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JOINT COMMITTEE ON THE ENVIRONMENT, HERITAGE AND LOCAL GOVERNMENT debate -
Tuesday, 2 Nov 2010

Role and Functions: Discussion with Housing and Sustainable Communities Agency

I welcome Mr. John O'Connor, chief executive officer, Ms Katherine Banks and Mr. Trevor Austin of the Housing and Sustainable Communities Agency, who are to make a presentation on the role and functions of the agency. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter but continue to do so, they are entitled thereafter only to a qualified privilege in respect of evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect parliamentary practice to the effect that, where possible, they should not criticise or make charges against persons or entity by name or in such a way as to make him, her or it identifiable.

I invite the delegation from the Housing and Sustainable Communities Agency to make the presentation.

Mr. John O’Connor

I will give a brief overview of the Housing and Sustainable Communities Agency. The agency was established in May this year on an administrative basis. It is essentially one housing agency under the Department of the Environment, Heritage and Local Government. The aim of the new agency is to facilitate the rationalisation of a number of existing agencies, and it replaces the National Building Agency, the Affordable Homes Partnership, the Centre for Housing Research and the Homeless Agency.

The primary objectives of the agency are to work with and support local authorities, which are the housing authorities in the country, voluntary housing organisations and the Department of the Environment, Heritage and Local Government in the delivery of housing, planning and related services. Its primary role is to support and assist local authorities in their delivery of housing. When fully operational, the agency will be responsible for supporting and assisting in the implementation of housing policy set by the Department. It will also facilitate the delivery of social housing and housing support. It will also provide research and policy advice, land bank management under the land aggregation scheme and in future carry out certain regulatory functions.

I will give a flavour of some of the current work carried out by the agency. It provides general advice in support of the Department with regard to housing. It supports local authorities with regard to best practice and in achieving consistency in the delivery of housing and there are also a number of operational areas in which it carries out work.

Currently there are 20 staff working in the housing agency, working in the following areas. There is homeless accommodation procurement in the Dublin region, which is a very high priority. With local authority loans, the agency carries out underwriting on behalf of local authorities for all house purchase loans issued by local authorities. Under the rental accommodation scheme leasing and housing provision, the agency provides support on the provision of housing through leasing, renting, construction and acquisition. With regard to land aggregation and local authority housing lands, the agency manages lands being transferred to Housing and Sustainable Communities Limited. It is also working on various other areas, such as incremental purchase, which will in time replace the tenant purchase scheme, and the introduction of sales of flats, which has not happened to date but is being introduced throughout the country. The agency also carries out research and general social housing reform, as there was a major piece of housing legislation last year that must be implemented across the country.

There are some examples that give a flavour of the work. With regard to homeless accommodation procurement in the Dublin region, in the past two months the housing agency became very heavily involved in the area. It is co-ordinating a procurement team across the Dublin region to source properties for homeless households. Currently in offices there are staff from the Dublin authorities, and these work with some voluntary housing organisations to source and provide accommodation. The aim is to provide mainstream housing in apartments for individuals and households which are currently in temporary homeless accommodation in Dublin. Along with the provision of housing there would be support provided for those families and households in living independently. The target is to provide 1,200 homes in Dublin for that purpose, and it is a major priority at the moment.

I will give an example of a central service to be delivered efficiently with regard to local authority house purchase loans. The agency provides a central underwriting service and credit checks for all house purchase loans carried out on behalf of all local authorities nationally. Underwriting has been completed on 770 applications. Three members of our staff are able to provide an efficient underwriting service, thereby avoiding pressure on local authorities to try to scale up staff in that area.

Housing provision is a key area in terms of demands for social housing. The agency provides support for the rental accommodation scheme, the recently introduced leasing scheme for social housing, and the acquisition, construction and use of unsold affordable housing for social housing purposes.

The land aggregation scheme has received considerable media attention. Under the revised arrangements on land used for social housing, local authorities can apply to the Department of the Environment, Heritage and Local Government to have their outstanding loans with the Housing Finance Agency redeemed and, if their applications are approved, the land will be transferred to us. Our role is to manage and maintain the land and come up with strategies for its future use. Land will continue to be made available to local authorities where it is needed for social housing. Some land will also be made available for alternative uses if, for example, the HSE, the Department of Education and Skills or other public body requires accommodation. A full consultation will be undertaken with the local authority concerned and other relevant organisations before we do anything with the land and, as planning authorities, local authorities will retain significant influence over its use.

