To pick up on the issue of 40% social and affordable versus 60% open market, one of the concerning things for many of us is that social and affordable housing is not even mentioned in the heads of the Bill. While the heads of the Bill say that the LDA must have regard to Government policy, it has no statutory requirement to deliver social and affordable housing. Because it is being set up as an independent commercial entity, there is clear potential for a real conflict between having regard for Government policy, whatever that is, and the types of commercial decisions that an independent designated activities company will have to make. This is one of the reasons some of us have raised the issue of NAMA and the publicly acknowledged conflict between its social remit and its commercial remit.
We also need to be really clear about the 40% target. It is exactly as Dr. O'Connell indicates. It is about facilitating the off-balance sheet nature of this. It is one of the components of trying to ensure that it gets off-balance sheet. In my interpretation, that jars directly with the repeated calls of both the NESC and the ESRI for a significant output, not just of social housing but particularly of affordable and cost rental accommodation. Let us look at the figures. The LDA is to have a remit to facilitate the delivery of 150,000 homes over 20 years. At 10% social, that means 15,000 houses and at 30% affordable that makes 35,000 houses, and then there are 60% open market price houses, which is 90,000. They sound like big numbers but on an annual basis, that means 750 social houses, 2,250 affordable houses, which could be 50:50 cost rental and whatever, and 4,500 open market price houses. This is in the context of the national development plan target of 30,000 total house completions on an annual basis over the life cycle of that plan. Some people think it needs to be 35,000 or whatever but let us take the figure of 30,000. The LDA will be responsible for 10% of that, which is hardly the game changer the Government keeps talking about.
The big concern of this committee is that we want housing need met, in particular for those whose needs currently are not met by the market. We are creating a mechanism that will be predominantly market in nature, to keep it off-balance sheet. As a result, we are dramatically reducing the ability of the LDA to meet the social and affordable housing need, which the ESRI and NESC have been highlighting for quite some time. In the case of NESC, as far back as 2005 it has been calling for affordable cost rental. Without putting words in the witnesses' mouths, clearly what we are hearing from them is that housing need should be paramount and, while they are not getting into saying the figure of 40% should be at a higher or lower level, they are not disagreeing with the committee when we are saying it would be better if it was higher. I do not think we need to stipulate the percentage in the legislation because different schemes can work in different ways. If the legislation had provided that it should be the priority of the Land Development Agency to facilitate the delivery of social and affordable housing, that would have given it a different context. I am interested in the witnesses' views on that. I am also interested in their views on the potential conflict between the independent, commercial nature of a market operator to meet EUROSTAT's off-balance sheet rules and the non-market nature of social and affordable housing. The whole point of social and affordable housing is that we are pulling out elements of the market from its delivery, such as land speculation and all the rest of it.
I want to go back to the issue of land value extraction although it is a little bit esoteric. Part of the difficulty with O'Devaney Gardens, for example, is that Dublin City Council is at the mercy of a private consortium because it bid in a competitive tendering process. Even though O'Devaney Gardens, strictly speaking, has no value in the sense that it is not up on the market for sale, if three, four or five large corporations are all bidding for it and if they all decide to put in an element of land value extraction over and above the profit margins, then Dublin City Council has no option but to select the best of those. That appears to be what happened in O'Devaney Gardens with the Bartra Capital deal. While I am not asking the witnesses to comment on that deal, given the fact that competitive tendering and competitive dialogue is actually going to set the final price, how do we ensure that in those competitive tendering processes, private interests are not allowed incorporate market value of the land for which they are not actually paying?
This leads to my other big concern with the LDA. I really like the idea of active land management. If this Bill created a strong, powerful, well resourced State agency to push other State agencies around and to acquire land because it was not being used in the most strategic way and to then engage with local authorities or the IDA about the best use of that land, it would be brilliant. My big worry is that we are giving the LDA two jobs, namely, active land management and then the primary role in residential development. We have lots of highly expert people in local authorities who, if only given the capacity and the resources, could be much better at that. From the witnesses' experience of other jurisdictions, are the roles of land management and residential development always combined, are they separate or how does it work?
On credit, for Professor McQuinn and Dr. O'Toole, my big concern is less to do with credit being invested directly in land which is then hoarded, although that is a problem. It is more about what is happening with investment decisions as a result of the macroprudential rules beginning to constrain house prices. What we see happening, particularly in Dublin, is not that everybody is sitting on the land and keeping it vacant but that different types of investment decisions are being made, in particular build to rent, co-living, high-end student accommodation and hotels. One reason they are doing that is they can extract more value; there are fewer constraints on what people pay in those cases than there are on household mortgage lending.
Should we be concerned about that? What changes could be made to allow the LDA protect against that in the big urban centres? Let us take Dublin 8 as an example. Someone recently did an interesting 3D mapping exercise of what is being built there in those four categories: student, co-living, hotels and build-to-rent. They are squeezing out standard residential development, let alone affordable accommodation. I would like the witnesses from NESC to address the locational value mechanism mentioned in the 2018 report and enlighten the committee in that regard. It is an interesting section that has not been touched on yet.