duty. Where is the break for ordinary working families, like the generous tax breaks these vulture funds have got? When will enough be enough? Do working families not deserve a break too?
Unlike other crises we have faced and are still facing as a society, few see an end to this housing crisis through the policies being developed by this Government, given its record. Leasing for Part V arrangements is yet another example of policies to suit developers and investors at the expense of the State. The cost of renting in this State has increased by in excess of 60% over the past ten years, more than four times the average increase across the eurozone. By allowing leasing for Part V arrangements we are effectively locking local authorities into long-term leasing arrangements at a time when rents nationwide have hit a peak even greater than that experienced during the Celtic tiger era. It is beyond me how anyone could view this as a wise strategy for local authorities to use when tackling this housing crisis. It is plain to see that this is another example of developer-led housing policy to suit investors at the expense of the State. This Government should put in place supports for local authorities to build their own housing on their own sites, thereby providing public housing to an appropriate standard because the standard and quality are not acceptable.
I too thank Teachta Cian O’Callaghan for bringing forward this Bill. It addresses one of the many imbalances in legislation that tilts housing provision in favour of developers and away from the interests of working families. Part V provision should not be leased. Leasing is bad value for money and families should not be left to the mercy of the market to fulfil their housing need. We have a housing crisis and particularly a rental crisis. This Government is currently asleep at the wheel. A lady contacted me last week wondering what she will tell her children when the "For Sale" sign goes up outside their home. The landlord is selling the house and she has just been given four months to leave. The only property in Monasterevin listed on daft.ie as available today is a three-bedroom house in Ferns Bridge costing €1,700 per month. There are five in her family and they will be homeless just as the children are due to return to school. Her children will have to be uprooted from their schools and their friends. As the Minister of State knows, councils assist families who are homeless and not those at imminent risk of homelessness. This needs to change. We need urgent action and I do not think we will see this action until we see an election.
Sinn Féin in government will implement an emergency three-year ban on rent increases and legislate for tenancies of indefinite duration. We will also introduce a refundable tax credit for tenants in the private rented sector to put a month’s rent back into every renter’s pocket. We will ensure all rental properties are compliant with minimum standards by introducing a national car test, NCT-style certification system. I was contacted by a man last week who is renting a converted shed that is so cold inside he can see his breath. His clothes are mouldy because of the dampness and he hears vermin in the cavities of the walls at night. He keeps the radio on so he is not woken by the scratching. His doctor tells him he will be hospitalised if he continues to live there. The only property in his town to rent costs €1,000 per month, twice what he is paying to live in the shed in somebody’s garden. He is on illness benefit and his income is €800 per month. Would anybody live in such a place?
The system is broken and it is time for this Government to stand aside and let people who are serious about fixing it to do so. I heard the Minister, Deputy Darragh O’Brien, this morning on “Ireland AM” and he kindly decided to tell the people who were watching that programme that he inherited the housing problem and he could not fix it as he had inherited it, but he would do his best. He is in government now and it is his best he needs to do.
I support the Bill and thank Deputy Cian O’Callaghan and everyone involved in bringing it forward. Part V long-term leasing is a cosy deal for developers, which leads to social holding being turned into a commodity under the watch of Fianna Fáil and Fine Gael. Part V long-leasing, combined with investment funds buying entire estates, as we have seen this week, will not solve the housing crisis but will in actual fact make it much worse. The Government is continuing to rely on passing the buck onto the private sector and developers to tackle the housing crisis. It has never worked, it will never work and it will only make developers and speculators rich.
In Cork, more than 8,000 families and individuals are on the social housing waiting lists, while there are 400 families and individuals in emergency accommodation. Cork City Council should be able to purchase these properties under Part V and not have to long-lease them. The council should not have to rent them for 25 years at exorbitant amounts from unscrupulous developers who are holding both Cork and our country to ransom. There is no surprise and no sense of irony by the Minister, Deputy Darragh O’Brien, who brought forward a proposal to Cabinet this week that would see affordable homes up to the value of €400,000 in Cork. What planet is that man on that he thinks housing at €400,000 is affordable to anyone? Housing prices have risen by 11% in Cork. How can the Minister of State and this Government stand over policies and these prices? The Government promised affordable homes, it built up expectations and it created hope in people’s hearts and minds but it has stolen that hope away again.