The agency will allow all existing agencies with responsibility for housing to be rationalised into a single body under the aegis of the Department of the Environment, Heritage and Local Government. Approximately 100 staff are currently employed in existing agencies but we will need fewer than 50 people to provide an efficient level of support and a centralised service to local authorities and other organisations. For example, we will be able to work with the four Dublin local authorities to procure property for homeless accommodation. We will also provide an underwriting service for housing loans on a national basis. By concentrating skills and expertise in the area of housing in one location, we can avoid the difficulties experienced by Departments and local authorities when staff transfer from housing into other areas. This will allow us to deliver housing nationally in a consistent manner.

I would like to begin with questions on land aggregation and, with the Chairman's permission, I may raise other issues subsequently. I welcome the witnesses to their first meeting with the committee. The rationale behind the Housing and Sustainable Communities Agency, namely, streamlining the number of housing bodies, is to be welcomed. Given that all homes could now be defined as affordable provided one can get a mortgage, questions might be asked about the role of the Affordable Homes Partnership.

The agency's appearance before us arises from a proposal I made at an earlier meeting that we would examine the land aggregation scheme. Perhaps Mr. O'Connor can outline the reason for the scheme and the purpose of the bookkeeping exercise involved in it given that, ultimately, the Exchequer will end up with the same level of debt. Will the loans be moved off the books in order that they are not calculated as part of our national deficit? I ask this question because 18 months ago the Department of the Environment, Heritage and Local Government put €1.5 billion of development levies on its books to meet the Maastricht criteria. Is the ultimate purpose of the exercise to take the money off local authority balance sheets?

If it is possible to do so, I ask for figures, broken down by local authority, on the total value of outstanding loans, the estimated amount of land to be acquired, the number of local authorities involved, the estimated value of land acquired to date and the planning status of the land. Does the agency make value judgments on whether the land it acquires is sustainable in the long term and does it have the power to direct a local authority to rezone land? The $64,000 question is whether the agency could be described as a NAMA for local authorities. Given that it is acquiring a significant volume of stressed assets, how does it propose to make them viable once again?

I welcome the delegation from the Housing and Sustainable Communities Agency. I would like to learn the full background on the land aggregation scheme. What are the agency's targets regarding the number of loans to be transferred and how will it manage the properties it takes over?

Does the agency expect to achieve the target of 1,500 housing units for homeless people in Dublin this year? The Minister's target is to eliminate homelessness by the end of the year. Does the agency see that as achievable? Will the agency advise where the homes are coming from to achieve the target? What mechanisms are being used? Are the homes being leased? In view of the amalgamation of the four agencies into one body, have any efficiencies come to light? Is there overlap in respect of some of the functions and services being provided and are redundancies expected in some instances.

Mr. John O’Connor

I shall take the land aggregation scheme first and give some background information. The overall policy and reasoning behind the land aggregation scheme is a matter for the Minister for the Environment, Heritage and Local Government. To put the issue in context, traditionally if a local authority saw a long-term need to provide social housing, it was permitted to borrow from the Housing Finance Agency to purchase that land. When housing development was carried out on those lands, the local authority was able to recoup the cost of the land. The arrangement was that the local authority bought the land and recouped the cost of same when it carried out the housing developments.

The change in policy to get greater housing integration and the fact that less capital funding is available means a number of those developments will not be carried out in the short to medium term. In that context the Department of the Environment, Heritage and Local Government has decided to recoup those loans earlier and, as Deputy Lynch said, while they still remain in public ownership they have been moved to another body, the Housing and Sustainable Communities Agency. That is in the context of the change of approach to funding. The intention is that where loans are paid they would be cleared. The Department of the Environment, Heritage and Local Government will use funding where available, to clear those loans. The Department or the housing agency will not take on loans. That will only happen where funding is available to clear loans, otherwise the loans remain with local authorities. That is the reason it is being done.

The reason for moving the lands to one agency is to ensure a co-ordinated approach between the housing agency, which will have a larger land bank nationally, in dealing with the HSE, the Office Public Works and NAMA, if it ends up as landowner, so that a rational decision can be taken where a number of sites in State ownership are side by side, without the need to deal with multiple organisations. I might invite Mr. Trevor Austin to outline the overall details. We have full records and we will provide all the details of the lands to the committee within the next few days.

