We now move on to ordinary questions. The first question is from Deputy Bríd Smith, and permission has been given to Deputy Boyd Barrett to speak on it.
Home Loan Scheme
61. Deputy Bríd Smith asked the Minister for Housing, Planning and Local Government the way in which the proposed home loan schemes and affordable purchase scheme will impact on the present housing crisis in view of the average industrial earnings of most persons; and if he will make a statement on the matter. [4581/18]
62. Deputy Kevin O'Keeffe asked the Minister for Housing, Planning and Local Government further to Question No. 235 of 17 January 2018 and the announcement of the introduction of the new Rebuilding Ireland home loan scheme, his plans to amend this loan scheme to include persons who are not first-time buyers due to changed circumstances (details supplied). [4340/18]
85. Deputy Aindrias Moynihan asked the Minister for Housing, Planning and Local Government if under the Rebuilding Ireland home loan scheme, particular targets for the uptake of the scheme will be set for particular geographic areas of the country; and if he will make a statement on the matter. [4566/18]
92. Deputy Fergus O'Dowd asked the Minister for Housing, Planning and Local Government the number of expressions of interest there have been in the new local authority home loan scheme. [4567/18]
96. Deputy Ruth Coppinger asked the Minister for Housing, Planning and Local Government if he will report on the implementation of the Rebuilding Ireland home loan scheme; the estimated number of mortgage loans to be availed of; and if he will make a statement on the matter. [4571/18]
117. Deputy Paul Murphy asked the Minister for Housing, Planning and Local Government if a review of the Rebuilding Ireland home loan scheme to improve its affordability will be considered; and if he will make a statement on the matter. [4573/18]
118. Deputy Mick Wallace asked the Minister for Housing, Planning and Local Government his views on whether the new local authority mortgage scheme will lead to an increase in house prices, particularly in the bracket of €250,000 to €400,000; the number of mortgages he expects to be delivered through the scheme; and if he will make a statement on the matter. [4576/18]
To carry on with the discussion we had earlier, the Minister is not acknowledging the facts. Cherrywood is a strategic development zone. The Luas was extended to Cherrywood to develop the city. I am telling the Minister that we have no percentage in terms of affordable housing units in these schemes and have no figure on what constitutes affordable housing. The offer made by Hines, the company the Minister flogged the site to, is way in excess of anything that any of the announced schemes will assist people in purchasing. We are not getting any affordable housing that is actually affordable on one of the biggest development sites in the State on a site that is funded by the local infrastructure housing activation fund, LIHAF, and which we flogged for a song via NAMA. What is the Minister talking about?
I propose to take Questions Nos. 61, 62, 85, 92, 96, 117 and 118 together.
Last week, I announced a package of initiatives to help alleviate affordability pressures faced by households, particularly in areas of high housing demand and high accommodation costs. A central element of the measures involved is the introduction of a new Rebuilding Ireland home loan. Following a review of the two existing local authority home loan schemes, this new loan offering will replace the previous loans and will be available with effect from tomorrow, 1 February 2018. The new loan will enable creditworthy first-time buyers to access sustainable mortgage lending to purchase new or second-hand properties within a suitable price range. The low rate of fixed interest associated with the Rebuilding Ireland home loan provides first-time buyers with access to mortgage finance that they may not have otherwise been able to afford at a higher interest rate. To extend the Rebuilding Ireland home loan to those who are not first-time buyers would mean that first-time buyers would have to compete for the limited funding available with those who have previously owned a home and who may have already benefited from some form of State support in purchasing their first home.
The Housing Finance Agency, HFA, has raised €200 million from a variety of sources on a fixed rate basis for periods out to 30 years maturity. Based on the pricing achieved, local authorities can offer a first tranche of fixed rate annuity finance to eligible borrowers at rates of 2.0% and 2.25% per annum, for 25 and 30 years, respectively, up to an aggregate maximum of €200 million. What this means essentially is that a person or couple can purchase a home while ensuring that they can still keep their monthly repayments to one third of their net disposable income with no risk of their mortgage rate rising and therefore no threat to their ability to afford their repayments, giving them certainty and security. By placing ceilings on the value of properties that may be purchased and by aligning the terms of the loan with the loan-to-value elements of the Central Bank prudential lending rules, any possible inflationary impact on the market is limited.
The funding is not allocated to individual local authorities but rather will be drawn down by local authorities from the HFA to match-fund their lending to approved loan applicants. Further tranches of loan finance can be secured by the HFA as necessary. As is currently the case, my Department will continue to publish information on the overall number and value of local authority loans on its website.
The website www.rebuildingirelandhomeloan.ie has been live since 21 January and contains full information on the loan, including eligibility criteria, interest rates, a borrower information booklet, a calculator and details on how to apply for the loan, including the application form. A call centre has also been put in place to deal with queries.
In addition to the new home loan, I announced the introduction of a new affordable purchase scheme which will be governed by the relevant provisions of the Housing (Miscellaneous Provisions) Act 2009. I will be commencing these provisions and making associated regulations outlining the criteria for the scheme in the coming weeks. Under the scheme, affordable homes will be delivered by local authorities, primarily using sites from their landbank to leverage the construction of homes for sale at affordable price points. This means that local authorities will now have more options for the development of their sites for mixed tenure social and affordable housing. The first such homes are being procured by Dublin City Council at O'Devaney Gardens and I have asked all local authority chief executives to submit, by mid-February, an outline of their respective affordable housing programmes from their lands, with a particular emphasis on Dublin, Cork and Galway, where the affordability challenge is greatest.
