Housing Provision

Questions (56)

Barry Cowen

Question:

56. Deputy Barry Cowen asked the Minister for Housing, Planning and Local Government the amount, location and criteria involved in the recently announced affordable housing scheme; and if he will make a statement on the matter. [4830/18]

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Oral answers (6 contributions) (Question to Housing)

Last week the Minister announced the affordable house scheme, which was long overdue. The details and the specifics pertaining to this scheme have not been much elaborated on in the public domain. Perhaps the Minister will inform the House what local authority areas have been identified for such a scheme, which approved bodies have been sanctioned to handle and provide for such a scheme on behalf of the Department and the State, what is the specific income criteria for the scheme and how many units are expected to be provided under the scheme this year and in the coming years.

The Government is committed to helping people to achieve the aspiration of home ownership. We recognise that buying a first home is always a challenging prospect but has become increasingly difficult in Dublin and other areas. Building on other initiatives already under way to improve affordability, I announced a number of new affordable housing measures last week. Together with the new Rebuilding Ireland home loan, a national scheme for affordable purchase is being reintroduced, targeted at households with annual gross income below €50,000 for a single applicant or €75,000 for joint applicants.

The new scheme will be governed by the relevant provisions of the Housing (Miscellaneous Provisions) Act 2009, which will be commenced shortly. I will then develop detailed regulations covering the operation of the scheme, including eligibility criteria, and I will be happy to consider any views that Deputies may have in that regard.  Once the regulations are in place, the elected members of each local authority will decide on the arrangements under which eligible households will access affordable properties becoming available.

The new affordable homes will be delivered by and through local authorities, primarily using sites from their landbanks to leverage the construction of homes for sale at affordable price points. This means that local authorities will now have more options for the development of their sites for mixed-tenure social and affordable housing. Local authority chief executives welcomed these affordable housing measures at the housing summit on 22 January.

The first such homes are being procured by Dublin City Council at O'Devaney Gardens and I have asked all local authority chief executives to submit, by mid-February, an outline of their respective affordable housing programmes from their lands, with a particular emphasis on Dublin, Cork and Galway where the affordability challenge is greatest.

I thank the Minister for his response. It would appear that information is not readily available to add weight to the announcement made. The Minister is simply saying that he hopes there will be recommendations made to him by the relevant local authorities in Dublin, Cork and Galway and that he, in turn, is in the process of developing the criteria that will be applicable. At this stage can the Minister even give an estimate? Is the scheme confined to Dublin, Cork and Galway? Will approved housing bodies have a role? When does the Minister expect to be in a position to inform the public about the income criteria that might be applicable? How many units does the Minister envisage being made available as designated affordable units to the cohort of people who find themselves not able to get on a housing waiting list and who cannot afford a mortgage but who may have a possibility of getting one under this scheme? The Minister needs to put meat on the bones of the announcement he made last week so that people can adjudicate on it and the public can be safe and secure in the knowledge that there are prospects available throughout the country under this scheme.

The Deputy asked about the numbers. When I announced the scheme I said that we had identified land and finance for at least 3,000 homes under the affordable purchase scheme, but our ambition is for 10,000 homes. Asking local authorities to identify more land that could be made available for those homes was part of our engagement under the housing summit. The way the scheme is being set up, with local authorities taking an equity stake rather than the discount taken, it will produce a rolling fund for the affordable scheme so they can continue to reinvest in affordable housing.

I will explain how we got to the figure of 3,000. Under the local infrastructure housing activation fund, LIHAF, which is the current scheme we are progressing through, between 1,700 and 1,800 homes will be made available. With the €25 million secured in the budget for this year and next some 600 to 800 affordable homes will be made available under the affordable purchase scheme. Some 120 homes in O'Devaney Gardens and 450 units in the Poolbeg strategic development zone project, SDZ may come under the affordable purchase scheme. We also looked at areas such as St. Michael's estate and Oscar Traynor Road, which provide potential for another 210 homes under the affordable purchase scheme. This significant number of units has been identified but the ambition is for more.