The pockets of developers and speculators will be lined while the people of Cork and this State will continue to be locked out of home ownership. The dream of ordinary people to own their own home is slowly vanishing under this Government and developers and investments funds are laughing all the way to the bank. Today it has taken an Opposition Deputy to bring forward this Bill to try to fix a problem caused by Fianna Fáil and Fine Gael. Yesterday, the Government refused to support Deputy Ó Broin’s Bill to support renters and the day before it decimated people’s hopes, including young families and individuals, of an affordable house. For the sake of everyone, I hope the Minister takes tomorrow off because people cannot live with these types of policies.
We are supporting the Bill. I thank Deputy Cian O'Callagan and his team for their work on this matter.
The provision of social housing stock by way of Part V acquisition should never have been allowed to become another cushy deal for developers but, unfortunately, it has. Local authorities and the Government must ensure social housing is provided in the most sustainable, efficient and effective manner possible. Ultimately, the point of social housing is for people to have homes and be safe and secure. The point of social housing is not to drastically increase the profit margins of developers while failing to ensure that they have the stock capability to provide housing for anybody who needs it in one year or in 20, 30 or 50 years. Disproportionate reliance on leasing for social housing stock means the State is open to stock dwindling again once these leases come to an end in 30 or so years. To whatever extent Part V leasing could have been justified, extensive reliance on it is not sustainable, and neither is it sustainable in the short, medium or long term. Our successors will end up back here dealing with these same matters forever if more local authorities fail to establish and maintain social housing stock.
I understand documents released to Deputy Cian O'Callaghan under freedom of information legislation indicate that Dún Laoghaire-Rathdown County Council signed a multimillion euro lease for 25 years with a developer but failed to engage an independent valuer on rental costs before agreeing to monthly rents per unit of €2,300. This speaks to an issue that goes far beyond the simple availability of leasing as not suitable for Part V acquisition.
The Government or local authorities may seek to justify recent surges in the use of leasing for Part V acquisitions on the basis that it provides housing more quickly. Nevertheless, Mr. Killian Woods, writing in The Business Post last month, indicated that seven apartments in Dundrum being leased by the local authority have been left vacant for more than 17 months. There are thousands of people on the housing list from all over Dublin, so not only was the council paying €2,000 every month to lease each apartment, it was not even housing people in them. There are no circumstances in which that is acceptable. It is utterly disgraceful.
The Planning and Development Act 2000 provides that local authorities must carry out an examination of several factors before entering into agreements for Part V housing. One factor is whether the agreement will constitute the best use of resources available to a local authority. Surely the examples to which I refer prove that this in no way meets that criterion. Local authorities are already under a statutory obligation to consider each and all of the criteria when entering Part V agreements. Why have they not been doing so? The information provided to Deputy Cian O'Callaghan through his freedom of information request suggests that local authorities are entering what are clearly financially unwise deals, meaning that there is a bigger problem on top of the leasing under Part V arrangements.
Local authorities are obliged to ensure that Part V agreements are efficient and effective in realising the overall objectives of the housing strategy. If they are not doing this, we could be left with a multitude of costly leasing agreements on which the State will have to either spend even more in a few decades to keep the leases or lose the properties to which they relate from the social housing stock altogether. If these agreements are not the best method of providing social housing under Part V in all these circumstances, that speaks to a systemic problem regarding the way in which local authorities are dealing with Part V properties.
We call on the Minister for Housing, Local Government and Heritage to address this matter with local authorities and for representatives of those authorities to come before the housing committee to set out exactly how they have been complying with their obligations under the 2000 Act. It seems that they have not been doing so. They should explain how these leasing agreements constitute the best use of resources under the Act to ensure an adequate supply of social housing.
We do not just need an adequate supply of social housing for the lifetime of this Government or the next, we need it for the next 30 or 50 years. We must learn from the mistakes of the past and at every level of politics we must ensure the provision of social housing is not treated as an afterthought or a money-making racket for developers. We will only have adequate social housing stock when there is nobody in Ireland without a roof over his or her head.
Labour supports this Bill. I ask the Government to seriously consider supporting it too. Not opposing the Bill on Second Stage is not the equivalent of supporting it. We can all see through that tactic now. Part V leasing arrangements have been neither an effective nor an efficient use of local authority resources and, worst of all, they are not providing people with any homes at all. We ask the Government to support the Bill.
As we do not have Members present from Solidarity, the Regional Group, the Rural Independent Group or the Independent Group, I must return to the Minister of State and ask him to respond on behalf of the Government.