Mr. Trevor Austin

An audit of all the lands was carried out by the Department which shows roughly 775 hectares of land with an approximate value of €650 million. Submissions must be made to the Department. The Department issued circular SHIP 1010/18 and several local authorities have started to make official submissions on the approved form to the Department. At this stage two loans have been redeemed but no land has yet been transferred to the housing agency. Two appraisals from the housing agency have already been sent to the Department and about six more are currently being assessed. We are looking at approximately 85 hectares of land which has a value of roughly €80 million.

Is that the 775 hectares?

Mr. Trevor Austin

No. It is part of the 775 hectares.

I am sorry for being late. I had another meeting and did not have time to go through the presentation. I listened to Mr. O'Connor inform the committee of the amount of land local authorities bought and that he will furnish the committee with the details.

Mr. John O’Connor

Yes.

Is it possible to get a breakdown for each local authority area of the amount of land in its possession, when it was bought and at what price per hectare or per acre?

Mr. John O’Connor

Yes. We will provide full details of the amounts of money involved and when the land was purchased to the committee.

I am concerned that land purchased by local authorities at the beginning of the boom or, perhaps, a few years into the boom, has not been built on. Given that there was plenty of money for house building during the boom period I cannot understand the reason for that. I am aware of a case towards the end of the boom where the local authority, bidding against two local developers, was able to give €2 million more for land than the local developers for private housing. It was taken off the market at, say, €2 million and the local authority is supposed to have more than €4 million. That is pure waste. That land should have been bought for a good deal less than the figure I have mentioned. These are issues we would like to know about. Will it be possible to identify the areas where local authorities have land?

Mr. John O’Connor

Yes, we will provide all of that detail, local authority by local authority, site by site. In regard to whether we can force the rezoning of lands, we have no power to rezone, such powers rest with local authorities. We are mapping all the lands nationally that we are taking into our ownership. With other State organisations we want to have all the land mapped jointly so that if a logical decision has to be taken in terms of adjoining State lands we can make representations as to what is appropriate in the best interests of planning for the counties, towns or cities involved.

The target of delivering 1,200 homes this year and moving everyone out of temporary homeless accommodation will be difficult to achieve.

That is in less than two months. How many have moved at this stage?

Mr. John O’Connor

Some 300 apartments and houses have been provided. A substantial number of properties may be provided, whether it is 500 or 600, and we are in the process of acquiring them in various forms before they can be allocated to people in accommodation for the homeless. This is being provided where local authorities have available housing through their current stock and it can also come about by renting a property on the rental accommodation scheme or leasing a property. We are working with Threshold on the general renting of properties from landlords throughout Dublin, and there is a level of acquisition of properties. We are also utilising any other property that could be considered suitable.

We are using every possible means to address the issue. Apartments and housing should be dotted around the city and we do not want a concentration of accommodation in one area. We want to provide mainstream housing and the support for the people in those homes will be given by the Simon communities or the voluntary bodies assigned to the work.

With regard to efficiencies achieved in bringing the agencies together, we are looking to concentrate on key areas where we can provide value. Some actions could be taken in a better way by other organisations or the private sector, and there is no point in doing work just to keep our staff busy. Providing services on a central basis can also work well. Rather than having the agency employing staff, we ask for staff from local authorities, as they have many experts. We bring staff together to carry out a particular function, and although it may be over several months they eventually return to their authorities. There are individuals in the system with much expertise, and a big efficiency comes about in identifying a person with a specific knowledge and bringing him or her to work with similar people.

Was there any external review of the different functions within the agency to ensure best practice?

Mr. John O’Connor

There has not been any external review to date. Currently we are in the process of trying to fully form the agency.

How many buildings does the agency occupy? Are agency personnel all in one building?

Mr. John O’Connor

Currently we are located in three buildings, although we will move to one location by the start of next year.

I will clarify a few matters with Mr. O'Connor before moving on to the secondary matter of housing in general. The issue may be better directed at the Housing Finance Agency but traditionally, Ireland has front-ended its costs in social housing. That is one of the reasons we are in our current position, whereas if we took a more elongated approach we would not have had the financial exposure that has been evident. The delegate is nodding, which is probably an indication that he concurs with what I am saying. Maybe that is an issue for the Housing Finance Agency. This is a new concept and members, as well as the general public, are trying to get their heads around what is happening in the organisation. Will Mr. O'Connor clarify this in simple terms?