We also need to be realistic. If we look back to 2007, we see that the Part V affordable scheme delivered over 3,000 homes in that year but it was the only year it went over 3,000 homes. That was during a year when we were building more than 70,000 homes across the State. As we reintroduce affordability, we need to do it in a way that we can scale up quickly while being realistic in our ambitions.

Deputy Cowen asked about the criteria around accessibility. The income limit for a couple is €75,000 and it is €50,000 for a single person. The scheme will be administered through the local authority. I will use the provisions under the 2009 Act and will set regulations off the back of that. As I have said at the Oireachtas joint committee, I welcome contributions. I am hearing differing opinions as to how people might access this scheme. When I spoke with residents about the Poolbeg SDZ, they said they wanted provisions made for local people to be able to access the affordable housing scheme. When I spoke with people who were not from the area, they said they wanted to make sure they also had access to the scheme. I have met with housing bodies, such as Ó Cualann, to see how they had set eligibility criteria for co-operative housing schemes. We need to bring about a general scheme that will work for the whole country and all these sites. We are not just talking about Dublin, Cork and Galway. I have tasked all local authorities to come back with relevant sites to do this. I welcome any input. We have some time to get the scheme and the criteria right and for the local authorities to roll it out.

I welcome the elaboration. Will the equity stake in the lands constitute on-balance sheet expenditure for the Government?

Does the Minister intend to extend the scheme to private lands and, if so, what is the timeframe for that process?

The Deputy asked if housing bodies would have a role. They will have a role in this but it will depend on how the relevant local authority wants to build out the land and the purpose it wants to put it to under the affordable housing scheme. Ó Cualann is a housing body and Dublin City Council has worked with it already. As such, we know this can work and we know how it could work in future.

On the use of private lands and affordability, we have been able to achieve a greater allowance for affordability on sites which are not necessarily State owned, such as the Poolbeg SDZ. That is a welcome development. From the conversations we have had with local authority chief executives on certain sites that might be coming in as part of developments which are on stream at the moment, there is a prospect of bringing in affordability there as well. One of the challenges I have put to the local authorities with the Minister of State, Deputy English, is that where we have identified land for social housing we then need them to identify what land they can use for affordable housing also.

The Deputy referred to the equity stake. As it is an equity stake, it will come on balance sheet for local authorities and therefore for the general Government debt. However, it has already been counted in the context of the money provided in the budget for the €25 million site service fund.

Private Rented Accommodation Standards

Questions (57)

Eoin Ó Broin

Question:

57. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government the actions he has taken since the broadcast of a programme (details supplied) in November 2017; his plans to amend the legal definition of "overcrowding"; his further plans to make it an offence to advertise substandard rental properties including on social media; if increased targets for local authority inspection will be brought forward; and the status of plans for a standard certification system for landlords. [4855/18]

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Oral answers (6 contributions) (Question to Housing)

We were all shocked by what we saw in "Nightmare to Let", the RTÉ "Prime Time" documentary which was televised last November. What actions has the Minister taken in the period since then? While the primary responsibility rests with local authorities, they are dependent on legislation. There have been calls for stronger legislation to define "overcrowding" and for greater resources to assist with inspections. I ask the Minister to update the House on actions his Department has taken since November.

I thank the Deputy for the question. "Overcrowding" is dealt with in Part IV of the Housing Act 1966, as amended. Minimum standards in rental accommodation apply to all properties let or available to let. Where someone believes that a property is being made available to let in breach of the standards, for example through overcrowding, the matter should be referred to the relevant housing authority. Any person who neglects or refuses to comply with requirements under the Act is guilty of an offence. Fines for non-compliance with the Housing (Standards for Rented Houses) Regulations 2017, which came into force on 1 July 2017, have been increased, with the maximum fine having gone up from €3,000 to €5,000 and the daily fine for a continuing offence increased from €250 to €400.

