I move:
That leave be granted to introduce a Bill entitled an Act to introduce a requirement for property developers who are in receipt of State subsidies to publish annual financial statements.
Gabhaim buíochas leis an Leas-Cheann Comhairle. This is a very straightforward Bill. If it is passed, it will provide transparency on the profit levels of developers who benefit from Government schemes and subsidies. For example, the shared equity scheme does this by amending section 41 of the Affordable Housing Act. If it is passed, we will have full transparency over developers with regard to what profit levels they have if they are in receipt or are beneficiaries of Government schemes or subsidies.
I am, in particular, looking at the shared equity scheme but it could, of course, apply to other schemes as well. It would require developers in those instances to publish annual profit and loss accounts, an auditor’s report and a balance sheet. A publicly listed company would already be doing this, but if it is not publicly listed it will be required to do so as a result of this legislation. This will enable us to see what the effects of Government subsidies and schemes are on companies' profit levels.
There is considerable evidence that a number of schemes are driving up house prices while increasing profits for developers. We know that the latest shared equity scheme was introduced after extensive lobbying from the property development industry. The lobbying register shows lobbying from Property Industry Ireland and the Construction Industry Federation. They were specifically looking for the introduction of this scheme. The lobbying register shows that the Government gave more time to consulting lobbyists on developments regarding the introduction of these measures than it gave for scrutiny of this legislation in the Dáil. That is what the record shows with regard to this legislation.
We have considerable evidence that these schemes are driving up house prices in Ireland. The Economic and Social Research Institute has said that if the help-to-buy scheme were scrapped, it would help to bring down house prices. Recent analysis by architect and academic Orla Hegarty has shown that the shared equity scheme has increased new-build house prices in Dublin 15 by €92,000. At the same time BNP Paribas has noted that new-build house prices are increasing at 18 times the rate of second-hand homes. It specifically cites the introduction of a number of Government schemes which are driving up the price of new-builds.
The residential property price index, as published by the Central Statistics Office, CSO, also shows that the prices of new-build and second-hand homes are diverging. They used to be linked when there was not much of a gap between price increases on second-hand homes and new-build homes but the CSO index shows, especially since the introduction of the shared equity scheme, that they are now diverging. The index shows that new-build house prices are increasing at 18 times the rate of second-hand homes. This is a new divergence. The data show that up to the introduction of the shared equity scheme, the prices of these different property types were quite closely linked and there was not a large gap between them. According to a review of the help-to-buy scheme carried out by the Department of Finance, this scheme is socially regressive and does not offer the State value for money. The Department also said that it should be dropped immediately.
The OECD has warned that the shared equity scheme could be fuelling house prices. The tax strategy group also issued warnings and noted that in 2021, 63% of help-to-buy claims were used to buy properties valued above the average national house price and, indeed, one third of help-to-buy recipients did not need the scheme in order to meet the 10% deposit requirement, and were instead using the scheme to create larger deposits, which, of course is a deadweight loss.
We have ample evidence from the UK of similar schemes leading to a boost in developers' profits. We do not have full transparency here, so the principle of the Bill I am proposing is very simple. We do not have transparency around the profits of developers who are in receipt of or are beneficiaries of Government schemes and of taxpayer-funded schemes.
There should be full transparency if they are beneficiaries of these schemes. That is all. If the Government is confident that its schemes are not boosting developers' profits, it should be very happy to support this Bill because it would give us transparency over exactly what is happening with the profit levels of developers benefiting from these schemes.
