I move: "That the Bill be now read a Second Time."
I am very pleased to be here today to speak on Second Stage of the Affordable Housing Bill 2021. This has been the culmination of nearly a year's work by me and my departmental officials, along with members of the Oireachtas committee, who did much work to get us to this stage. The Bill has been passed through the Seanad, as Members know, and what is now coming before the Dáil is very important legislation. It is a major priority for me, as the Minister responsible for housing, to deliver affordable housing for working people and to provide hope for a whole generation that feels it has been locked out of the housing market. I am very pleased to be here today and I thank Members for their input so far.
At its heart, this Bill is about the State stepping up to provide affordable homes for purchase and rent using all means at its disposal to tackle the housing crisis. The ongoing affordability crisis has reduced home ownership rates to historic lows. It has increased the age of the average first-time buyer by almost a decade to just under 36 years of age. Ireland has plummeted from a world leader to below the EU average rate of home ownership. For an entire generation, owning a home is slipping through people's fingers as they pay over unprecedented levels of rent or languish in their parents' houses. A generation is caught in an unaffordable rent trap.
We must put in place the legislative buildings blocks of a new approach to the crisis, one which puts home ownership back on the table for a generation that has been smothered by rising rents and job uncertainty. This housing crisis is not about one party or the Government but about giving a whole generation hope and investing in the future of our democracy. The Affordable Housing Bill 2021 is a very important step in rising to that challenge. It places the legislative foundations for the State to put bricks and mortar on the ground to directly tackle the housing crisis, particularly in the area of affordable rents and purchase. It is the most comprehensive affordable housing Bill ever published. It is radical and a clear departure and change from what has been the housing policy. It is a change that many thousands of our young people are looking for.
I firmly believe home ownership is good for individuals, families, communities and the country. With this in mind I have put affordability and the chance to own one's own home at the heart of this Government's housing policy. This Bill and the Land Development Agency Bill 2021 are going through the Oireachtas simultaneously and will work in tandem to give people the opportunity of ownership. These two landmark pieces of legislation are backed up by the largest housing budget in the history of the State and our most ambitious social housing targets on record. Combined, this represents a major step change in our housing policy that mobilises both the public and private sector.
This Bill has four key new elements. There is the first local authority-led direct-build affordable homes on State lands in over a decade. There is our first ever national cost-rental scheme and an innovative shared equity scheme. Finally, it will expand Part V provisions to increase the percentage contribution to 20% and to apply it to cost rental as well as social and affordable housing. These elements of the Part V expansion will be brought to Members for consideration on Committee Stage, following the conclusion of our work with the Attorney General and Cabinet approval last Tuesday.
The upcoming housing for all plan, which will be published next month, will set out an ambitious range of targets across the country over the coming years. The roll-out of local authority-led affordable housing will be a central plank of the Government’s affordable housing plan. Homes will broadly range from €160,000 to €310,000. I have worked with the Minister for Public Expenditure and Reform and am glad that we have agreed a number of significant reforms to the serviced sites fund to ensure it can help local authorities effectively fund major housing delivery, and to get on with the delivery of those affordable homes.
Shared equity will involve the State bridging the affordability gap by taking an equity stake of up to 20% between an individual’s mortgage limits and the price of the home. It will work in conjunction with the help-to-buy scheme to help to get people into homes this year, starting this year. It will be one tool in helping to turn generation rent into a generation that can buy and own their own home.
On shared equity, I want to address some of the concerns and comments that have been raised, and tackle some of the unfounded and opportunistic criticisms around a particular aspect of the Bill, to dispel any uncertainty and directly tackle deliberate misinformation. Because of the Opposition’s hesitancy, in some quarters, to acknowledge that it is broadly supportive of most of the measures contained in the Bill, such as local authority direct build affordable homes, expanding Part V and a new form of tenure in cost rental, a particular and intentionally distracting focus has been paid to the affordable purchase shared equity scheme. I intend that this scheme will be a short-term, targeted measure as part of a much broader multifaceted approach to increasing housing supply and affordability. This specific measure on shared equity increase viability and generate supply to provide an immediate boost to first-time buyers for new homes. It has been developed in very close consultation with relevant Departments, housing delivery partners, international comparator bodies and other key stakeholders. It will work. We have examined and assessed the impact of similar schemes, not the same schemes, in other jurisdictions, including in England, learning from experience and developing an Irish scheme that is calibrated for Ireland. With regard to our nearest neighbour, the English scheme has supported 250,000 home purchases. An independent assessment conducted by the UK’s National Audit Office - the equivalent of Ireland's Comptroller and Auditor General, not the London School of Economics - found that the scheme has met its twin objectives of increasing supply and increasing home ownership. The office's analysis found it increased supply by 14% and that purchase price or house price inflation rose by approximately 1% on a like-for-like basis.
Certain elements of the Opposition, but not all, may not want this scheme to provide support to house purchasers. I believe those needing to buy a home want support. They deserve support and they need it. A recent Behaviour & Attitudes survey found that 76% of those expressing a view were in favour of the introduction of a shared equity scheme as a means of making the cost of homes more affordable. We have a decision on whether we delay further to allow people to continue to pay up to €2,000 a month in rent, or help them to get a mortgage that would be half of that, and help them to get to own their home now. There should be no more procrastination. We must get on and do it.