My Department will be examining amendments to the legislative provisions in relation to overcrowding as part of the Residential Tenancies Board's change management plan and the preparation of further legislation during the current Oireachtas session. This legislation will also strengthen the RTB's enforcement functions, for example, by making it an offence for a landlord to contravene the provisions relating to rent pressure zones and providing more protections for tenants.

Inspections are currently carried out by local authorities on a risk-based approach, targeting properties, such as older properties and those with a history of quality problems, that are identified as being at risk of not complying. Provision has been made for an allocation of €2.5 million in 2018 to facilitate increased inspections of properties, with the intention of providing further increases each year in the period to 2021 to enable targeted inspection coverage of 25% of rental properties annually, which is to say every property will be inspected once every four years. My Department will be writing to each local authority chief executive shortly with a view to agreeing increased inspection targets and developing implementation plans to achieve these. These will build, in particular, on the inspection arrangements that apply in relation to properties in which there are tenancies supported under the housing assistance payment scheme. In addition, a landlord accreditation scheme to educate landlords on best practice and their rights and responsibilities is being developed by the RTB. It is also intended to change the requirements for registration with the Residential Tenancies Board to require landlords to certify that their property is compliant with these standards.

I assure the Minister that this is an issue on which we all want to work on a cross-party basis. In the debate we had last year, there was very strong agreement across the Chamber on the actions required. While I understand fully the provisions of the 1966 Act, we are being told by city and county managers that they are simply not strong enough. I sent the Minister and the chief executive of Dublin City Council an email in December 2017 listing properties being advertised but which were clearly not of an acceptable standard. I received a reply earlier this year from Dublin City Council to say it had inspected all of those properties and while the authority believed they were not acceptable, they were not in breach of the 1966 Act's provisions on overcrowding notwithstanding the presence of multiple bunk beds in kitchen facilities or other rooms. I urge the Minister to bring forward an amendment to the overcrowding provisions in the Act as soon as possible. If he does so, he will have our support to put it through the House.

I turn to local authority inspections. There are some local authorities which currently inspect at a 20% plus rate. I accept and welcome the fact that the Minister is seeking to increase that rate across all local authorities, but 2021 is too far out, in particular for those areas where there is a heavier concentration of substandard properties. I ask the Minister to consider bringing forward that increase so that we move towards the 25% inspection rate at an earlier date than 2021.

I accept the Deputy's bona fides absolutely on this and when it comes to us all wanting to work together to ensure we get better standards for tenants. What we saw in the RTÉ exposé were human rights abuses perpetrated in our country against people who were not able to defend themselves. One of the things we have looked at with the Residential Tenancies Board is to see how we can make it a strong and independent regulator whereby the onus is no longer on tenants to have to report these crimes. That is priority legislation in this session, as the Deputy will have seen. We are going to progress it with two Bills. When we refer to a two-year change management plan it is not that we are waiting until two years have passed for everything to be done. We are actually doing it over the course of two years based on the priorities as we see them.

I am glad to hear that the properties the Deputy listed for the local authority were inspected and I take his point on the current regulations and legislation not being tough enough. Things have changed since 1966, of course. That is why we are looking to strengthen provisions on overcrowding, both in terms of its legal definition but also in terms of the enforcement actions and sanctions applicable in such circumstances. We have to ensure the legislation is strong enough to constitute a proper deterrent to criminals using their properties in this way. Currently, it is not. That is why it is our priority. It is also a priority to get annual registrations of tenancies to get that certification process in at the same time.

I thank the Minister. In The Irish Times today, Jack Power has a very good article listing a range of properties which are being advertised this week on a variety of social media websites primarily targeting foreign language students and migrant workers, although the substandard accommodation issues do not only occur in those sections of the rental market. I recommend strongly that the Minister also consider in the context of forthcoming legislation making it a criminal offence for online platforms to advertise properties which clearly breach regulations. That would not only put the onus on the Residential Tenancies Board but also on www.myhome.ie and www.daft.ie to be compliant and prevent their platforms being used to advertise properties which the photographs submitted clearly show are substandard. That would also strengthen the regulations. I urge the Minister to bring forward this legislation to a committee as quickly as possible. It is important this is got right because there are, unfortunately, far too many individuals and families out there living in overpriced substandard accommodation. If everyone in the House wants to tackle that, the sooner the legislation is here, the sooner we can give tenants and the law-abiding landlords being undercut by such practices the support they deserve.

