Joint Committee on Housing, Local Government and Heritage díospóireacht -
Tuesday, 29 Mar 2022

Social and Affordable Housing: Discussion (Resumed)

Acting Chairman (Deputy Emer Higgins)

I thank all the witnesses for coming. From the County and City Management Association, CCMA, we are joined by Mr. Frank Curran, chair of the housing, building and land use committee, Mr. Eddie Taaffe, programme co-ordinator of the Local Government Management Agency, LGMA, housing delivery co-ordination office, and Ms Margaret Geraghty, assistant programme co-ordinator at the same office. From the Housing Alliance, we are joined by Mr. Sean O'Connor, chair, Ms Sharon Cosgrove, director, and Ms Camille Loftus, executive director. Opening statements and briefings have been circulated to members. I understand the CCMA representatives may have to leave a little early. I ask members to bear that in mind when they ask their questions. I will begin by asking the witnesses for their opening statements. Members will then be invited to address their questions. As always, I ask them to please remember to confine their questions to five minutes at first. If possible, we will come back to them at the end.

Before we begin, I will go through the rigmarole of reminding members of the constitutional requirement that they must be physically present within the confines of the place where the Parliament has chosen to sit, namely, Leinster House, in order to participate in public meetings. Members and witnesses are expected not to abuse the privilege they enjoy. It is my duty as temporary Chairperson to ensure this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with this direction.

Members and witnesses are reminded of the long-standing parliamentary privilege practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. The opening statements have been submitted to the committee and will be published on its website after this meeting.

I call Mr. Curran to make his opening statement.

Mr. Frank Curran

I am chairman of the CCMA subcommittee on housing, building and land use. I am also chief executive of Dún Laoghaire-Rathdown County Council. I am accompanied by Mr. Taaffe and Ms Geraghty of the LGMA's housing delivery co-ordination office, which co-ordinates the delivery of social and affordable housing by local authorities. On behalf of the CCMA, I thank the committee for its invitation and look forward to assisting it in consideration of social and affordable housing.

As members are aware, all local authorities, along with approved housing bodies, AHBs, perform an extensive range of housing services, including a multibillion euro programme of new social housing construction throughout the country. Under the Housing for All programme, local authorities and their AHB partners have been tasked with delivering 47,600 new-build social dwellings by 2026 and an additional 3,500 dwellings via long-term leasing. In addition, local authorities have been tasked with delivering 6,750 affordable purchase dwellings, 800 cost rental and a further 1,400 affordable dwellings via the recent reintroduction of Part V affordable housing delivery.

At present, the delivery pipeline for new-build social housing stands at approximately 23,000 dwellings, of which 11,000 are under construction, 3,500 are about to commence on-site and a further 8,500 are in the planning and design phase. These dwellings are spread over approximately 1,200 separate projects being delivered by local authorities and AHBs. In addition to these figures, proposals for a further 8,000 dwellings are currently being considered by local authorities and AHBs. Local authorities are currently recruiting more than 200 additional architects, engineers and administrative staff to assist in social housing delivery. Arrangements to recruit these additional staff to deliver affordable housing are also being put in place and this is strongly welcomed by local authorities.

In order to ensure that local authorities can deliver housing in accordance with their delivery targets, each local authority was asked to submit a housing delivery action plan to the Department. These plans contain the how, where and when of social and affordable housing delivery over the next five years and have been developed in conjunction with AHBs. The plans are currently being finalised in partnership with the Department of Housing, Local Government and Heritage and are expected to be published in April.

Local authorities are currently developing a significant pipeline of projects to deliver affordable purchase and cost-rental housing. Various procurement and delivery models are being employed, such as design and build, competitive dialogue, public private partnerships, PPPs, and advance purchase arrangements to activate uncommenced planning permissions for housing developments. In addition, local authorities have undertaken a significant review of their existing housing land banks to assess their ongoing land requirements to deliver on the social and affordable housing targets in Housing for All. The review is being undertaken in close co-ordination with Irish Water to ensure there is close alignment between Irish Water and local authority housing teams with regard to providing the necessary infrastructure to facilitate housing development. Local authorities, in conjunction with the housing delivery co-ordination office, are continuously engaging with the Department regarding delivery of social and affordable housing. In particular, there has been extensive engagement on the terms and criteria of the affordable housing fund and the soon to be published affordable purchase regulations.

The CCMA is confident that while local authorities can deliver on the objectives contained within Housing for All, it must be recognised that the construction sector continues to experience issues in relation to material price increases, supply chain delays and disruption, and an increasing demand for skilled workers. These issues have the potential to impact upon delivery and will require close co-operation by all stakeholders for the foreseeable future.

Acting Chairman (Deputy Emer Higgins)

I invite Mr. O'Connor to make his opening statement on behalf of the Housing Alliance.

Mr. Sean O'Connor

I will hand over to Ms Loftus, our executive director.

Ms Camille Loftus

I thank the committee for the invitation to address it on behalf of Mr. O'Connor, outgoing chair of Tuath Housing - this is his last act as chair of that association - and Ms Cosgrove, CEO of Oaklee Housing.

The Housing Alliance is a collaboration between six of Ireland’s largest not-for-profit housing bodies. The alliance was formed to promote the delivery of social and affordable housing, to address barriers and challenges to delivery and to promote strong professional approaches to housing management. We collaborate and work in partnership with other stakeholders to build better communities. Collectively, members provide almost 30,000 homes, delivered in partnership with Government at local and national level. While the pandemic has impacted construction activity, the Housing Alliance provided over 3,750 new homes last year. Members currently have plans in place to deliver a further 4,350 homes this year. Development AHBs have long advocated for the introduction of cost rental in Ireland. Three Housing Alliance members have developed the country’s first cost-rental homes and are eager to develop this new sector at scale. In addition, two Housing Alliance members manage PPP bundles providing approximately 1,000 new homes.

AHBs are not-for-profit housing organisations, which are approved by Government to provide and manage social and affordable homes for people in need. The most recent regulation report indicates the sector provides more than 43,000 social and affordable homes. It is a diverse sector, with a small number of larger providers and a large number of smaller providers. Some 80% of AHB homes are provided by just 8% of AHBs and approximately two thirds of all AHB stock is provided by members of the Housing Alliance. All AHBs have a singular mission in common, namely, to provide high-quality, secure and affordable homes for people in need.

This mission is reflected in the legislation governing the sector. By law, all approved housing bodies must provide and-or manage homes to alleviate housing need as their primary purpose; prohibit distribution of profit, surpluses, bonuses or dividends; and they must use all property solely to provide and-or manage homes to alleviate housing need. Providing homes for people who need them is what we do. It is all that we do. All our property must be used to address housing need and for no other purpose.

Housing Alliance members, in common with other AHBs, allocate their tenancies to people on the social housing waiting list. Local authorities have exclusive nomination rights to the social homes we provide. Our tenants do not have the right to buy their homes, meaning that our stock always remains within the social housing sector and is available to meet future housing need. Our tenants pay the same differential rent as local authority tenants. Regardless of the size of the home, our social tenants pay a rent determined by their household income to ensure that rent is always affordable.

