I move amendment No. 6:
In page 6, to delete line 35 and substitute the following:
“(iii) an area of the site greater than 0.05 hectares is vacant or idle,”.
Vol. 886 No. 3
I move amendment No. 6:
In page 6, to delete line 35 and substitute the following:
“(iii) an area of the site greater than 0.05 hectares is vacant or idle,”.
I move amendment No. 7:
In page 7, to delete line 3 and substitute the following: "(i) an area of the site greater than 0.05 hectares is vacant or idle, and".
I move amendment No. 8:
In page 7, to delete lines 4 to 7.
Amendments Nos. 9, 12, 15, 16, 18 and 19 are related and will be discussed together by agreement.
I move amendment No. 9:
In page 7, line 17, to delete "1 January 2017" and substitute "1 January 2016".
The amendments are about the time factor in terms of the register of vacant sites. I do not know why we have to wait until January 2017 and, as such, we have put down a series of amendments to change the provision to 2016. I do not know the purpose of waiting so long. This has been a problem for many years. Amendment No. 19 relates to the requirement in section 15 to the effect that the vacant site levy shall be payable in arrears each year beginning in 2019, and seeks to bring that back to 2018. I am not clear why this is not being brought forward more quickly, as it could be. Perhaps it is because the Government wishes to buy the election.
This provision could be brought forward more quickly.
I understand that the wheels of bureaucracy move slowly and everything takes time but we all know we are able to make things happen more quickly when we really want to do so. The Minister of State might explain why it would take so long to put this provision in operation. The timeframe for bringing it forward seems very long.
I am opposing amendments Nos. 9, 12, 15, 16, 18 and 19 as collectively they propose to bring the implementation of the vacant site levy forward by one year. Deputies have asked me to explain the reason for the timeframe set out in the Bill and I am happy to clarify it.
There has been extensive engagement between officials of my Department and the Attorney General's office in developing the proposals for the vacant site levy from the general scheme to the published Bill. While in certain circumstances the Constitution allows the State to delimit the property rights of individuals in the interest of the common good, such restrictions on landowners' property rights must be reasonable and proportionate to the ends that the legislation seeks to achieve. In particular, measures such as the vacant site levy must be introduced in line with the principles of fair procedures and administration.
In this regard, the Bill provides the timeframe for key actions by the planning authority in the implementation of the levy as follows: a register of vacant sites shall be established by planning authorities beginning on 1 January 2017; annual notices to owners of vacant sites shall be issued by 1 June 2018 in respect of vacant sites on the register on 1 January 2018; and the actual application of the vacant site levy shall commence in 2019, but it is important that this initial levy charge will be in respect of the previous year, which is 2018.
The individual dates within the overall timeframe are set with a view to allowing appropriate time and notice for each key action. The deferment until 2019 of the commencement of the charging of the levy is intended to allow site owners sufficient time and opportunity to initiate development or alternatively to sell their sites in order to avoid becoming liable to the levy, which ultimately facilitates the achievement of the primary objectives of the measures in the Bill. While the bringing forward of the various dates, as proposed, by which specific actions shall be undertaken or commence may, on initial consideration, seem to be justifiable, it is important that an appropriate degree of proportionality and reason be applied in the implementation of the levy provisions. I am satisfied that the timeframes in the Bill, as proposed, are reasonable and balanced, while allowing site owners the necessary opportunity to regularise their affairs before becoming liable to payment of the levy.
In this context, the Minister of State might consider the timeframe he allowed for people to register their properties for the property tax. I acknowledge that one element of his argument has merit, namely that it would take a certain amount of time to offload a site if one wanted to sell it rather than pay a levy. The Minister of State spoke about giving people a fair opportunity to deal with the new measure and to come to terms with it because of property rights and so on. A longer period is being allowed for this measure than people were given to register their properties for the property tax. To treat the two measures differently is a little unreasonable. Likewise, with respect to separate legislation, a landlord will become liable for a tenant with regard to water charges and the landlord will be given 20 days to re-register a new tenant. If I was a landlord-----
That is a separate matter.
I know, but we are talking about time limits-----
----fairness and giving people time to deal with something. I would insist, a Cheann Comhairle, that there is a relationship between both issues but I am just making the point that sometimes we seem to be able to give people plenty of time in terms of fairness but not quite so much at other times.
It might be a problem for the local authorities to deal with these issues in a particular period, but because we have such a severe housing crisis, and this measure could leverage many more properties and much more action in terms of housing, what is being asked in this amendment is reasonable.
Does the Minister wish to respond?
I will respond briefly. The primary objective of this Bill is to stimulate activity on sites that are of high potential in areas of high demand. The objective, essentially, is not to put levies on sites but to stimulate activity. It is a carrot and stick approach, and this is the stick element. I believe it is fair and reasonable that due process be allowed for any owners of sites. We must remember that many of these sites may have been lying idle for many years and it takes time for local authorities to reassess their local town and city development plans, identify these sites and then engage with the various stakeholders and the owners involved. We have to allow for due process in terms of allowing sufficient time for the owners to come back to the local authorities with their plans for those sites. We all know as public representatives that it takes time from concept to design to planning permission to construction. We believe that by flagging these levies now the establishment of the register will go ahead and they will be charged from 2018 but they will apply the following year. That is a reasonable approach and it gives due process and time for the owners of these sites to come forward with proposals on how they propose to bring them back into beneficial use. We believe it is adequate and appropriate in the circumstances.
Can I come back in?
Deputy Ellis moved the amendment. A Deputy can only speak twice except the person who moved the amendment. I am sorry but I cannot allow Deputy Wallace back in.
I move amendment No. 10:
In page 7, to delete lines 26 to 37.
I am happy to allow Deputy Wallace deal with this amendment.
We have previously discussed the principle of this amendment, at which time I made the argument that any land purchased for the purpose of landbanking should be taxed. I was taken aback by the Minister of State's response on the last occasion when he said that the objective of this Bill is not to put levies on sites but to stimulate activity. In terms of the housing market in Ireland over the past 30 years, landbanking has been the biggest problem. The Minister of State said a levy on landbanking is being introduced to stimulate activity. In my opinion, the desire of the Government should be to stop or, at least, discourage landbanking.
It was mentioned earlier that not only do we have land banking, but we also have shadow landbanking which is long term. In many cases, people are buying land at just above the agricultural price and holding on to it for between ten and 15 years. If this issue is not addressed now, we will face similar problems in the future. As long as landbanking continues unhindered by Government policy, it will be encouraged and the result will be a small cartel of people controlling the price of sites. That, to me, is a major problem.
During the height of the boom, an apartment cost up to €400,000, some €200,000 of which was the site value with the remaining €200,000 being the construction cost. Even though it cost only €200,000 to build the apartment, the builder or developer had to charge more than €400,000 to cover the cost to him of the site. That is a fact. A site that had planning permission for 20 apartments cost €4 million, which equates to €200,000 per site per apartment. For the developer to make a profit, he had to charge €400,000 per apartment. If it had not been possible for him to sell the apartments at that price, the bank would not have given him the money in the first instance.
The Government needs to take on board that the biggest problem in this area is landbanking. To the best of my knowledge, the Kenny report was published in 1974, which is a long time ago. One of the proposals in that report was that one could only charge 25% more than the price for agricultural land for any land. That would be difficult to apply. I believe it is possible to apply a ruling to the effect that only double the price of agricultural land could be applied to any land. This would require the Government to establish a market price for agricultural land, with double that price being applied to land that was earmarked for zoning or already zoned for development. In refusing to regulate this area, the Government is driving up the cost of property in Ireland.
Reference was made to all of the great bargains in the property market during the recession, which was the case to a degree. However, as members are aware, the market is quickly recovering. We are once again in a situation whereby most young people cannot afford to buy a home. Last night, I referred to the impact of the Central Bank ruling in that regard. I agree with that ruling, which is sensible and sustainable. It ensures that people are not able to get crazy mortgages that they cannot afford. I do not disagree with the Central Bank on that point. However, the State must examine the effect of the Central Bank ruling in the context of the landbanking issue. The price of land now will not be cheap because of the huge prices people paid for it in the past. This is one of the reasons there is little activity in the private sector. If, five years ago, I obtained planning permission for 50 apartments on a particular site at a cost of €100,000 per site per unit, I could not possibly build on that site today because to do so would be to acknowledge that I paid too much for it. Taking into account the cost of the site and the cost of building each apartment, I would not get any return for my money. The only thing I can do is sit on that land. If I cannot meet the interest repayments, the bank has to make a call on whether to repossess the site and fire sale it or nurse me through the problem until such time as I can pay. That is a decision for the bank.
The Government could address the issue of landbanking by way of the introduction of a measure that would, at least, stop more land going into this golden pot which allows the price of property in Ireland to escalate. The current price of an apartment is between €250,000 and €350,000, the knock-on effect of which is high rents. If I own 20 apartments that are worth X amount, I might also owe X amount on them and as such I will be under pressure to charge sufficient rent to meet the repayments on what I owe. The price of housing has a direct impact on the rental market. This is all part of our housing crisis. The problem starts with landbanking. The Minister of State said the focus of this Bill is to stimulate activity. The Government needs to think again about how it is going to address the issue of landbanking. I am aware of the problems highlighted in the Kenny report around property rights in the context of the Constitution. However, this issue needs to be addressed.
I am not saying it will be easy. On the contrary, it will be a challenge to deal well with the issue, but we must start somewhere. Whoever does it, whether this Government or the next, there will be a great deal of opposition from vested interests. As we all know, challenging vested interests is never easy, but somebody has to do it. Until that happens, we will continue to have periodic housing crises. That is a given.
I remind the Deputy that the section to which this amendment relates concerns the register of vacant sites.
That is the next one.
No, it is this one.
We are talking about a planning authority or appeals board determining whether or not there is a need for housing in a particular area.
The section concerns the register of vacant sites.
My amendment is to delete lines 26 to 37, inclusive. I realise the relevant section is to do with the register of vacant sites. I disagree with the different loopholes that are being allowed, which is why I have spoken against it.
There is a balance to be struck between people's constitutional right to purchase property - in this case, a site - and hold on to it for a period of time. Looking back at what went on in the property market in recent years, we see that much of the activity was speculative, that is, it was designed to make a short-term profit. The only profit that was made was on the backs of those people who wanted to have a house located on a particular piece of land. It was the same in Waterford as it was in many other cities and counties. Deputy Wallace is 100% correct that if we allow lots of land to be bought up by people who are hoping to get five or six times what they paid in a few years time, then we are falling into the same trap into which previous Governments fell. The party that was in power for 14 years allowed all this speculation and landbanking to take place.
I acknowledge there is a difficulty for the Minister of State in that this issue touches on the constitutional right of citizens to own property. It is very difficult to find a way of imposing conditions on how long a person may own a piece of land and what they can do with it. We must, however, find some way to prevent what happened in the past, where so much land was left aside for no other reason than to make a profit on it. That is what Deputies Wallace and Ellis are seeking in this amendment. There must be some mechanism whereby we can prevent speculation without interfering with the right of the individual to buy land and do with it as he or she wishes.
I have no doubt the Deputies are genuine in the concerns they have raised. I wish to make crystal clear, however, that the mechanisms and provisions set out in this Bill are concerned with targeting the urban regeneration of city and town centres where vacant sites are a blight on streetscapes and are not being utilised to their full potential. We all know where they are in our own towns or cities. The first objective of the Bill is to stimulate activity in the housing sector. If that activity is not taking place, then the vacant-site levy will apply. That is what I mean by the primary objective of the Bill being to stimulate activity. It is a perfectly logical approach to take because, unlike the landbanks to which Deputy Wallace referred, these are sites that already are served by public infrastructure. They have enjoyed investment out of the public purse already and can, therefore, be turned around relatively quickly. They are sites in zoned areas in locations of high demand. That is where the focus of this Bill lies.