We must increase inspections. That is what the funding commitment between now and 2021 is about. We want to get to a point where a property is inspected once every four years approximately. When it comes to a housing assistance payment tenancy, we have a much narrower timeline than that. In that case, the property must have been inspected in the previous 12 months or is to be inspected in the following eight months. That is a good protection in the context of the money the State is providing. It is also important to recognise the great utility of a risk-based inspection programme. It allows us to identify properties which are prone to overcrowding because they have been used that way in the past, or to identify properties using social media and other channels. It means that when we go to inspect those properties, it actually helps people who are suffering in those situations. That is why when we look at the figures for compliance based on the inspections that have been taken according to this at-risk inspection model, we find a high rate of non-compliance.

I have raised the issue of social media and language students with officials. It will require having people with the right language skills in Portuguese and so on to read these advertisements and to help with inspections. On the Deputy's proposal to make it an offence for platforms to advertise or to place an obligation on them to regulate what is advertised, I would not see a problem if it is about professional property or letting platforms. It would be difficult to achieve that through normal social media channels like Twitter or Facebook, however. I am not against pursuing that course of action and I will look at it.

Repair and Leasing Scheme

Questions (58)

Barry Cowen

Question:

58. Deputy Barry Cowen asked the Minister for Housing, Planning and Local Government the number of units provided through the repair and leasing scheme; his proposed changes to the scheme; and if he will make a statement on the matter. [4831/18]

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Oral answers (6 contributions) (Question to Housing)

The repair and leasing scheme was wholly inadequate last year, which resulted in a very poor uptake.

That was not lost on Members of the House, who were quick and constant in their efforts to point it out to the Minister. The Minister said towards the end of last year that he was revising the scheme and providing new criteria to ensure it had the desired effect. Can he elaborate on what changes he has made or is making to the scheme so it will be more successful in the near future?

The Deputy has raised this matter on a few occasions. I agree it is a scheme we had hoped would work better. However, it is a demand-led scheme. It was a carrot to the sector to bring housing forward by providing access to finance to bring vacant properties to the market. While my Department is currently finalising detailed output data across each of the social housing delivery programmes in 2017, it is already clear that the repair and leasing scheme, RLS, has not yet delivered the level of new social housing homes envisaged.

At the end of 2017, a total of 820 applications had been received under the scheme. Local authorities were engaging with the property owners on 573 properties, 31 lease agreements have been signed and nine homes have been tenanted.

The Minister, Deputy Eoghan Murphy, has reviewed the operation of the scheme, as part of the review of Rebuilding Ireland, and has concluded that the scheme has significant potential but there are areas where it can be improved to make it more attractive and effective. We all probably agree on that. At the housing summit last week, local authority chief executives were advised that, from 1 February, a number of key changes are being made to the scheme. These include a reduction in the minimum lease term required from ten to five years and increasing the proportion of market rent available to property owners where they take on more responsibilities under the tenancy, meaning that up to 92% of market rent will be available. Previously, it was only 80%. Now, if one takes on more responsibility it is up to 92%, which is much more attractive. There is also the provision of additional funding for property owners, over and above the current €40,000 limit, where the dwelling is a bedsit type dwelling being brought into compliance with the standards for rented houses regulations and being made available for social housing.

The Minister is making €32 million available for the scheme in 2018 and I expect local authorities and approved housing bodies to continue to implement the scheme locally and to achieve the target of 800 new properties this year. At the housing summit we asked for the support of local authorities to drive this forward and I have repeatedly asked all parties in the House to help us to drive it. It is an attractive scheme and I believe we have made it more attractive. It is a good scheme to bring forward housing stock at a good cost to the State. Hopefully, there will be greater uptake in the year ahead.