Not-for-profit housing bodies are regulated by three statutory regulators, which are the Charities Regulator, the Residential Tenancies Board and the new Approved Housing Bodies Regulatory Authority. This makes AHBs distinctive. No other housing provider in Ireland is subject to this range of statutory standards.

As Mr. Curran mentioned, the target for new build social housing under Housing for All is 47,600 homes. AHBs are to provide 45%, or almost 21,500 of these homes, an average of nearly 4,300 homes per annum. Housing Alliance members have plans in place to deliver 4,350 homes this year. Local authorities are developing housing delivery action plans, including detailing existing land holdings and land acquisition required to deliver the targets. From the Housing Alliance perspective, this is a particularly important aspect. Access to low cost land is one of the critical enabling factors that will allow us to reach the level of output both we and Government desire. The Housing Alliance looks forward to working in partnership with Government at national and local level to realise the goals of Housing for All. Implementation will be challenging and will require the right policy and practice framework to be put in place by Government.

Eight in ten new homes developed by the Housing Alliance use the capital advance leasing facility-payment and availability, CALF-P&A, funding mechanism, which requires members to borrow 100% of the costs. This makes the AHB sector in Ireland unique. No other European state has asked not-for-profit housing bodies to meet such a significant proportion of housing need without any state grant provision, particularly at such an early stage in the sector’s development. Consequently, Housing Alliance members face gearing ratios much higher than, for example, their peers in the UK. These high gearing levels are the primary limiting factor for future housing development by larger AHBs. Members are reaching a point where they will be unable to add further debt to their books to develop new homes.

Analysis conducted by Savills social and affordable housing consultancy concluded that reintroducing an element of capital grant alongside the CALF-P&A model would extend the ability of AHBs to develop new homes in the long term. Accordingly, the Housing Alliance calls for CALF and cost rental equity loan, CREL, schemes to be converted from a loan to a grant in order to release capacity within the sector to deliver more homes. We remain committed to ensuring our housing stock is always available to address housing need. Providing good homes for people who need them is what we do, and it is all we want to do.

Access to serviced land at a low cost is critical to delivering affordable housing. Strategic land management capacity is, in our view, critical to ensuring the supply of social and affordable housing that Ireland needs, both now and in the future. There is a risk that competition for land could exacerbate the growing housing affordability challenge. The role of the Land Development Agency in improving the functioning of the Irish housing market by providing a sustainable supply of land for housing will be important in this regard. There is significant development capacity within the Housing Alliance if we have access to land at an affordable cost. Access to publicly-owned land on which to develop new homes is critical. As our primary funding mechanism is 100% debt financed, the Housing Alliance cannot increase the supply of land by taking on further debt. Grant funding would be required.

An obvious challenge will be ensuring an adequate supply of skilled labour to develop and deliver these homes, alongside retrofitting targets and the need to remedy construction defects. Brexit, Covid and the war in Ukraine have impacted supply chains and increased the cost of materials. In this regard, we are all price takers, and need to recognise that these factors will increase the cost of delivering new homes, notwithstanding due diligence in relation to cost control. A further challenge is achieving the right housing mix. Over half of the social housing waiting list is comprised of single adult households. Likewise members’ experience of cost rental indicates that demand is strongest for smaller homes. In general, these homes are more costly to deliver than larger homes. We need to recognise that delivering the appropriate mix is likely to increase the average cost of delivery. Planning delays can also slow down new supply. The phenomenon of NIMBYism is not unique to Ireland, but in our view is grounded in a misconception about social housing and the people who live in it. Housing Alliance members work hard to manage and maintain homes to a high standard, and to build inclusive, sustainable, and mixed communities. Political leadership at local and national level is important, we believe, in addressing these concerns.

The Housing Alliance has made a significant contribution to increasing the supply of social and affordable housing. Providing high quality, secure, and affordable homes to people who need them is what we do. Our homes will remain available to alleviate housing need as long as there are people in need of social and affordable housing. The Housing Alliance is keen to increase our contribution to addressing Ireland's housing needs, and we have the skills, experience and expertise to do so. To release that potential, we need a stable and sustainable system of funding that addresses the level of debt members now carry, and access to land on which to develop housing at an affordable cost.

Deputy Joe Flaherty

I congratulate Mr. O'Connor on his tenure as chair. Hopefully he can leave here unblemished and have a successful tenure. I pay tribute to the Housing Alliance for its important work in providing housing. Approved housing bodies across the country have a success story to tell. It is great to see that it is continuing and the scale of their ambition. I have two key questions. It does not matter who takes them. They project 4,350 homes for this year. Over nine years, that would be probably 39,000. Would it be fair to say that they will probably far surpass the target of 21,500 in the Housing for All programme?

Deputy Stephen Matthews took the Chair.

Mr. Sean O'Connor

Ms Loftus has some of our statistics.

Ms Camille Loftus

Last year, even with the slowdown in output as a result of Covid, we produced just under 4,000 new homes, which is a reasonable baseline assumption for the output of the Housing Alliance.

Deputy Joe Flaherty

An important message from today's meeting is that the Housing Alliance will deliver almost 40,000 houses over the next nine years, which is almost double what is projected in Housing for All. That is good news and I commend the witnesses on that. I am interested in the cost rental model and the fact that the Housing Alliance will have to look at smaller units. Has it engaged with any modular housing suppliers? Is it working on any potential modular housing project to address that?

Mr. Sean O'Connor

Yes, we have. A number of associations have used off-site construction techniques. My own association has engaged in a number of projects. There are not many in Ireland and I would like to see more. Government support and research and development for that sector would be good. Real benefits of off-site construction relate to environmental and quality control aspects. The largest site undertaken by my association, Tuath, was in Ardee, through Modern Homes Ireland. They are steel-framed. The finished units are brought in by crane. About 90% of construction is in a factory. It is a massive job that happens off-site. That scheme involved 102 three and four-bed houses and was delivered in 12 months from start to finish, including groundworks, at an average cost of €250,000 per home. That was at the end of 2019.

Deputy Joe Flaherty

There are many good lessons for us about modular housing, particular looking at the work of the Department of Education.

It is doing Herculean work on modular building and that is something on which our guests must build. There are a number of very good providers in that area. I am pleased the Housing Alliance is engaging on that issue.

A bone of contention for the many happy tenants across approved housing bodies is that they are unable to buy out their own homes, unlike their neighbours in what they would call a traditional local authority house. It may well be that our guests will tell me that the tripartite regulatory model in force prohibits the Housing Alliance from offering tenants a purchase scheme. At odds with that assertion was a comment that stood out in the opening statement of Ms Loftus, who said:

The phenomenon of NIMBYism is not unique to Ireland, but in our view is grounded in a misconception about social housing and the people who live in it. Housing Alliance members work hard to manage and maintain homes to a high standard, and to build inclusive, sustainable, and mixed communities.

