I move amendment No. 1:
In page 10, line 13, after “interest” to insert “including lower interest rates and longer maturities”.
On Second Stage and again on Committee Stage we had a detailed discussion of whether Home Building Finance Ireland could be used in particular to target small and medium sized builders who are unable to access bank finance on the open market but have credible and viable projects. One of the issues we discussed on both of those occasions was whether one could have a facility whereby builders unable to access finance on the open market would be able to access lower-cost finance or finance stretched over longer maturities via HBFI. We had some discussion at an earlier stage with officials from the Department who seemed to suggest that this might be in breach of EU state aid rules. We pointed out at the time that the Rebuilding Ireland home loan provides such a mechanism where the State is able to lend at lower interest rates over potentially longer maturities to those seeking mortgages in that instance, on foot of information showing that they were not able to access mainstream bank finance. It seems to me that there are no EU state aid rule prohibitions on ensuring that is the case. What we are trying to do in the amendment is to give HBFI the option, if it so chooses in the context of its lending, to consider whether offering lower but nonetheless commercially returnable rates at lower interest or longer maturities to those kinds of builders.
I have used this example in all of the discussions we have had on the issue to date. The local infrastructure housing activation fund, LIHAF, as originally designed, was intended to assist builders who were unable to proceed with housing developments because of the lack of funding for infrastructure. In exchange, the Government was to get some kind of affordability dividend. When HBFI was first announced in budget 2018 almost one year ago, Sinn Féin's response was that it could potentially be a good thing but that it needed to target builders who could not access finance elsewhere. Furthermore, there had to be an affordability dividend for the home purchaser and, ultimately, for the social good, housing policy and the State. The worry we have about the way HBFI is constructed in the legislation is a little like our concern about the LIHAF in that there is nothing to direct or guide HBFI into this kind of lending. The amendment provides that this could be an option. It is not prescriptive and it does not mean all HBFI lending has to be on this basis.
There is a reason this is important. I bring to the attention of the Minister of State, a recently published working paper by the Economic and Social Research Institute, ESRI, published by Eoin Corrigan, Daniel Foley and others, on precisely this issue of affordability. We hear constantly in housing debates that we have an issue with housing supply, which is the case, but it is not just housing supply in and of itself, it is about having the right types of houses, at the right price and targeting the right purchasers. If they are not part of the plan, we will not meet the need. One of the startling findings in the June ESRI working paper is the scale of the affordability crisis. It found that in lower income groups both in the rental sector and also in the mortgage sector there is a very large cohort of people who are now paying more than 40% of their disposable income on rental costs. That is not just a feature of the current housing market. The research identified that it has been a structural feature of the housing system as far back as 2003, which was the oldest data examined.
There is an urgent need for us to think about how we use Government policy and public resources to ensure that those people who need houses at lower prices are able to access them. The difficulty is that the other schemes the Government has in place, for example, the help-to-buy scheme, the tax rebate scheme and the Rebuilding Ireland home loan scheme, are not managing to provide assistance to working families on modest and average incomes, in particular in large urban areas such as Dublin and Cork, who are looking to buy but because of the unaffordability of prices of €320,000 and more are not able to get onto the property ladder.
Our proposition is very sensible. It has merit to provide that some or a significant portion of HBFI lending should target builders who are trying to provide these kinds of facilities. It is also important to note that the only affordable housing project developed in the city of Dublin in recent years is a partnership between the community in Ballymun, Dublin City Council and the Ó Cualann Cohousing Alliance. They brought together private bank finance in conjunction with the co-operative housing model and council land to deliver homes for purchase prices of between €170,000 and €225,000 for good quality two and three bedroom homes. There is a value in trying to find a way of using the HBFI loan facility to access those kinds of small builders and small co-ops in partnership with local authorities to ensure genuine affordability. Our worry is that unless the Bill is amended and there is some element of targeted affordability for small to medium sized builders, the houses that are built will be of a price beyond the range of affordability for households, for example, on a gross income of €80,000 for two earners or below €50,000 for a single earner and they will simply be unattainable.
In the previous discussions the Minister of State's counterpart was sympathetic to the principle of what we are trying to do but did not accept the way in which are trying to do it. I am interested, therefore, in hearing his response in terms of how he thinks the loan fund can be used to achieve what we are seeking.
Almost the entire House believes that Home Building Finance Ireland, HBFI, is a good project. Unless it is used to target and guarantee affordable homes, however, and this amendment is one way to ensure that, my fear is that, like the local infrastructure housing activation fund, LIHAF, money will go to developers who do not need it and there will not be an affordable dividend for home purchasers or Government housing policy. In light of this being funded by €750 million of taxpayers' money, that would be a missed opportunity.