The Minister of State, Deputy Noonan, is very welcome to the House once again.
Housing (Miscellaneous Provisions) Bill 2024: Second Stage
Question proposed: "That the Bill be now read a Second Time."
I am delighted to be here to bring the Bill before the House. This Bill passed all Stages of the Dáil last week. It intends to make amendments to the Housing (Regulation of Approved Housing Bodies) Act 2019 and the Affordable Housing Act 2021, as well as a further amendment to the National Treasury Management Agency (Amendment) Act 2014, to be brought on Committee Stage in the Seanad.
The Housing (Regulation of Approved Housing Bodies) Act 2019 provides for the regulation of approved housing bodies, AHBs, for the purpose of supporting stronger governance and the financial viability of this sector.
Section 25 of the 2019 Act provides for existing AHBs, approved under section 6 of the Housing (Miscellaneous Provisions) Act 1992, to be deemed registered on 1 January 2022, subject to applying for registration within 12 months in the case of AHBs providing or managing 300 or more dwellings, two years in the case of AHBs providing or managing between 50 and 300 dwellings, and three years in the case of AHBs providing or managing fewer than 50 dwellings. The Act was commenced on a phased basis and concerns were raised by the sector regarding the prescriptive nature of the eligibility criteria set out in section 25 of the Act.
Due to the eligibility criteria being overly prescriptive, very few AHBs would meet the criteria and, as a result, would not be in a position to register, causing cancellation of registration by the Approved Housing Bodies Regulatory Authority, AHBRA, by virtue of technically not meeting the registration requirements within the timeframe set out in the Act. In particular, a provision that "all of its property, both real and personal, be applied solely in furtherance of its primary object or primary objects specified" in the Act means AHBs with constitutional objects outside the primary object specified in the Act would no longer be allowed to use any property for those objects.
The aforementioned timelines were extended through legislation in 2022 to allow time for consideration of the issue. The Department formulated an opinion that to prevent AHBs falling out of registration due to a failure to meet the timelines set out in the 2019 Act, a more appropriate approach is to amend the Act to permanently register so-called deemed AHBs, thus removing the need to meet the eligibility criteria, rather than require an application for registration before the end of the timelines. This approach is in line with the approach taken under charities regulation. The amendment is considered necessary to mitigate against the risk of AHBs that do not apply due to administrative or other constraints, or where AHBs do not wish to be regulated nor wish to adhere to AHBRA's standards, and therefore chose not to apply to be registered, having their registrations cancelled, with both the entity and its assets falling out of AHBRA's remit and powers.
As the Act further links AHBRA's powers directly to the constitutional objects in an AHB's constitution, and the above amendment will mean AHBs are no longer required to make constitutional changes, nor to apply for registration, further consequential amendments will rectify this so that the intended AHBRA powers come into effect regardless of whether an AHB changes its constitution by, rather than referencing section 25, referencing directly a function of the AHB, namely, the alleviation of a housing need.
Overall, these amending provisions ensure that existing AHBs are permanently deemed registered and remain under the regulator's remit, with an active action to cancel registration required, and that the regulator's powers apply to all AHBs on the register.
With regard to the other amendments proposed in the Bill, the new cost-rental sector in Ireland was given a statutory footing in Part 3 of the Affordable Housing Act 2021. This legislation introduced a new form of rental tenure targeted at middle-income households above the eligibility thresholds for social housing supports, who are struggling with often-acute affordability pressures in the private rental market. The introduction of the cost-based model represents a significant contribution to the rental sector and was an action set out in the Government's Housing for All plan. Having been launched in 2021, cost rental in Ireland, while at an early stage of implementation, is working, with almost 1,800 homes delivered nationwide to the end of quarter one of this year. Building on this success, officials from my Department have been engaging with stakeholders, including cost-rental delivery partners, to assess the lessons learned to date since the launch of cost rental. Arising from this process, a number of measures have been identified that will help to support the continued growth of the sector and strengthen its legislative framework.
