I welcome the Minister of State, Deputy Coffey, to the House.
Urban Regeneration and Housing Bill 2015: Second Stage
Question proposed: "That the Bill be now read a Second Time."
I am pleased to have the opportunity to introduce Second Stage of the Urban Regeneration and Housing Bill 2015 to the Seanad. We have had considerable and lively debates in the Dáil on this Bill.
The primary background to this Bill is the housing supply shortage, which is one of the most pressing and important challenges faced by, and priorities of, the Government and society as well. This supply shortage is particularly acute in Dublin where demand for housing well outstrips supply, and has done for a number of years, with a consequential knock-on effect on house prices and rents which impacts negatively on thousands of households throughout the country.
As Senators will be aware, the Government published the comprehensive Construction 2020 - a Strategy for a Renewed Construction Sector in May 2014. It encompassed 75 specific actions aimed at addressing issues in the property and construction sectors and ensuring that any critical bottlenecks that might impede the sector in meeting residential demand, as well as non-residential commercial demand, are addressed.
I have responsibility on behalf of the Government for co-ordinating the implementation of the Construction 2020 strategy, which is central to the restoration of growth in the economy and growth in employment.
The construction sector is one of the sectors which was most adversely affected by the economic downturn.
In line with the significant decrease in employment in the sector, the level of housing completions has also reduced significantly since the downturn. To put this in context, at the peak of construction activity in 2006, more than 93,000 houses were built nationally which, in hindsight, was an unsustainably high number, with 19,000 of these being built in Dublin. By 2013, housing completions had plummeted to a mere 8,000 units nationally, with just 1,200 of these being constructed in the Dublin area, again unsustainable, but this time an unsustainably low level of completions.
We need to reverse this scenario and generate increased activity with a view to increasing the number of house completions over a number of years in order to return to a market equilibrium situation where housing supply equals demand and where the sector is operating at a more sustainable level in line with what one would expect in a well-performing economy.
Since the publication of the Construction 2020 strategy last year, we have, however, begun to see some positive signs of recovery in the sector in that housing completions rose to 11,000 nationally in 2014, an increase of 30% on the 2013 figure with just over 3,000 of these completions being in Dublin, while a further increase in activity is expected in the current year. However, we still have some way to go to overcome the current housing supply shortage.
Taking account of household formation patterns, which are changing, recent studies have estimated that in order to meet projected housing demand, we need to be building around 25,000 houses nationally on an annual basis with 8,000 to 10,000 of these being completed in Dublin. Further to action two of the Construction 2020 strategy, a housing supply co-ordination task force for Dublin, comprising representation from the four Dublin local authorities and other relevant stakeholders, was established with an immediate focus on addressing supply-related issues in the Dublin area. The initial report of the group indicated that there are sufficient existing planning permissions or planning applications with no insurmountable infrastructural deficits, which have the potential, if acted upon by developers, to supply almost 21,000 residential units in the Dublin area.
The challenge is to ensure that the stock of existing permissions are activated and the associated housing supply materialises. While some of the barriers to activating these permissions appear to be financial and economic, the measures in the Bill are designed to ensure that any perceived barriers to housing supply from a planning perspective are addressed. These measures will not on their own resolve the housing supply problems, which are unquestionably multifaceted and require a wide-ranging and co-ordinated approach, but the intention is that they will help make a start in addressing these problems.
The main provisions in the Bill relate to amendments to the Part V provisions of the Planning and Development Acts to support the provision of social housing, the introduction of revised arrangements relating to the application of development contributions by planning authorities and the introduction of a new measure, a vacant site levy, to incentivise the development of vacant, underutilised sites in urban areas for housing and regeneration purposes.
As the House will be aware, a number of Government amendments were made to the published Bill on Committee Stage in the Dáil. The purpose of these was to strengthen and clarify the provisions in the Bill regarding the vacant site levy relating to its application, the definition of a vacant site and how the proceeds of the levy shall be used by a planning authority. I also brought an amendment to the Housing (Miscellaneous Provisions) Act 2009, which relates to local authority rent schemes and charges. I will touch on these as I go through the provisions of the Bill.
The Bill is set out in six Parts, comprising in total 37 sections. Part 1, sections 1 and 2, contains standard provisions dealing with the Short Title of the Bill, collective citation with existing Planning Acts, construction and commencement. It also incorporates some standard definitions.
Part 2, which is a substantial Part, comprising sections 3 to 26, inclusive, relates to the proposed introduction of a vacant site levy to incentivise the development of vacant sites in central urban areas for housing and regeneration purposes. This proposal follows from action 23 of the Construction 2020 strategy.
In other areas of interaction between public policy-making for the common good and property rights, the courts have determined that private property rights may be counterbalanced where there is a need to address matters of pressing or compelling concern and the wider community good. Examples in this regard include the Derelict Sites Act 1990, derelict site levy and the Part V provisions of the Planning and Development Acts relating to social and affordable housing. In effect, there is already legal precedent for measures of this nature impacting on private property which are socially desirable and in the overall common good.
The Bill contains a number of changes to the vacant site levy provisions compared to the general scheme published some months ago, all of which are intended to make the provisions as fair, reasonable and proportionate as possible. It now proposes that from 1 January 2019 planning authorities will be empowered to apply an annual vacant site levy of 3% of the market value to vacant sites which a planning authority has determined were vacant or idle in the preceding year. The sites liable for the levy will be in designated areas identified by the planning authority in its development plan or local area plan for residential or regeneration development.
Section 3 provides for definitions of terms used in the context of the vacant site levy provisions, such as "housing", "market value" and "owner". Section 4 outlines that the vacant site levy provisions shall apply to residential land or regeneration land. I brought forward a Government amendment on this section to remove an exemption for land owned by a housing authority. This is to ensure that all owners of vacant sites will be treated equally and that local authorities will have the same responsibilities under this Bill as private landowners.
Section 5 is central to the vacant site levy provisions in that it provides for the definition of a vacant site, which shall be residential or regeneration land as zoned by a planning authority in its local development plan or its local area plan. In the case of residential land, it means a site in an area where there is a need for housing that is suitable for the provision of housing and is vacant. In the case of regeneration land, it means a site that is vacant and has an adverse effect on the existing amenities or character of the area. Any area of land exceeding 0.05 hectares may be designated a vacant site, not including land that contains a structure that is a person's home.
An amendment was also made to this section that reduced the size of a site that would constitute a vacant site from 0.1 hectares to the current 0.05 hectares. The size of a vacant site was the subject of some discussion during the Dáil debates. The Government amendment to reduce the size threshold of a site subject to the levy will bring a greater range of sites within its scope. In particular, it will include smaller vacant sites located in our cities and towns, many of which are unsightly eyesores on main streets. The amendment was welcomed by all.
Debate adjourned.