The Minister has not answered the question. We were told earlier that the 40% target for affordable housing on sites by the local infrastructure housing activation fund, LIHAF, was abandoned because it would affect commercial viability, that is, the profits of the developers. Affordability was abandoned. Neither the Minister nor Dún Laoghaire-Rathdown County Council can tell me what percentage of affordable housing we will get back from LIHAF on, I repeat, one of the biggest development sites in the State, nor can the Minister tell us what the price of so-called affordable housing will be. Let me remind him and correct him on what he said earlier. Two people earning €75,000 between them can, including a deposit, borrow €288,000.
Those figures are different from those the Deputy gave earlier.
Two people on €40,000 would not qualify for the Minister's scheme. That is €80,000. It is over the threshold so they would not qualify. Two people just inside the threshold can borrow €288,000. Average house prices in Dublin are €350,000. I have just quoted what Hines is offering, which is two bedroom homes at €358,000 and three bedroom homes at €442,000, so this scheme will not allow those people to buy houses that we are supporting with State subsidies.
The figure of 40% in the original circular was not going to work in terms of getting the sites opened up in time. Instead we have a commitment for affordable houses, in terms of a reduction across every unit on the site or a carve out of a certain number of homes that will roll into the affordable purchase scheme I announced last week. The eligibility criteria applicable to that is an income of €75,000 for a couple or €50,000 maximum income for a single applicant. Using the LIHAF funding, that means that we will have more than 4,000 social and affordable homes across those 29 sites that have already been agreed. There will be an additional 5,000 homes with a LIHAF cost reduction, and another 7,000-plus which will be sold at market prices. If we look at the 18,000 homes in their totality across the 29 sites that have been agreed, 50% of those homes are going to come in at less than €320,000, which is very significant in terms of what we are getting for the State investment. If we were not making this investment, it is possible that none of the 18,000 homes would be built until after 2021. We are bringing forward the development of these sites by essentially paying the development levies and getting these sites opened up using important strategic infrastructure. As a result we are getting homes built that will be for sale on the private market, but also a significant number of homes for social and affordable housing.
I have different issues in terms of the Rebuilding Ireland home loans. I welcome the package in principle, and I wish to acknowledge the local authorities and the number of people they have helped get on the housing ladder over recent years. I want to talk about people who had mortgages but for various reasons lost them. A good example would be a person who lost his or her mortgage because of the financial crisis. People had big mortgages then. Family separations or people who are still on an income rate which is too low for the banks are other examples. Can we make a special case for people who are prepared to go back into the housing market and own their own house? Can those people be considered under this package? These people have the income but cannot go back to the banks.
They would have a good credit rating. It is ironic that developers who became bankrupt and went across the water for a few years were able to come back with a clean sheet, while the people in question will be carrying a black tag over their heads with the credit rating agencies for the rest of their lives. Could an option be included in the scheme to provide for an exemption to enable them to get a loan from their local authority?
I thank the Deputy for his question. I also thank him for welcoming the Rebuilding Ireland home loan scheme. We had staff prepared to deal with queries in a call centre for two weeks but after the first day of operation of the loan scheme we had to double the number because of the level of interest among the people telephoning the helpline to ask questions about how they could apply and whether they qualified for the scheme. There is a great deal of interest in it and we expect a considerable take-up. The first tranche of funding for the scheme is €200 million. As we draw down from it, until there is €50 million left in it, the Housing Finance Agency will go back to the market to build a second bundle, a second fund, which will then be released as part of a second tranche which is likely to be at a higher fixed rate but only slightly than, say, the 2% rate for 25 years. A person who has undergone a family separation or divorce is eligible under the scheme. If someone is in receipt of State payments, they can be considered as part of his or her income contribution, but a person must have a primary source of income that is not a State payment. We are reviewing the scheme in so far as the first tranche of funding is concerned. We are logging all of the different queries to the call centre and the different issues people are raising as to what they can and cannot do. The scheme will be demand driven in terms of the number who apply and are successful. As the funding is drawn down we will see what might need to be changed for the second tranche, the second phase of the scheme, in terms of the eligibility criteria.
The next Member who tabled a question in this grouping is Deputy Aindrias Moynihan.
On the face of it, the home loan scheme appears to be attractive. It must be welcomed as a great number of people trapped in the €40,000 to €70,000 income bracket are under great pressure in trying to buy their own home. The scheme offers them an opportunity to do so. The Minister has acknowledged that the funding will be limited to approximately 1,000 applicants who will be able to avail of the first tranche of funding for the scheme. He has identified that the affordability gap is greater in Cork, Galway and Dublin. Is it envisaged that once the scheme is open, there will be a scramble to be in the first 1,000 loan applications which will be snapped up immediately in these areas or will it be steered throughout the country to allow for more balanced regional development? Will the applications be dealt with on a first come first served basis? The Minister mentioned a second tranche of funding for the scheme. When will it come to pass? Will it come on stream as soon as the first tranche is used, or has the Minister set a timeline for it? We need to obtain clarification in that regard. There is pent-up demand for the scheme. It appears that it could help, but it will be very limited in providing funding for the provision of 1,000 homes only.