Taking account of what the Deputy is saying about landbanks, if we learn only one thing from the past it really should be an understanding of why the property crash happened. In that context, a number of measures have been taken by this Government to ensure we do not go back to the boom-bust property cycles of the past. For the first time ever, we have an independent body, the Housing Agency, engaged in analysing the country's demographics and growth patterns, where the demand is and where infrastructural deficits are. We are utilising its findings to inform public policy and decision-making. That was never done before. In the past, we had a lot of ad hoc development happening around the country, with local development plans and local area plans sprouting up all over the place and huge tracts of lands being zoned. That will not be allowed to happen under the new regime. Instead, we are utilising informed decision-making methods.
There are several methods for dealing with the landbanks to which Deputy Wallace referred. We are already seeing huge tracts of land being dezoned around the country. It is our intention, moreover, to bring forward another planning Bill in the autumn. That might be the more appropriate legislation in which to seek to address the concerns expressed by the Deputy around landbanks and how they are impacting on housing and property infrastructure.
I do not propose to accept amendment No. 10. Deleting section 6(4) would remove critical criteria and provisions that underpin the legislation, which, as I said, is essentially concerned with stimulating activity in the housing sector. The section sets out the specific criteria to be used by a planning authority, or An Bord Pleanála on appeal, for determining whether or not there is a need for housing in an area, with reference to the housing strategy and core strategy of the planning authority. The criteria include house prices and the cost of renting houses in the area, the number of households which qualify for social housing support and have specified the area as an area of choice, and whether the number of houses available for purchase or rent in the area is less than 5% of the total number of houses in the area. These provisions will help to deliver more houses and ensure more sites are turned around and put back into beneficial use. I have explained the focus of the Bill and why we cannot accept the amendment. We will consider the wider issue to do with landbanks as part of the new planning Bill to be introduced in the autumn.
The Minister of State is saying these particular measures will help to stimulate activity in the housing sector. However, requirements such as factoring in house prices in an area will effectively see the invention of a great deal of bureaucracy. It would be much cleaner and involve a lot fewer loopholes if my amendment were adopted. As to stimulating activity, I maintain that in the present climate, if legislation does not initiate some really dramatic change, it will simply remain unappetising for the private sector to start building again in a serious way. People will build one-off houses, of course, and there is a whole separate discussion to be had about how much of that should be allowed. The worst of the housing crisis is in Dublin and I estimate that fewer than half the units completed in the city this year will go for sale. In the case of most of the major developments by the likes of Kennedy Wilson, there is no intention of putting the units up for sale. Kennedy Wilson has no appetite for that, but it does, because rents are so high, have an appetite for going into the rental market. Unfortunately, a whole range of factors that are relevant when it comes to stimulating activity are not being addressed under this legislation.
I move amendment No. 11:
In page 8, between lines 21 and 22, to insert the following:
"7. (1) Owners of sites greater than 0.05 hectares that are vacant or idle have a responsibility to register their interests with the local authority before 1 January 2016 or face a fine of 3 per cent of the site market value, for the year 2016.".
Under the provisions of the Bill, all the so-called vacant sites will be identified by the relevant authorities and the levy applied. I remind the Minister of State that when the property tax was introduced, there was no suggestion that somebody would go out and identify all the properties liable for the tax and make their owners register for it.
The onus was put on people to self-register. People were told they were obliged to register their houses. I do not understanding the thinking behind not asking the owners of vacant sites to register and giving them a certain period within which to do so. I would not like the job of looking for them all, but I imagine the sensible thing to do would be to put pressure on the owner to register. If someone tried to make the argument to me that not everybody will know whether their sites are included, I would forgive them, given that there are so many loopholes for which people might think they qualify. I would put pressure on everybody to register their sites, explain the circumstances involved and give the State authority any information it might need.
A lot of self-certification takes place, something with which I disagree. There is self-certification in building regulations, which has not worked but is continuing. The new system has simply increased bureaucracy. We are still not checking to see whether buildings have been built correctly. Architects who have not even been on site are expected to sign off on things that craftspersons, engineers or steel fixers have done on site. A four-metre beam which is supposed to have 32 mm bars at 100 mm centres at the top, bottom and middle, but instead has a 20 mm bar on the side over which concrete is poured, will stay in place. The building will not fall down, but if the bar ever comes under the pressure it was designed to take it will crack. Will an architect see that? He or she does not have a prayer. He or she is not a genius and can only see what is in front of him or her. As the bar has been covered in concrete, it will never be seen. I disagree with that end of self-certification. There should be supervision on site by the local authority in the shape of clerks of works which were in place years ago. The system made sense, but it was a cost to the State because they had to be paid. The costs should be passed on to builders and developers. We will continue to have problems in construction until independent supervision controlled by the State is reintroduced in the form of clerks of works.
I would like to hear a good argument from the Minister of State as to why he should not ask the owners of vacant sites to put their hands up and say they have sites in certain locations. They do not even need to know the size of each site, only whether it is more than one acre. The authorities could examine sites and determine whether they qualify for the site levy. Why should we not put the onus on property owners?
I support the amendment. I agree with Deputy Wallace that there should be an onus on owners to register sites. Such an onus will entail recording what a site is used for and whether it is vacant or used for some activity. It is a sensible thing to do.
What Deputy Wallace proposes does not compare like with like. He compared the local property tax with the vacant site levy. To be clear, self-registration was an option for the local property tax because everyone was liable for the tax, whereas not everybody will be liable for the vacant site levy; it will apply only in certain cases, and selective criteria will apply. To expect everybody to understand the criteria that would apply and volunteer to levy themselves is untenable and would not work.
In a similar vein to the derelict sites levy or other processes, local authorities are housing authorities and, as such, when developing town and city development plans, are obliged to identify potential sites in their jurisdiction and then go through the process outlined to apply the designation as appropriate. The local authority, as the Deputy said, includes elected members, is the closest body to citizens, and is the best place to address the issue. As I said, they understand their development plans, know how their areas will develop and know what their priorities are. Therefore, they are best placed to identify these plans. Deputy Ellis mentioned that there would be engagement. Once a local authority identifies sites, it will be obliged to engage with owners in a proactive way to determine what the plans for the site are, and due process will then apply. That is the way the system should and will work.
For those reasons, we will oppose the amendment. It is not practical and proposes an inappropriate and unworkable approach. The process as outlined involves very clear criteria, which means that local authorities can apply them in a consistent manner across the board where they feel designations are required. We oppose the amendment on that basis.
I find the Minister of State's argument irrational. He said people will not know whether their sites are eligible for the levy. They should first acknowledge their ownership and let the State decide whether they are eligible for the levy. I have argued that every site should be eligible and disagree with all the loopholes. A small percentage of those who own land banks will be caught. It has slowly dawned on me that this Bill is not designed to deal with land-banking. The Minister of State referred to another Bill in the autumn, but this is a missed opportunity to deal with land-banking, which is clearly not the aim of the Bill. He said its aim was to stimulate activity, but because NAMA has sold assets for less than half of what they cost to build, it will be difficult to get the private sector involved. I know people with development land who would love to build on it because they want to create work, be back in business and employ people who were loyal to them for years, but they cannot access funding because they cannot compete in view of the asset prices that have prevailed for the past couple of years. Apartments were sold in 2014 for less than half of what it cost to build them. I do not know how the Bill will stimulate activity. I do not accept the logic that the Minister of State thinks it is unworkable to ask the owners of vacant sites to state that they own them. That is not rational.
I do not see any reason why owners could not be asked to register. Local authorities could examine such registrations and decide whether it is appropriate to take action depending on replies. There would be a mechanism in place to check what was registered and whether the information was correct. I do not see the logic in the Minister of State's argument. Other people have to register for other things and I see no reason owners of properties should not do the same.
I move amendment No. 12:
In page 8, line 33, to delete "with 2018" and substitute "with 2017".
Amendment No. 14 is a physical alternative to amendment No. 13. The amendments will be discussed together.
I move amendment No. 13:
In page 9, to delete lines 13 to 21.
If a site has been bought for development and has been land banked, there should be a levy on it whether it is used or not. The practice of land banking is not being addressed otherwise. If I bought a site with five acres for development, do people honestly believe I would leave over half of that vacant and pay a levy? I would make sure it would be occupied in some form or another so that I would not have to pay the levy. This is just another loophole and arguing about whether a site is vacant, putting the onus on an owner to provide proof, would not even come into play if the scenario was not allowed to develop. If the land is being banked, nobody should be allowed out without the levy being applied. As I have said, land banking is encouraged otherwise.
My amendment is an attempt to stop developers or other people delaying or stalling through an appeals mechanism. On the face of it, that seems a tricky route as there are so many ways in which people can argue their case. The process must be much more straightforward. Allowing people to appeal is to give them time and leverage for delaying a process. We should employ the levy and then consider whether something can be appealed. There are too many ways out for developers, and I do not know how many times we have seen them argue about the use of land and whether it is a proper vacant site. We could get into a long and drawn-out process, giving developers far too much leverage.
To delete these sections of the Bill would, in effect, remove the appeal mechanism open to an owner on the designation of a vacant site. I have gone to great lengths to outline that it is important with respect to property rights in the Constitution that we have recognition of due process and fair and transparent procedures. The process as outlined in the Bill is clear with the criteria as outlined. We have to allow that if an owner's site is to be designated for a levy, an appeal mechanism should be available, as it is in any due process. If we removed that, we could weaken the Bill and leave ourselves open to judicial challenge. For those reasons, we oppose amendments Nos. 13 and 14, as they remove the critical provisions in section 9 outlining the mechanism open to a site owner to appeal to An Bord Pleanála regarding entry of a site to a register of vacant sites.
It is important in a measure like this that a clear and fair appeals mechanism is in place. In this case, the proposed amendments remove, in summary, part or all of the following provisions: the burden of proof on the owner to show the site is not vacant; the power of the board to determine if a site is not vacant and direct that it be removed from the register; and that the entry of a site on the register would not take place until an appeal is determined. These are fundamental provisions of the appeals process against the entry of a site on the register. It elaborates on how the appeal mechanism would work in practice, and without them it would not function. Therefore, I oppose these amendments.
Truth be told, somebody will some day have to address the issue of ownership and property rights in the Constitution. It seems to emerge on a regular basis as a reason for not doing the right thing far too often. We were looking at something similar when there was contemplation of implementing the findings of the Kenny report in the 1970s.
Some people would argue that our Constitution gives greater rights to property than it does to the individual. It does need to be addressed. It would be so much cleaner if, as I have argued before, we just set out to levy all land-banking, without any loopholes. It would do away with so much bureaucracy, it would be so much easier to determine, and there would be far less argument about it, but I can see that it is not going to happen today.
Does Deputy Ellis wish to speak again?
The Minister of State also has two minutes if he wishes to contribute. If not, I will ask Deputy Wallace how stands amendment No. 13.
I will press the amendment.
I move amendment No. 14:
In page 9, to delete lines 20 and 21.
I move amendment No. 15:
In page 9, line 33, to delete “1 June 2018” and substitute “1 June 2017”.
I move amendment No. 16:
In page 9, line 35, to delete “1 January 2018” and substitute “1 January 2017”.
I move amendment No. 17:
In page 11, lines 34 to 38, to delete all words from and including “where—” in line 34 down to and including line 38 and substitute the following:
“no market exists for the site.”.