As outlined in the Bill, it is now proposed to amend the Affordable Housing Act 2021 to provide for the following new elements: providing for the Minister to prescribe eligibility requirements for different compositions of household; providing for allocation plans for particular cost-rental homes; and allocating cost-rental tenancies to tenants in situ. Prescribing eligibility requirements for different compositions of households will allow for the introduction of individual household income eligibility requirements for shared households to reflect the variety of household formations that now exist and provide for two or more unrelated adults to access the benefits of a cost-rental tenancy and share the cost of the overall rent. Following the proposed amendment to the Act, this will be done through regulations, which the Minister for Housing, Local Government and Heritage will bring forward in due course.
The second amendment provides for cost-rental landlords to propose allocation plans for particular cost-rental homes. These are similar to the schemes of priority that are already provided under the Affordable Housing Act in respect of local authority affordable purchase homes. Under such plans, the process for allocating tenancies and the selection criteria that a cost-rental landlord may utilise when selecting potential tenants can be set out but will require ministerial approval before it can come into effect.
The current system of allocation - a lottery to randomly sort all eligible applicants - will remain in place as a default option but providing scope for alternatives will give cost-rental landlords greater flexibility and efficiency in tenanting increasing numbers of homes.
The final amendment will provide for circumstances where a cost-rental dwelling can be provided to a tenant in situ in that dwelling at the time of its designation under section 30 of the Act. Currently under the Act and associated regulations, a cost-rental dwelling must be allocated and leased in a transparent manner. This includes advertising the property. This cannot be done for obvious practical reasons when there is a tenant in situ. Therefore, this Bill proposes to amend the Act to allow for such circumstances and the designation of these homes as cost rental. I am confident these important enabling amendments will continue to support the development of the sector as delivery increases in scale, as well as providing access to cost rental to even more people.
I intend to table an amendment on Committee Stage in the Seanad which will permit the Minister for Finance, at the request of the Minister for Housing, Local Government and Heritage and with the consent of the Minister for Public Expenditure, NDP Delivery and Reform, to direct the National Treasury Management Agency, NTMA, to pay a further €1.25 billion to the Land Development Agency, LDA, from proceeds of the disposal of directed investments. This amendment will make statutory provision for the LDA to access up to €6.25 billion in capital, split between €3.75 billion equity investment from the NTMA, €1.25 billion in debt and €1.25 billion from sources associated with the performance of certain statutory functions related to provision of cost-rental and affordable accommodation, development of public land, provision of socially integrated housing and engagement with local authorities. The amendment is required to protect the delivery of 12,900 homes projected by the LDA's 2024 to 2028 business plan. The increased ambition envisaged in Housing for All requires investment in additional resources beyond those provided for in the Land Development Agency Act to support the delivery of these homes. The board of the LDA cannot approve the agency entering into commitments for the delivery of these homes until it is confident it can meet financial obligations as they fall due. The additional equity funding provided for in this amendment will ensure the LDA has access to a total of €6.25 billion in capital and will be well positioned to provide affordable and cost-rental housing in communities all over Ireland and support the delivery of the national planning framework well into the lifetime of the 2024-28 business plan. I thank Senators for their consideration of this Bill.
We have a number of Senators willing to contribute. They have 15 minutes each but I suggest that is a maximum rather than a target. The Minister of State has given a comprehensive opening statement.
I welcome to the Public Gallery a group from Coláiste Íosagáin in County Offaly who are guests of the only Member of the House who is both a Senator and a Minister of State, Pippa Hackett. They are welcome to Leinster House and Seanad Éireann and I hope they enjoy their time here.
I call Senator Fitzpatrick.
Go raibh maith agat. I, too, welcome the pupils and students from County Offaly. I hope they enjoy their visit to Leinster House.
I thank the Minister of State for bringing this legislation to the House. It is important legislation that amends the Housing (Regulation of Approved Housing Bodies) Act 2019 and deals with some core features and benefits of Housing for All in terms of how housing policy has evolved and changed under this Government. It speaks particularly to the increased role of approved housing bodies in providing social homes and, for the first time ever, affordable cost rental.