I thank the Deputy for his question. This was something we considered when we were designing the loan scheme, namely, whether bundles or targets would be given to each local authority, but we thought it might interfere with some of the decisions the credit policy committees would have to make on loan applications in trying to meet their targets or draw down what might be seen as a limited amount in the particular local authority area. It is not confined solely to Dublin, Cork and Galway or certain parts of the country. It is up to every local authority to administer the scheme based on the number of applications it receives. We are not going to wait for the fund to run out before we build up a second fund to allow a continuation of the scheme with whatever changes we might deem to be necessary based on how the first phase of the scheme had operated. The Deputy is right in pointing out that the fund of €200 million for the scheme will, I hope, result in the achievement of 1,000 mortgages for families and individuals. When the level of the fund is at approximately €50 million, the Housing Finance Agency will build a second fund. The total for local authority mortgages amounts to just under €1 billion. The total mortgage market in Ireland is about €99 billion. The sum of €200 million is small and limited in the scheme of things, but there is scope to build it, depending on the level of demand. The scheme will be demand driven. We are depending on the local authorities to administer it efficiently. The Housing Agency and the Housing Finance Agency will act as a backstop to help in reviewing difficult cases, engage in due diligence and everything else. There is a timeline built in for each of the credit committees to make its decisions, but there will be a turnaround time of four to six weeks for applicants.
Deputy Mick Wallace has also tabled a question in this grouping.
The way we supply housing in Ireland is a disaster. It is incredibly expensive. For all practical purposes, too many aspects are unregulated. Most of the measures the Government introduces amount to a further subsidising of the industry, which does not help to bring down prices. When he appeared before the housing committee, Mr. Dick Brady told us that the council had land in Dublin which the State owned on which to build 45,000 units. If there is a site with the capacity to provide 100 houses or apartments, why does the Government not approach the builders and ask which of them will provide 20% of them as social housing and 30% as affordable housing - they could keep the remaining 50% as private housing - and what the cost would be? Is it prepared to do business? It will not challenge the way the industry is operating, unless it has a direct proactive place in it. From what I can see, it does not have the appetite for it, which beggars belief. As I said to the Minister previously, things are going to get worse before they get better.
We will hear a final response from the Minister.
I understand the Deputy's interest and recognise his knowledge in this area, but he complains about the cost of house-building and also about the lack of regulation. As someone who comes from the sector, he knows that the more regulation there is the greater the cost burden on builders.
More regulation does not increase-----
I do not understand the contradiction in the point made by the Deputy. He should not look at any one measure in isolation. The Rebuilding Ireland home loan and affordable purchase schemes are only part of the affordability measures we have introduced. To date, we have introduced the An Bord Pleanála fast-track process to remove time and costs from the process for developers. It is proving successful so far. Thousands of applications are already before the board and many thousands are waiting to come before it with sites to provide more than 100 homes or more than 200 bed spaces. We also have the local infrastructure housing activation fund, LIHAF, which Deputy Richard Boyd Barrett and I discussed earlier. It provides for the use of €200 million in the first phase and €50 million in the second phase from a direct Exchequer-funded fund to have up to 21,000 homes built on sites across the country. We have a national turnkey campaign to do exactly what the Deputy spoke about - going to builders and developers to say to them that if they build on a site, we will be willing to buy a certain percentage from them as social and affordable housing in order to have a mix of housing. If the Deputy looks at the public land on the Rebuilding Ireland land map which is available online, he will note that one third of it has been allocated for social housing. We know that on the remaining two thirds we can build social and affordable housing, as well as private housing, to have a mix as we look to the future. That is work the Minister of State, Deputy Damien English, and I are doing with the new building unit in the Department and the new land management group.
Rental Sector Strategy
63. Deputy Barry Cowen asked the Minister for Housing, Planning and Local Government when the pilot project on affordable rental schemes will be launched; and if he will make a statement on the matter. [4546/18]
83. Deputy Jan O'Sullivan asked the Minister for Housing, Planning and Local Government his plans to develop a cost rental model of public housing; when the expert group on same will report to him; his further plans to ensure the sites in the ownership of local authorities that have been identified as suitable for housing will be prioritised for social and affordable housing; and if he will make a statement on the matter. [4336/18]
Further to last week's announcements by the Minister, there was some disappointment that a more extensive and expansive affordable rent scheme was not announced. There was mention of a pilot scheme or schemes. I hope the Minister might be in a position today to elaborate on that issue and inform the House where the schemes are to be located, what they entail, what potential they have and after what period the scheme or a similar one will be expanded.
I propose to take Questions Nos. 63 and 83 together.
I thank the Deputies for their questions. Against the background of the affordability pressures in the rental market in certain areas, the Government is determined to make affordable or cost rental a major part of the housing system. Under this approach, rents are set at levels to recover the construction costs and facilitate the management and administration of developments but with only a minimal profit margin included. To this end, on 22 January, I announced a suite of affordable housing initiatives, including a new affordable rental scheme, to be based on a cost rental model. Further details on the suite of initiatives announced last week can be found on the dedicated Rebuilding Ireland website.
A pilot project is being progressed by Dún Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an approved housing body, using land owned by the agency. I expect the pilot scheme to go to the market later this year to secure a development partner and the best value for both the State and prospective renters.