Contaminated sites should be levied. If a site is not usable, then a developer should not just be sitting on it, hoping that someone will take it off their hands. This levy will encourage developers to sell to someone who may work to resolve the site's issues, or at least raise revenue to offset the damage caused by this loss of land in the area.
In a built-up area like Dublin, or in an old city, there will always be many contaminated sites. I have rarely bought a clean one. There was some element of contamination in most of the sites we bought in Dublin. Some were worse than others. Sometimes it was not a huge issue, but sometimes it cost up to €500,000 to clean a site before we could start excavating or piling. Any developer who buys a site in Dublin without checking the amount of contamination is very silly.
Contamination comes from many areas, but much of it has come from the tipping of waste over the years, particularly in in-fill sites. If there was space to tip rubbish, they used that space and they filled it. That is where the contamination usually comes from. It settled and more stuff went over it, including clay, and it might not have been visible, but if someone were buying land and paying too much money for it, they would want to be testing it out to see what contamination was in it. I remember getting caught once with a site up around the North Circular Road, where the contamination was severe and I had not realised it. It cost us about €500,000 to get rid of the contamination.
How will contamination be measured? What does "contaminated" mean? There are so many degrees of it. The Government is opening a hornet's nest. It is a good idea to bring in legislation that means builders will pay a levy whether the site is contaminated or not, because it puts the onus on the buyer to check how much contamination is in it so that he is not overpaying for a site that is contaminated. He is taking on a great deal of extra work before he can develop it and he must factor that in when he is buying it. That would be better than letting the land-banker, who might have held it for ten or 20 years, sell a faulty product. A contaminated site is a faulty product and if a person does not detect the contamination before buying it, he or she has bought a pig in a bag, which is not a great idea.
If the Government ensures all sites, including contaminated ones, are caught in the net of the levy, it will open people's eyes to the fact that a site may be contaminated and the buyer will have to pay the tax on it either way, so they will want to check it. There is a very simple way of testing it. If someone were digging out 4 metres, they would get someone to take a sample of no more than three or four inches, right down to four metres. They would bring it back up, send it away to be tested and then get the results. It is not a madly expensive process, but it is something people should do. I encourage the Minister of State to think again about that.
I oppose amendment No. 17, which seeks to amend the provisions in section 14, which provide the criteria by which the planning authority or tribunal may deem that a vacant site has a zero market value. The amendment proposes to delete the following criteria:
(a) no market exists for the site, or
(b) the site is situated on contaminated lands and the estimated costs of remedial works necessary in order to use or develop the site exceed the market value of the site itself.
This is the key point: we must have a realistic economic development cost for sites, as Deputy Wallace knows only too well. Some scenarios arise whereby the land is so contaminated that the remedial works necessary to bring it back to a proper development site would exceed the market value of the site. In the interest of fairness, the Bill is drafted to ensure that if there are contaminated lands that require remedial work to that extent, the levy provisions are as fair and reasonable as possible. That does not preclude the local authority from engaging with the owners of those sites and does not preclude them from working with the owners to have those sites remediated, but it recognises that if there is serious contamination and as a result the market value is zero, there is an opt-out for the levy on that particular site because of the issues associated with it. In the interest of fair, reasonable and proportionate application of the Bill, we oppose this amendment.
I have seen many sites over the years in which houses were even built on the sites of dumps. They have changed in value and with modern technology an amazing number of things can be done with certain sites. We have had sites where asbestos was dumped, but it was removed and the land was made available again. We must be careful not to exclude sites that could be very valuable and could be left lying for years when there are opportunities to get them up and running.
There are no other contributors. Does the Minister of State wish to add anything?
I recognise Deputy Ellis's concerns, but this exemption only applies where a market exists for a site and the remediation costs exceed the market value. If the remediation costs are way below the value of the site, there is nothing stopping the authority from designating the site and applying a levy. It is only where the market value is exceeded that this would apply.
I move amendment No. 18:
In page 12, line 1, to delete "with 2018" and substitute "with 2017".
I move amendment No. 19:
In page 12, line 7, to delete "in 2019" and substitute "in 2018".
Amendment No. 20 is in the name of Deputies Ellis and Wallace. Amendments Nos. 20 and 23 are related and will be discussed together. I call, first, on Deputy Ellis.
I move amendment No. 20:
In page 12, line 16, to delete "Subject to subsection (2),".
This relates to the amount of the levy. I will let Deputy Wallace take it.
I disagree strongly with the thinking behind this section. I was really surprised to see it in the Bill.
What percentage of banked land out there is not mortgaged? I would imagine it is low. As anyone who knows the sector well will confirm, if one had a site worth €2 million and one owed nothing on it, one would mortgage it to get some money. If I have an asset worth €2 million and I let it sit there, that would not be clever. One uses money to make money, if one is in this game. If one has such an asset and goes to the bank stating it is valued at €2 million, it would not be unusual for the bank, following independent valuation of it, to provide a mortgage of 75% of the asset. They would not give one 100%. They would allow for shrinkage. In the present market, they would probably only give 50% but I can confirm that ten years ago getting 80% was not a problem. When we built offices and restaurants and kept them, we did not just let them sit there. We would have had units worth, maybe, €1 million or €2 million. We would have been off our head to let them sit there and not get money for them that we could use to do other work. That is what we did. We mortgaged them so that we could do other development and we could build in other places with the money that we would get from it. Anyone who would own a valuable development site and not mortgage it would be a very poor businessman.
The only scenario I could imagine where those involved in the land-banking game would not have land mortgaged is probably those with what we would regard as old money and those who had cash down through the years who worked in a different way in business and never really adopted the modern business methods. However, it would not be encouraged by any financial adviser that one would have an asset worth serious money and not mortgage it so that one could get money to do other work and make further money with it. From a business point of view, it does not make any sense that a site, deemed vacant and eligible for a levy, will be free or partially free of a levy because of a certain mortgage on it. The majority of sites will be mortgage. That is a call an investor will make.
If it so happens that the site is mortgaged at close to the current market value because one might have bought it when sites were dearer and the value has come down, I would say the investor has a decision to make. If I was the bank manager who gave the investor the mortgage in the first place, I would say he or she must make a call as to whether it is in his or her interests to hold this site even though the mortgage on it is approximately equal to its market value, to hold this site and pay a 3% levy on it, or to sell it on. That is a call one makes; it is a business decision. One looks at the site's location, its potential and the markets. One looks at all that one can do with it. One might get someone to do up a scheme to see the site's potential. One garners as much knowledge about it as one can and makes a business decision. However, the idea that such a site would not be eligible for the 3% levy does not make any business sense. That is a mistake.
I am thrilled sitting listening to the developers' handbook.
For too long, in this country people have had to rely on the private sector to provide housing. Obviously, everything in this Bill reeks of that. In relation to when this vacant site levy will and will not be invoked, I had an amendment ruled out. The Government is actually reducing the levy on vacant sites and while I am thrilled to hear from Deputy Wallace about the way developers think, we need to introduce serious emergency legislation in this Dáil to deal with the emergency that is out there. Obviously, this will not deal with it.
Developers are sitting on land and we are in thrall to them to make it available for housing. Why not pass a law in this Dáil before the summer recess to compulsorily purchase all of these vacant sites at a nominal rate? That is the only way we will get our hands on the land that we need to provide housing in this country. If we are sitting waiting for developers, out of the goodness of their hearts, to provide it, it will not happen.
Everything that is in this legislation reeks of incentives, such as cutting development contributions to local authorities and making the market good for developers to suddenly provide us with housing, and it will not work. Developers are not interested. As has been outlined, they are only interested in profit. They do not have a social conscience.
Why are we throwing taxpayers' money at these developers in the hope that they will suddenly wake up some day and provide land or build houses? It will not work. Why is the Minister of State completely relying on it? There are people hoping some provision will emerge from this building some day soon that will build some houses. The Minister of State is responsibility for Construction 2020. There are no houses available. He is not building any and it has not gone unnoticed.
This Bill, that we are cutting and dissecting line by line, is ridiculous because the only way that we will get houses built in this country is the way they were provided in the 1970s and 1930s, that is, by funding local authorities to build them. Developers, even in the good times, would not leave aside 20%. They will not leave aside 10%. We will deal with that when those amendments come up. I will not intrude on that discussion. However, I am quite sickened here listening to all of these incentives that we must throw in the lap of developers that they might provide a few crumbs from their land banks. It is galling for people.
I am perplexed to hear for the first time a levy being called an incentive. A levy is a levy. That is clear to anyone. We are opposing amendments Nos. 20 and 23, which amend section 16 by removing the provision that a reduced or zero rate of levy should apply in certain circumstances. We recognise that some sites are in negative equity and that loans attach to same. In the interests of a fair, reasonable and proportionate approach, we recognise that difficult circumstances are faced by individuals who bought these sites during the height of the boom and that there is no gain in applying a levy. As I outlined, however, this does not stop local authorities from engaging with owners to establish the latter's plans for their sites and to incentivise within the authorities' development plans through zoning and other mechanisms the sites' beneficial use.
There has been extensive engagement between my departmental officials and the Attorney General's office in developing the proposals on the vacant site levy from the general scheme to the published Bill. The Bill provides that the levy should be applied at a flat rate of 3% of the market value of a site. In certain circumstances, a reduced or zero rate can apply. These provisions were included to help alleviate the financial burden faced by owners of vacant sites that are subject to site loans greater than 50% of their market value. Owners who purchased at peak prices in the boom years and whose sites have reduced in value arising from the property crash are examples of those likely to be affected. These legacy issues must be addressed.
The intention of the provisions in section 16 regarding the application of reduced or zero rates of levy is to ensure that the levy provisions are as fair, reasonable and proportionate as possible. Section 14 provides that a zero rate levy will apply where no market exists for the site or the site is on contaminated land and the estimated remediation costs necessary to use or develop the site exceed its market value. Therefore, I am satisfied that these provisions are appropriate and I oppose the amendments.
The Minister of State did not address my point that it would be irrational for landbankers not to mortgage their landbank assets. The Government is telling them that, if the mortgages are of a certain size, it will reduce the levy. I am baffled by how the Government will justify it. This is a no-brainer, another serious loophole, and I will be curious as to how many sites are caught in the so-called net that the Bill will introduce. It is more of a sieve than a net. Not many sites will qualify for the levy as presented by the Government.
The Minister of State made the point that the Government was trying to stimulate activity and that this provision was not directly related to landbanking, but it was presented initially as something that would deal with landbanking in some form or another. He must admit that this has zero to do with tackling landbanking. This missed opportunity is a disappointment.
I have called this an incentive because there are large incentives for developers throughout the Bill. The proposed vacant site levy, which the amendments address, will reduce the levy for developers with outstanding loans on or negative equity in their sites. Developers in NAMA, receivership or negative equity could be exempted. That is the sum total.
The lands in question are needed urgently. In fact, we should be taking them over. In my area of Dublin 15, for example, not one social house is due to be built by Fingal County Council, which covers an area of 100,000 people. However, NAMA has control of a number of sites where houses are being built or have received planning permission and are due to be built. None of these houses will come into the hands of people on the housing waiting list or workers who cannot get on that list and are priced out of the market. Despite this, loopholes are being written for developers.
The Bill makes retrospective the development contribution cuts that have been made by local authorities in order to incentivise developers. A number of cuts were made by Fingal County Council while I was a member of it before being elected to the Dáil a year or so ago. Loads of councils have made cuts. The Government is saying that this should be encouraged and councils should do more.
Relying on developers is a failed policy. Many of them are dysfunctional and not in a position to provide social or private housing even if we wanted them to. This provision will disappoint many people.