I would say that an inherent part of a sustainable, successful and vibrant community is the opportunity to buy out one's home. If there is a potential fly in the ointment, it is that existing tenants cannot buy out their homes. Our guests are probably going to tell me that there is a statutory reason for that.

Mr. Sean O'Connor

There is nothing on the Statute Book in that regard. I will hand over to Ms Cosgrove to explain.

Ms Sharon Cosgrove

There is no legislative provision for approved housing bodies to sell on the homes to the tenants. It is not something we do. Obviously, if the legislation changes, we would have to take that on board. The Housing Alliance sees value in the stock remaining in the sector for future tenants. That is where we are on the issue.

Deputy Joe Flaherty

I will turn now to the housing delivery co-ordination office. Mr. Taaffe or Ms Geraghty may wish to take my question. When I start to talk about this next issue, I feel like Tony McCoy getting back on the hobby horse. The issue is affordable housing for rural Ireland and the fact that 13 counties have thus far been excluded from that scheme. I understand, and hope our guests will confirm, that the housing delivery co-ordination office has written to those 13 local authorities, including Longford County Council, to invite them to come forward with submissions and proposals for affordable housing in towns with a population of more than 10,000.

Mr. Eddie Taaffe

As the Deputy knows, the criteria are that local authorities must have discovered, through a housing needs demand analysis, that 5% of households have an affordability constraint. We are working with local authorities in areas where, for example, the average for the county might not reflect particularly high prices in a particular town in the county. There might be a local affordability issue in a town. We are working with local areas in areas like that to do a town-specific or an area-specific housing need and demand assessment, which will allow them to qualify. We are working with local authorities in those kinds of areas. There are a few local authorities that did not exceed the 5% threshold but, after reanalysis, were able to make a case that a particular town exceeded the threshold. We will continue to work with local authorities to examine that fully.

Deputy Joe Flaherty

When do our guests anticipate that an affordable housing scheme will come to fruition in any of those 13 counties, Longford in particular?

Mr. Eddie Taaffe

It is dealt with on a case-by-case basis. The door is not closed. It is open to a local authority to come in and make its case at any stage and justify the numbers. It is an ongoing process. It is not the case that if a local authority misses a particular deadline it becomes ineligible. It is continuously open to local authorities to make their case.

Chairman

I welcome our guests and apologise for being late to the meeting. I thank Deputy Higgins for taking over the chairmanship. I know that the representatives of the CCMA have a meeting to attend at 5 p.m. in the Custom House. Perhaps members will direct any questions they have to those representatives before then. I am sure our guests from the Housing Alliance will stay on until after 5 p.m. I just note that we will probably not have the CCMA present for the second round of questioning. I call Deputy Ó Broin.

Deputy Eoin Ó Broin

I thank our guests for their presentations. I acknowledge the good work of the staff in the local authority sector and in the approved housing body sector in delivering social and affordable housing. I often feel if they were listened to more often, we would be a lot further on than we are. That is an argument for the Minister and not one for this meeting.

The purpose of these sessions is to focus on housing delivery. I will ask questions of both the organisations that are represented before the committee today. I wish to discuss challenges, if not obstacles, that we are currently facing and to see if our guests have ideas or suggestions that might be helpful to the committee's deliberations. I will have to step out briefly to speak in the Dáil Chamber but I ask our guests not to worry because I will be back to ask them more questions in the second or third rounds, if we get that far.

My first question is for the CCMA. I received a reply to a parliamentary question a couple of weeks ago about the length of time it is taking to get projects through the four-stage approval process with the Department. As our guests will know, individual projects are meant to get through within 59 weeks but only five local authorities met that target. That is not a criticism of the local authorities. I have enormous sympathy for directors of housing and the level of bureaucracy that is imposed on them. Bearing in mind the review the Department has completed of the pre-construction delivery process and, more generally, the four-stage approval, tendering and procurement process, are there further reforms that could be made to try to assist the acceleration of the delivery of homes that are in the pipeline or coming into the pipeline?

My second question relates to the cost ceilings for new-builds, properties under Part 8 and turnkey properties. Those ceilings were revised in quarter 2 of last year. We have seen construction sector inflation between then and now. How much of a problem are we facing? Are contractors coming back and saying they can no longer deliver the project within the cost ceilings? Do we need to revisit those cost ceilings at this stage in line with the expected further inflation of costs in the construction sector?

I will turn to the Housing Alliance. I will be diplomatic when I say the alliance is on a bit of a fool's errand in looking for the capital advance leasing facility, CALF, to be grant aid. I am not sure it will find a lot of support for that position from the Government or from some of us in opposition. If it was an equity stake, would that get the members of the Housing Alliance who have a particular problem over that obstacle? The reason I am suggesting an equity stake is that I happen to be of the view that the State should hold on to some interest in the homes the alliance is delivering well beyond the lifetime of the people currently in the approved housing body sector. Would an equity stake resolve those problems?

I know our guests have not mentioned the payment and availability, P&A, report but particularly for projects in rural areas, how urgent is it that we get a resolution of the P&A review in terms of fixing that particular problem? I have some other questions I will ask in the second round.

Mr. Frank Curran

I thank the Deputy. The four-stage approval process was reviewed recently and some good ideas came out of that, including the funding of a site survey and investigation prior to stage 1 so that all the investigative work and site surveys are completed and there are no minefields presented by unforeseen ground conditions or that type of thing. We could make stage 3, which relates to post-planning and post-tender, optional. That stage could be skipped if there is not a great variation in the planning process and the proposal has not changed from the original scheme or there is no major variance in the cost estimate. That would help.

Deputy Eoin Ó Broin

Variance, given construction sector inflation, means that what could potentially be very positive in terms of the collapsing of phase 3 may not be available in reality. Would Mr. Curran have concerns about that?

Mr. Frank Curran

The reality is that at cost estimate stage, we must focus on the reality that is facing us with cost inflation and take it into account as much as we can.

Deputy Eoin Ó Broin

I hope the Department is listening to Mr. Curran.

Mr. Frank Curran

We mentioned a central online repository of all guidance and information. We also mentioned carrying out strategic assessment reports at programme level. Single-stage approval for mixed tenure schemes is another suggestion. The housing delivery co-ordination office will be working with practitioners around the country, which will help a lot. We also suggest a review of the single-stage process and would promote greater use of it.

Modular design builds were mentioned earlier and they definitely improve the rate at which we can get schemes completed.

The Deputy mentioned construction price inflation. It is a real issue. It is an issue in getting contractors to tender for public works contracts. It is an issue for contracts that are on site without a price variation clause. It is also an issue for subcontractors.

Deputy Eoin Ó Broin

Obviously without naming any counties or developments, we are hearing stories of projects that might not be able to proceed unless there is greater flexibility from the Department in terms of the gap between the ceilings and the new prices. Is that widespread?