I am glad some changes have been made, although I do not know if they go far enough. Can further recommendations be made by other Members of the House to try to improve the scheme? The figure for last year was 800 too, and it proved illusory. There are only 31 leases and nine properties tenanted from the scheme. The Minister is aiming for 800 again this year. Is he satisfied that the two changes he mentioned - the reduction in the term and 92% of the market rent rather than 80% - are sufficient? Are they the key factors attributed to the failure last year?

I agree that the figures were ambitious, but rightly so. There is potential for the scheme and there was potential for it last year as well. The prediction of 800 this year is realistic when one considers that over 550 applications are in the system and are waiting to be processed, so we can reach the figure. The changes are sufficient. The biggest deterrent, as we found from feedback from interested applicants and from Members of the House, was the issue of ten years. People felt it was a long time to commit to the scheme. The five-year term should solve that. The other issue was the amount of rent available. Up to 92% of the market rate is more attractive. Also, some people still strongly believe that this is not a good enough return for them. I should stress that this scheme was introduced to help people who could not access finance in some other way to make their housing stock available. It is not about meeting everybody's desires but to encourage people who own these properties and do not have an income or cash to bring them forward. We believe the changes we are making should make the scheme more attractive and help us achieve the target of 800 units this year and into the thousands over the next three years. However, it will only work if we promote it. We will try to promote it again. It is a way to bring vacant properties back into use. We all agree with the concept and I ask for the Members' support in getting the message across. It is a good scheme, and it has been improved.

If the investigation into the failure of the scheme was thorough, the Minister might be able to clarify if the 700 applicants who were refused have been informed of the new process or new criteria. How many of them will meet the new criteria and how many can we expect to be successful as a result?

In case I gave the Deputy misinformation, it was not 750 refused. There were 850 applicants. Some 573 are still going through the process and over 40 have gone through it. A couple of hundred did not pass the test. In most cases, it was that, after they engaged and made the applications, there were parts of the scheme they did agree with or the application did not pass the social housing requirement test, that is, it was in an area where there was no demand for it. In some cases, the house would have needed much more than €40,000 spent on it or it would not have been suitable. Those people were encouraged to sell the house, perhaps to the local authority. In some cases where it would not have been viable, it would have made more sense to buy the property because, given the value of the property, it would not have been worth entering the scheme.

However, they have not been notified yet, as far as I am aware. This was only discussed and agreed at the housing summit and the Minister, Deputy Eoghan Murphy, made the announcement afterwards. It is something we could consider. It would make sense to re-engage with the people who expressed an interest so we will do that on foot of today's discussion.

Local Infrastructure Housing Activation Fund

Questions (59)

Richard Boyd Barrett

Question:

59. Deputy Richard Boyd Barrett asked the Minister for Housing, Planning and Local Government his plans to revert to the original proposal with regard to LIHAF-funded developments as set out in circular PL 10/2016 of 26 August 2016, which required an affordability dimension for each site such that a minimum of 40% of homes were to be affordable; his further plans to ensure that affordable is defined so that they are accessible to those on low and middle incomes; and if he will make a statement on the matter. [4682/18]

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Oral answers (10 contributions) (Question to Housing)

When the Minister introduced the local infrastructure housing activation fund, LIHAF, which is a subsidy to private developers to open certain sites, the initial circular indicated that we would get 40% of any LIHAF supported development in affordable housing and that affordable would mean, in Dublin, a price of no more than €300,000. Within a month of that announcement the Minister, I suspect under pressure from developers, abandoned that, so we now do not know what "affordable" will mean in a number of sites and what percentage we will get, although the signs are that in many places it will be utterly negligible. What is the Minister going to do about that?

The primary aim of LIHAF is to stimulate and accelerate the early release of land for housing in urban areas with large demand, by opening up these lands with key enabling public infrastructure that would otherwise not be provided in the short term.