It is important to note that when this House first sat, affordable cost rental did not exist as a tenure in this country. It is to the great credit of the Minister of State, the Department, the Government and all who have supported the Government not only that legislation has been brought forward to make affordable cost rental a reality, but also that people are actually living in cost-rental homes, a thing the Opposition would have had people believe would never be achieved.
Great credit is due to everyone who was involved in not just progressing the legislation and the policy, but delivering affordable cost-rental homes on the ground. It has largely been the approved housing bodies that have provided affordable cost-rental homes. I appreciate that the Government, through its legislation, has created a situation to ensure all 31 local authorities now have the legislative tools and powers to deliver affordable cost rental. By placing the Land Development Agency, LDA, on a statutory footing and funding it, the LDA is also in a position to deliver affordable cost rental.
It is indicative of the innovation that is being delivered to meet people's housing needs, under Housing for All, that the Government has progressed from a situation where there was a decade of undersupply when fewer than 20,000 homes were being built to having a horizon of close to 40,000 homes by the end of this year. It is important to note that one in every three homes built under Housing for All is a social or affordable home. That is a value that is defined in Housing for All and is being delivered in reality by approved housing bodies, the Land Development Agency, and local authorities.
We support the amendments. It is practical and sensible to make the registration process one that is workable and that will lead to an orderly registration of those already recognised approved housing bodies. It is appropriate and welcome that the amendments also seek to address the changes in society and how families are now composed. It builds on the previous amendments and changes the Government has made to legislation in introducing the fresh start principle, which recognises the fact that not all relationships endure indefinitely and there are always opportunities for new relationships and a fresh start. I commend the Government on introducing that principle and concept.
It is very important to define how cost-rental housing will be allocated. My final point relates to the cost-rental tenant in situ scheme. It is incredibly important because I know for a fact that it is preventing hundreds of people, and families, from becoming homeless. I commend the Minister and thank him for his legislation.
It is good to see the Minister of State again. As he is aware, we will not be opposing the Bill. The changes being made here to the registration regime for approved housing bodies are necessary. We accept that they need to be introduced as a matter of urgency. I understand it is on that basis that pre-legislative scrutiny was waived. My colleague, Deputy Ó Broin, has asked me to thank the officials for facilitating the briefing at last week's committee meeting.
When we look at what the approved housing bodies were saying, there are some elements of the Bill that really need to be teased out. That is not to say we cannot support the changes proposed on cost rental, but there are parts that definitely need more thought to be sure we do not end up with unintended consequences. I will go into those in a moment.
It is important to point out again that pre-legislative scrutiny was waived on the basis of the first Part of the Bill being urgent, but the additional elements on cost rental were not urgent and should have gone through pre-legislative scrutiny because there are concerns that need to be teased out, and now we do not have time to do that.
The main issue with the cost-rental sector is the rising level of rent, yet this Bill does nothing to address that, which is really disappointing. Increasingly, the cost-rental units that are on offer are so expensive that they are excluding so many of the people for whom cost rental was mostly designed, that is, singles and couples on incomes above the threshold for social housing.
With respect to section 15, and the revised definition of "household" and income eligibility changes for single people sharing or a couple sharing, we agree with the idea in principle, however, there is a danger of unintended consequences, such as a worsening scenario of involuntary sharing. This could happen when two single people agree to share a rental property but, at some point, one of them may find that their circumstances have changed.
They might have a partner or a child and then they are stuck because, financially, it will not be viable for them to exit cost-rental. As I said, the Bill does nothing to make cost-rental more affordable. People in that situation may become trapped involuntarily in sharing arrangements into their late 20s or early 30s. Of course, we are already seeing that happen in the private rental sector.
What this Bill could and should have dealt with is the real problem, which is that rents are too high. I note that in the speeches of the Minister of State and the Fianna Fáil Member, they did not mention the cost of cost-rental, which is kind of important. If we look at recent cost-rental at Citywest in Dublin, for example, the rents are almost €1,400 per month for a one-bedroom unit. That is worth repeating. Does the Minister of State think it is affordable? It is almost €1,600 for a two-bedroom unit and almost €1,800 for a three-bedroom unit. A major concern is that there is no single funding model for cost-rental and the problem with how the various funding mechanisms work is that they push rents in a particular direction.