Mr. Frank Curran

It is a fluid situation at the moment and definitely needs to be examined. I agree with the Deputy in that regard. There is construction price inflation and allied to it are the material supply chain issues and the skills shortages in the wet trades, in particular, but for all skills within the construction industry. Another issue is the buoyant private sector construction at the moment, which is competing for the skills, resources and supply chains, etc.

I will ask Mr. Taaffe to come in on this if that is okay.

Mr. Eddie Taaffe

There are three things local authorities are seeing on the ground. Over the past six months or so we have seen a reduction in the number submitting tenders for public works contracts. That is because the private construction sector sees them as slightly more risky because of the price variation issues, so there is an overall reduction in the level of interest. The second thing we are seeing - this pertains more to rural authorities - is that the smaller builders, who have had a very good relationship over the years with their local authorities and who build eight, ten or 12 houses, are the contractors who seem to be less capable of or who have less scope for absorbing the material price increases. They may well be the ones who will suffer the most from this, which would be a pity. Third, the Construction Industry Federation, CIF, has confirmed to us that because of supply chain issues and uncertainty in that regard, it is taking longer to build a house now because of delays in getting components and uncertainty in that regard. What could have been a 20-week or 26-week programme has now been pushed out by four, five or six weeks in some instances. That is through no fault of the builder. No builder wants to spend a day longer on a site than is necessary. It is happening because of the lead-in times in getting materials. They are the three effects we are seeing at local authority level.

Chairman

Deputy Ó Broin, I will bring you back in-----

Deputy Eoin Ó Broin

In the second round.

Chairman

-----on the question of the equity stake and the P&A review.

Senator John Cummins

I welcome the witnesses. I wish to put on record my thanks for all the work that is done right across the country by all their employees, both in the local authority sector and within the AHB sector, on delivering much-needed homes for individuals and families.

I have a few questions. I will start with the LGMA. The eligibility threshold for the single-stage approval process was increased, I think, about 18 months ago. I think it is €6 million now. Therefore, depending on the area, probably between ten and 25 units can be delivered through the single-stage approval process. The information I have, however, is that it is not being used to any extent by local authorities. Is that the case? If so, why?

Mr. Frank Curran

One reason might be that €6 million was the maximum and some local authorities were concerned about claims and overruns and how they would be dealt with. We need to work with the local authorities, Mr. Taaffe and Ms Geraghty to try to get over that issue and to increase use of the single-stage process.

Mr. Eddie Taaffe

We are constantly examining schemes that could go into the single-stage process. We are pushing local authorities to use it. As Mr. Curran said, one of the issues is that, particularly with the cost increases, the budget is fixed early and, if there are cost increases later, the question is how they are dealt with. It is a single-stage process with a fixed budget from the outset, whereas, with the four-stage process, at each of those stages the budget is reassessed. We want to strike that balance between certainty and flexibility but we are pushing local authorities as much as possible-----

Senator John Cummins

There are many examples of schemes in that territory that absolutely could go through the single-stage approval process. I hear many people criticise the four-stage process, saying it adds significant delays. Deputy Ó Broin referred to it just a short time ago. There is, however, a mechanism for those smaller schemes and it is not being used by the local authorities. They must start using that process. Then perhaps we can start looking at the level of funding and increasing it from €6 million to €8 million and so on, but the local authorities have to prove to us that they are willing to use that mechanism first. That is not the evidence on the ground, so I make that point to the local authority sector very strongly.

As for turnkey developments, and this applies to the housing bodies as well, it is attractive for developers to deliver schemes through a turnkey process because they have a guaranteed single purchaser at the end of it and, as for their financing arrangements, it reduces the interest rate they get from their lenders. As for the local authority sector and the local authority affordable purchase scheme that has been launched, I refer to one of the first three schemes in my local authority, in Waterford, that have been approved as turnkey developments in conjunction with a developer. The legislation has been framed to allow for a direct sales agreement between the purchaser and the developer in order to minimise the risk to local authorities but also because if the units were acquired in bulk by the local authority and subsequently sold to the individual purchasers, they would not be eligible for the help-to-buy scheme, which will help with 10% of their deposits. As for that risk, locking in the price at a certain point in time was referred to. The reverse is that we are saying to developers that we are looking for them to lock in a price now for something that will be delivered in 12 months' time but we are not giving a guarantee of purchasers of it. The committee had the Housing Agency before us last week. It said those contracts were being worked on. I appreciate that Waterford is seeing the first of these and that it will take time to work that out, but there needs to be some mechanisms whereby we maintain the direct sales arrangement but give confidence to developers to be able to deliver schemes at the agreed prices and to satisfy their funders. That is the difficulty I am experiencing on the ground in Waterford. I would like the witnesses' opinion on that.

Mr. Frank Curran

There is a lot of certainty for the developer in that we will have a long list of affordable housing clients. Once the scheme comes on, it will be advertised and there will be a scheme in place for that, but in the event of units not being sold there are other options. The developer may sell them on the private market-----

Senator John Cummins

After six months. A unit is completed and sits there for six months, so I-----

Mr. Frank Curran

The developer may also take the units in as social, which would be good for sustainable communities etc., so there is no real risk from that point of view. Getting that message out to the developer is the important part.

Senator John Cummins

If there is some confidence in that respect, there should be something to give comfort on the back end. That is the appropriate way to go about this.

I turn to the AHBs and the Housing Alliance. I think some people would be surprised by the number of AHBs there are. I believe the last count, or the returns for the end of quarter 3 of last year, showed there were 450 AHBs in the country. The fact that six of the biggest are in an alliance is a welcome move and certainly helps to change the dial and to streamline the messaging, but what is the witnesses' opinion on the number and a possible rationalisation in the sector?

Mr. Sean O'Connor

I will start and the others should feel free to join in. There are a lot. I think that is an historical position in that a lot of communities decided to undertake and to deliver schemes. Regulation is probably thinning that number out, that is, the demands of regulation are pretty stringent. It is time-consuming and requires expertise on boards and suchlike, so I think there will be a natural process - "evolution" is the wrong word, but the Senator understands. Mergers and acquisitions are under way. There is probably a viability number on the stock. I do not know what it is. We probably need-----

Senator John Cummins

Does Mr. O'Connor have a view on that?

Mr. Sean O'Connor

I do not, but if any of my colleagues do-----

Chairman

You are out of time now, Senator Cummins, so when we come back you might-----

Senator John Cummins

It is an interesting area in which to get answers.

Chairman

It is but-----

Senator John Cummins

Maybe six. Is that what the alliance is suggesting?

Chairman

We will move on.

Deputy Francis Noel Duffy

I have some simple questions. I thank the witnesses for informing us of the numbers because I like crunching numbers and there is some interesting information here to work from in the projections. The question for the CCMA is whether the housing delivery plans are available and produced annually.

Mr. Frank Curran

They are being developed over five years and will be available very shortly. It is mid April or something like that.

Deputy Francis Noel Duffy

Okay. They are done every five years. Is that correct?

Mr. Frank Curran

This is the first one. It is for the next five years.

