Barry Cowen
Question:63. Deputy Barry Cowen asked the Minister for Housing, Planning and Local Government when the pilot project on affordable rental schemes will be launched; and if he will make a statement on the matter. [4546/18]
View answerWednesday, 31 January 2018
Questions (63, 83)
Jan O'Sullivan
Question:83. Deputy Jan O'Sullivan asked the Minister for Housing, Planning and Local Government his plans to develop a cost rental model of public housing; when the expert group on same will report to him; his further plans to ensure the sites in the ownership of local authorities that have been identified as suitable for housing will be prioritised for social and affordable housing; and if he will make a statement on the matter. [4336/18]
View answerOral answers (8 contributions)
Further to last week's announcements by the Minister, there was some disappointment that a more extensive and expansive affordable rent scheme was not announced. There was mention of a pilot scheme or schemes. I hope the Minister might be in a position today to elaborate on that issue and inform the House where the schemes are to be located, what they entail, what potential they have and after what period the scheme or a similar one will be expanded.
I propose to take Questions Nos. 63 and 83 together.
I thank the Deputies for their questions. Against the background of the affordability pressures in the rental market in certain areas, the Government is determined to make affordable or cost rental a major part of the housing system. Under this approach, rents are set at levels to recover the construction costs and facilitate the management and administration of developments but with only a minimal profit margin included. To this end, on 22 January, I announced a suite of affordable housing initiatives, including a new affordable rental scheme, to be based on a cost rental model. Further details on the suite of initiatives announced last week can be found on the dedicated Rebuilding Ireland website.
A pilot project is being progressed by Dún Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an approved housing body, using land owned by the agency. I expect the pilot scheme to go to the market later this year to secure a development partner and the best value for both the State and prospective renters.
I want to see local authorities realise new affordable homes from their lands without delay. Following the housing summit with local authority chief executives on 22 January, I have asked each chief executive to furnish a report to me by middle of February, setting out his or her plans for delivery. I expect further affordable rental proposals, based on the cost rental model, to be put forward by local authorities, especially those in the main urban centres, as part of this process.
The delivery of additional affordable housing will rely on the State developing the full potential of its residential land bank. To oversee this important work, I have established a dedicated residential land management and development group. In addition, my Department will lead an expert group to examine the issues around and provide advice on the most appropriate way forward in delivering a more sustainable rental sector in Ireland. I am considering the terms of reference, formation and composition of the group with a view to establishing it in the coming weeks. In parallel, discussions are ongoing with the European Investment Bank on its experiences in developing and supporting cost rental and other affordable models that could also work in Ireland.
It appears that one scheme is progressing and, as the Minister stated, will come to fruition in Dún Laoghaire later this year. The Minister last week met with the chief executives of local authorities at the housing summit. He previously stated to the Joint Committee on Housing, Planning and Local Government that he would be in a position to provide it with the targets he had agreed with each local authority regarding what they would provide in the coming year. Can the Minister give an indication that he will come back to the House with such figures, to specifically include affordable rental schemes for each local authority?
The cost rental model makes up almost half the rental market in some European countries. There are huge gains for Irish society if we can move to a cost rental model because of the security it will give to people who are not able to own a home or who want to rent and have security in that choice. I want it to be a major part of our housing market but it will take time to get us there. That is why the first pilot scheme we are progressing is so important. It is only a pilot scheme but if it is successful, we will be able to expand it quite quickly because of conversations that I am having with the European Investment Bank, with which I have had a number of meetings to date. I will soon fly to Luxembourg to further those discussion because cost rental, as I said, is working in other European countries with European Investment Bank support and I want to have that support here in Ireland. Under LIHAF and a couple of other measures that some local authorities are pursuing we will see something akin to a cost rental model, whereby they use LIHAF either for a rental discount for certain properties or where local authorities get involved with new build-to-rent properties that are coming on line. Different things are happening that I want to come under this cost rental idea and to progress as quickly as possible.