The Government's objective is to achieve a normalised construction sector following a large economic crash that affected every sector, but none more so than the construction sector, with an impact on housing provision and so on. The Bill is just one mechanism for addressing regeneration and housing provision in urban areas.
As to the wider debate on housing, local authorities are being provided funding to build again, to restore voids to use, etc. Approved housing bodies, AHBs, will also play a role. It would be negligent of us all were we not to recognise the issues of viability in the construction sector. The thrust behind reducing development levies is to take these issues into account where high, but previously appropriate, development levies are no longer appropriate. Levies affect construction's ability to deliver what we want, that being, houses. We cannot ignore this fact and are working to address it.
I outlined the landbanks issue to Deputy Wallace. He is well aware that local authorities have powers to zone their lands and development plans. They have dezoned land across the country where landbanks were inappropriately zoned and contributed to the crash. I welcome the fact that local authorities are engaging in sequential zoning in a planned and appropriate manner. This power is available to local authorities.
In this autumn's planning (No. 2) Bill, we will consider additional measures to address the genuine concerns raised by Deputy Wallace about the hoarding of land. We must be cognisant of property rights and the Constitution. We are opposing the amendment.
The Government is not challenging land hoarding with this Bill. The amendment addresses an aspect that must be changed if the Government has any appetite to challenge land hoarding. A number of large players controls many of the landbanks that are being hoarded.
It is amazing how so few people own so much of it. That has been the way for a long time. Most of the land we were building on in the boom time between 1998 and 2007 was purchased in the late 1980s. It was held and hoarded by a small number of guys before being sold on when the price was good and high. It was easy for them to have a cartel and to pull together in dictating the price of the land. This led directly to our housing crisis. Such crises will continue until measures are introduced at Government level to prohibit the hoarding of land for development or make such hoarding very unattractive. Sadly, this Government has not yet developed an appetite for the necessary measures. It is a terrible pity. Some Government will introduce such measures someday. We will continue to have housing crises until that happens. I do not think the measures that are being proposed to deal with the current housing crisis are sufficient to make a serious dent in the problem. Our housing crisis will continue for a while yet because the measures in question do not have the capacity to make a big difference.
Amendments Nos. 21 and 22 are out of order.
I move amendment No. 23:
In page 12, to delete lines 18 to 33.
Amendments Nos. 24 to 27, inclusive, are out of order.
I move amendment No. 28:
In page 16, between lines 22 and 23, to insert the following:
“(c) on any local authority owned land in the area on the development of social housing.”.
The Minister has outlined where the proceeds of the vacant site levy will go. The legislation provides for a number of areas where it can be used, but we believe this money should solely be used for social housing for local authorities. The Minister said it can be used for all sorts of things, be it structures or providing services and facilities for local communities, including education, training and so forth. However, there are other mechanisms from which they should be funded.
We should have a clear picture of what will be done with this levy. We are imposing it in the context of housing. The building of social housing is the major issue that faces us, so that is where the money should be targeted. It should not stray off into areas that are already looked after, as other services are dealing with those. I hope the Minister will support the proposal that all of the levy should go towards social housing.
I oppose the amendment. It is unnecessary. The existing provisions in the Bill allow for what the Deputy is proposing. Section 23 outlines how the proceeds of the vacant site levy are to be used by the planning authority. It essentially ring-fences the proceeds to be used solely on the provision of housing on residential land or for the development and renewal of regeneration land.
The proposed amendment inserts a new paragraph in subsection (i) to provide that the proceeds of the levy may be spent "on any local authority owned land in the area on the development of social housing". I already brought forward an amendment to this section on Committee Stage to provide greater clarity on how the planning authority may use the proceeds of the levy. Following this amendment, the section provides that the proceeds may be used for the provision of housing on residential land in the vicinity of the site or for the development and renewal of regeneration land in the vicinity of the site. This gives the planning authority wider scope in the use of the levy proceeds, including on the provision of housing on local authority owned land in the area, thereby providing greater benefit to the overall local area in which vacant sites are located.
I consider that the provisions as they stand enable the planning authority to use the levy proceeds in the most appropriate way. The proposed amendment is unnecessary and I oppose it on that basis.
I wanted to hear the Minister of State's views on the amendment before speaking. I wonder why he is not willing to stitch the proposal into the Bill. Section 23(1)(a) provides that "where the vacant site comprises residential land", moneys received from the levy may be spent "on the provision of housing on residential land in the vicinity of the site". It does not, however, specify that this should be social housing. The purpose of the amendment is to nail down a requirement to spend these moneys on social housing. We must be specific in this matter. Why will the Minister of State not agree to include a reference to social housing? Surely the ultimate purpose of the vacant site levy is to deliver social housing. In that case, why not agree to the amendment? The reference to using the proceeds of the levy for "the provision of housing on residential land" is vague. What type of housing will be provided? We want and need social housing because this is the area most affected by the current housing crisis. The reason the Minister of State will not accept the amendment is unclear.
On the same issue, the fear is that moneys that flow into the coffers of local authorities from the levy will be frittered away for other purposes. There is no guarantee this money will be used to contribute to the provision of additional social housing. The Minister of State was studied in his vagueness in answering the question. I ask him to provide a direct "Yes" or "No" answer to the following question. Will the money that accrues from the levy be ring-fenced specifically for social housing and must it be spent solely for the provision of social housing? We want a direct and clear answer to that question.
I will not labour the point but this is an important amendment. The Government has not indicated how quickly social housing will be provided. Social and private residential housing are urgently needed. Will the vacant site levy be directed towards social housing?
We have been discussing the serious shortfall in funding for local authorities, which is all well and good. The Department of the Environment, Community and Local Government has always considered regeneration projects and the Minister of State referred to the use of some of the proceeds from the vacant site levy for regeneration and other purposes. Will funding for other Departments be reduced to make up for the levy? I do not know how long it will take under the current system to build up a fund that would be worthwhile in terms of delivering housing. However, once a certain amount has accumulated, the priority must be to deliver social housing. Local authorities have land and we should invest in building social housing. This is the main issue in the current housing crisis.
The Government has promised on numerous occasions to provide rent certainty for the large numbers of people who are renting. I have been arguing for a long time that rent certainty is urgently required, yet we are still waiting for legislation on the issue. Despite the severe crisis in the rental market, the Government is proposing to direct the proceeds of a levy into a number of areas for which funding has already been provided. Will it not make a clear-cut statement that the money will be allocated exclusively for social housing? That is all we are asking.
Deputies are in broad agreement that the need for the Government to build State housing again has not been greater in our lifetime, even if it was greater in the 1940s, 1950s and 1960s. The financial challenges that have arisen in recent years have prompted the Central Bank to intervene in the market to ensure the days when people were lured into buying property for which repayments could have become unsustainable are not repeated. While it is correct to intervene in this way, the flipside of the coin is that at least half of the younger generation will not be able to get on the house ownership ladder. This may not be the end of the world but it would be the end of the world for young people if there were no alternatives available to them. This means the State will have to build houses. The Government's reliance on the private and rental sectors to provide housing does not stack up, will not work and will lead to serious problems.
Rent levels in cities will go up before they go down. Leaving a large chunk of the population at the mercy of the rental market is not a sustainable approach. One could ask where we should go from here but it would be preferable not to start from where we are. The Government must persuade our European partners to adopt a more flexible approach to the current rules on borrowing. European Union rules preclude the State from borrowing, at less than 2%, the money it needs to build social housing. These rules must change to allow the Government to borrow to invest in infrastructure without these loans going on the books. In the event that the Government decided to build social housing but was prevented from accessing cheap money, the alternative would be to engage in public private partnerships or PPPs. Public private partnerships are not a good approach because they place the State in the hands of investors who make a killing through the high interest rates they charge. They are another form of vulture capitalism and similar to the vulture funds that pay peanuts to the National Asset Management Agency for assets which they either flip or hold and rent out, thereby driving up rents. Public private partnerships have cost the State astronomical sums. It beggars belief that the State can borrow money for infrastructure investment at a rate of approximately 1.7% but is being prevented from doing so on the basis that it would break the rules on the debt to GDP ratio. This does not make sense.
Continuing to depend on the rental market and refusing to build social housing which the State would own and make available to people who need it is not the way forward. The State will eventually have to build social housing again.
Relying on the rental market and rent supplement is not even good economics. If rent goes up, the rent supplement has to go up, and what we have then is the State subsidising the rental sector. We need to think more about the long term and less about the short term. Long-term thinking encourages real investment for the long term. Relying on the private rental market to provide the necessary housing for those who cannot get on the ownership ladder is short-termism, not long-termism. Obviously, the fact that the political process works from one election to the next is a big factor. This has a dramatic impact on how we deal with climate change also. I see it now having an impact on the housing crisis in that we are not prepared to make the decisions required to bring long-term sustainability into the housing market.
Wide-ranging housing issues are being debated and discussed, but I will address some of the points about the amendment. As I outlined earlier, the intention and objective of the Bill is not to raise revenue. The primary objective is to incentivise and stimulate the beneficial use of vacant or dormant sites in our cities and towns. The purpose of the levy is to incentivise the owners of sites to unlock and develop them. I want that to be clear.
On the question of local authorities and social housing, the Bill already allows local authorities to utilise the levy proceeds for social housing. The success of the Bill will not be measured with reference to the amount collected in levies; it will be measured with reference to the number of vacant sites brought back into beneficial use. The levies collected should be relatively small if the Bill is a success. If we are not successful in that area, the levies can be collected and invested in social housing by local authorities. As drafted, the Bill also allows local authorities to invest the money in amenities, facilities or infrastructure to allow the development of more housing units. I brought forward an amendment on Committee Stage to give greater flexibility to local authorities so that the money does not have to be spent specifically on sites and can be spent in the vicinity of sites within local development plan areas. As such, we will oppose the amendments, because the Bill as drafted provides local authorities with the flexibility and authority to invest in social housing, amenities or facilities according to their preferred priorities.
I asked a very direct question and, yet again, got a very indirect answer or none at all. The question is: are local authorities required to spend the money on social housing or can they spend it on other things? That is what we want to know. As I understand the amendment, it states that we need to spend the money on social housing. I think the Minister of State has told us they can spend it on other stuff. Can he just clarify that? We cannot even vote on something unless we get a clear answer from the Minister of State.
I just told the Deputy.
The Minister of State did not.
He should answer the question. Are the local authorities required to spend the money on social housing? "Yes" or "No."
The Deputy was not listening. It is on the record.
I was. The Minister of State said they were allowed to-----
I said the Bill gives them flexibility.
It is allowed. So they are not required to do so.
It is social housing or other amenities.
So they are not required to spend the money on social housing. The Minister of State could just say that.
This is unbelievable. What is emerging is that the vacant site levy will not help us to develop social housing. On closer scrutiny, my reading of section 23(1) is that any money received by a planning authority pursuant to section 15 should be spent by it:
(a) where the vacant site comprises residential land [if there is a vacant site that is residentially zoned], on the provision of housing on residential land in the vicinity of the site, and (b) where the vacant site comprises regeneration land, on the development and renewal of regeneration land in the vicinity of the site.
There may never be social housing from whatever funds come forward from this. That says it all. Is it an ideological matter whereby the Government is completely opposed to council housing? Is it a Thatcherite thing that it has an aversion to local authority housing?
Deputy Coppinger must have a blind spot for the social housing strategy.
I do, as 75% of it is contingent on leasing from developers and renting. It has been said here already that this is not going to work. The fact that we are spending so long discussing the Bill is somewhat annoying, because it is not going to deal with the housing crisis. We are trying to use it as an opportunity to expose that. It lays it bare that the Government will not make it compulsory for local authorities to provide social housing based on this. They can spend it on architectural, historical, archaeological and artistic structures. They can build statues with the money from the vacant site levy or provide services and facilities for local communities. That is not ring-fencing the money for housing. It is a general fund that local authorities can use for all sorts of things, including the preservation, improvement and extension of amenities. That money could, in theory, be used to put a statue in Malahide. This is ludicrous stuff. The fact that the Government is not willing to nail it down means the amendment must be put to a vote.