I want to see local authorities realise new affordable homes from their lands without delay. Following the housing summit with local authority chief executives on 22 January, I have asked each chief executive to furnish a report to me by middle of February, setting out his or her plans for delivery. I expect further affordable rental proposals, based on the cost rental model, to be put forward by local authorities, especially those in the main urban centres, as part of this process.
The delivery of additional affordable housing will rely on the State developing the full potential of its residential land bank. To oversee this important work, I have established a dedicated residential land management and development group. In addition, my Department will lead an expert group to examine the issues around and provide advice on the most appropriate way forward in delivering a more sustainable rental sector in Ireland. I am considering the terms of reference, formation and composition of the group with a view to establishing it in the coming weeks. In parallel, discussions are ongoing with the European Investment Bank on its experiences in developing and supporting cost rental and other affordable models that could also work in Ireland.
It appears that one scheme is progressing and, as the Minister stated, will come to fruition in Dún Laoghaire later this year. The Minister last week met with the chief executives of local authorities at the housing summit. He previously stated to the Joint Committee on Housing, Planning and Local Government that he would be in a position to provide it with the targets he had agreed with each local authority regarding what they would provide in the coming year. Can the Minister give an indication that he will come back to the House with such figures, to specifically include affordable rental schemes for each local authority?
The cost rental model makes up almost half the rental market in some European countries. There are huge gains for Irish society if we can move to a cost rental model because of the security it will give to people who are not able to own a home or who want to rent and have security in that choice. I want it to be a major part of our housing market but it will take time to get us there. That is why the first pilot scheme we are progressing is so important. It is only a pilot scheme but if it is successful, we will be able to expand it quite quickly because of conversations that I am having with the European Investment Bank, with which I have had a number of meetings to date. I will soon fly to Luxembourg to further those discussion because cost rental, as I said, is working in other European countries with European Investment Bank support and I want to have that support here in Ireland. Under LIHAF and a couple of other measures that some local authorities are pursuing we will see something akin to a cost rental model, whereby they use LIHAF either for a rental discount for certain properties or where local authorities get involved with new build-to-rent properties that are coming on line. Different things are happening that I want to come under this cost rental idea and to progress as quickly as possible.
I gave the commitment referred to by Deputy Cowen in advance of the housing summit. We had an engagement with the local authorities before the housing summit and they came back with indicative numbers. The housing summit was a chance for the Minister of State, Deputy English, and I to discuss some of the new schemes, such as the affordability measures, the enhanced leasing scheme and the new repair and lease scheme. The housing team in each local authority must now look at our targets for 2018 and out to 2021 and decide how it will achieve those targets. I want that to then be published in order that every councillor, Deputy and Senator knows exactly what is expected of each local authority. That transparency will facilitate accountability and delivery.
We have a special housing unit which has been on site. The Minister of State, Deputy English, has also made several site visits to local authorities, as have I, to go through their detailed plans. Whenever I am in a local authority area, as I was in Clare and Limerick on Monday, it is a chance for me to talk to the housing officer there and see not just the sites but also the timelines around delivery and to deal with any questions or difficulties the local authority may have in respect of the relationship with the Department.
In so far as cost rental is concerned, the targets will be for delivery under the Rebuilding Ireland numbers we have.
The Minister will have a further opportunity to speak. I call Deputy Jan O'Sullivan.
As regards build, acquisition and lease and everything else, those targets will not necessarily contain a detailed breakdown of where the cost rental will be.
I welcome that the expert group will be set up in the coming weeks. There is an urgency in that regard. I am very concerned that this is so far behind in terms of the approximately 700 sites that are available. I am particularly concerned that the Minister, when replying to the previous group of questions, stated that the 40% affordable could not be achieved in the relevant time period because of difficulties getting the sites opened up in time. My concern is that the family silver, the 700 sites, will largely be gone for private profit by the time we get cost rental models up and running.
Organisations such as the Nevin Institute and Threshold have stated that a greater scale is needed in this regard. Although progress has been made with the pilot scheme, we need the process to move far more quickly.
Why is Limerick on a lower level in respect of the home loan scheme? The Minister has stated that the affordable scheme is for all local authorities but I am concerned that Limerick, which is a larger city than Galway, nonetheless seems to be in the second tier in that regard.
As regards the cost rental model, one must consider the different affordability measures we are trying to progress. For example, we wanted to have a cost rental model on the O'Devaney Gardens site but when we ran the numbers it transpired that affordable purchase was a better way to go, so we prioritised affordable purchase as part of a mix of social and private housing on the site. People understand the idea of cost rental but that does not mean it is simple to implement on individual sites. That is why we are working with the European Investment Bank, which has many years experience of cost rental. We have prioritised the affordable purchase scheme because we know it can work as it has so well already in this country on the sites where it has been done. We now need to implement it on a larger scale.
Deputy O'Sullivan mentioned the figure of 700 sites, but those 700 sites are public or LIHAF sites. There are currently 29 sites and there will be 30 once Adamstown gets over the line, which will happen this week or next. Of the 29 sites, it is important to note that the decision to move them from the 40% affordable housing was because it was seen as a cap for developers into which they were not necessarily going to buy. As we got into certain difficulties with developers, they moved away from the process, which either meant the sites would not soon be opened up or we would not have any affordable homes thereon. Thanks to the LIHAF funding, as set out in the figures I gave to Deputy Boyd Barrett, the 29 sites will deliver 18,000 homes, of which 50% will cost below €320,000, 4,000 to 4,500 will be social and affordable and over 5,000, separate to the social and affordable, will have a LIHAF discount, while the rest will be sold at market prices. The delivery of those houses is progressing very quickly. A small amount of money was drawn down from LIHAF in 2017 but that will ramp up quite quickly in 2018 because I signed all those contracts in the latter half of last year.
