Dáil Éireann Debate, Thursday - 3 March 2022
111. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the way that the cost rental equity loan will deliver affordable cost rental homes in Dublin city; and if he will make a statement on the matter. [12316/22]
View answerWill the Minister confirm that none of the successful applicants for the second round of the cost rental equity loan, CREL, scheme involved projects in Dublin city centre? Will he outline what changes he is currently considering to ensure that this much-needed scheme is able to deliver homes in Dublin city centre and in the other areas in need of cost rental accommodation?
The cost rental equity loan funds approved housing body, AHB, development of cost-rental homes through low-interest loans over 40 years for up to 30% of delivery costs. We have had two calls for proposals to date, with a major focus on delivery in 2022. We set parameters specifying that proposals submitted must see homes being tenanted this year. There was one application from Dublin City Council, DCC, that did not meet that criterion. We expect it to come in again. To explain what we will be doing in this regard, I will be opening the call to all local authorities and it will refer to post-2022. I will open the call this year and it will look to development in 2023 and 2024. I expect that DCC is working on some proposals in that context as well.
Overall, 911 homes have been approved for funding, with the first 65 occupied by tenants last year. The current pipeline for delivery this year is nearly 700 units, and that will increase. The most recent vacancies have just been advertised by the Tuath AHB, in Parklands in Citywest. It is a development of 44 two-bedroom apartments, with rents ranging from €1,200 to €1,300 per month, which is way below the market rent sought in the private sector. CREL properties have so far been delivered as turnkeys due to my determination to respond in the short term. That is why I set this criterion for near-term delivery. As I mentioned to Deputy Ó Broin earlier, however, I am providing more flexibility in the open call to allow all local authorities, including DCC, to make new proposals and this will result in a better pipeline.
Specifically concerning DCC, we had one proposal for the second call, but that did not meet the criterion for delivery this year. We do have other examples in Dublin, to which I will return in my supplementary response.
I have no objection to the use of turnkeys in the short term while a pipeline of development of affordable cost rental homes by AHBs and councils comes on stream. The difficulty, though, as the Minister is aware, is that the price of purchasing turnkey properties in Dublin city centre means it is not possible to deliver the affordable element of the cost-rental proposition. Therefore, I have a specific question. Is the Minister actively considering any amendments to the cost rental equity loan scheme that would provide additional flexibility in the short term for the turnkey acquisitions?
There is a real problem, in the sense that the Minister is right in respect of there being 716 cost rental units in the pipeline for this year, according to his officials, but half of those are units that were funded and agreed in principle in the context of last year's funds. In fact, therefore, this year's additional cost-rental provision is about the same as what was meant to be delivered last year. None of those units, however, is in the city centre. What is the Minister considering to try to ensure that some cost-rental homes could be delivered at genuinely affordable prices in the city this year and next year?
It is a new scheme and a new call and it is important that we recognise that this year we are going to have hundreds of families in State-backed affordable cost-rental units with rents up to 40% and 50% below the market rate. It is something that is most welcome. Equally, just to be clear, when I referred to turnkey units, many of these properties being developed are ground-up turnkeys. There are not being purchased from someone else just to provide cost rental homes. These turnkeys are being developed from the ground up. There are issues with costs and particularly so in our cities, in Cork and in Dublin. Lancaster Quay will see the provision of our first tenanted cost-rental apartments in the heart of Cork city in quarter 3 of this year. They will be tenanted this year.
I am, however, looking at some changes in this regard and particularly concerning the management fees. The Government is providing generous grants through the affordable housing fund to the local authorities. Therefore, I envisage that DCC will be coming forward with further proposals in the open call to come for cost rental provision. We already have the projects at St. Teresa's Gardens, which is an important one, and at Emmet Road, and we will have more questions on this later. We also have our own projects which I want to see developed by our local authorities and we are going to do that.
With the greatest of respect Minister, any arrangement concerning management fees is not going to deal with the central problem now being experienced by Dublin City Council which, of course, is the cost of units that are acquired. Whether those turnkeys are developed from the ground up or are at any other stage of development, the cost is more than €400,000. As the Minister is aware, there has been some media commentary regarding correspondence between him and Bartra, in the context of the company seeking to charge somewhere - we do not know the full figures - between €400,000 and €440,000. Under the current scheme, that would mean cost rents of €1,600, €1,700 and €1,800 a month.
Neither the Minister nor anybody on the Opposition benches would support that.
My specific question, which I will ask again, is whether the Minister is looking at any further changes to the way in which the cost-rental equity loan is currently operating to ensure the delivery of affordable cost-rental in Dublin city this year and next year. So far I have not heard the Minister indicate that he is.
Let me be very clear. We are going to be delivering cost-rental units in Dublin city.
Will that be this year or next year?
As I said, what I wanted was short-term delivery. I want people in homes this year. As a result, I set the parameters around the call to the local authorities and AHBs to bring proposals to us whereby the units could be delivered this year. That is what I wanted. Dublin City Council had a proposal that would not be delivered this year, and I stated that it would not be included in the call. I look at all these proposals with my colleagues. There will be further proposals and we will deliver cost-rental at scale. We want to deliver 18,000 units during the lifetime of Housing for All. It is a new tenure of housing and, of course, the scheme will evolve. We have the first 65 tenants in place.
I should be clear that when I mentioned management fees, I was referring to the managing costs and how we look at managing cost-rental versus what is done in continental Europe. There could be significant savings, and I am looking at some changes in that space. I will report back to the House or the committee when I do that. I will keep Deputies advised of it because there could be significant savings in the management of these units that will help to drive down rental costs further.