It was initially proposed that a capped price point would be set on a percentage of the housing. However, in consultation with local authorities, it was considered that setting a cap in 2016 for housing that would be developed up to 2021 and beyond was problematic and would have adversely impacted the commercial viability of some sites, with consequential negative impacts on overall supply. Accordingly, a second option was put in place where a cost reduction related to the LIHAF contribution could be spread over the housing development as a whole, reflecting in a lower price for buyers, or aggregated to provide a smaller number of more affordable units.

I have signed grant agreements in respect of 29 projects that were approved in principle last March and, in a number of these, local authorities have secured agreements from developers to aggregate LIHAF deductions to provide more affordable housing under qualifying criteria to be set in line with national policy on affordability, the affordable purchase scheme.

There will also be a social housing dividend from all the LIHAF sites, together with additional social and affordable housing to be provided on the State-owned sites. Regarding the 29 approved projects, and subject to the planning process, it is estimated that approximately 3,000 of the 18,000 new homes to be released by this enabling infrastructure will be for social housing purposes and a further 1,500 will be affordable homes.

Some 70% of approved sites are projected to have housing available at €320,000 or less, based on 2017 prices. With regard to the Dublin region, I have asked the local authorities to seek to provide as much affordability as possible on related sites and many of the projects in Dublin will have some starter homes for sale in that price range as well as more affordable housing.

The Minister always talks about social mix. In fact, his housing policy is one of social cleansing. In huge areas of Dublin his failure to secure adequate social and affordable housing on the developments taking place mean that people on low and middle incomes are being cleansed from, or driven out of, those areas due to the unaffordable housing. Cherrywood is a LIHAF supported development. Last October, Hines Real Estate Ireland Limited, the developer to which the Government sold that site for a song, offered the social housing element at the following prices: €243,000 for a one-bedroom unit, €358,000 for a two-bedroom unit and €442,000 for a three-bedroom unit. It is completely unaffordable. That was the discount price for the Part V element. There is no commitment to any level of affordability on the Cherrywood site and no idea of what the percentage of affordable housing will be. This is despite the fact that the Government provided €15 million in LIHAF funding. The Minister has allowed these guys to get away with murder and the effect is that people in the area on low and middle incomes, up to €40,000 or €50,000 per year, will not be able to buy houses on that site, even though it was a public site and it is subsidised with LIHAF funding. What is the Minister talking about?

It is important to understand the purpose of the LIHAF funding, which is to have the very large land banks, with over 500 homes per site, opened more quickly and to ensure the public money is returned in a lower cost of houses or an affordable purchase scheme such as I have announced. If one looks at the 1,800 homes which will be built on the 29 sites, on which I have signed off, 50% of them will be sold at less than €320,000. Some 4,500 units will be social and affordable housing, 5,900 units will benefit from a LIHAF reduction, while 7,700 will be sold at market rates. At the end of October 2017, the median price in the greater Dublin area was around €340,000. Thousands of homes will be built - both social and affordable housing - and benefit from a LIHAF reduction, with the remainder being sold at market prices. The Deputy's language is grossly exaggerated. If we consider how we might otherwise have used the €200 million, had we used it directly, we would have only built a few thousands units. In this way we will see at least 18,000 homes being built as private, social and affordable housing. There is a dividend for the State in the provision of 4,500 social and affordable homes, with 5,900 units being sold with the benefit of a LIHAF reduction. Some 50% of the 18,000 homes on the 29 sites on which I have signed off will be sold for less than €320,000.

Two people - a couple - earning €40,000 each can only borrow €312,000. I have just told the Minister about a LIHAF supported development in which two-bedroom units are being sold back at a discounted rate of €358,000, up to €442,000. They are not affordable for the average person who will be cleansed from the area. The local council only has plans to provide just over 1,000 social houses. People on those earnings cannot get onto the housing list because the Minister will not raise the eligibility thresholds. Middle income workers in swathes of Dublin, including the Minister's constituency and mine, Dublin South and Dublin Bay North, will be cleansed from these areas. There will be no social mix and it is social cleansing because nothing is being offered to middle income workers at levels they can afford because the Minister has let developers off the hook.