Limerick is not being left out. The Rebuilding Ireland home loan scheme and the affordable purchase scheme are very much for Limerick. I had a fantastic opportunity to visit the Lord Edward Street developments and a number of other developments with Deputy O'Sullivan, which are absolutely the right way to progress in terms of rebuilding our country in a sustainable way, not just building a home but a community and a place. Limerick is very much part of that and has an advantage because it is doing so well. I have every faith in it, as a local authority, to be able to take advantage of these schemes.
64. Deputy Fergus O'Dowd asked the Minister for Housing, Planning and Local Government the structure of the new affordable purchase scheme. [4568/18]
65. Deputy Tom Neville asked the Minister for Housing, Planning and Local Government when he expects the first houses to be available under the new affordable purchase scheme. [4522/18]
75. Deputy Ruth Coppinger asked the Minister for Housing, Planning and Local Government if he will report on the affordable purchase scheme; his views on using public land for public housing; and if he will make a statement on the matter. [4570/18]
Eoin Ó BroinCeist:
87. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government his plans for the €25 million affordable housing fund; the details of his announcement of local authorities taking out an equity stake in affordable housing developments; the location in which the announced 3,000 affordable homes are to be located; and when construction will commence. [4586/18]
90. Deputy Paul Murphy asked the Minister for Housing, Planning and Local Government if a review of the affordable purchase scheme in order to use publicly owned land solely for social and affordable housing will be considered; and if he will make a statement on the matter. [4574/18]
94. Deputy Aindrias Moynihan asked the Minister for Housing, Planning and Local Government the schemes under consideration to increase the number of affordable homes and homes available to rent in addition to the recently announced Rebuilding Ireland home loan scheme; and if he will make a statement on the matter. [4565/18]
Richard Boyd BarrettCeist:
98. Deputy Richard Boyd Barrett asked the Minister for Housing, Planning and Local Government his plans to ensure that a mechanism is included in plans for affordable housing such that these houses remain affordable if sold in the future, including making it mandatory for the homes to only be sold back to the relevant local authority; and if he will make a statement on the matter. [4423/18]
114. Deputy Barry Cowen asked the Minister for Housing, Planning and Local Government the estimated number of houses per annum to be delivered by his recently announced affordable homes scheme; and the location and anticipated price. [4548/18]
120. Deputy Martin Heydon asked the Minister for Housing, Planning and Local Government the way in which the new affordable purchase scheme will work; the timeframe for completion of affordable homes; if they will be available nationwide; and if he will make a statement on the matter. [4572/18]
When does the Minister expect the first houses under the new affordable purchase scheme to be available?
I propose to take Questions Nos. 64, 65, 75, 87, 90, 94, 98, 114 and 120 together.
The new affordable purchase scheme will be governed by the relevant provisions of the Housing (Miscellaneous Provisions) Act 2009, which will soon be commenced. It will be targeted at households with annual gross income of below €50,000 for a single applicant or €75,000 for joint applicants. The maximum discount permissible under the Act is 40% and the sale prices will vary, depending on costs, the discount given and other relevant factors.
Once the relevant legislative provisions are commenced, I will develop detailed regulations covering the operation of the scheme, including the full eligibility criteria. The elected members of each local authority will then determine the order of priority for the sale of affordable homes to eligible households.
The new scheme will see local authorities taking a fully repayable equity share, to the value of the discount given, in all homes that are sold. Importantly, this will provide for a sustainable funding stream for affordable homes into the future. The funds arising from repayment of the equity shares will be recycled into the provision of more affordable housing through the establishment of an affordable dwellings fund, which will be managed by the Housing Finance Agency.
I anticipate that there is significant potential for the delivery of affordable homes on local authority lands. Following the housing summit on 22 January, I asked local authority chief executives to submit, by mid-February, an outline of their respective affordable housing programmes, with a particular emphasis on Dublin, Galway, and Cork, where there is currently the greatest affordability gap, notwithstanding Limerick and the importance that both Deputy Jan O'Sullivan and I placed on it in our earlier discussion.
The Minister should tell his officials about that.
The overall scale of delivery, and timescales, will be informed by these responses.
In addition, I am providing funding of €25 million over 2018 and 2019 for a targeted programme whereby local authorities will make low-cost serviced sites available to approved housing bodies or co-operative housing associations in specific areas. This approach has worked well in certain areas and I would like for it to be delivered on a greater scale in other areas, within the parameters of the overall scheme that will soon be set down in regulations. My Department is currently drawing up the criteria for access to this scheme, taking account of broader policy on affordable housing, and will be seeking submissions in that regard from local authorities and Members of the Oireachtas in the coming weeks.
As I stated, the Government is also determined to make cost rental a major part of the Irish housing system. Under this approach, rents are set at levels to recover construction costs and to facilitate the management and administration of developments. Accepting that this innovative concept will take time to test and deliver, a pilot cost rental project is currently being progressed in Dún Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an approved housing body, on publicly owned land.