The agency has dealt with Cork City Council, and it had a number of land banks, having paid the cost of acquiring them. Those loans are now on the way to the agency, as are the land banks. Is that correct? Are these loans on book with the Department of the Environment, Heritage and Local Government or are they with the agency? If they are with the agency, has some special purpose vehicle been put in place or is it just on the agency's loan sheet?

Will the agency engage in a process where it will put a valuation on the stock of lands to be taken in hand? I imagine that will be a notional value as it is very hard to determine land values now. Has the agency a methodology for working out the current notional values?

I was distracted at times when the delegate made his presentation as I was reading my notes. As I understand it, the report regarding ghost and unfinished estates published last week indicates that the agency will take the lead in that area. Not only is the agency acquiring land banks and significant loans, it is also taking on the responsibility for these private estates which are not owned by local authorities. It must find solutions but is not at this time taking on the loans or properties. Is my understanding of this correct?

Mr. John O’Connor

Yes. On the financial side, I will take Cork City Council as an example. It may have purchased land for €2 million.

I would imagine they are separate loans.

Mr. John O’Connor

If, for example, Cork City Council purchased lands intended for housing at €2 million, it would borrow money from the Housing Finance Agency. That would be the council's responsibility and would be seen as part of what is owed by the council. If the Department looks to redeem the loan, out of capital funding it would pay €2 million to the housing finance agency. When this is done, the site would be transferred to the housing agency from Cork City Council. The Department would intend to clear the loan using capital funding when it is available. Until there is money to clear these loans, they will remain with the local authority along with the land.

On the valuations, everything should be in order with regard to title to site if Cork City Council have that title, for example, clearly showing that €2 million was paid for the land having borrowed the amount from the Housing Finance Agency. The Department must be satisfied and we would carry out assessments of each site to ensure everything is in order. The Department redeems whatever the loan is, separate from the valuation of the land. In future, we will have to reassess the values of land in current markets.

Who has the land?

Mr. John O’Connor

When the loan is paid off, the land rests with the housing agency. Specifically, the company which would have the land is called Housing and Sustainable Communities Limited. That is a company in which the Minister for Finance has a 99% holding and the Minister for the Environment, Heritage and Local Government has 1%. As the National Building Agency was set up in primary legislation, it was considered expedient to establish the company as a subsidiary of it. When and if the agency is fully established on a statutory basis, it will be transferred to the new organisation.

Returning to the Cork City Council model, the loan is valued at €2 million. Irrespective of whether it is a deck chair moving exercise, the Exchequer still has a debt of €2 million. At the start of the process Cork City Council held the title to the property. Who has the title now?

Mr. John O’Connor

Housing and Sustainable Communities Limited will hold the title and we will be responsible for managing and maintaining it in the public interest. If Cork City Council needs it for housing, we can make it available for that purpose.

Will any of these vast tracts of land be returned to agricultural use?

Mr. John O’Connor

In the short term some of the land will be leased under conacre to get an income on it. Deputy Lynch asked about ghost estates and unfinished housing developments. It was announced two weeks ago that I will chair the ministerial advisory committee on unfinished housing developments. The agency will play a role in gathering information on these unfinished estates and deciding what to do with them. Once we have mapped the estates and gathered the necessary information we will be able to make rational decisions.

It is like writing the Book of Revelation in terms of the apocalyptic nature of these estates. A great amount of junk will come Mr. O'Connor's way and I wish him the best of luck. He will deal with communities in crisis all over the country.

How much capital funding has the Department set aside to deal with the scheme? Mr. O'Connor mentioned a value of €650 million for the 775 hectares but what was the original cost of these lands? The general public is rightly angry about the bad decisions made by local authorities. We have not seen accountability or resignations on foot of these decisions.

Deputy Lynch mentioned the ghost estates. Will Mr. O'Connor consult the people who have purchased houses in these estates? People paid big money and in some cases less than a dozen houses were sold around them. Formerly private estates are now being turned into social housing. It would be appreciated if the agency consulted the residents who paid big bucks for their houses before it makes decisions.