Deputy Francis Noel Duffy

Fair enough. In the context of the Housing Alliance, what is the debt-to-asset ratio in a typical large approved housing body? If Mr. O'Connor does not know, I am happy to come back to him.

Mr. Sean O'Connor

It is all different. It would depend on the scope and level of activity. What we all have in common is the current funding scheme is predicated on 100% debt financing. We and the Irish Council for Social Housing, which is the umbrella organisation for all associations, believe that is not sustainable. It is a unique position in Europe and there was probably some good meaning in its design in that, at the time, it may have been considered helpful in maintaining our off-balance sheet status. That is water under the bridge now and we are on the balance sheet. There will be a fair bit to be done to get us off the balance sheet. Most of the money we borrow comes through the Housing Finance Agency, HFA, as a conduit for European Investment Bank money. Once we borrow off the HFA, it is on the balance sheet anyway, so it is scoring against public expenditure. We also borrow off Bank of Ireland, Ulster Bank, Nord etc. There are other borrowings. Our potential for off-balance wins but not in the current system. The ratio is moving up so the higher the gearing, the worse it is financially considered.

We have a very good funding system that underpins our borrowing and we are all risk-averse creatures, so we will all fix our money now for as long as we can get - 25 years. There is a back-to-back agreement with the local authority that fixes the payments to serve the interest cover. We are very robust in that but, nonetheless, the regulatory system we have in place had thresholds that have now been softened or blurred. One of the thresholds was a 60% gearing level, above which four of our members are currently. Why does this matter? It matters because when we go to banks to borrow money, it is something in which they are interested. It is not their primary interest and they are more interested in whether we can pay the debts and who underwrites them. They are more interested in debt service cover ratio and interest cover. We all have very healthy arrangements in that regard and we can pay our debts.

The system of 100% debt funding is unique in a bad way in Europe. We went from 100% grant funding to 100% debt funding overnight. We went from one system to another, and that has been very detrimental to smaller associations that have not been able to get to grips with the new funding regime and the robust nature of regulation and governance around that. Do we think it is sustainable in the long term? We probably do not. It is also starting to creak and show problematic symptoms, particularly in areas where the process does not work. It is underpinned by rents in a region, so if the rents are not high enough to service the debt and borrowings, the process starts not to work.

Ms Sharon Cosgrove

I agree with Mr. O'Connor. Of the six members of the Housing Alliance, four of us are well over the 60% threshold. Our figure is over 70%. It was a real issue with the regulator when the work was in a voluntary capacity. It was talking to boards and almost saying they needed to be very careful because the process was very risky. We are now pushing to 70% and 80% geared. Every house we add in turn adds to the gearing level. It is a question of sustainability.

As Mr. O'Connor has said, the other matter is that in some parts of the country, such as rural areas where the market is not very strong and the open market value of other properties is not at the cost of construction, there is a challenge. As well as pegging payment and availability to market rents, those rents are lower than where we can sustain the debt. Everything is linked and the fact everything is 100% debt-funded, essentially, is causing us problems with regard to the sustainability of the organisations and, potentially, the sustainability of the sector. It also has an effect on the viability of schemes in quite a number of rural areas.

Deputy Francis Noel Duffy

I have a quick question on cost rental. I apologise for cutting across Ms Cosgrove. I do not see numbers in there. I know the approved housing body space is quite interested in cost rental and pushed it. If there are to be 21,500 units in the next eight years, I do not see the numbers. Is the Government holding that back?

Ms Camille Loftus

I will not be able to remember the numbers off the top of my head but the numbers under cost rental equity loan, CREL, 1 and 2 are known. We are anticipating the announcement of a rolling programme of funding around cost rental that would allow us, in the same way as capital advance leasing facility and payment and availability, to spot an opportunity or development and bring forward that proposal proactively instead of waiting for a call. One of our problems with the way CREL has been rolled out so far is that we know we want to get stock delivered as quickly as possible-----

Deputy Francis Noel Duffy

Will this be additional to the 21,500 units when it is rolled out?

Ms Camille Loftus

Yes. Absolutely.

Deputy Francis Noel Duffy

I thank Ms Loftus.

Senator Victor Boyhan

I welcome the delegations from the Housing Alliance and the CCMA. I thank them for their work. I will focus on the CCMA now as we will have a second round of questioning and I understand the CCMA has equally important work to do down below, as it were. I welcome the CCMA, and Mr. Curran in particular, who has just taken up the role in Dún Laoghaire-Rathdown County Council. He is in it two or three months, or possibly less. I was a councillor in the area and I wish him well. It is an especially exciting task and an important juncture for that council. I also acknowledge Mr. Curran as the chair of the CCMA housing, building and land use committee.

I have a few very focused questions. In his statement on behalf of the CCMA, Mr. Curran referred to the range of methods for providing homes. Will he tell the committee the priority in that regard? I will go through the rest of my questions before asking Mr. Curran to reply, if he does not mind. What funding commitments are in place from the Department and is Mr. Curran confident he can deliver the targets set down? I know they are to be finalised and we are still waiting on that. A total of 47,500 units are committed to in new build social housing to 2026. We are now in 2022. Will Mr. Curran confirm his confidence in the delivery of that programme? Will he take us through what will be delivered and the expected output for the remainder of this year? That is very important.

Are councils free to raise finance themselves? We need greater clarity on the capacity of local authorities to raise funding for themselves in their own right. Will Mr. Curran speak to that? With affordable housing, are chief executives clear about the affordability criteria because I am beginning to doubt that from my own engagement? I am not quite sure if all chief executives fully understand matters relating to the housing affordability criteria. This relates to how prices will be calculated and eligibility will be determined.

Have the local authorities been given the regulations governing affordability? What do these provide for? I read some coverage in the Sunday newspapers that local authorities were still not aware of, and the Department has not finalised, the regulations governing affordability. Perhaps the CCMA is aware of them. I have a funny feeling it may have seen an advance copy of them because the CCMA has close engagement with the Department. Will Mr. Curran share some commentary in that regard?

I will leave it at that now. I will touch on another area later, as the Housing Alliance raised it, and that is the provision of serviced land at low costs for the approved housing bodies. It is a challenge and it is clear local authorities are best placed to come in there because of the synergy between the actors. There might be a role for the Land Development Agency, LDA, as well, but it is not represented here today. Will Mr. Curran deal with those points? I will come back if I need to put further questions.

Mr. Frank Curran

There was a question on the priority method for providing homes.

Social own-build housing on our own land is a priority. We will also have Part V, PPPs, mixed tenure units and advance purchase of uncommenced units with planning permission but a priority for social is direct build.

In terms of affordable housing, in the long run it will be construction of mixed tenure. As Senator Cummins mentioned, there is advance purchase of uncommenced units so we are working through that with developers to get affordable delivery in the short term.

I will respond to the question asking what funding commitments are in place. Social and affordable targets are fully funded under Housing for All. Under the affordable housing fund, up to €100,000 is available for units but that depends on density. On the approved housing sector, as mentioned earlier, CALF is the main delivery stream with, generally, a 30% payment upfront and a payment and availability, P&A, over 20 years so the programme is fully funded.

