Wednesday, 20 February 2019

Questions (21, 22)

Eoin Ó Broin


21. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government when the new affordable housing scheme will be published; the income limits of the new scheme; the local authorities which will be using the scheme; when it will be available for applications; the targets for the number of affordable rental and affordable purchase homes to be delivered in 2019, 2020 and 2021; and the number of such homes to be delivered in the Ringsend SDZ and the various pathfinder sites across Dublin city and county. [8670/19]

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Darragh O'Brien


22. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government when he will publish regulations for the affordable purchase scheme; and if he will make a statement on the matter. [8292/19]

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Oral answers (30 contributions) (Question to Housing)

Will the Minister give the House an update on the affordable housing scheme that his Department officials have been working on? I ask, in particular, for as much detail as possible of income limits, eligibility, price, if such information is available, for renters or purchasers, and a timeline as to when the scheme will be introduced. There is a degree of frustration among councillors in Dublin City Council, for example, keen to progress a number of affordable housing projects. Those councillors are being advised by officials that the absence of a statutory scheme is slowing down progress. Any update the Minister can provide will be most welcome.

I propose to take Questions Nos. 21 and 22 together.

Part 5 of the Housing (Miscellaneous Provisions) Act 2009 provides a new statutory basis for the delivery of affordable housing for purchase. The Act itself contains significant detail on the new arrangements, reducing the extent to which regulations are required. Insofar as regulations are necessary, the most immediate requirement is for regulations dealing with the making of schemes of priority by local authorities. I will be signing regulations dealing with that issue shortly which will allow local authorities to finalise their schemes of priorities by June, as required. Further regulations and detailed guidance will issue to local authorities in the coming weeks.

The new affordable housing scheme is targeted towards low to middle income first-time buyer households, with incomes of up to €50,000, and €75,000 in the case of single and dual applicant households, respectively. The priority areas for the operation of the scheme will be influenced by the economic assessments local authorities were asked to carry out on affordability issues in their areas. The examination of assessments submitted will be finalised shortly. The new scheme will be set in the context of moderating growth in house prices and rental levels in the market and will complement other key Government affordability initiatives. These include the Rebuilding Ireland Home Loan, which has seen 575 loans to a total value of some €107 million drawn down to date, and the Help to Buy scheme, under which there have been nearly 10,000 applications, to a value of some €142 million, approved.

The affordable housing scheme will be open to applications as projects are delivered. In that regard, significant delivery is to be achieved through the €310 million serviced site fund, SSF, under which at least 6,200 affordable homes are to be supported over the next three years. An initial ten projects have been approved for €43 million of funding under the first call for proposals under the SSF. A second call will issue shortly and the first homes are expected to be delivered next year. In addition, some 2,350 affordable homes will be delivered on mainly publicly-owned lands being supported through the local infrastructure housing activation fund, LIHAF, while 5,600 further homes will benefit from a LIHAF-related cost reduction. The work of the Land Development Agency will also be of crucial importance in delivering more affordable housing. The initial portfolio of sites the agency has access to will have the potential, over the short to medium term, to deliver 3,000 affordable homes in line with the Government policy of achieving 30% affordable housing on State lands generally.

In parallel with this, the Dublin local authorities continue to progress a number of other significant housing projects on publicly-owned lands, including the redevelopment of O'Devaney Gardens and a site at Oscar Traynor Road in Dublin city, yielding some 250 affordable homes, and 380 cost rental homes to be delivered between projects at the former St. Michael's Estate in Inchicore and at Enniskerry Road in Dún Laoghaire-Rathdown. The timing of delivery under these projects is contingent on the completion of planning and procurement in the first instance, but the local authorities are working to achieve delivery as quickly as possible.

In relation to the Poolbeg West strategic development zone, SDZ, the planning scheme for the area included provision for approximately 550 affordable homes. Delivery of these homes was to be arranged by agreement between Dublin City Council and the landowner and I understand that discussions in this regard, although not yet complete, are at an advanced stage.  As Deputies will be aware, there is currently an appeal to An Bord Pleanála in relation to the planning scheme for the SDZ.  Progress on development of the site is therefore dependent on the timing of the board's decision.