The pilot project is providing significant lessons to the State in terms of the delivery of cost rental and, in parallel, discussions are ongoing with the European Investment Bank regarding its experiences in delivering cost rental and other affordable models in other jurisdictions that could also work in Ireland.
The delivery of affordable housing will rely on the State developing the full potential of its residential land bank. The residential land management and development group, which is now being established and which will be chaired by the Minister of State, Deputy Damien English, will play a key role in driving delivery as speedily as possible.
I welcome the initiative from the Minister. Obviously, we have seen there is a cohort, a particular demographic, who have been hit very hard in the crash in recent years. Having been hit that hard, such people would have applied to get onto a council housing list but, as circumstances have improved again, and as they are starting to get back into employment and starting to climb the ladder in that employment, their salary increases. This is pushing people out of the loop for social housing and into a bracket where they are unable to access a mortgage while being unable to stay on the council housing list. This is the middle group that is getting caught and these initiatives are very welcome in trying to target them. Will the Minister give a timeline for this and outline when he would foresee the first transactions taking place?
I thank the Deputy for welcoming the initiatives. People were hit very badly by the economic crash that occurred following the bank bailout in 2008 and the intervention from the IMF and ECB in 2010. What we saw was a collapse in property prices across the country of somewhere in the region of 54% from a very high peak. As we look at escalating property prices now, year on year, prices are only at about 71% of where they were in 2007, yet they are still pricing people out of the market. It is important, as we recover our economy and as we rebuild our housing sector, which was destroyed in the collapse, that we do so in a sustainable way and that we make sure affordability is at the centre of everything we are trying to do. That is why we introduced the Rebuilding Ireland home loan and why we talk about certain caps around that loan, namely, €320,000 in the greater Dublin area, Cork and Galway, although not in Limerick, which may please the Deputy, and €250,000 everywhere else. Up to the end of October 2017, roughly 67% of homes bought by first-time buyers in the greater Dublin area, Cork and Galway were bought for less than €320,000 and roughly 91% of first-time buyers buying homes everywhere else paid less than €250,000. There is affordability, although we need to help where we can.
In regard to houses under the affordable purchase scheme, we have identified lands and money. At sites like O'Devaney Gardens, we will see the first homes constructed this year. I have asked local authorities to come back and see if there are particular sites where, if we use technologies like rapid-build, we could get some of these completed this year. That is what I am going to hear in the coming weeks.
While much of the talk on the different schemes has been on the availability of houses to buy, I want to also look at people who want to be in the rental sector and the availability of houses for people who choose to rent. Rent rates are continuing to rise. In Macroom, for example, it is over €800 for a three-bed and it is €1,300 for a three-bed in Ballincollig. It is getting harder and harder for people to afford the rent, even if they can find a house. What kind of plan is the Minister considering putting in place to make available more rental properties? There are vacant units in our towns and villages, whether they are over shops or in houses. Has the Minister a plan to put houses into circulation and make them available for people? The renovation scheme for council houses had a very low take-up of only 30 houses overall. Clearly, that is not the route or, at least, some improvement needs to be made. There needs to be some way of making available more properties for people who choose to rent in villages and towns around the country.
I thank the Deputy. It is important he acknowledges that there are people who want to rent and that it is a choice that people want to make because it suits their particular lifestyle. Too often, when we have this debate, speakers do not acknowledge that cohort of people. I am glad the Deputy recognises them.
When I talked about the peaks in 2007 and how we are off the peak in terms of house prices, it is the case that rents are above the peak level of 2007 because of the dramatic shortage we have and the way the housing sector was destroyed in the crash. There is a real affordability challenge around people who are trying to rent and that is why we are trying to progress the cost rental model as quickly as possible.
The rent pressure zones were an affordability measure that was put in place. While it is still very new, from the evidence we have to date, it is working, although we need to review how it has worked and what improvements can be made. In the priority legislation for this term, we are bringing in some changes around rent pressure zones as part of the change management programme for the Residential Tenancies Board, of which we spoke earlier. I am looking at an initiative around working with landlords in an incentive-based way to develop longer-term leases for tenants. I have discussed this with some of my colleagues and am going to progress this with the Minister, Deputy Donohoe, over the coming months. We have the new build-to-rent guidelines that are to encourage more professional landlords and larger landlords, and more investment into the rental sector in order to have a more mature rental market. I and the Minister of State, Deputy English, introduced the change-of-use regulations for units over shops in towns and villages whereby people can now take a vacant commercial premises over the shop and turn it into a home without the need for planning permission. I believe this will be very successful in getting life back into towns and villages but also in terms of providing new accommodation for people who want to rent. We have reformed the repair and leasing scheme and we are expecting a much greater uptake this year as a result of the changes made.
This is my third go at this. The Minister has an impressive ability to reel off statistics indicating the effectiveness of his programmes but to resolutely refuse to address the problems I am raising about particular sites and about affordability generally. I will repeat this for the third time. In whole swathes of Dublin and other areas, the Minister's affordable schemes will not work because he has not ensured that private developers set an affordable price that is actually affordable, or committed them to any percentage, having abandoned a 40% percentage. I would like the Minister to tell me what is the percentage on Cherrywood or any other site where the prices are currently way in excess of prices on any of the Minister's schemes. In addition, for the affordable schemes on public land, will the Minister guarantee they will stay affordable into the future or will "affordable" become a stalking horse for privatisation of public land? The only way that will not happen is if the Minister ensures that affordable houses on public land have to be sold back to the local authority and cannot be sold onto the market in the future. Will the Minister make that commitment?