Are we free to raise finance? Yes, generally through the Housing Finance Agency and, generally, for land by borrowing at a very low interest rate.

Will we prioritise own builds? There are between 9,000 and 10,000 units built each year. Leasing is decreasing and is only 2,500 units over the programme. Acquisitions are generally only for four-bed units, one-bed units or where there is a need in respect of a particular disability, etc. Certainly our own builds are prioritised for the next number of years.

Are we clear about affordability and how the price will be calculated, etc? The scheme will be out in the next number of weeks. There would have been engagement with all chief executives, directors of services and practitioners on the ground. People understand that the affordable sale price will be a minimum 15% below the market value. The percentage housing equity is a minimum of 5% and a maximum 40%, which will be confirmed under regulations. The minimum sales prices is the all-in cost of development less the affordable housing fund. There will be a variable sales price depending on the household's ability to borrow. The affordable housing fund is a density-based grant that ranges between €50,000 and €100,000. Loans are available according to the macroprudential rules and the local authority home loan. There will be a national scheme of priorities with 70% but that is depending on the regulations to come, and it will be first come, first served with 30% to be determined locally, etc. Engagement has been ongoing with the Department. Chief executives and directors of services are familiar with that. They know what is coming down the track and we would have been consulted on that.

The target for this year is 9,000 units. We are confident we will achieve that but earlier we mentioned the challenges such as construction price inflation, materials, the supply chain, skills, etc. We need to be cognisant of that but we are confident that we will reach this year's target and the targets for the next five years that have been set out in the housing delivery plans and Housing for All.

Senator Victor Boyhan

From what I have heard the CCMA is confident that the 47,600 units can be delivered until 2025 albeit with the caveat that has been raised about which we are all aware. We want to convey the message today that we are ambitious, we are confident 12,500 units will be built this year and we are on market to provide 47,500 units. That is what the people want to hear and I presume that is what we all want to hear. I ask Mr. Curran to confirm hat.

Mr. Frank Curran

I am confident that we will achieve the target of more than 9,000 units this year. Currently, the pipeline is 23,000 dwellings so there is 11,000 under construction, 3,500 dwellings about to commence on site; and a further 8,500 dwellings at the planning and design stage. These dwellings are spread over 1,200 separate projects that are being delivered by both local authorities and AHBs. In addition, proposals for a further 8,000 dwellings are currently being considered by local authorities and AHBs. It is a very strong pipeline.

Chairman

The figures are quoted in the opening statement and they do not include the LDA.

Mr. Frank Curran

It is the local authorities and approved housing bodies.

Chairman

So there is more and that is good to know.

Senator Rebecca Moynihan

As I am the last to speak many of my questions have been asked but I will try to zone in on questions that have not been asked to avoid repetition by the witnesses.

A figure of 800 cost-rental dwellings was mentioned in the opening statement of the CCMA. Does that mean 800 dwellings will be delivered per year or over four years? I ask because the figure seems low as local authorities have been tasked with delivering 47,600 dwellings by 2026 and the Government wants to deliver 2,000 dwellings a year.

Mr. Frank Curran

Under Housing for All, local authorities on their own have been tasked with delivering 800 cost-rental units between now and 2026 but the AHB sector cost rental target is 3,950 in the same period and on top of that there is LDA cost rental. There are three elements of cost rental: local authority, AHB and LDA.

Senator Rebecca Moynihan

That is interesting so a lot of that will be taken up by St. Michael's Estate or the current Emmett Road plans and there will be no other units around the country from local authorities.

Mr. Frank Curran

Local authorities are progressing and under their housing delivery action plans they will get targets for cost rental and obviously there will be other projects. Generally, we must plan for greater than the 800 because some of them might get delayed or encounter issues between now and 2026. We would like to have more projects as a safety factor.

Senator Rebecca Moynihan

I look forward to seeing the housing delivery action plans in April.

Each local authority has been given housing targets but in the same month Dublin City Council had to as part of its competitive tender process on its largest site at O'Devaney Gardens sell a portion of the site to deliver the social and affordable units on that site. There is many a slip twixt cup and lip so does Mr. Curran believe that the local authorities can deliver on housing delivery targets? I ask because so far I have not seen such capability in the biggest local authority in the country.

I have some questions for the Housing Alliance. Deputy Ó Broin said that he would focus on housing delivery and, therefore, I will focus on the experience of the alliance in housing maintenance because one of the reasons the housing stock has been undermined is it was sold. I will direct my questions at Mr. O'Connor because I know that he has a lot of experience of the UK. Some of the AHBs in the UK have had great difficulty in matching their long-term maintenance budget with the service that needs to be provided. Do the witnesses believe that the Housing Alliance can between differential rents, funding streams and direct funding, and the long-term maintenance budget maintain services? UK AHBs have suffered a disservice. I mean that they have not received an appropriate amount of funding to sustain maintenance provision over time and people have criticised them for not being able to do so.

The period is 50 years if an organisation is a designated cost-rental provider. One of the problems with that period is there was no mention of the phrase "in perpetuity" after a certain time. Does the Housing Alliance intend, when it gets the loans, to continue providing cost-rental housing for the long term as opposed to, potentially, renting out units or selling them at market value after 50 years? It is not going to be Mr. O'Connor personally but that aspect is a problem and worry for the future. That mistake has been made in the past.

Has the Housing Alliance assessed the impact of a rise in interest rates? With regard to its business model and funding, the Housing Alliance delegation has said that it gets funding from the Bank of Ireland and the Ulster Bank. What funding arrangements are in place? Has an assessment been carried out?

Mr. Frank Curran

We are confident that we can deliver the 47,600 dwellings.

As I said, there was a lot of consultation with each local authority on the targets that will be set out in the housing delivery action plans. There is now a range of mechanisms in place, specifically direct build, PPPs, advance purchase, mixed tenure and Part Vs. We are recruiting 200 extra staff, including engineers, architects, quantity surveyors, etc. A full review of land is being carried out in conjunction with Irish Water. I will not go through the figures again but there is a very strong pipeline of approximately 23,000 dwellings right now. Of those, 11,000 are under construction.

Chairman

There were a couple more questions on housing maintenance.

Mr. Sean O'Connor

I will deal with cost rental first. The Senator is correct that it is a 50-year general designation. There are longer designations. The first homes we let last week on the Enniskerry Road in Stepaside have a 70-year designation because serviced site funding was used. There was blended funding on that project. Housing associations are not going anywhere. There is an element of funding in the designation of 50 years in that we look to the private market for funding. The HFA is our main funder but theoretically it is the funder of last resort. The State would prefer we secured funding through Irish banks or non-Irish banks. There is an issue around the designation and how that is treated. Make no mistake, there is no intention to sell these properties. We were talking earlier about the need to look again at the current funding system of relying on CALF-P&A. The sector would have not problem in signing up to social housing in perpetuity if a grant is provided. That has not been done because there are some funding implications.