Was the money to purchase these lands borrowed by local authorities or the Department? The latter will repay the loans and Mr. O'Connor's agency will take over the lands. What will happen to the lands in the long term? There are probably fewer ghost estates as one gets close to Dublin. Will the lands be revalued? Local authorities in my area paid prices of €1 million per acre for land which is now worth less than €100,000. I presume the taxpayer will pay the difference but what will ultimately happen to the lands? Will they be simply left to a certain community that deals in horses and which takes over lands without paying rent? I have seen the traveller community coming into local authority land and putting in 30 or 40 horses. They pay nothing. Will these lands just facilitate people like that, in which case we would get no return from it?

Mr. John O’Connor

The loans are valued at €650 million.

Is that at today's value?

Mr. John O’Connor

Yes.

What was the original cost?

Mr. John O’Connor

I will revert to the Deputy with the figure. Obviously, it would include interest. The capital and interest figure on the loans is €650 million. The area involved is 775 hectares, or approximately 2,000 acres. In terms of funding, the Department made an initial allocation of €25 million this year. It may provide more money this year but the amount will be relatively small. The intention is to provide capital funding in the coming years to redeem the loans.

It is our responsibility to manage the lands and we will seek to utilise them optimally in the future. We are not taking over ownership of unfinished housing developments. We are assessing them to determine the best solution. The residents of these developments and their living environment have to be our primary concern. It should be the main issue in dealing with those residents. Arrangements can be made to liaise with residents throughout the country in a rational way.

I will allow time for another question.

If the Vice Chairman must leave, we can bring in an Acting Chairman. There is plenty of questioning left to be done.

The Deputy will have much time for that.

How many applications have been received from Dublin City Council for the land aggregation scheme? There are loans where interest is not due currently but does the delegate have a handle on that? Will he be able to investigate through local authorities where land was purchased but interest is not due until 2015? I know one parcel of land bought by South Dublin County Council and where there is no interest due at present. The land is not being transferred to the land aggregation scheme. Will the delegate comment on that?

With regard to the agency's interaction with NAMA, have there been discussions on the current state of play? Have maps been compared and has a plan been worked out? What is the proposal for sitting down with representatives of NAMA on a regular basis and how often will the agency interact with them on these issues?

I will move to some of the other matters covered this afternoon so perhaps we could facilitate a response to Deputy Flanagan.

Deputy Johnny Brady took the Chair.

Mr. John O’Connor

Dublin City Council has sought approval from members to put forward lands and I am sure it will submit lands in the next week under the land aggregation scheme. We have received details of the lands and we will provide these to the committee. The council has not yet put any lands forward.

On the question of interaction with NAMA, I have met representatives and discussed sharing information. I am particularly interested in ensuring that we have all the data and can have it quickly mapped. We must quickly know what land will be taken into our ownership. We will also map land that local authorities have in their ownership but are not transferring. The main idea is to have all the information between State bodies so we can make rational decisions on what needs to be done. These are the discussions on which we are concentrating and there is ongoing liaison with NAMA. Personnel from the Department also liaise with NAMA regularly, in the first instance to share information and in making rational decisions on the best actions to take.

The agency will know how much land the local authority has that will not be transferred.

Mr. John O’Connor

We have that information.

I will move on to the leasing initiative, which is one of the areas coming under the agency's brief. As I understand it, departmental policy is being implemented with regard to leasing and questions regarding the Comptroller and Auditor General's report and other matters are not relevant for the agency to place value judgments on. One area of the leasing initiative that I cannot get my head around currently is with regard to taking possession of affordable homes. The funding coming from the Department, which the agency may have oversight of, deals with the interest section of the loan. Will the delegate explain how the loan is serviced in total? Is there a capital payment against that loan? The leasing cost of an affordable unit is approximately half the leasing cost of a privately acquired unit but I understand the cost is only ring-fenced towards interest payment. Is any capital payment being made on those properties which are currently vacant?

Deputy Flanagan may have raised the following issue more times than I have. There is a plethora of social housing schemes operating, with Home Choice one of them. Are such programmes coming under the agency's remit? It is not the value judgment of the delegate but that of the Minister as to whether the Home Choice programme continues.

I have a strong interest in two areas, going back even before my time on Cork City Council. The issue of the sale of flats referred to in the presentation - which I assume are local authority flats - has been around for a substantial period and it now seems to be an issue inherited by a new agency. The legislative framework was put in place in 2008 but I am not sure about the commencement order. The methodology by which the local authorities are to act is still off by a fair degree. Am I correct in assuming we are still 12 to 18 months away from a position where somebody who has for 15 or 20 years tried to buy a home can go to the local council with a deposit? That is being ring-fenced for the incremental purchase approach, meaning the tenant purchase programme as we know it will not be available for these purchasers.