Every time we talk about numbers and statistics, behind that are individuals and families. When we talk about HAP, the Deputy will mention an individual who is having a difficulty with HAP, and I understand that and we try to work to resolve those difficulties. When I talk about 32,000 families and individuals who are in HAP, those are families and individuals for whom HAP is working. I have just been down at the HAP offices in Limerick, where we talked about some of the cases and queries that are received in the call centre and some of the difficulties they have. While I am trying to remember the percentages off the top of my head, in something like three out of four calls the problem is resolved during that call. HAP is working for people.
For a few months, maybe a year.
These statistics are important because they tell us something about our policies and whether we are moving in the right direction, and that is why I give them. It is also important that we talk about individual cases - hard cases as well as good cases, because we have both. The hard cases will help us make sure we have more good cases, which is why it is important we talk about them.
What about affordable housing?
The median house price up to the end of October last year was around €340,000 to €350,000 in Dublin. Under our Rebuilding Ireland home loan, where a couple is earning less than €75,000, they will be able to buy a house at about €320,000, and it is capped at that. To take first-time buyers last year in Dublin, Galway and Cork, 67% of homes were sold for less than €320,000 for first-time buyers-----
I am talking about Dublin.
-----so people are able to afford to buy homes and apartments in Dublin. The figures tell us that people can afford to buy homes in Dublin and they did last year, which is what is happening.
I will give the Deputy the figures around affordability on Cherrywood, as I committed in the Oireachtas committee, when I have finalised the Adamstown agreement. LIHAF 1 will then be finished on 30 sites and I will be able to give as much detail as I can, while obviously respecting the fact that LIHAF 2 will have some commercial sensitivities around it as well.
The rent control zones were meant to be helping the tenant and keeping some control on rents. However, the scheme is a blunt instrument and is not working the way it should. There was meant to be a review. Has that review been conducted? When will the information be available? Clearly, there are serious deficiencies in the rent control zones.
For example, the estate of Classes Lake is split between two areas. One side of it is inside the rent control zone and the other is outside it because it is based on electoral areas. There are so many other deficiencies. People do not necessarily see the rent that the last tenant was paying and do not know whether it has been increased by over 4%. This was meant to be reviewed previously. Is that review going to be conducted any time soon or has it already been done? Will it be published and can we get action on those deficiencies?
I restate that the rent pressure zones, RPZs, are new. It is important with any new policy that we keep it under review. We try to keep it under review almost constantly. I have had a number of engagements with the CEO of the Residential Tenancies Board, RTB, to keep talking about what exactly is happening in the RPZs. If we look at the change from quarter 2 of last year to quarter 3, we saw some surprising things in terms of the rate of inflation in Dublin, which is under RPZs. We also saw an increase of about 5,000 or 6,000 new tenancies on the RPZ registration database. It is not yet clear if that is new stock coming onto the market or existing stock that had been registered under a different person's name and that was sold to another landlord or for which a different person in the relationship registered the tenancy for that year. Part of the change management programme that we have under way with the RTB is to give it annual registrations of tenancies so that it can have much better data as to the number of landlords that are in the market so that we can see the number of new landlords coming in and the impact that might have on the RPZs.
The RPZs have been reviewed. That work is now being finalised with the RTB and when I have it I will be able to bring it to the relevant Oireachtas committee or here to the Dáil. We can then discuss the implications of the review. It is a very new policy. Almost every quarter, new areas have come under RPZs because they have met the two sets of qualifying criteria. In the last quarter, they did not, which I thought was interesting. That tells us a story in and of itself.
I understand the complaints some Deputies are making about the effect an RPZ is having on an area adjacent to it that is not classified as an RPZ. We are looking at that as well.
I welcome the newly announced affordable house purchase scheme. It is a really important element of everything the Minister is trying to do in Rebuilding Ireland. What detail has the Minister in respect of lands that Kildare County Council might have available for the affordable house purchase scheme? Does he have a projection of how many houses might become available in County Kildare as part of it? Affordable housing is becoming available and I think the scheme applies to a value of up to €320,000 in Kildare. The Minister might clarify that.
The focus in the media has very largely been on homelessness and the different challenges the Minister faces in his Department. However, I have a lot of constituents who are working and who aspire to buy and live in their own home in the future. That is not always attainable. The affordable purchase scheme will allow those people to aspire to own their own homes within the communities where they were born and raised, with all the family supports that go with that. It is really important for us in Kildare, where we have seen a very significant increase in house price pressure. I very much welcome the scheme and look forward to seeing it being rolled out in Kildare.
Under the affordable purchase scheme, we have already identified land and finance for at least 3,000 homes. At the housing summit we had with local authorities last Monday, I talked about our ambition for reaching 10,000 under the affordable purchase scheme, which is achievable because of the way it has been set up. By taking an equity stake, when the home is sold or part of the equity is paid back, that money will go into a rolling fund for more affordable purchase homes. I have asked each local authority chief executive to look at the land banks they have and to see what proportion of that land can be developed for affordable schemes, bearing in mind our commitment to mixed development - social, affordable and private. I think there are about 135 ha in Kildare where we have identified the potential for building social, affordable and perhaps some private homes as well. I have asked the local authority chief executive to come back on that front.