I take this opportunity to reflect on a number of the matters touched on during the debate on the Bill. I reiterate that local authorities are not obliged to enter into agreements to deliver Part V obligations through leasing. A clear preference for housing authorities is to acquire units on site in order to comply with relevant Part V conditions. Leasing to satisfy Part V elements should only be used in limited circumstances as set out in ministerial guidelines and circulars. It is clear that, to date, this has been the case. Part V leasing delivery represents a very small proportion of total Part V output. Of the 742 Part V homes delivered in 2020, just 16 were subject to a Part V lease and total delivery between 2018 and 2020 was 39 dwellings.
The Government's objective and priority is to focus strongly on new builds and, in particular, local authority-led new-build activity. The major focus of the €3.3 billion in funding being made available for the delivery of housing programmes this year will be local authority and approved housing body build activity, with an overall target of 9,500 homes for this year.
The general leasing programme is separate to Part V leasing but utilises the same kind of agreement. A total of 1,440 leased properties were delivered in 2020, including the delivery under key programmes such as mortgage to rent and repair to lease. Mortgage to rent is a very important scheme that will allow families and households in mortgage distress to remain in their homes. The repair and lease scheme and the buy and renew scheme allow local authorities to return vacant homes in their area for use as social housing. Both mortgage to rent and repair and leasing schemes are key leasing delivery streams.
Leasing provides additional social housing on a long-term basis, allowing us to address a greater proportion of social housing need than can be addressed by means of construction and acquisition programmes alone. The build programmes are the main focus of delivering stock but leasing provides for additional delivery of homes on a waiting list. The priority for us all must be the delivery of homes for the households that need them. In many cases, leasing is assessed to be a viable option where local authorities do not have access to adequate land or build pipelines to cater for demand in the area. I understand the concerns arising from the fact that under a Part V lease agreement, a property is not owned by the local authority at the end of the lease term. The issue of asset transfer at the end of lease is tied up with the balance sheet status of the contract. If the house was to transfer to the State at the end of the contract, the lease payments would be on a general balance sheet, leaving less capacity for other State investments. Funding housing in this way gives the Government much more flexibility in its spending and allows us to deliver more social housing than we could under the capital programmes alone.
Concerns have also been raised regarding the value for money of Part V leasing and leasing in general. Relative cost-efficiency is always an important consideration in the mix of delivery but it is not the only consideration and this must be viewed in the context of policy objectives and wider concerns. The cost of leasing is kept under constant review but it is not the sole determinant of value.
I am also aware of recent commentary relating to a loophole in the private rental market whereby landlords are registering higher rents than they are charging in reality with the Residential Tenancies Board, RTB, in order to keep market rates high. The Minister, the Department, the Housing Agency and the RTB keep the operation of the rental market under review and any necessary legislative change will be made. If there is any evidence of this taking place and affecting the rents paid for leasing, it is of concern. I ask that any Deputy with any evidence of the practice to make it available to my Department as a matter of urgency so appropriate steps can be taken.
It is clear from this debate that all speakers agree on a fundamental point, which is that we need more homes. We need more homes for the rental sector, more social homes and more affordable homes. We also need more homes for first-time buyers. We need to increase supply. Earlier in the evening there was mention of the figure from the Economic and Social Research Institute of 33,000 homes being required annually. There is no single approach to deliver this number and we should have a multifaceted strategy drawing on the capacity of all sectors, including the private sector. We need to increase local authority builds and ensure we have a fit-for-purpose and affordable private housing market. We need an attractive and secure private rental market. We must ensure we can use every possible mechanism to bring vacant housing back to use. That is why, in formulating the Government's new housing plan, Housing for All, we are looking at avenues to increase delivery across all areas.
The Programme for Government: Our Shared Future commits the Government to the mission of housing for all.
The document articulates core beliefs that everybody should have access to good quality housing for purchase or rent at an affordable price and that the State has a fundamental role in enabling the delivery of new homes. It recognises, not only that the provision of more affordable housing has a profound benefit socially and economically, but that affordable housing contributes to a high quality of life for citizens.
The publication of the affordable housing Bill on Tuesday was a key step in that process. The Bill will be the first comprehensive and stand-alone legislation dedicated to the provision of affordable housing in the history of the State and will provide for the first scheme of direct State build affordable homes in over a decade. It will provide the first ever national scheme for the delivery of long-promised cost rental housing and will introduce a new affordable housing purchase equity scheme for homes in private developments. This will be landmark legislation and a game changer for affordable housing in this country. This Bill is delivering on the programme for Government commitment to put affordability at the heart of the housing system and to prioritise the increased supply of affordable homes.