The Minister of State has told us he sees the levy as an incentive to stimulate the market. He does not really envisage a great deal of money coming in through the levy and is hoping it will push developers and others to use the lands. He is mistaken. It will not work in the way he thinks. The reason I proposed the amendment was to clearly provide that whatever money comes in through the levy be targeted at social housing on lands under the control of local authorities. The Minister of State referred to the vicinity of sites and a raft of areas. Even in the present legislation, there is a raft of areas where the money could be used. It is a get-out clause for a lot of local authorities. If it came before me on Dublin City Council, I would be saying to myself that I could send the money into any department. I am asking specifically to include in the Bill a clear undertaking that the money will go to local authority social housing. That is what I clearly want, because the crisis out there requires it. I ask the Minister of State to think again about what he is saying here. He is giving local authorities an awful way out. I know he, or at least his party, is ideologically opposed to social housing, as we have seen time out of number. That is wrong and it is why we have a crisis. It is why we have so many people on the housing lists at the moment. It is why so many people are homeless. Since the death of Jonathan Corrie, the number of families who have gone on the housing and homeless list has doubled. That is the reality of what has happened.
Amendments Nos. 29 to 32, inclusive, are out of order.
Amendment No. 33 is in the names of Deputies Cowen, Ellis, Wallace, Coppinger, Paul Murphy, Higgins and Boyd Barrett. Amendments Nos. 33 and 44 are related and will be discussed together.
I move amendment No. 33:
In page 19, to delete lines 33 to 35.
This amendment seeks to delete lines 33 to 35 on page 19. In effect, that retains the existing Part V percentage of 20% rather than the reduction as proposed by the Government to 10%. Despite the criticism that has been levelled at the Part 5 provision by the Minister, Deputy Kelly, and others, it delivered 15,000 units between 2002 and 2011. The Minister proposes to halve it from 20%, which would appear to be a capitulation to the building sector on the part of Fine Gael and a capitulation by the Labour Party to Fine Gael with the retention of the site levy, despite the fact that the site levy has the support of all parties in the House as an effort to address dilapidation and encourage the development of many derelict and hoarded sites throughout the country.
I agree with the provision in the legislation to abolish the cash in lieu element and recognise that it did not work in a way that would assist local authorities. That might be due to the fact - this touches on a point raised in the previous amendment proposed by my colleagues - that the funds collected by local authorities from that source were not properly ring-fenced in such a way that they could be redistributed for the purpose of providing social housing. As an add-on to that, and further to a question put down by Deputy Troy in recent weeks, could the Department provide the Members with a breakdown of what was collected by each local authority during the lifetime of that legislation in terms of where it was spent, how it was spent and whether any funds retained by any local authority were collected in that fashion?
My reasons for seeking to retain the 20% provision are much the same as those outlined by many speakers since the beginning of this debate and long before that, while we awaited confirmation of proposed legislation on the part of the Government to tackle this crisis rather than allowing it to develop into the crisis it is now. An effective house building programme needs to be twin-tracked. The public and private elements should run parallel and every effort should be made to accommodate the private sector, which in turn can provide 20%, in addition to proper elements of policy on the part of the Government for local authorities to do what they do best and to tackle this issue in the manner in which it should be tackled. The only way in which it has been resolved in the past, as others have said, was when local authorities were building houses in the 1930s and 1970s. If there is a supply issue, the only way to address it is to build units, but it seems the Government is proposing to go to new lengths to appease the landlords, and it relies far too much on private rental accommodation.
The abolition of the affordable element is being done by ministerial order rather than through any specific part of the legislation. I appreciate that this is because it was at the discretion of the local authorities to apportion percentages within the 20% provision between social and affordable housing, cash in lieu, and affordable units, but I disagree with that element of it. Banks have intimated that they may deal with people in mortgage distress and allow them a break on their negative equity if they surrender their property and qualify for social housing from a local authority. Unfortunately, many of those who find themselves in that position would not qualify for social housing, but it may be that local authorities could furnish loans and allow an affordable price within the current legislation. I put that to the Minister of State. I do not expect him to respond positively to it now, but I take at face value what he said earlier about other measures being brought before the House in the coming months to address the difficulties and deficiencies in the current programmes.
As I said, we were a long time waiting for movement on the part of Government to address this issue. Now that there appears to be some semblance of movement, although it is not manifesting itself on the ground, I ask the Minister of State to consider that seriously.
On the 20% provision, I was approached in recent months by people who wish to provide private sector housing for the elderly and in this regard wanted the 20% provision done away with. As the Minister of State will be aware, there are many elderly people who, because their existing homes cannot be adapted to meet their needs, are on the housing waiting lists for senior citizens' dwellings and so on. They have as much entitlement to a unit as does any young person or other person on those lists. For this reason, I do not support the proposed reduction in the 20% provision. I also believe people living in houses that are larger than they need should be incentivised to trade down, which in itself would create a gap for those wishing to trade up. If the people who approached me in recent months are serious about providing those facilities, I would encourage them and others to do so. Measures such as breaks in relation to stamp duty and the property tax could be introduced to encourage this. That is just an example of the different suite of measures that is required by way of a more wholesome housing Bill to seriously tackle this issue. As stated by many speakers, this issue needs to be tackled seriously.
Suffice it to say, I do not agree that the 20% provision should be reduced to 10%. I believe it should be retained at 20% and that more efforts should be made not only in public housing provision but in private house building and development. To this end, the Strategic Investment Fund could lend itself towards a home development bank that could lend to developers and those who have land and sites throughout the country at a rate that would be competitive and would encourage them to undertake house building. This, in parallel with the Government's programmes, would address this issue in the short term. This is the type of out-of-the-box thinking that is necessary to address the housing crisis.
I do not expect that the Minister of State will take on board my proposals in this instance, but I ask that he give serious consideration to them in the preparation of other legislation that might be introduced, such that the public will see a real and meaningful effort being made by the Government which is cognisant of the obligations of the private sector as well as the obligations of local authorities. This might address the imbalance in the legislation to which I referred earlier, whereby the Government is seeking to penalise those councils that cannot provide housing on sites they hold despite the fact that they are not being provided with the funding to do so, which is a huge contradiction, one of the greatest contained within this Bill and on which members of the Government voted accordingly. I am surprised and shocked that this proposal has not yet reached the public domain. However, we will do our best to ensure that it does.
I disagree with the proposed reduction of the 20% provision to 10% and ask others to support my proposal in this regard.
As far as I am concerned, this is a private developments charter. I cannot for the life of me understand why we are going down this road. Amendments Nos. 33 and 44 relate to the reduction from 20% to 10% in respect of the number of social and affordable units to which we are entitled under the Part V provision and to the increase in the number of units that constitutes a development from five or more to ten or more. This might fit into the mindset of Fine Gael, but I am disappointed with the Labour Party. This should have been a red-line issue for the Labour Party. It should never have agreed to it.
In the past, developers used every means possible to get out of meeting their obligations under Part V. We do not get this 20% social and affordable housing for nothing. We pay for it. One would think from the way this is being presented that we get that 20% social and affordable housing for nothing. That is not the case. In the past, land or money was exchanged instead of housing units, which caused major problems. In my own constituency, social and affordable housing units were not provided in particular areas because the developer did not want that type of housing in the area or because the developer felt he would get more money by not providing social housing there. That happened in many areas. Affordable housing delivered homes for people who could not afford housing in the private sector. I cannot understand why that obligation was removed by way of ministerial order. That, to me, does not make any sense.
I am at a loss to understand why we have gone down this road. I expect that the Minister of State's response will be that there is not enough building taking place and that this will incentivise building. I do not believe it will. I believe that people intent on building will do so. All these incentives will do is punish local people, as they will get no social and affordable housing, and put more money into the pockets of developers. This proposal is scandalous and should be re-examined. As I said, I do not understand why we are going down this road.
We have a serious problem in Ireland that is leading to a whole range of other problems, namely, ghettoisation. This issue has never been addressed. The purpose of Part V provision was to address ghettoisation.
Deputy Cowen mentioned that 15,000 units were delivered under Part V, one third of which - 5,000 - were social housing units, with the remainder being affordable housing units. During the five years in question between 55,000 and 75,000 units per annum were being built in this country. This means approximately 400,000 units were built, only 5,000 of which became social housing units, which is a pretty poor offering. There were many reasons for this, including loopholes in the legislation which allowed developers to buy their way out of meeting their obligations. When I raised this issue with the Minister of State on Committee Stage he told me that provision under Part V was ring-fenced. I have taken another look at the Bill. In regard to whether it will be impossible to have a development that does not include social housing, the answer is "No." We will still have developments that contain no social housing. While developers will not be allowed to buy their way out of meeting their obligations, they will be allowed to provide housing somewhere else in lieu of that obligation. This does not address the issue of ghettoisation. It means that a developer seeking to build in Ballsbridge could seek to provide the necessary units somewhere else. This leads to ghettoisation. It is a case of allowing people who are better off to live together and the poor people to live together. The number of problems that arise because of ghettoisation is frightening. How one does in life and how things fall for one is determined to a great degree by where one lives.
That factor determines life opportunity. It determines the quality of the transport and other amenities of which one can avail. I am not saying that people living in poor areas never have access to good transport but, generally speaking, those living in better-off ones have available to them a better transport system as well as more social amenities and a better selection of schools to which to send their children. They probably have more shops to choose from close to where they live because it is easier for retailers to do business where people have more money. Major associated problems develop out of ghettoisation. It creates an underprivileged class, which leads to drug problems and crime.
Another serious consequence of ghettoisation is poor housing. Like all the other things I mentioned, poor housing has outcomes and they are not very good ones. People who live in good housing have better outcomes. It was very disappointing that even where social and affordable housing was delivered under Part V, the developer or builder - it was often the same person - was allowed to put different material into those units from what was being used in the units that were put on the private market. It is very sad that this was allowed. Most people will agree that inequality is at a greater level now than it was 20 years ago. It is a primary responsibility of any Government to challenge inequality and any increase in it. Moreover, any Government that is serious about challenging inequality will certainly tackle the blight that is ghettoisation.
The point has been made that it is not as if it costs nothing for the builder-developer to provide social and affordable units. In fact, because of the way in which the scheme is framed, that is not completely true. Builders were offered their build costs plus 15% under the provisions, but were not given the value of their site purchase. If, say, a builder paid €100,000 per unit for 30 units, which amounted to €3 million for the site, he or she did not get €100,000 per unit back from the local authority in respect of the social and affordable element. What happened was that the value of the site land was based on an agricultural value, which was a major problem. It is my strong view that developers should be given their site value in order to make it bankable. Very often, smaller players could not bank it if they had paid a lot of money for a site. Some people paid up to €230,000 per unit for apartment sites in 2006. If they had delivered social and affordable units on that site, they would not have got their €230,000 per unit back. As I said, it was worked out on an agricultural value formula. They would have got 15% profit on the construction costs, but they would have lost out on the supply of the units. That should not have been allowed to happen. Of course, when the formula was designed, it was not envisaged that site values would ever reach such crazy highs. That is what happened, however, with the result that the State allowed developers to get out of their obligations when they claimed social and affordable housing would not fit on a particular site or would not work alongside expensive apartments for private sale. What we had, as a result, was a continuation of ghettoisation.