I gave the commitment referred to by Deputy Cowen in advance of the housing summit. We had an engagement with the local authorities before the housing summit and they came back with indicative numbers. The housing summit was a chance for the Minister of State, Deputy English, and I to discuss some of the new schemes, such as the affordability measures, the enhanced leasing scheme and the new repair and lease scheme. The housing team in each local authority must now look at our targets for 2018 and out to 2021 and decide how it will achieve those targets. I want that to then be published in order that every councillor, Deputy and Senator knows exactly what is expected of each local authority. That transparency will facilitate accountability and delivery.
We have a special housing unit which has been on site. The Minister of State, Deputy English, has also made several site visits to local authorities, as have I, to go through their detailed plans. Whenever I am in a local authority area, as I was in Clare and Limerick on Monday, it is a chance for me to talk to the housing officer there and see not just the sites but also the timelines around delivery and to deal with any questions or difficulties the local authority may have in respect of the relationship with the Department.
In so far as cost rental is concerned, the targets will be for delivery under the Rebuilding Ireland numbers we have.
The Minister will have a further opportunity to speak. I call Deputy Jan O'Sullivan.
As regards build, acquisition and lease and everything else, those targets will not necessarily contain a detailed breakdown of where the cost rental will be.
I welcome that the expert group will be set up in the coming weeks. There is an urgency in that regard. I am very concerned that this is so far behind in terms of the approximately 700 sites that are available. I am particularly concerned that the Minister, when replying to the previous group of questions, stated that the 40% affordable could not be achieved in the relevant time period because of difficulties getting the sites opened up in time. My concern is that the family silver, the 700 sites, will largely be gone for private profit by the time we get cost rental models up and running.
Organisations such as the Nevin Institute and Threshold have stated that a greater scale is needed in this regard. Although progress has been made with the pilot scheme, we need the process to move far more quickly.
Why is Limerick on a lower level in respect of the home loan scheme? The Minister has stated that the affordable scheme is for all local authorities but I am concerned that Limerick, which is a larger city than Galway, nonetheless seems to be in the second tier in that regard.
As regards the cost rental model, one must consider the different affordability measures we are trying to progress. For example, we wanted to have a cost rental model on the O'Devaney Gardens site but when we ran the numbers it transpired that affordable purchase was a better way to go, so we prioritised affordable purchase as part of a mix of social and private housing on the site. People understand the idea of cost rental but that does not mean it is simple to implement on individual sites. That is why we are working with the European Investment Bank, which has many years experience of cost rental. We have prioritised the affordable purchase scheme because we know it can work as it has so well already in this country on the sites where it has been done. We now need to implement it on a larger scale.
Deputy O'Sullivan mentioned the figure of 700 sites, but those 700 sites are public or LIHAF sites. There are currently 29 sites and there will be 30 once Adamstown gets over the line, which will happen this week or next. Of the 29 sites, it is important to note that the decision to move them from the 40% affordable housing was because it was seen as a cap for developers into which they were not necessarily going to buy. As we got into certain difficulties with developers, they moved away from the process, which either meant the sites would not soon be opened up or we would not have any affordable homes thereon. Thanks to the LIHAF funding, as set out in the figures I gave to Deputy Boyd Barrett, the 29 sites will deliver 18,000 homes, of which 50% will cost below €320,000, 4,000 to 4,500 will be social and affordable and over 5,000, separate to the social and affordable, will have a LIHAF discount, while the rest will be sold at market prices. The delivery of those houses is progressing very quickly. A small amount of money was drawn down from LIHAF in 2017 but that will ramp up quite quickly in 2018 because I signed all those contracts in the latter half of last year.
Limerick is not being left out. The Rebuilding Ireland home loan scheme and the affordable purchase scheme are very much for Limerick. I had a fantastic opportunity to visit the Lord Edward Street developments and a number of other developments with Deputy O'Sullivan, which are absolutely the right way to progress in terms of rebuilding our country in a sustainable way, not just building a home but a community and a place. Limerick is very much part of that and has an advantage because it is doing so well. I have every faith in it, as a local authority, to be able to take advantage of these schemes.