Nevertheless, taking on board legitimate concerns, safeguards over and above those in place in the UK's scheme are being built in to tailor eligibility to meet individual affordability needs only and to manage prices through area-based price ceilings. These price ceilings are price caps, not price targets. The price ceilings are based on real data, which is the CSO-recorded median price of new first-time buyer homes sold in each area. This means that developers will build homes in the lower half of the price distribution specific to that area. I am happy to confirm, again, that this will explicitly not be a second mortgage. It is an equity stake. It is not a debt-led scheme. It will not compel homeowners to borrow more than they can afford. It will not attract exorbitant interest rates, as some have tried to portray earlier in the debate.
I am pleased that the provision of cost rental has been widely welcomed by a range of political and research groups. It will see rents that are anticipated to be the region of 25% to 30% lower than comparable market rents, and which will provide greater returns as they mature. This is an entirely new form of tenure and an exciting departure for housing in Ireland. Cost rental will cover the cost of developing and managing those developments, and will provide State-backed affordable rents for our people.
I want to correct any suggestion that the inclusion of a very limited return on equity is equivalent to allowing the private sector to generate large profits in this space. We want to broaden out and expand cost rental. The Exchequer will need assistance in doing that. Where any private providers wish to deliver cost rental homes, for instance large institutional pension funds, or indeed ethical funds, they will of course seek a modest return. The legislation provides for regulatory-making powers to set a cap on the allowable level of return. For example, between 3.5% and 5% is permitted under the exemplar Austrian cost rental model of cost rental, which we are seeking to emulate in Ireland. This allows the delivery of cost rental at scale and a model that is not entirely reliant on State support. Furthermore, this provision will allow the Land Development Agency, LDA, to deliver cost rental at scale, and to provide for some modest returns in that space to reinvest into further cost rental across the board. That is for those who are supporting the Land Development Agency Bill 2021, and who support the LDA in building homes. This will be a very important deliverer in this space with where we start breaking ground this year.
I will now turn to Part V and first-time buyers. I have previously confirmed that it is my intention to bring forward further changes to strengthen this Bill on Committee Stage. This will include expanding Part V provisions of the Planning and Development Act 2000 to increase the percentage contribution and to make it available for the provision of affordable housing by local authorities and approved housing bodies, AHBs. The provisions, however, will require that the Part V contribution for social housing will be a minimum 10%, which is protected. In areas where there is no affordable purchase or rental need, which will be very few areas but there may be some, all of the 20% will be applied to social housing provision.
My Department is also currently working on amendments to create an owner-occupier guarantee. This will involve enabling local authorities to designate a specified number of houses and duplexes with a predetermined range of at least 0% to 50% in a development for owner-occupiers similar to requirements under Part V. It will complement the actions taken by the Minister for Finance and me last month on protecting traditional family homes from bulk purchasing.
We are in the middle of a national housing crisis. We are taking steps to address that. Faced with such an emergency we need to use all the tools at our disposal to address this challenge across the private and the public sector. I am genuinely committed to pragmatism over ideology and real delivery over dogmatism to boost housing supply and open up home ownership to a new generation. To refuse to use the private sector would be fighting with one hand tied behind our back. Instead we need to show energy, innovation, flexibility and commitment to get bricks and mortar into the ground, with the State playing a central role. The State is the biggest builder and biggest investor in housing. This will remain so through our housing for all plan, which we will publish in the coming weeks. In this light, the Bill is very important legislation. It is a major leap forward in housing policy. It is also a major leap forward into helping people own their own home or to rent their home at an affordable rate.
I look forward to a debate on the Bill's provisions. I will seek to respond to any specific questions put forward by Deputies in that regard. I genuinely look forward to any suggestion on Committee Stage for how this legislation can be improved. We need this legislation to pass by the summer recess. It is urgent and important.
A lot of very detailed work has gone into it. There was good pre-legislative work done by the Oireachtas joint committee, which was also protracted. There was good debate in the Seanad throughout all Stages, including amendments.
I fundamentally put to colleagues, and I say this respectfully, that if they support home ownership for generation rent, they will support and vote for the Bill. If they support affordable and cost rental, they will vote for the Bill. If they really want affordable homes on State land for our young people and not so young people to buy, they will vote for the Bill. If they want every newly granted planning application for new housing estates after the passing of the Bill to include an increased affordable housing provision, they will vote for the Bill. There are no ifs or buts at this stage. There is no equivocation and no conditions. It is now time to start delivering for our people. This is the basis for delivering affordable housing at scale on private and public land.
People are watching. There is great interest in this legislation and this initiative by the Government to deliver real opportunities for people to buy and rent homes at an affordable rate. Now is the time for Members to decide whether they are for helping generation rent get out of that rent trap and whether they really want to start developing affordable homes for people at scale, through this legislation and separately in the LDA legislation, which are intertwined.
I am acutely interested to hear views and I have heard views all the way through this. At the end of the day, Deputies either support these measures or they do not. I hope we will get as much cross-party and independent support for the measures I am bringing through, in the first year of this Government being in place. Others have fed into the process and I welcome this. I welcome the feedback I have received on this. Now is not the time to allow someone's perfect be the enemy of the good. We need to get on with delivering affordable homes to rent and to buy for our people. This is the way forward to do so.