With regard to management and maintenance funding, it is a difficulty, especially with associations that have older stock. Tuath and Oaklee, represented today, are quite youthful organisations but older organisations are starting to suffer with their stock. We get a management and maintenance allowance of just over €500 per annum. It has been left to wither on the vine for at least ten years. In the current situation of hyperinflation it is nowhere near adequate. On the average rent across the sector, differential rents apply, similar to in local authorities. The average is probably between €55 and €60 per week. That is not a lot of money to pay for management and maintenance costs, staffing and all the overheads. There is an issue with that.

On the funding system with P&A, there is money within that and it was designed to have money within that to allow for management and maintenance costs. We have to go through rigorous modelling when we have schemes approved and cash flow modelling when we present to banks. We all use a financial modelling tool called Brixx that shows a minimum of 30 years' investment. We have to provide those funds for investment. Often people will say to associations that they seem to have money in their reserves, ask them what that is about and if they could not use that money right now. It is there for long-term provision and capital investment. My association is currently making capital investment in the order of €3 million or €4 million per year to upgrade properties. Retrofitting will have an enormous bill and we hope we will be helped with it. We take it very seriously. We are very careful when we do new schemes that we model them out to ensure we can afford to maintain them properly.

The Senator's last question was about interest rates. We are indeed worried about them rising, not on the basis of what rising rates will mean for us financially but on the basis of what they might mean for development because schemes are starting to become unviable on paper. The inputs are land, construction and the money we need to borrow. When all those higher input costs are combined, we get a highly volatile mix that is leading to unviability in projects. That is where the main knock-on is. We all fix our money for 25 years and then we have a back-to-back payment agreement in the funding system that allows us to match one with the other so there is zero risk. It de-risks the whole thing.

Chairman

I thank Mr. O'Connor. We move to the Fine Gael slot and Deputy Higgins.

Deputy Emer Higgins

I thank the Chairman. I thank all our guests and their teams, not just for attending and talking us through this but for all the work they do to deliver homes and get people into them, which we all support.

My number one concern in this area, which previous speakers also raised, is the delivery of targets and the ability to hit them. When the targets for Housing for All were set last year they were seen as ambitious by those of us in Government at any rate. We are operating in the context of the changing landscape with Brexit and everything that occurred last year, the supply chain backlogs and logjams we have seen as a result of Covid, rising inflation and its impact on the price of construction, the skills and labour shortage in the construction industry and the impact of the war in Ukraine, which is twofold in that it has a global impact but also a local impact with refugees already arriving here seeking homes. In the context of all those new global and domestic challenges the Housing for All targets are even more ambitious.

Mr. O'Connor, Mr. Curran and Ms Loftus have outlined how they expect to deliver them from a pipeline and an action plan perspective. My fear is whether they are achievable. The housing delivery action plans are being finalised by local authorities up and down the country. I am wondering if Mr. Curran has any insight into whether they will contain the figures and targets we expect or whether there may be surprises in store. If the plans propose to achieve what we expect in the context of the rolled-up Housing for All figure, are those targets achievable? Are we going to see from local authorities how they will be achieved? I appreciate there are strong pipelines in place to deliver those figures, as Mr. Curran detailed. I am concerned that even having people on site does not necessarily always translate into deliverables on time or on budget. Mr. Curran said there were 11,000 housing units under construction but I know of a couple of sites in my local authority where tools have been downed on social housing sites as a result of budgets and increasing costs. There are also other challenges from the builders' perspective but also from the perspective of the local authority, which has negotiated, set tenders and gone through the entire process. I want to try to get a handle on what can be done, what is achievable and what, if anything, Government can do to ensure this can be achieved. We had the HFA in with us last week and one of the questions I asked its representatives was whether local authorities had the ability to go back and ask for additional funding if prices were increasing on sites. The answer was "Yes". It was almost a no-questions-asked scenario where they would be getting at least 10% in that situation. What else can we do to make this work because we all need to make it work?

From a skills shortage perspective, is there anything the Government can do there? The Minster for Further and Higher Education, Research, Innovation and Science, Deputy Harris, is doing a lot on the apprenticeship side. What else can we do? I think 27,000 is the figure for additional construction workers needed to fulfil Housing for All. On top of that, we have the retrofitting plan coming down the tracks and people will be subsumed into that as well. I am looking for our guests to use their expertise to indicate to us what we can do to help ensure those targets are achieved and entice more people into the industry from a skills perspective.

Mr. Frank Curran

I thank the Deputy. The targets she mentions in the housing delivery action plans are based around Housing for All. They will set out the how, where and when of the units being delivered. There will be details on each local authority and the targets will have been set in conjunction with the local authorities. As I mentioned, we are still confident about delivering on those. In the period between 2016 and 2021, more than 48,000 units were delivered between build, acquisition and lease. That is taking into account what happened with Covid during 2020 when there was a three-month delay and in 2021 when all those issues the Deputy mentioned started to come in. There was still very significant delivery at that time and that is continuing on the ground. We have all the mechanisms I mentioned at our disposal, namely, direct build, advance purchase, PPP, Part V, etc., and we are working with our colleagues in the LDA and the approved housing bodies.

Having said all of that, the issues we raise are real issues. Price inflation was mentioned earlier. This is a real issue for contractors who are on site and for those looking to tender for new work. It is a real issue for subcontractors. What can we do? I believe the Office of Government Procurement, OGP, could look at this in terms of price variation clauses in contracts, which might make them more attractive and reduce the risk for contractors who are coming in. This is something that could be done. We need to work with the construction industry on this, along with the Construction Industry Federation and the Office of Government Procurement.

Skills are also a real issue, and it is very difficult in particular for the wet trades. As was said earlier, the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, has put a lot of work into this. We really need to target the schools and parents to let them know that these trades and roles are really good options for young people. That message has to get out there. With regard to energy retrofitting, if a person in their 40s was unemployed and if he or she went back and trained in energy retrofitting, there would be sufficient work right now to take them through to the retirement. These are really attractive careers and jobs out there, but people need to be trained. There needs to be a sales pitch made that these really are trades worth getting into.

It is about keeping an eye on price inflation, working with the Office of Government Procurement, working with the Construction Industry Federation, and selling the idea on skills to the people who are leaving school and who are in school that these are really good career options.