The measures being introduced in this Bill will, in the near term, improve market access for first time buyers, stimulate an increase in the number of new homes being developed and provide State supported rental housing at more affordable prices. This Bill provides the statutory underpinning for affordable housing going forward. The detailed operations in the scheme, outlined in the Bill, are already under way and are being developed further, including terms of target setting and longer term funding provision in the context of the development of Housing for All and the Department's submission to the review of the national development plan.
I refer to homelessness. The publication of the Bill is just one of many steps the Government needs to take to deliver on its commitment in Housing for All. Our most recent homeless data for March 2021 shows that the total number of homeless individuals, including dependants, is 8,060. This represents an 18.6% decrease on February 2020 when there were 9,907 homeless individuals recorded. There were 913 families in emergency accommodation in March 2021, representing a 38.6% decrease on March 2020. This is the lowest number since March 2016. There is a declining use of hotels and bed and breakfast accommodation in Dublin and there has been an 80% reduction in the number of families accommodated in commercial hotels in the past year. While these decreases are welcome, the number of people experiencing homelessness is still a major cause for concern and the numbers are still far too high. We need to continue the work we have started and make sure numbers continue to come down.
The past year has seen extremely challenging conditions in social housing delivery for the construction sector as a whole. The unprecedented nature of the pandemic has led to major disruption of the sector and we still face considerable challenges in delivery. However, the Government's priority remains the acceleration of the social housing build programme. It is essential that any change in Part V leasing policy is carefully considered in terms of its implications for social housing delivery in the short to medium term. Therefore, the current policy will be reviewed in the context of the work being undertaken on the Government's forthcoming Housing for All plan.
I would like to mention the issue of institutional investment. The Minister is opposed to institutional investors purchasing inappropriate properties, such as housing estates, in bulk where there is no evidence of real additional supply. I know this has been referenced by Members. The Minister is considering taking additional measures to tackle this and already, on 4 May, he secured Cabinet agreement on increasing Part V from 10% to 20%, to include affordable purchase, which will ensure that every development has an affordable section. This, in itself, will prevent cuckoo funds from snapping up entire developments. Institutional investors occupy a relatively small share of the housing market; approximately 5% of tenancies. Investment that leads to additional supply is welcomed and needed. However, the move of some institutional investors into traditional estates, where demand and viability are not issues, is deeply concerning. The Minister for Finance sets out the regulatory basis for investment, in particular in ensuring that where an investment brings profit, a fair share of tax is paid, and that a whole-of-Government approach is required to address the issue. Our commitment in that regard will be dealt with as a matter of urgency.
I am conscious of the fact that there are four groups that were not in the Chamber but were in the House when their time came up. I am also conscious of the fact that it is difficult for groups to know when they are going to be called and when they are not going to be called. During my period as a Whip for the Opposition, the Opposition Whips co-ordinated and worked through one Whip to ensure that all the groups knew how the debate was progressing and when spokespeople might be required. That is not happening at present and I suggest to Opposition groupings that some level of co-ordination between themselves might avoid this sort of thing happening in the future. While I would always be anxious to facilitate people who would want to contribute to an important debate such as this - and it is of critical importance - the procedure is well established that once the Minister or Minister of State has started to reply to the debate it is not possible to return to Deputies.
I ask Deputies Shortall and Cian O'Callaghan to conclude.
I commend my colleague, Deputy Cian O'Callaghan, for bringing forward this important Bill. It makes a contribution to an important aspect of the area of what we are now seeing, namely the increasing privatisation and commodification of housing.
After Fianna Fáil crashed the housing market in the late noughties - we all experienced the devastation of the associated banking crash - most people would have thought it should never be allowed near housing again. It was kept away from it for some time but it did not make an awful lot of difference to the approach taken by Government. What we saw from Fine Gael over the last ten or 12 years was a repeat of the mistakes of the past. We saw the commodification of housing, priority being given to the profit margins in housing and little regard paid to the need for housing to be provided as a basic service and a basic responsibility on the part of Government to ensure that housing was provided in adequate numbers and was affordable. Instead of that, thanks to former Deputy, Michael Noonan, over the last ten or so years Fine Gael introduced tax breaks to encourage vulture funds and REITs to come into the market in order to bring in international capital. We are paying a huge price for that. That was followed by the introduction of HAP, which sought to create demand at a time when demand was low. That was followed in 2015 by the then Minister, Deputy Kelly, reducing the standards of apartments, making them cheaper to build and increasing the profit for developers. That was followed by the lifting of height limits by the then Minister, Deputy Coveney. The former Minister Eoghan Murphy then further reduced standards and gave us the fast-track strategic development housing system, which squeezed the public out of the planning process. All of these policies were designed for profiteering within the housing market and happened at the direct expense of ordinary people trying to access homes. Little regard is paid to people on average incomes who aspire to own their own homes. It seems that is no longer a realistic aspiration as long as we have Fine Gael and Fianna Fáil in charge of housing policy.