Last year, the ESRI, in conjunction with the Department of Housing, Planning and Local Government, published important research on housing affordability. While it was found that overall 32% of renters and mortgage holders were having affordability issues, in the bottom 25% of income earners, it was found that 75% of those households were struggling with rent and mortgages. That demonstrates the scale of the problem. The research also clearly identified that this was not a recent phenomenon but something in place since approximately 2002, the date to which the research dated. We need to hear as well when these units will be delivered. For example, could we start to have annual targets, as we already have with social housing, for cost rental and affordable purchase? Could that also be broken down by local authority?

We need to start knowing the prices as well. For instance, we are hearing the price for Enniskerry Road will be 80% of market rent. That is nowhere close to affordable for the income brackets outlined in the new affordable housing scheme. The Minister might also clarify another issue I am concerned about. I welcome the affordable housing scheme the Minister is going to publish. Will it, however, only deal with purchase and not cost rental? My understanding is that local authority managers would like some clarity on that matter as well. At this stage, we would like to know when the units will be ready, what local authority areas will they be in and what will the price be to rent and buy.

On the first part of Deputy Ó Broin's question, if we examine the different schemes in place now, we are talking about delivering about 29,000 affordable homes. That is growing and work is happening in the Department to build that pipeline out. I refer to a pipeline similar to what is in place for social housing targets under the Rebuilding Ireland programme. We are going to do that. We are going to have targets for local authorities for the delivery of affordable homes to purchase and to rent. It will draw in the schemes currently in operation. That is happening now and it is going to be more ambitious than the 29,000 affordable homes currently in the system.

I turn now to cost reduction for renters. On cost rental we are talking about 15% to 25%, depending on how the scheme has been funded, what land was used, the interest rate at which the finance was secured and other factors that also play a part. That will be over the lifetime of a person's tenancy, whether that is five, ten, 15 or 20 years.

In our models, the cost reduction with respect to the market rent grows to about 40% over time because the market rent continues to increase at market rates while the cost-rental rent does not. It may be linked to the consumer price index, CPI, or perhaps another much lower metric. We are trying to provide rent certainty over that period.

I thank the Minister. I am glad we are discussing this again. I have raised this issue with the Minister on a number of occasions. As the Minister is aware, Fianna Fáil made the delivery of an affordable housing scheme an absolute priority in the budget negotiations and secured €310 million over the next three years to kick-start this scheme. I am pleased that Sinn Féin has belatedly come on board and recognised the need for affordable purchase because that party opposed this very thing in the Dáil last May and opposed the budget as well. That said, we are all in agreement that there is an urgent need for the delivery of affordable homes. House prices are 90% higher than they were in 2012 and home ownership rates have dropped to 67.6%, the lowest level since 1971, while rents are soaring. We need the option of affordable purchase and affordable rent. When will the Minister actually publish the regulations? He reintroduced Part V after last June. When will the regulations will be published and when will we proceed with building affordable homes on State-owned land?

I thank the Deputy for the follow-up questions. The affordability schemes were already there but I very much appreciate Fianna Fáil's support for additional funding for the existing affordability scheme and the recognition that it is a good scheme that will work to delivery affordable housing. Fianna Fáil's support for Rebuilding Ireland is very welcome in that regard. As for the provision of affordable housing-----

The Minister is being a bit disingenuous there.

-----several schemes already were functioning very well. The Rebuilding Ireland home loan is more successful than anyone anticipated.

It does not bring affordability.

Just under 10,000 people have been able to purchase their first home through the help-to-buy scheme, which is fantastic. Other things are also happening, as I referenced in my first reply.

On the regulations for priority of access to affordable homes or schemes, it is unfair to suggest the fact that the regulations have not been finalised is delaying anything because we already have awarded €43 million in funding for the first round of sites. We have finalised the second round of sites and we are doing another call now. We have also received the economic assessments. I would like to give the Dáil the current proposed regulations in respect of the order of priority. I seek input from Members as to whether it is the appropriate order of priority for such a regulatory scheme.

I am not sure how the time works when two priority questions are grouped together.

I do not know either.

Do people have time to contribute again?

Both Members may ask a supplementary question.

The Minister is being deliberately disingenuous in part of his response there. The Fianna Fáil affordable housing scheme is the one we have actually pushed for.

The Fianna Fáil affordable housing scheme?