It is important when considering the Government's policy on the affordability of housing not to look at any one housing policy in isolation. It is important not to look at LIHAF funding only but also at what we are doing with affordable purchase schemes, the Rebuilding Ireland home loan scheme and the different things we are doing to reduce the cost of development. The Deputy likes to focus on one particular site and say it is not working for the taxpayer-----

-----but all of the evidence is that LIHAF is working for the taxpayer. On the numbers the Deputy gave in his example, the couple would be able to afford to meet the minimum price of €348,000 he mentioned if one were to take into account their combined gross earnings, the size of the loan they could take out, the deposit they would have to have, plus any assistance they would receive to buy.

From the bank of mum and dad.

No, I am not talking about the bank of mum and dad but about their own savings and the help-to-buy scheme which the Government has introduced. The affordability measures are working. Look at what LIHAF is trying to achieve and what it will achieve with State funding. We will get a much bigger bang for our buck than if we had invested the money directly. Furthermore, thousands of homes are being built on sites that may not have been built on until 2021 had we not put the funding in place. That is what is being delivered by LIHAF. It is increasing supply and there is also a claw-back in terms of affordability. Not every LIHAF project that was to be commenced is being followed through. In some instances, the developers are proceeding without the local authority or Government assistance and as a result there will be no affordable housing units on those sites. The LIHAF funding will help to secure affordability in parts of Dublin where previously there would not have been affordable homes available.

Approved Housing Bodies

Questions (60)

Mick Wallace

Question:

60. Deputy Mick Wallace asked the Minister for Housing, Planning and Local Government the amount paid to approved housing bodies to date in upfront or accelerated CALF funding; the amount of interest that to date has been paid back on these loans; the amount of principal loan funding that to date has been paid back; and if he will make a statement on the matter. [4846/18]

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Oral answers (12 contributions) (Question to Housing)

There is much interest in and concern about how the Minister is dealing with the housing crisis. On social housing, why has the Government anointed and funded approved housing bodies to deal with the shortage of social housing stock? With regard to capital advance leasing facility, CALF, funding, how much has been loaned and paid back and how much does the Department expect to get back in the long term?

The Government is committed to supporting approved housing bodies, AHBs, to contribute to the delivery of social housing. The purpose of the capital advance leasing facility, known as CALF, is to provide AHBs with a small amount of loan capital to assist them in securing other loan finance for the purchase, construction or refurbishment of new social housing homes. The loan facility can support up to 30% of the eligible capital cost of the project where the units will be provided under long-term lease arrangements, known as payment and availability agreements, for local authorities for social housing use. A nominal interest rate of 2% fixed per annum is charged by the local authority on the initial capital amount. Repayments on either the capital or interest are not required during the term of the loan, although where an AHB chooses to, repayments can be made during the term. No such repayments have been made to date. At the end of the term, the outstanding capital amount, plus the interest accrued, is owed and repayable to the local authority.

In recognition of the shift in investment required by AHBs towards construction of new units, my Department introduced upfront or accelerated CALF payments in 2015, a change to the scheme which was launched in 2011, which allows for the drawdown of funds prior to a project starting on site. Up to 95% of the approved CALF funding can be drawn down as specific milestones are achieved, while 5% is held back until the payment and availablity agreement is signed. The use of funding in this way provides more funding certainty for AHBs, particularly on construction projects. There are 42 projects that have received approval for accelerated CALF payments, amounting to over €63 million in capital advances.

I do not know who in the Department negotiates with approved housing bodies, but I would not mind setting up my own charity and arranging a meeting with them.

The Deputy is welcome to do so, if he meets all of the criteria.