There is obviously going to be high demand for this. It is important, going back to 2007, to remember that was the only year that Part V delivered more than 3,000 homes across the country. That was a year in which we were building more than 70,000 homes. As we rebuild our construction industry and rebuild homes here, we are going to have the affordable purchase scheme. It will come on line to a greater extent as we are building more homes each year. The first affordable purchase scheme homes will begin construction towards the end of this year. I have asked some local authorities in areas of particularly high interest to identify a piece of land that is serviced and has planning and to consider whether, if they use rapid technologies, we could actually have some affordable purchase schemes this year. I think it is possible. We are going to try to achieve it.
Local Authority Housing Provision
66. Deputy Tom Neville asked the Minister for Housing, Planning and Local Government his plans to monitor the effectiveness of local authorities' building programmes in 2018. [4523/18]
I welcome that the Minister, Deputy Eoghan Murph,y visited Limerick city last week. Limerick City is a sister constituency of mine as I am from Limerick County. Some 79 council housing units were opened on Lord Edward Street. I have people on the fringes of the city who are in the county constituency and are looking to obtain housing in that scheme.
Can the Minister outline his plans to monitor the effectiveness of local authorities' building programmes in 2018?
Since the publication of the Rebuilding Ireland Action Plan, the Government’s attention has been firmly focused on delivery. The implementation of the plan is overseen by the Cabinet committee on infrastructure, housing and climate change, chaired by An Taoiseach. Within my Department, implementation is driven at ministerial level and led at official level by the Secretary General and other senior officials on an ongoing basis.
The housing summit model was introduced last September for the purpose of monitoring and driving delivery under Rebuilding Ireland. I held a second housing summit with local authority chief executives on 22 January, when each chief executive was requested to furnish a report by the middle of February setting out how his or her local authority will deliver on its social housing targets over the coming years. It is intended that the targets will be published. Progress made by each local authority in terms of delivery against these targets will also be published on an ongoing basis, providing greater accountability and driving delivery. Transparency in construction delivery is also facilitated by my Department's quarterly publication of social housing construction status reports, available on the Rebuilding Ireland website.
In order to provide further delivery impetus, I have established a new delivery team in my Department, working with local authorities and approved housing bodies. This is additional to the continuous contact that I, the Minister of State, Deputy Damien English, and my Department have with local authorities to drive housing delivery, including quarterly meetings, where progress on construction projects is reviewed and technical issues are resolved.
The Minister mentioned 2006 and 2007. I cast my mind back to when I was first going into the council in the noughties. There were council estates being built in small rural towns throughout County Limerick. We want to get back to that space again, with small pocket, turnkey type estates being built. I ask the Minister to continue to liaise with the local authorities and to hold them accountable in delivering what they need to deliver on the ground, particularly in the county and rural areas.
I ask the Minister to be mindful of the other Departments as well in respect of broadband, transport and economic development. All that will be the engine driver of this. Something arising from speaking to the ordinary one-man or two-man band type builders is that there is an increasing construction economy starting to happen. There is also now a shortage of labour and skills. The Department of Education and Skills is working on developing apprenticeships. This needs to be pushed big time. I ask that the Minister's Department would work in conjunction with the Department of Education and Skills. There needs to be a refocus on apprenticeships and getting people back into the sector. We need to attract people back because the labour shortage is starting to kick in.
I thank the Deputy and his colleagues for the very kind welcome to Limerick. I very much appreciated the band; that was a nice touch.
Delivery is key in everything that we do. Rebuilding Ireland is our plan but it has to be delivered. We do not just release a policy and step back from it. That is why we started this housing summit model to bring the local authority chief executives in. I also meet with the housing body CEOs and the voluntary sector and NGOs to talk about how we are going to resolve this housing and homelessness crisis.
Turnkey type estates are exactly the way we should be going with local authorities where it makes sense. We are rolling out a national turnkey campaign to take advantage of existing sites and builders who are willing to build a cluster of 30, 40 or 50 homes that we can then bring in for social, affordable and private use.
Other infrastructure is, of course, key. Thankfully, one of the key responsibilities I have under my Department is Irish Water and making sure it is working in tune with our housing policies so there is no delay in opening up a new land bank because it has not been serviced by the appropriate water infrastructure. The point about broadband is very well made. It is something that myself and the Minister, Deputy Naughten, have discussed, not only in the context of what we are doing today in housing but also in the context of the future housing needs of our population. At least 550,000 new homes are needed between now and 2040. We need to make sure we are progressing our plans for things like broadband and other key infrastructure at the same time.
In respect of a potential skills shortage, I have discussed it with the Construction Industry Federation.
I am keen on particular programmes which get people from long-term unemployment back into developing construction skills and having jobs. I was at one recently which had taken a group of ten people from long-term unemployment, one from homelessness, and over the course of a three to four week programme had given them a course on construction skills. All were employed and starting on sites the following week. It is also worth noting new technologies relating to prefabrication, which we call rapid build but which has a host of other names, including modular homes. These will help since not as many people will be needed on site as were traditionally needed in the past so that we can meet the housing need without needing as many people, but we still need people to have the requisite skills.