Staying with the incremental purchase programme, I understand that will replace the existing tenant purchase programme. Is there a timeline on this, assuming there will not be a change in the Government? Under current guidelines, how long will the tenant purchase scheme be in place? The incremental purchase scheme is a bit like the affordable housing programme. In 2006 and 2007, affordable homes were being sold for €250,000 and €300,000 in some instances. The term "affordable" was becoming stretched as they were anything but affordable. The rationale was that the market had gone beyond a middle income earner's capacity and a structure was being put in place. The incremental purchase initiative was very much along those lines and its raison d’être from the time of its creation is no longer in place.

Do we need to examine incremental purchase before it is rolled out? If a property acquired under incremental purchase at the time legislation went through the House was €200,000 with somebody acquiring a 50% purchase on that - which the legislation allows for - it would bring about a mortgage of €100,000 approximately. Even for an average industrial wage earner the repayments could be approximately €600 or €700 per month, depending on the annual percentage rate. Given the property now only has half that value, the incremental purchase would be at €50,000. Does the delegate see where I am coming from? Councils could be giving away houses very cheaply here on a basis that did not form the original thinking behind the initiative. Is that something to be considered before the system is fully rolled out?

Mr. John O’Connor

I will begin with the leasing and specifically the question asked on unsold affordable stock being used under a leasing arrangement. In the Department, where there is unsold affordable housing throughout the country, rather than leaving the property vacant if it is not sold, the Department wants local authorities to use it for social housing where possible for some years. The intention is that in five years, if market demand has changed, the stock would be sold as affordable housing. The Department of the Environment, Heritage and Local Government is paying interest costs on loans that local authorities would have borrowed from the Housing Finance Agency.

The local authority always borrows from the Housing Finance Agency and the Department cannot borrow from that agency. A local authority would borrow from the Housing Finance Agency and if the affordable housing is used for leasing, the Department will pay the interest costs but not any of the capital. The intention may be that if in five years the local authority decided to sell the stock, it would recoup the capital cost from the purchaser and repay the loan. It is just the interest that would be paid currently.

The Deputy mentioned Home Choice loans and the Deputy also knows that local authorities provide house purchase loans. The underwriting for both of these is carried out by the agency, so it is involved with Home Choice loans as well as house purchase loans. On the sale of flats, or the sale of apartments as it is referred to in the legislation, the agency has worked with the Department in recent weeks in putting together legal documents on the matter. Regulations would have to be issued by the Department before it can fully commence but it will be 12 or 18 months before we see the first steps towards selling. I may be able to go through that separately, because there is much detail in it. The legislation is in place and a system will be set up to facilitate the process. There will be a right for local authorities to sell as opposed to a right to buy. It will be up to a local authority to decide if it is appropriate and it must ensure a substantial number of purchasers before the selling starts. In a number of cases it will happen.

On the issue of incremental purchase, Ms Banks might give an account of where it is and answer some of the questions from the Deputy.

Ms Katherine Banks

It is intended that the incremental purchase scheme will replace the tenant purchase scheme, and it is envisaged that the tenant purchase scheme will possibly expire in August 2012. That is in less than two years. I understand local authorities are informing their current tenants about this. The incremental purchase scheme will be based on the actual cost of provision of property rather than its value. It may be 50% or 60% of the cost.

It could be 40% of the cost.

Ms Katherine Banks

Yes.

It is far easier to adjust something before it is rolled out than after. Perhaps I am going out on a limb but I speak as someone looking for an overview rather from a political or policy perspective. I am considering the maths of the initiative. The concept of incremental purchase was introduced when house values dropped, as they will continue to drop. Any prediction is showing that house prices will drop over the next 12 to 18 months. If there is to be a house price register database, which might be a stabilising factor, property prices will drop as incomes drop and we return to normalisation in the market. Purchase prices will be related to a ratio of people's incomes, and this formula has not been in place for at least ten years. The Central Bank has indicated that lending practices will go that way over the next few months, and adjustments will drive down house prices over the foreseeable future.