Last summer, when Kennedy Wilson got planning permission to build 164 apartments on the Clancy Barracks site, it told the planners the site was not suitable for social housing. The outcome was that there is no social housing on that site. We need to think again about how the system should work. No site should ever again be developed in this country that is exempt from including an allocation of social housing. I do not care where it is, in any part of this city or any part of the country, every development should have its quota of social or affordable units rather than allowing them to be moved elsewhere.
It is incredible that as we face the greatest housing emergency in the history of the State, the single useful measure that was introduced by the former, pro-development Fianna Fáil-Green Party regime is being amended by this Government. It is just unbelievable that the social and affordable housing quota is being reduced from 20% to 10%. When this change was originally thrown out into the ether, one of the reasons given was that affordable housing was no longer needed in a context where house prices were decreasing. Nothing could be further from the truth now, as house prices continue to rise relentlessly, particularly in cities. Any argument that affordable housing is not required no longer stands. The other reason given was that the change would remove impediments to developers in getting construction going. It would be a terrible drain on them, we were told, if they had to set aside 20% of any development for social and affordable housing.
As we know, the Part V provisions did not work particularly well in the past, producing only 15,114 units, or 3.5% of total dwellings built during one of the greatest building booms the country has seen. Developers found all sorts of way to avoid meeting their obligations. As we know, no social housing was built in places like Malahide or Castleknock. Instead, money was given in lieu to fund social housing on other sites. We had developers claiming people would not want to live in an estate if it included a component of social or affordable housing. As a result, the intended integration never happened. Be that as it may, the provisions did produce some housing. Why, then, is the Government seeking to reduce the quota at precisely the time when it could usefully be utilised?
The other justification given for this change is that cash payments or the money in lieu provision is being abolished. It will be a more stringent regime, we are assured, which will see more houses being built. There are several reasons that will not prove to be the case, one of the most obvious being that local authorities will still have to buy the units from the developers at normal market costs. The Bill provides that where houses are transferred to a planning authority, the price will be determined on the basis of the site cost of the houses and "the costs, including normal construction and development costs and profit on those costs, calculated at open market rates". That is simply incredible. Local authorities are not allowed to build houses themselves but must instead stump up greater costs to developers to provide them.
As a previous speaker said, one would think we were getting them for free. I have spoken to people at a high level in local authority housing and they told me they do not want this because it is too expensive. As they are starved of funds, they will not have money to buy large numbers of houses from developers and will have to go for the other option that has been introduced, that is, alternative arrangements, which I will discuss.
One of the claims made by the Minister of State and others is that is it cheaper for local authorities to go this route than to build houses. I have heard that argument in councils. How could it possibly be cheaper to provide housing through this scheme? There is no way that could be the case. Unlike Deputy Wallace, I do not think we should have to pay developers money to provide social housing. He referred to their site costs. One could argue that we should get the units free of charge on the basis that developers are being granted the very valuable resource of planning permission. The idea that local authorities have to pay private developers which are crawling their way out of NAMA or trying to get back into the market at this level is outrageous.
I refer to the alternative arrangements provided for in the Bill. They include entering into a rental accommodation availability agreement or a lease agreement with a planning authority in respect of those houses. We all know councils will not be able to buy houses given the current costs in Dublin, Cork and Galway, whatever about other locations. Such places are where the crisis is particularly acute, but things are bad everywhere. Councils will have to use taxpayers' money to put tenants into rented properties at a significant cost. What will the rental rates for such homes be? I assume the market rate will apply or developers would not engage. Will there be long-term leases? We again have the problem of people living in houses without security and from which they can be moved after five or ten years. I do not know what is envisaged.
This scheme is likely to have large-scale take-up and could even become the norm for councils that cannot afford to buy houses up-front or take on debt due to EU rules. It will mean councils paying rent to developers indefinitely, as is already happening under the NAMA social housing leasing initiative, without ever becoming owners of the property. It would link up quite nicely with the social housing 2020 strategy which wants to replace more and more local authority housing with long-term leases. The gist of this is that such arrangements will not be exceptional; they will be the norm.
It is disappointing that, yet again, we have to worship at the feet of developers and nothing proactive is being done to fund councils to build houses. I oppose any reduction in Part V from 20% to 10%.
Somebody asked why the Government would want to reduce the requirement for developers to reduce from 20% to 10% the level of development given over to social and affordable housing. I found part of the answer in the latest document from the European Commission, the post-programme surveillance report. It comments on the shocking rise in rents and so on and states: "Policies should aim to increase supply more effectively through raising low private sector financing to developers and revising planning and development regulations." That is, essentially, what the Government is doing and what its strategy involves.
The Government opposes, on an ideological basis, large-scale public investment in the direct provision of local authority housing and has submitted itself to the diktat of the troika and the neoliberal ideologues in Europe. Therefore, public investment in the direct provision of local authority housing is not on because it is ideologically opposed to it and favours the privatisation of everything that moves. One is left with no option but to rely on the private sector to deliver social housing.
As a result of the scale of the crisis, the Government has to pay some lip-service to a return to local authority housing provision. However, as I said yesterday, when I rang the alarm bills about a document that came from the Department of the then Minister of State, Deputy O'Sullivan, in 2011, I got very little traction. I do not know why, but I suspect it was because media commentators could not get their heads around the idea in 2011 that a housing crisis would be coming down the line. We had just come out of an enormous and unprecedented housing boom, so it probably seemed inconceivable to people who did not understand what was happening in regard to social housing lists that we would face what is now a catastrophic crisis.
I, and one or two others, tried to ring the alarm bells when the document was released. The Government said it would no longer be involved in the construction of direct social housing, but would instead source it from the private sector. As a result of the crisis that ensued from a policy decision taken by the Government, a situation that was bad turned to disaster, about that there is no question. We are no longer building council housing and are instead relying completely on the private sector. We have since seen the results.
The homelessness rate is spiralling out of control. When I came into the Dáil, people were on the social housing lists for nine or ten years, which was outrageous. People would get on the list when their children were born and their children would be ten before they had secure housing. If one goes onto a housing list in Dún Laoghaire now - I know it is the same elsewhere - it will be 18 years before one gets a house. If ones goes on a housing list when one's child is born, he or she might have reached an age where he or she would be moving out and will have had no secure housing. The dramatic spike in the length of the housing lists happened because the Government made a bad situation a hell of a lot worse with a policy decision that was set out in clear and unambiguous terms in July 2011.
For that alone, this Government should be flung out of office. It was incompetence on a scale that is quite staggering. Now, having made that catastrophic mistake, it is continuing along the same line by saying that it cannot or will not deliver social housing, therefore it will get down on bended knees, with the encouragement of the troika, to again incentivise private developers to deliver it for us.
Surely it is obvious, after what happened during the last boom, that even if the private sector builds the record levels of social housing it did during the boom, which were mentioned earlier on, when 70,000, 80,000 and 90,000 houses a year were built, the housing crisis will worsen.
Every single year of the building boom the housing list got longer and the homelessness crisis got worse. If we wanted a textbook example of how the housing version of the trickle down just does not work, we have it in Ireland with the building boom. It just does not work, yet the Government wants to do it again. It wants to state it cannot, or will not, do this because the EU will not let it and it is submitting to it. In any event, it believes in the private sector anyway, even though we have the most clear evidence of the failure of this ideology and strategy in our very recent history but here we are doing it again, saying we must incentivise it. Then we have the troika. It is beyond belief these guys are pushing this stuff. I do not really care whether it is because the troika is pushing and the Government is submitting, or because they are all in cahoots in just believing in this stuff, but it is absolute madness.
We have said we agree with the levy, but the truth is that levy is small beer really. We agree with it, but it will not really address the issue in a very substantial way. If property prices rise at the level at which they are at present, even the levy will not hurt the developers who are land-banking because they are sitting on a rapidly accumulating asset.
The really substantial elements of the Bill are the reduction of the requirement for social and affordable housing from 20% to 10% and the issue of leasing. What will be the cumulative effect of this? To cut a long story short, the developers will not have to give 20% but will have to give 10%. However, they will not actually have to give the 10% because they can lease. They can discharge their obligation on social housing not by giving the housing to the local authority but by leasing it to the local authority and making a fortune on the rents they set, which will be controlled by a tiny oligarchy of huge owners of property.
The other interesting thing in the EU Commission document is the comment made about the scale of the real estate investment trust, REIT, business, which is now €1.8 billion, so these guys control 1% of GDP. The document states REITs have become an important channel through which foreign capital can enter the Irish property market. So far, REITs have primarily focused on purchasing or refurbishing existing properties. How true it is that they are just interested in making money. They do not give a damn about providing social housing or providing the supply the people desperately need. They are just interested in making money out of it, yet we are getting down on our knees trying to incentivise these people. It is total madness.
The points have been made, but we must ring the alarm bells. The people who said we are heading towards a disaster before the crash were told by one Taoiseach that they should go and commit suicide and that they were insane. It was only afterwards that it was said we should have listened a little more to these people whom Nyberg called contrarians. I can tell the Minister of State, and quite a few other people are saying it here, we are heading towards a disaster if the Government continues down this road. There needs to be a radical shift back towards the direct provision of local authority housing on a very large scale for obvious reasons for the people on the housing list but also for the sustainability and security of the economy as a whole. If we do not do this, we will pile up a massive problem.
I have raised this with the Fiscal Advisory Council and it acknowledged we have a point on this. I do not see how, when the troika wants to push so hard on the question that we must keep public spending down and we are not allowed to have public spending, that it does not see the Government will continue to spend more for years and years to come, in a way that will suck money out of the Exchequer, by trying to deal with the social housing problem in this way. It is just billions and billions of euro and it is set to expand every year, going into the pockets of property developers and landlords. As a proportion of the overall social housing stock, it will increase exponentially as a result of what Government is doing. It potentially could bankrupt the State, that is how bad it is, when these people control the rental and property market to the extent they now do. It could actually bankrupt the State. The Government will not introduce rent controls, so there will be no mechanisms to control these guys. We will be utterly at their mercy and the housing crisis and homelessness crisis will be out of control. We are doing our best to ring the alarm bells. It would appear the Government is immune to it, but sooner or later this crisis will blow up in a very big way in all of our faces unless we radically change tack.
Reading through the Bill gives no sense whatsoever of the emergency and crisis in our communities and society at present. Almost 100,000 people are on the housing list. Many people are couch surfing and in emergency accommodation. Last month 65 families, all from the private rental sector, approached the local authority homeless section seeking emergency accommodation. In May the figure was 64 families. If a natural disaster, such as a flood, wiped out 200,000 houses we would have a national emergency trying to deal with it. What we have is a national disaster. We are speaking about cutting back on one area where we could, as a State, enforce social housing in the way it was presented previously. I believe we should move away from the 20% social and affordable housing model in Part V.
The Bill should be just taken off the agenda. To see all of the Government backbenchers coming in to vote for it but not sitting in the Chamber trying to challenge what is going on is unbelievable. It is shocking. It shocks me that we are still in this situation. The opportunities the State has to get developers to provide social housing is being halved from 20% to 10%, which is a disaster. The next step will be that developers will actually go to local authorities to tell them they will come to a leasing arrangement with them rather than providing social housing. We will never get a social house out of this. Developers will immediately jump at the leasing aspect of it whereby they can make money more easily. It is a disaster. It is mocking the people of the State debating this and for the Government to have presented it as an alternative way to try to deal with the housing crisis.
Some Deputies are speaking as if there are conspiracy theories and that the Government has a hidden agenda. I and many backbenchers in the Government come from working class areas and represent the very people about whom they speak.