That is the scheme the Minister has not yet delivered. We had to drag €310 million out of a kicking and screaming Fine Gael. People are interested in knowing when they can apply and buy affordable homes. While the Rebuilding Ireland affordable home loan is a welcome product, I have said that publicly before, it does not deliver affordability in itself. It is an affordable product but it does not do anything vis-à-vis house prices, as the Minister is aware. It is not an affordability measure as such but helps people make affordable repayments. We are talking about affordable homes and a shared ownership arrangement with an equity stake held by the State, particularly on State-owned land. That is what we have been driving for.

I understand that nine local authorities have responded to the initial call. How advanced are those specific landbanks? I would welcome the Minister publishing the draft regulations in order that we can debate them here in the Dáil with input from all parties. This is a major part of the housing crisis. People are consigned and condemned to a rip-off rental market with no hope whatsoever of ever owning their own home. That is the situation for a whole generation of people. We will work with anyone to deliver a scheme that works, including schemes that have worked in the past but can be improved upon. I seek a timeframe. As I said, I will work with the Minister to deliver it and to get this scheme launched this year.

Is Deputy Ó Broin's question similar?

Perhaps. It is on the same subject.

The Minister can answer the two questions.

I have two supplementary questions. First, can the Minister clarify whether the regulations he has been speaking about will cover the cost-rental model, as well as affordable purchase? I have a genuine concern with the way he is structuring the financing of cost-rental projects. Because the model involves paying down the loans over 25 or 30 years, the starting rents are simply too high. Unless people's salaries increase substantially over the first five to ten years of their tenancies, they will not be able to benefit from what the Minister is calling a market price reduction. It would be much more sensible to extend the use of the capital advance leasing facility, CALF, to approved housing bodies as a soft loan from the Government to supplement the European Investment Bank, EIB, loans. That would allow the loans to be paid down over a period of 40 or 50 years, which would allow starting rents that would have no relationship with the market but could be genuinely affordable for families with modest incomes according to the Minister's own criteria. I refer to starting rents somewhere between €700 and €800 per month, instead of what we are going to see; in Dún Laoghaire, 80% of market rates would mean rents of €1,500 or €1,600, which is not affordable. There is a facility there already, namely, CALF. It just needs to be extended to the cost-rental model. I would strongly welcome annual local authority targets for all the schemes. Can the Minister give an indication of when he intends to publish those?

I thank both Deputies for their follow-up questions. Again, I thank Deputy Darragh O'Brien for his support for Rebuilding Ireland and the Rebuilding Ireland home loan. It is really welcome to hear that.

The Rebuilding Ireland home loan is a decent product.

I also thank him for supporting the serviced sites fund for affordable housing, which was in existence before the budget. The idea of using local authority land was not Fianna Fáil's idea, because it was not Fianna Fáil's practice in the past.

The Government has not done it.

It was our way of ensuring security for the provision of affordable housing. That is a fact on the record. I was in the meetings too.

The Government has not delivered a single affordable home.

Deputy Ó Broin's questions concerned the cost-rental model and financial modelling. A lot of work has been done with the EIB and the National Development Finance Agency, NDFA. Some of it is site specific and some of it is more general. This is absolutely not going to work if the rents are not affordable. We understand that. At the moment we are doing a lot of financial modelling around the Enniskerry Road site to see what starting rent we can lock in before it grows to a 40% cost reduction over time. The Deputy is aware of how important the cost-rental model is to me. It is something I want to see in this country so I am keeping a very close eye on the different schemes we have.

I have the order of priority for access to the scheme. In the first instance, this relates to affordable purchase. Once people apply, the first question will be whether the housing is suitable for their needs. If the applicant is a single person but the houses becoming available are three-bedroom homes, it will not be. The next criterion will be whether the person has been resident in the housing authority area for the 12 months immediately preceding application. The next question will be whether a household member is attending an educational facility within a certain distance of the homes concerned, then whether a household member is working within a certain distance of the home concerned. The next criterion is the date on which the application was made.

That is the current order of priority in the regulations. I ask people to consider those criteria and to come back very shortly on whether it is the right priority order. I believe it is, but I want to make sure people are happy with it.

The Minister for Finance, Deputy Donohoe, said in his budget speech that he would review the income limit of €75,000 for a couple. Has that review happened? Is it happening as part of this?

The limit is €75,000 for a couple and €50,000 for an individual. That has not changed.

The Minister for Finance said he would review it.