This programme was dreamt up when modest homes were not affordable to people on the national industrial wage. We are now in a position where we will sell houses under this programme to people on modest wages but at ridiculously cheap prices. That must be looked at and I am flagging the issue. Creation of the agency is fantastic and it is brilliant to be able to bring one agency in here without needing to get on to some other agency. Many issues which needed a single umbrella now have it and I hope representatives of the agency will come before the committee at least once annually and possibly twice annually because of the very important role it fulfils. I would be interested to hear the views of the delegates on this.

The sale of flats has changed quite significantly even since the miscellaneous housing provisions Bill. The incremental purchase scheme has also changed significantly since that Bill was introduced, as there was reference to 40% and 60% amounts when it went through the House, and there is now a 40%, 50% and 60% band. I stress that there may be another way to examine the matter as we could potentially be selling houses for €30,000 or €40,000, particularly if we consider the requirements related to land banks and so on. We may be going from one extreme where people could not afford to buy a house to where a person could buy a house after speaking to a credit union manager. One could even buy a house with a credit card if the limit was high enough.

It is well for some.

I am just pushing the boat out but the matter should be considered.

Mr. John O’Connor

I agree that the matter should be considered. We are very conscious of many of the issues alluded to by the Deputy and we have worked on them. We should examine what a tenant is paying for a house. A family might remain as tenants in the long term but we should consider whether it is in its best interest to purchase the property, taking over home ownership and maintenance. We must balance the purchase price of the property against the long-term cost for local authorities and general social good. The Deputy is correct that we must ensure our actions are good from a value-for-money perspective.

I am a very strong believer in tenant purchase but that issue should be considered.

Does Deputy Flanagan wish to contribute on the same issue?

I have separate questions. I will be very brief and will not delay the meeting any further. It has been a long meeting and I am conscious of the time. I wish to deal with the land aggregation scheme with regard to maintenance and management of the land that is transferred. What will happen in the event of anti-social behaviour on land which is not properly fenced? What is the agency doing to protect site boundaries? What is the agency's budget for future housing developments and is it considering innovative schemes from the Centre for Housing Research? Mr. O'Connor's title is "chief executive designate". Is that because the legislation to establish the agency on a statutory basis has not yet been introduced?

Mr. John O’Connor

Yes.

When does he anticipate the legislation will be brought before the House?

Mr. John O’Connor

The full legislation is likely to be two years away. The agency may be established under the corporate bodies amendment legislation until then. I ask my colleague, Mr. Trevor Austin, to outline our plans for managing land aggregation.

Mr. Trevor Austin

We are not managing anything at present. Some of the loans have transferred and within a two-month period we expect the transfer of contracts. The arrangements for the implementation of the land aggregation scheme are set out by the Department and any submission has to identify the relevant site's co-ordinates, area and boundaries. We are trying to avoid taking over sites where boundaries have not been established. We recognise that issues will arise in respect of anti-social behaviour and we held discussions with the Department this morning on providing a budget to deal with them. We expect two sites to be transferred to us shortly. Thankfully, most of the lands are agricultural, although some of them are used for other activities.

Does the agency intend to sell some of the land for agricultural purposes in years to come?

Mr. Trevor Austin

Yes. All the land banks will be reviewed for location and suitability for housing. Some of the sites may be too steep and it may be too expensive to develop housing on others. Our review will help us to decide whether such sites should revert to their agricultural origins.

It is refreshing to meet witnesses who are willing to share information about the organisation they represent. They seem to be operating in an up-front manner and I welcome the cohesion they are bringing to the housing sector after a decade of fragmentation.

Is the agency subject to the Freedom of Information Act or will secondary legislation be required to sort out its operational structure? It would be regrettable if its work is not accessible to parliamentary questions. If I put a question to the Minister for the Environment, Heritage and Local Government, it would be unfortunate if I was told it was a matter for the agency because we would have to drag Mr. O'Connor before the committee every few weeks to get answers he would otherwise be happy to facilitate.

Mr. John O’Connor

The Freedom of Information Act applies to us in so far as the company will be established under the aegis of the National Building Agency. However, we will not require a request under that Act to answer any question we are asked. In respect of parliamentary questions, the Department will ask us to provide the response. All staff in the office are instructed to provide Members with any information they may require.

I thank Mr. O'Connor and his colleagues for their informative presentation and the manner in which they answered our questions.

The joint committee adjourned at 5.05 p.m. until 3.30 p.m. on Tuesday, 9 November 2010.
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