We are working day in, day out trying to assist the very same people in meeting the housing need that they have. We are not some kind of alien Deputies on this side of the House. We have clinics and backgrounds very similar to those of the Deputies opposite but we deal with matters in a realistic fashion. We are dealing with a legacy of problems that many would argue is a perfect storm in terms of housing provision in this country. Deputies are correct in that we have not been building local authority housing for many years. This Government, and specifically my Department, has ring-fenced funds to build local authority houses directly for the first time in years. I do not see that being welcomed here, although councillors from Sinn Féin, Fianna Fáil and the Independents are welcoming the projects going ahead. That has not been mentioned in the House this evening.
Where are they?
They have correctly said that we need more, and I have no problem with such a statement. There will be more allocations as resources allow. That is the type of realism the Government has to deal with. There is no magic bullet or pot of gold from which we can access funds. Deputy Boyd Barrett mentioned on Committee Stage some €1 billion fund that exists in the ether. I am not using this as a point of attack but if such a fund exists, will the Deputy please emphasise where it is? I certainly cannot see it.
We are accessing all types of funding to try to address the housing crisis in the country, including direct provision of funding from the Exchequer, leveraging funding from the approved housing bodies off balance sheet and the public-private partnership system. We have a very open mind on all ways of delivering housing. To say that the direct building of social housing is the one solution for the problem we face is not realistic. The local authorities do not have the capacity to build to the extent being mentioned, although we are gradually ramping up planning and housing staff. We have allocated more than 300 staff to local authorities so they can increase the capacity to respond as we start allocating funds to them.
I will repeat what I said about the void issue. There was a totally unacceptable level of vacant and void existing housing stock. We have prioritised those because we feel they can be turned around more quickly. We are seeing progress in the area, as we have returned over 2,000 vacant houses to beneficial use, with another 1,000 to be delivered by providing additional funds to local authorities in those areas. There is no conspiracy on this side of the House and we are using all available avenues to address the housing issues. Saying that the private sector cannot, and will not, be part of the solution is not realistic either. As I have said in previous debates, if in the morning we had all the money being mentioned to put into the direct building of social housing, there would still be a time lag of a number of months, if not years, in delivering those houses. What would be done in the mean time? We have to utilise the private sector; we have no other option. That is what we are doing, and to write off such a process would certainly do an injustice to the people on the housing lists.
It is recognised, not by Deputies on this side of the House but by independent agencies like Housing Agency, that the construction sector is not working to its full potential. We do not have a viable and normalised construction sector, as we are operating at half the rate of possible production of houses. This is because existing planning permissions have very high development levies attached, which makes those construction projects unviable. This Bill addresses the issue by giving flexibility to local authorities to revise those levies to more realistic levels. That will unlock construction sites and deliver more housing units.
The Part V element has been examined closely by the Housing Agency and an independent review has been carried out. A recommendation was made that because of overhead costs and viability concerns, a reduction in the Part V contribution would assist in the delivery of more housing units. That is why we are proposing in the Bill to reduce the proportion from 20% to 10%. Over the past five years, the number of private sector housing construction projects has been close to zero. As Deputy Boyd Barrett noted on Committee Stage, 20% of zero is zero. We need to see activity on these sites, so a 10% Part V element is a reasonable level in order to achieve viability in construction. On top of that, we are removing the cash in lieu element that existed heretofore. I welcome the fact Deputy Cowen welcomed the removal of that mechanism as, in the past, it allowed many developers to get out of their obligations. Aside from Deputy Cowen, I do not hear too many others welcoming that fact. We are not on the side of the developers; we want to see units delivered. We are making interventions in many different ways to try to achieve it and the removal of the Part V cash in lieu element is one of those.
We are strengthening the hand of local authorities in getting agreement on Part V prior to the commencement of construction on a site. Although it is a provision of the Bill, I do not hear people talking about it. We all know of cases in the past where developers managed to get out of that commitment through negotiation. In this legislation, it will be part of the planning condition that negotiated Part V output will have to be agreed before work commences on a site. That is a positive element that should be welcomed as it ties down a commitment on the delivery of units under Part V.
For the reasons I have outlined, we will oppose the amendments. The Government feels that what it proposes is reasonable and addresses viability issues as well as issues that must be considered in order to see more construction of housing units in the country. We need to get back to a normalised and sustainable level that will meet the needs of society.
I welcome the Minister of State's response to many of the issues, although I do not agree with all he said. I stated earlier that I accept there must be a public and private mix in addressing the large housing crisis. This Dáil more than any that has gone before it has a responsibility to learn from the past. I have no problem accepting that. The Minister of State and his Government are relying solely on the advice of an independent group made up, I presume, of stakeholders in the industry. I am not aware of who exactly comprised that review group. The Government has relied on the recommendation to reduce the social element of Part V from 20% to 10% but that is a grave mistake as it disregards the views and knowledge that exists not only on this side of the House but on the Government benches as well. As the Minister of State has correctly stated, we are all in the same boat in terms of our responsibility to those who give us the privilege to represent them. We have all been inundated with representations from people in our constituencies who are at their wits' end because of the unfortunate prospect of not having a home or being in a position to receive accommodation from the local authority charged with the responsibility for it by the Government. That is a source of great disappointment to me.
There are inquiries taking place in other parts of this building, with people giving open, frank and honest responses to questions. An exercise for Members in this House is to learn from what went before. One lesson is not to take at face value advice that might appear sound. I implore the Minister of State not to be led by some review group with faceless people, as far as I am concerned, because I do not know who they were. The Government should accept the best will and intention of those on this side of the House and on the Government benches who believe we must learn from the mistakes of the past and adhere to a 20% social dividend rather than a 10% portion.
The Minister of State mentioned that he lived in an estate and that the same people come to see him. I suggest that he and his party are out of touch with the reality. The Minister of State mentioned funding.
There was no problem chasing after Irish Water and taking €1 billion out of the pension fund. The strategic investment fund is still there and there is over €7 million in it if the Government is looking for money. We have had four years under this Government in which this crisis has been getting worse and worse. Local authorities also gave over land when it came to Part V. They gave land free to the developers in return for housing. Infill sites were used quite a lot in my area to deliver social and affordable housing. Other European countries have 20% and 30% in their rules and regulations, so why are we going down this road? Why are we lowering our guidelines on the number of units? Previously, developments of five units and upward would come under Part V but now the lower limit is ten. What is the logic for that? It does not make sense.
I do not know where the Housing Agency and others are coming from in giving that guidance because everyone I listen to, including all the different housing bodies - I have met with nearly every one of them, including Focus Ireland and the Peter McVerry Trust - is finding this very difficult to understand. I do not know where these people are coming from and questions must be asked about how they are coming to their conclusions so that the Government can drop Part V in the way it has.
I will touch on a few things the Minister of State said. He claimed he was as much in touch on the housing issue as those on this side of the House and that he was from the same type of background. That is not true of the Dáil. The Dáil is not in any way representative of working class people. Approximately 27% of Deputies are landlords, which is not the case in wider society. I do not know how many millionaires are in the Dáil, but in one Dáil there were 25. Ministers and Deputies are on much higher salaries than the general population. Very few Deputies are from working class backgrounds compared to the proportion of the general population and very few were brought up in a council house. This Dáil is not in any way representative of society at large. Some people made their money through politics but there are many who were very wealthy before they came in here and who have carried on those vested interests. How many Deputies got bank write-downs compared to the general population and how many have property portfolios?
What projects was the Minister of State talking about us welcoming in local authorities? There are no projects. There are no houses-----
Stick with the amendment. The amendment is about reducing from 20% to 10%, not-----
It was the Minister of State who spoke on these topics.
We have had this debate before and we have argued that the Government's continued reliance on private landlords and the private rented sector will not deal with the housing crisis. We have made the argument many times before and I do not see much point in labouring it, but it will become evident very quickly to the electorate. The Minister of State referred to projects in his speech.
The Deputy's time is up.
What projects is he talking about? If there are projects we do not know about, we would love to hear about them.
I can help Deputy Coppinger on that one. In response to a recent question, the Minister of State informed us that 1,700 housing units are to be built in 100 separate projects across all 31 local authorities by the end of 2017. To put that in context, in my area alone, 1,200 people joined the list last year. They are joining the list at a rate of 100 per month. The figures are the same elsewhere. Not only will that not deal with the crisis, but based on those figures, it will be ten times worse by the end of 2017.
In terms of Part V, the Minister of State says the Government estimates 4,000 additional units will be made available, although this is entirely conjectural because it is based on the private construction industry, over which we have no control and which even the European Commission says is not interested in building at the moment because it has a captive market in terms of buying up property that is already there and renting it out at massive prices. This is pathetic and I do not want to say that. For the sake of what I have to go through every Monday and Friday in my clinic and what so many others have to go through, I wish I could say there was something in this that gives me hope. People come in who are in absolute bits, faced with the possibility of homelessness. Landlords just announce they are putting up the rent and the tenants have nowhere to go. There is nowhere anywhere near the rent allowance caps and they just do not know what to do. They have been on the list for 18 years, they have kids who are sick and all the rest of it. I welcome the levy and the removal of the cash in lieu provision but it will not even come close to solving the problem and it will be counteracted by the renewed reliance on the private sector, which will make the problem worse.
I agree with the Minister of State that we cannot eliminate the private sector from the market as that would be madness. However, the point being made was that reliance on an element of the private sector is one thing but over-reliance on it is another. It is no secret that the primary motive of the private sector is profit. That does not mean that all builders are rogues or that they all fail to do their job properly. We have good builders and bad builders, as in every profession. However, their primary motive is profit while the State's primary motive should be taking the best care of the interests of the citizens. Doing away with the cash buy-out is, of course, a good idea. That is a given. However, I thought the Minister of State was going to ring-fence these obligations and ensure there is no way around them. If this is ring-fenced, in future every single site will have social or affordable housing on it. We are not getting that. We are allowing ghettoisation to continue. Would the Minister of State not consider making sure that element is challenged and stopped forever? Would he not look at the legislation again and ensure that no site can be developed in the future unless there is social or affordable housing on that particular site?
I will quote from the Bills Digest, explaining what this is about. It states:
Section 33 amends [section] 96 of the 2000 Act. [It d]etails how a developer may satisfy his or her Part V obligations. This section removes the option of providing a cash payment in lieu of social housing, [which is grand] as well as removing the option of providing sites elsewhere [which is also grand]. It allows the developer to provide completed social housing units in another location in the event that the development in question does not meet the needs of the local authority. Provision is made for the Part V obligation to be fulfilled through long-term leasing.
The removal of the cash element is very welcome but if the leasing aspect of it comes in, we are not going to get social housing out of this. The developers will say to the council that it is not acceptable and they cannot provide social housing in the development but they will allow long-term leasing. It is a no-brainer. The Minister of State cannot allow this to happen. If he is going to reduce the 20% requirement to 10%, which I think is the wrong move at the wrong time, when we need actual social housing, he should at least take the provision allowing long-term leasing arrangements out of it. It has to be done. No one here is saying that all private developers are bad or that we do not need private developments. Of course, we do. We need aspects of everything. The State's obligation is to look at the needs of a society and put in place structures to provide for the housing needs of the people.
We need to build at least 100,000 to 150,000 houses over the next period of time. The Minister of State said it will take time. Of course it will take time, but it will take even longer under the proposals in this legislation.
What we all can agree on is that we need a greater supply of houses, whether they be social or private.
This Bill is a mechanism to try to address some of the viability issues and also to incentivise the use of high-potential sites where there is high demand. It is but one way of responding to the housing crisis of which the Deputies speak. The Government is making other inventions as well. It is treating it as a priority. The social housing strategy is a priority for the Government. We would all like to see far more funds available for it, but a strong commitment has been made by the Government to build houses over the next number of years and to engage with approved housing bodies and local authorities to ensure more houses are delivered through direct construction in local authority areas right around the country.