Another issue we have with these cost-rental revisions in the Bill is in regard to the allocations scheme. We understand the Minister will prescribe in regulations the criteria against which allocations can be made but the cost-rental landlord will apply to the Minister to utilise some or all of those conditions in individual schemes or in the whole offering. There was probably a better way to do this. Again, we are not opposed to the idea of an allocations scheme but it would be better to tease it out more and get it right, rather than rushing it through in this Bill. As it is, this will cause a lot of confusion as different schemes will have different conditions.
Another issue that we hope the Minister will consider is how to facilitate mutual transfers across cost-rental providers. We have seen this problem arise with social housing provided by approved housing bodies. If somebody is in need of a transfer because their family is growing or they want to downsize, but the AHB has limited housing stock and cannot provide a transfer, getting a transfer from one AHB to another is almost impossible in social housing. It seems the problem is going to be replicated here. If a mutual transfer was provided across the cost-rental providers, that would be helpful.
With regard to the tenant in situ scheme, we accept that this provision is legally required. However, the tenant in situ scheme has been a disaster and this Bill will not fix the issues. The approved housing bodies were asked at last week’s committee if they thought this legislative fix would really change or reduce the level of challenge they currently have in acquiring those properties under the tenant in situ scheme. The response was as follows:
To be perfectly honest, I do not think it will make a material difference. We still will have the challenges of them being one-off properties. The additional piece is not just the cost of managing and maintaining single units but also the condition they are in…
The Minister must look at the way the scheme is funded and, in particular, take into account the age of some of the properties that AHBs are being asked to buy, and the fact that refurbishment and repair is an additional cost to them. Deputy Ó Broin has raised all of the same concerns with the Minister. I hope our comments and those of the approved housing bodies will be considered now, or at least before the subsequent regulations are drawn up.
I thank both Senators for their contributions. I thank Senator Fitzpatrick for her positive comments on the Bill and her comments generally around cost-rental and its imminent introduction into the programme for Government and Housing for All. It will certainly deliver significant benefits. It is based on what occurred in Vienna and is an attempt to take that approach and ramp it up over the coming years, which will be important. I also note the comments on the Fresh Start initiative and the cost-rental tenant in situ scheme.
Senator Gavan raised issues around rising rent levels. Again, this is a supply issue. The rent pressure zones are in place and are working in the vast majority of cases in terms of keeping rent rises at no greater than 2%. That is working well. At the same time, it is a supply matter.
Senator Gavan also referred to multi-occupancy involuntary sharing of accommodation. I note that cost-rental tenants derive a number of benefits, including security of tenure, below-market rents and high-quality housing. However, as the Senator noted, in some cases we would envisage that as incomes rise and an individual’s circumstances change, there may be opportunities to move to a different accommodation situation, for example, to the private market, to another cost-rental home or, in some cases, to purchase their own home.
Where a tenant wishes to move out after a period of time, normal notice periods will apply and the replacement of tenants will happen with the landlord's consent. The replacement of tenants on a cost-rental lease will only happen with the landlord's consent. To regulate matters and ensure the eligibility criteria are not circumvented, under section 32(6) of the Affordable Housing Act 2021, the Minister may prescribe how a landlord can give his or her consent to the removal, replacement or addition of tenants to a tenancy contract. The required regulation in respect of this will be drafted in the coming months as the Department and delivery partners make multiple occupancy cost rental a reality. As part of this process, the Department will be working with providers to draw on their experience in drafting the regulations as well as exploring mechanisms to facilitate transfers. For example, right-sizing between cost-rental homes. I hope that gives some assurance to the Senator regarding the very valid concerns he brought forward.
Question put and agreed to.
When is it proposed to take Committee Stage?
Is that agreed? Agreed.