It was quite surprising yesterday when my colleague, Deputy Catherine Murphy, raised with the Taoiseach the matter of investment funds swooping in and buying up entire apartment blocks and, increasingly, housing estates and second-hand housing. It is a licence to print money for them and the Taoiseach seemed to be surprised that it was taking place at such a level. He was doubly surprised when Deputy Catherine Murphy pointed out the tendency for local authorities to engage in this practice of entering long leases with these investment funds. The Taoiseach expressed surprise and responded by saying that it is an unacceptable practice.
Yes it is an unacceptable practice but it has been facilitated by his Government's housing policy, a policy that was inherited from Fine Gael and continued faithfully by Fianna Fáil in partnership with Fine Gael. I often wonder just what is the Green Party's position in all of this. We hear very little from it, other than tonight's attempt by the Minister of State, Deputy Noonan, to somehow justify the practice of long leasing.
It is a licence to print money as a return for 25 years is guaranteed. The investor cannot lose. The people who lose, of course, are the taxpayers who pick up the very substantial tab for this. The Taoiseach also said he would work with us on implementing the Bill and its provisions. It is quite clear from the responses of the two Ministers of State this evening that they have no intention of doing that. They are talking about considering it in the context of a review of housing policy. It is clear we are getting more of the same and that the Government cannot be trusted. The Minister and the Taoiseach, who made those points yesterday, simply cannot be trusted.
I thank all of the Deputies who contributed to this debate. It is very clear from the statement by the Minister of State, Deputy Burke, that the Government is not opposing the Bill at this time. We know it has no intention of working with us to help progress the Bill. Both Ministers of State effectively defended the Government's position on long-term leasing in their comments, as did the Minister last night. That does not surprise me. What does surprise me is that the Minister of State, Deputy Noonan, repeated the recent Government line on institutional investors and basically said it should not be happening in suburban housing estates but for it to happen in apartments is okay. This was from a Green Party Minister of State who, of course, should be supporting sustainable compact development. I do not understand this comment.
To be clear on this, and we have been very clear on this all along, until recently, Part V long-term leasing was happening on a very small scale. That has changed dramatically in the past six months to a year. I have given concrete examples of this, as have Deputies Catherine Murphy, Paul Donnelly and Ó Broin. I am surprised the Ministers of State are referring to figures from previous years when we have been saying that what is happening now needs to be addressed.
Survey data by researchers at the Central Bank has found growing wealth inequality in Ireland. Looking at survey data from 1987, it found the share of wealth of the top 1% of households has increased from 10% to 15% while the share of wealth of the bottom 50% of households has declined from 12% to just 7%. The top 1% of households in Ireland now have more than double the amount of wealth of the bottom 50% of households. We know that housing completely dominates the composition of distribution of wealth in Ireland. Of the bottom 25% of households in Ireland, only one in 1,000 are home owners. Of those aged under 40 years of age who bought a home between 2013 and 2018, almost 50% did so through receiving inheritance. Younger people, renters and people on lower incomes are being caught in a trap of paying high rents and are unable to afford to buy a home.
Long-term leasing does not make sense. It does not make sense for social housing tenants who do not get security of tenure and face eviction as they grow older. It does not make sense for building sustainable communities, it does not make sense for the State and society in terms of long-term value for money and it creates problems down the road. The only people for whom this makes sense are developers and investment funds. If the Government is serious about tackling this it should be serious about progressing the Bill. Long-term leasing is a sweetheart deal for developers. It is an incredibly reckless economic approach and it is not an efficient use of State funds. The Government is creating a perfect storm of lax oversight and developer-centric deals that are driving up housing costs and denying the State an opportunity to add to its permanent social housing stock. Before any more damage is done, it is time to end the State's reliance on long-term leasing as a means to provide social housing. To tackle this housing crisis we must take a new approach and prioritise the delivery by the State of long-term secure and affordable social homes.