We need more social housing but I would argue from an ideological point of view that we also need more private housing. I have listened closely to some of the arguments on the other side. The solution I am hearing in the main is that we only need social housing on a large scale and that will solve all our problems.
I cannot help that.
Perhaps the Deputies are not explaining themselves fully, but that is what I am hearing.
I am of the view that every person should have an opportunity to own his or her own home in an affordable and sustainable way but until we address the supply issues, the affordability issues and the viability issues, that will not be possible. This Bill is an attempt to address that in a number of ways.
For those reasons and the reasons I have already outlined, I will be opposing the amendments.
Amendment No. 34 arises out of Committee Stage proceedings. Amendments Nos. 34 to 43, inclusive, may be taken together as they are related. Amendments Nos. 35 to 42, inclusive, are physical alternatives to amendment No. 34 and amendment No. 36 is a physical alternative to amendment No. 35.
I move amendment No. 34:
In page 20, to delete lines 5 to 39, and in page 21, to delete lines 1 to 41 and substitute the following:
"33. Section 96 (inserted by section 3 of the Planning and Development (Amendment) Act 2002) of the Act of 2000 is deleted.".
Part V was weakened by amendments lobbied for by developers in 2002. This should never have happened. The Government now wants to weaken it further by allowing leasing to become a major part of Part V. I completely oppose this. Leasing is not a means of delivering proper social housing, which is what the Government claims it wants to do. Leasing arrangements are part of the Government's social housing policy, but I do not believe they constitute the delivery of proper social housing. That is why I am opposing the Government's approach.
I have tabled an amendment to this section of the Bill because I have issues with it. The Minister of State has spoken about, and made a play of, the proposal to insert the words "prior to the lodgement of a commencement notice within the meaning of Part II of the Building Control Regulations 1997" after the words "to which the application relates". In the past, there was a problem in this regard because one was allowed to start building and commence development after getting planning permission even if one had not settled one's Part V arrangement with the planning authority. The Government is planning to introduce a system whereby one will not be allowed to start building until that is sorted. That is actually good, to a degree, but my argument relates to why there should there be any debate about it.
If the Government had ring-fenced the Part V arrangement, as I recommended, there would be no need for a debate because every site for which planning permission is granted would have a proportion of social and affordable housing laid down for it as a condition of planning. This would do away with the practice of strong lobby groups and big developers going into planners to exercise their muscle. One does not need to be a rocket scientist to know that guys who can build 500 units at a time go into the planning process to challenge planners about how Part V arrangements should be dealt with and what sort of deal should be done. I assure the House that the guys developing 100 or 500 units have much more power than those developing five or ten units. It is not a level playing field. We are not getting a consistent result in how it is being dealt with.
The process that the Government is facilitating will allow the great, good and powerful to continue to exercise a level of influence in this area that is not good for the system. I recommend that the Government should put in place a system that requires a decision to be made in advance of the issuing of planning permission on whether the development will consist of social housing, affordable housing or a mixture of both. If this is clearly stated as a condition of planning permission, it will have to be accepted by developers and builders. When a builder or developer gets planning permission, of course he looks at the conditions. The conditions are significant to him because some of them will impose a cost on him. If a cost does not materialise because a condition has been left out, it is a case of "happy days". I assure the House that getting planning permission with conditions is much better than not getting planning permission at all. I looked for planning permission on many occasions. I did not always like the conditions that attached to planning, but I was always glad to get it. Regardless of the conditions that may have been attached to a site, I did not leave it there. I went ahead and built on it. I put up with the conditions because that is business life. The Government has the potential to sort out Part V in advance of the giving of planning permission. I suggest that if this is included in the conditions, there will be no argument afterwards.
That is what we are doing.
Deputy Wallace, without interruption.
I am just clarifying the matter for the Deputy. I apologise to the Chair.
My reading of the Bill is different. Is the Minister of State telling me there will be no debate after planning permission is given? If so, why is he saying that commencement cannot start unless the Part V arrangements have been agreed? Is he telling me now that the manner in which Part V arrangements are decided on will be included as a condition of the planning permission? Is that the case?
In that case, some of this does not make sense to me.
I am sorry to hear that.
I will have another look at it.
We have had a long debate on this matter. We have gone through the various arguments in great detail on Committee and Report Stages. The five amendments I have tabled and the amendments tabled by some other Deputies deal with the worst aspects of this Bill. We have argued at length about the big weaknesses in the Bill. There are one or two strengths as well. The get-out clauses and loopholes in this Bill will allow private developers to avoid providing the amount of social and affordable housing that is necessary to address the absolutely dire crisis in this area. All of the Government's efforts in this regard will come to nothing because of what it is proposing to do in this section of the Bill. Developers will no longer have to assign 20% of any development to social and affordable housing. Instead, they will be able to get out of having to meet the 10% level that the Government is now setting by opting to lease the property back to the council. They will keep the property. The tenants, the State and the wider public Exchequer will fork out money to them week after week and month after month. The gold mine we are opening up for developers will cost the State an absolute fortune at a time when rents are increasing.
A tiny number of property developers and big property speculators control a vast amount of the property in this country. Indeed, the ownership of commercial residential property is now more concentrated in them than it was before the disastrous boom. We are going to be complete hostages to them, to such a degree that it could bankrupt the State. Rather than dealing with the social housing crisis, this measure will suck money out of the public coffers. That money could be used to deal with the social and affordable housing crisis in the permanent, serious and sustainable way in which it should be dealt with. The direct construction by the State of its own council houses would save us the money that would not have to go to private landlords and would generate rental revenue back for the State. It is beyond me that the Minister of State and his colleagues do not see the economic logic of such an approach, which also represents the best solution to deal with the housing crisis. I suggest the only explanation is that they are the hostages of these big developers, speculators and financial institutions and that the troika is backing all of this up. That is the purpose of this measure. The decision to give the developers a big get-out clause that will make a bad situation worse completely unwinds any possible progressive element in this Bill.
I will be brief. I would like to reiterate the request I made to the Minister of State last time out. The reduction in the Part V social and affordable housing requirement from 20% to 10% is bad enough. It is actually terrible. Now it has been decided that rather than securing that 10%, provision should be made for the option of leasing out that 10% as private rented accommodation.
This is like the out clause that allowed the developer to buy out the 20% social and affordable housing. I appeal to the backbenchers of the Government parties not to allow this to go through. It serves nobody to include it.
I support amendment No. 42 which relates to specialist age developments. St. Michael's Estate in my constituency is now Thornton Heights, which is part of the regeneration that was built with 75 social housing units. There is a proposal to build a 50-bed step-down facility for old folks with special needs beside the Richmond Barracks section, where there is a ten acre site. The council and St. Michael's Estate regeneration board support it and there will be a community meeting tomorrow night to hear the views of the community. I appeal to the Minister, who has not yet stepped up to the plate on this, to say it is a good idea. It is beside the local primary care centre and a nursing home, and it is linked with another small old folks' camp at the beginning of the estate. The inclusion of amendment No. 42 would mean something positive, at least, in this part of the Bill.
We have argued about this all evening but this marks a huge change in social housing policy in the State. Previously, local authorities or housing agencies were funded to build and provide social and affordable housing, whereas now the priority is that developers and landlords will be funded by the taxpayer. Rather than being able to buy houses, councils will be forced to lease them from these developers. How likely is it that councils will be able to buy houses at market rates from developers? It is extremely unlikely. Why would the Minister not give them the money to build the houses at a cheaper rate themselves?
This appears to be an ideological policy to get the poor old developers, including the dysfunctional ones, out of a hole and to provide them with a regular, steady income. Why would the Minister do this otherwise? However, it means that the taxpayer will be stumping up a huge amount of money for rent for social tenants. The waiting lists have increased dramatically. There are now 100,000 people on the lists. It will be an extremely expensive means of housing people.
The other problem is that families will be stuck in an invidious position. They will not have security in their lives. Their children will be faced with moving from one school to another every couple of years, which is the situation they are in at present. They can never put down roots. In fact, there could be ghettos in some of these estates. There are social consequences to renting out 10% of an estate. At least in the case of the county council there are councillors who are accountable to the people in rented units and if there are problems there are agreements, and pressure can be exerted on the tenants. Who will be managing these units? There is a serious issue in that regard as well. For families on the housing lists, they will be stuck in the rented sector for the rest of their lives. It is ironic that the Minister waxes lyrical about people's right to own their own houses. These people will never own their own house because they will be stuck paying rent.
Has the Minister budgeted this? Will people be paying rent as they do at present by claiming from the community welfare officer and paying it to landlords? Will it be under the housing assistance payment, HAP or the rental accommodation scheme, RAS? What will be the cost to local authorities and the State for housing people in this expensive and very unfair fashion?
I wish to speak on amendments Nos. 41 and 42. What we are discussing here could be described as social or voluntary housing. I am proposing a system of integrated housing for a specified age group, for example, people over 70 years of age. There are many examples of this in rural areas where people who are no longer able to continue living alone due to lack of services, lack of care or for security reasons move into a system of integrated housing. Integrated housing means housing where care is provided, health services are available and there is security. They live independently and continue to live in that home for much longer. They continue to live in the community, as most people wish to do.
There are a number of examples of the benefits of this throughout the country. If the people concerned have a home in the country, they give up that home. Sometimes the local authority will take it over and make it available for housing other people. There are people who would like to move out into the country and many people are desperately in need of housing so this frees up housing as well.
I ask the Minister to remove this. The developers and voluntary groups in many cases provide this system of housing, and it is an impediment to them to have the restriction placed on them. This is a difficult scheme of housing to operate, and people must raise funding. It is very important that we continue to provide this. We are conscious that there is a housing crisis not just in the cities but across the country. While there is much talk about it being resolved, there is not much action on it at present. There are people and builders who are ready to move on these houses but this provision is creating a difficulty for them. In fact, amendment No. 42 specifically identifies what is integrated housing. In this case we are talking about elderly people over 70 years of age, and the services are provided along with the housing.
I often think, and many people have said this to me, that the terms we use for housing, such as "social housing" and "affordable housing", are not very wise. It is pity we should have to classify people and put them into sections or label them for housing. There should be a better term than "social and affordable housing". Everybody's home is his or her castle and people want homes. That is what we should provide. In this instance, the Minister is putting obstacles in the way of developers and communities who have plans to build and deliver houses for older people throughout the country. I ask him to re-examine this.
I am conscious that there are a number of amendments to be discussed and I wish to respond as comprehensively as possible.
I wish to clarify the Part V obligations for Deputy Wallace, and where that stands with regard to the planning and conditions. The Part V agreements must now be in place before developers can turn a sod on a proposed development site. The Part V negotiation process has been pinned down under the Bill and agreements must now be in place prior to works commencing. This new provision will avoid protracted disputes arising after developments have been built, which was the case in the past. Paragraph (1)(a) of section 33 amends section 96(2) of the principal Act to explicitly provide that the Part V agreement must be made with the planning authority before the developer lodges a commencement notice within the meaning of Part 2 of the building control regulations of 1997. In certain instances in the past, Part V agreements were not finalised between the parties before construction commenced.
This led to confusion and a lack of clarity on the part of developers and planning authorities about the social housing dividend required. This amendment will ensure there is clarity about the social housing dividend early in the planning and construction process. It will remain the case that a planning condition will require a Part 5 agreement to be put in place. Planning enforcement provisions will continue to be used to ensure all planning conditions are fulfilled by developers.
That is what I said.
I am simply clarifying the position.