As the Minister said, by way of CALF the Department provides 30% of the funding upfront for a private organisation to purchase housing units. From what I can see, the loan is unsecured, with a 2% interest rate over a 30-year term. It is understandable organisations are not queueing up to repay during the term of a loan. Even after the 30-year period, there is no concrete repayment option. There are four vague possibilities as to how the money should be repaid to the housing authority but from the guideline notes I have read, it seems as though the housing authority does not think anyone will be around in 30 years time to collect the money; therefore, they are not too worried about it. In effect, the Government is paying one third of the building cost of the units, retains no claim on the properties and will then pay once again to rent the properties back from the approved housing body. Having spent some time in the construction industry, I can say it is not a great business model to pay for something, to give it away and then rent it back. I understand the pressing need to provide social housing units, but the Minister should address the matter of ownership and say why he believes the State giving up ownership of housing infrastructure for which it is paying is a good idea.

I disagree with the Deputy. It is a good scheme and makes financial sense if we can stretch our capital budget and by putting up 30% of the cost it results in a 100% spend on a house which is to be delivered, but it is only part of the solution. Every time I engage with local authorities I stress that they are central to the delivery of social housing. They are the key players. Approved housing bodies engage and work with them to go through every housing project, with the Department's housing agency. They are allocated about one third of Rebuilding Ireland's expenditure for housing delivery in conjunction with the local authorities. It is, therefore, a good scheme. We will get our money back and expect to do so. All of the approved housing bodies go through the regulator. The Deputy claims that it is easy to step in and he is welcome to do so if he engages with the regulator and passes all of the regulations, but, in fact, it is not that easy to pass all of the tests. To ensure the money is secure, there is a tough regulation process to be gone through. At the end of the 25 or 30 year period, the outstanding CALF loan interest must be paid. The AHB may decide to sell the homes and repay the moneys owed to the housing authority, given that at that stage the asset should have a considerable residual value, and may wish to invest elsewhere. It may wish to realise some of the residual value of the properties and secure a further private loan to invest in homes and repay the housing authority or it or the housing authority may decide to enter into another leasing agreement. There are many options, but the money is secure because it is the same as a loan facility.

I find it interesting that charitable, not-for-profit approved housing bodies are very good at making profits. When one considers the amount of State aid they receive, they would have to work very hard not to make a profit. Take Cluaid, for instance. It made a profit of over €6 million in 2016. Its rental income is €16 million and it has reserves of €74 million. It is sitting on a portfolio of almost 6,000 units which it values at €615 million. In three years time, thanks to schemes such as CALF, it plans to own well in excess of 8,000 units, on many of which the local authority will pay 92% of the market rent. This, in turn, will be topped up by the tenants' differential rent payments.

In most cases the charitable approved housing body would be getting more than the market rent. The private sector could not compete with these fellows. We are paying the deposit and the mortgage and the Government is giving the units away. In that context it is not surprising that the Central Statistics Office, CSO, and EUROSTAT want approved housing bodies to go on the balance sheet. Approved housing bodies manage their stock well and manage their tenants well, but I still wonder why the Department is so allergic to building and owning social housing. The Minister has said that local authorities are central to it. I can tell him that the local authority in Wexford has been sidelined and the approved housing bodies are running the show. It is costing us more, and it could be done cheaper through the local authority.

I want to stress that the local authorities are the key players for social housing. The approved housing bodies are part of that and are working with us and our local authorities to deliver quite a lot of social housing into social housing stock. They have a proven track record. I am not sure if the Deputy is trying to insult them or compliment them. He seems to be confused in his comments. They are doing very good work in most cases, in conjunction with local authorities.

We are overpaying them.

For the record, I have asked our councils and local authorities to engage more with them, because the approved housing bodies cannot bring any project forward without the co-operation of the local authorities. They work through them, with our Department and the agencies. I want to be clear on that. The Deputy should not tell me that they are taking over local authorities or that local authorities have been sidelined.

They are in Wexford.

They are part of it and have to work in conjunction with local authorities. I have to stress that they provide very good value, and our commitment under the 30% target is about €63 million. We are getting a large amount of housing stock for that. One can look at the figures that have been delivered over the past year in terms of the housing targets. This year there will be in excess of 2,000 houses, in 2019 there will be 2,000 houses and in 2020 there will be 2,600. The figures are quite good. They are delivering. This is money well spent, in my view, and I disagree with the Deputy when he tries to slag them off.