Mr. Sean O'Connor

This is a very difficult period right now with hyper-inflation, particularly in the construction sector and development. It is probably a vicious circle going on there and it could well get worse before it gets any better. I would be in full agreement with some of the things Mr. Curran alluded to. There are some elements within the public works contract that allow price variation. There needs to be more flexibility in there. It is impacting members in two ways. These are the schemes that were tendered for, where contractors and developers are coming back and saying that the prices are no longer adequate, and there are schemes on site where I believe there is a real risk of insolvency amongst contractors now. Generally, that is building up a head of steam, and it is unfortunate because everything is already expensive. Some of our schemes are starting to look unviable. Going back to the funding scheme, there are issues with that now around viability and it being based on older market valuations. As everyone knows, it is far more expensive to build an apartment than it is to buy an existing apartment, so there are issues around that. The situation calls for better flexibility. One thing I will say about the public works contracts is that they do not save the public any money, they do not produce value, and they never have. They probably cost the State money but we are tied into Europe in this regard. It is the procurement method that we must go through. A developer who employs a contractor will not go through the same process. They are time-consuming and they are costly. I have been told informally by more than one developer that it probably adds 20% to the costs. It does not save anything but we are tied into this process. I am sure that all of the local government people will have had nightmare scenarios of disputes with contractors and so on, as my colleagues here and other members of the Housing Alliance will be aware. If anything, there is an opportunity now because we have to look at it and something must be done about it.

Chairman

On Deputy Higgins's point, I believe that people can apply for apprenticeships now on the Central Applications Office, the CAO. I reiterate Mr. Curran's points that those trades jobs are highly skilled and highly technical. I would give it longer, and if one went into those jobs now there would be 30 or 40 years employment ahead when one comes out of the training, in renewable energies, retrofitting and construction.

Senator Victor Boyhan

I want to focus on the Housing Alliance. I have been a councillor for more than 20 years and I have been an observer of housing. I have engaged in and I am really interested in this area. I acknowledge the approved housing bodies, AHBs. I am a great supporter of approved housing bodies, absolutely. It is important that we have a multifaceted approach with different people doing different things in housing. My experience of Circle, Clúid and the whole lot of them is excellent. This is not to be critical of the local authorities here, but I must tell the committee that my experience of AHBs is that they run a tighter regime around tenants, with good structures around pre-tenancy and tenancy. I hear a lot of people complaining: "With AHBs you cannot get away with anything with that shower." But I love to hear that. The approved housing bodies run a tight show. They have pre-screening on the courses and so on. I am aware that local authorities also do that but I have been on these schemes and I have many friends who were in them, and there is a level of quality around the maintenance of the management structures and the sense of responsibility by the people that are in them is strong. That is my take from it. It might be a rigorous approach and it might be firm but at the end of the day this is an asset that provides people with homes. We are not providing people with castles, we are providing them with homes. I really liked it when Ms Loftus spoke about the focus being the one thing, which is delivering affordable and sustainable homes for people. I personally do not get hung up on the idea of home ownership and who is building it, be it the private sector or syndicates or anybody else. This is important to say. My feedback and experience has been one of a real tight ship, and that is right.

The big key ask the alliance spoke about in its submission is the real need for development land and the challenges around that. I want to hear how this is frustrating the alliance members' progress, and what more it could do if it had more land available. Perhaps the alliance will also speak to the committee about its relationship with the Land Development Agency. That agency has done a lot of good work. We are now getting a handle on what lands the local authorities and State agencies have. That is really important. I would like to hear what the witnesses have to say around all of that, because that is the key takeaway from me here today; if the alliance had more affordable land, suitable and appropriate for the development of new homes, it would be able to rise to the challenge. Will Mr. Curran clarify the City and County Management Association, CCMA, position on capacity? Is there any spare capacity to release zoned or appropriate land for housing to the approved housing body sector? I am happy to take away from Mr. Curran, representing the CCMA, that his priority is direct build by local authorities. That is a really strong message I am taking away from the CCMA here today and it is one that I welcome. I would like to see what are the possibilities the CCMA can assist the Housing Alliance with. I will now hand over to the alliance and the CCMA for the remainder of my allotted time.

Ms Camille Loftus

I thank the Senator for his very kind comments. The Housing Alliance takes some degree of pride in running a tight ship and in providing good quality homes for people for as long as they need them or for their lifetimes. The viability of developing these homes rests very strongly on being able to get access to land. If one talks to the larger developers and the larger AHBs, they will all say that the bulk of this is developed on publicly owned land that is transferred for no or low-cost from the local authority. Obviously, the local authorities also have targets to meet over the next number of years, so there is going to be pressure on that collective resource. Eventually, we will have built on all of the public land that we own. The point we are trying to make in our submission is that we actually need a long-run system in place. We need somebody with the responsibility whose job it is to ensure that there is a sustainable supply of land in order to develop housing so we are not constantly finding ourselves in a boom-bust cycle with too many homes or too few homes. There are many ways of doing that and one of the things we want to flag is that there are a lot of players in the housing market at the moment. If we are all charged with going out and running around to acquire additional land, there is a risk that Sean will be bidding against Frank will be bidding against Sharon who will be bidding against somebody in the LDA, and the only person who will benefit from that is the landowner.

From our perspective, there is merit in the State trying to master plan and land bank for the future so there is a source of land available. It should be able to say that land will require water supplied to, or electricity and gas, etc., and will need servicing with roads. That will leave us ahead of the game and not trying to respond to crises as we go along.

Mr. Sean O'Connor

I have a point before Ms Cosgrove comments. The work of the associations cannot happen without collaborating hand in glove with the local authority sector, which I acknowledge. Local authorities have other things to do and I am thankful we do not. We just do housing and that is our focus. We are a conduit between the public, private and voluntary sector. It is where our strength is.

Senator Victor Boyhan

We are under some time pressure so will Mr. Curran elaborate on how the local authority sector can feed into and support the alliance? It is a critical message we need to take home from here today.

Mr. Frank Curran

We certainly can do that. I was part of a meeting only the other day on that very question of how we can work in a more collaborative way and share information. We have transferred zoned land to AHBs. We mentioned Enniskerry Road earlier and there are to be 50 units for cost rental or affordable purchase while 100 social units are being developed by both Tuath and Respond, and they are pretty much constructed at this stage and being allocated. We work on that basis.

As I said, our priority is own-build on our own lands but it is really important that we, the approved housing bodies and the Land Development Agency know what each other is doing. We are not competing with each other and we really do not want to compete with advance purchase or sites with uncommenced planning permissions, etc. It is really important we share information and the directors of services for housing know what is happening with each approved housing body in their area and the Land Development Agency. We must work collaboratively. That is absolutely essential.

Senator Victor Boyhan

I have a final statement rather than a question. We must see more evidence of that collaboration. It is really important and I would like to revisit that as a committee. Perhaps we could get some hard data and facts in that regard. This is about providing homes for people. One can say we are committed but we must see evidence of that. Within a few months we should be looking at this again so as to keep focus and momentum. I thank the witnesses for coming here today.

Deputy Paul McAuliffe

I thank the witnesses for coming before us. I apologise as I had initially requested as part of our work programme that they would be asked before the committee but, unfortunately, I had two oral parliamentary questions selected to be put to the Taoiseach today. One does not fail to show up for the Taoiseach. I thank the witnesses for their contributions so far and I apologise for not being here.

I have put this question to other providers of public housing when they appeared before the committee. There has been much thrown at the sector in the past two years in terms of legislative solutions. Is the required in-depth knowledge of each of the policy tools available for AHBs and local authorities to start implementing those? Is the practical interaction with the Department working to allow the bodies do that work? Whether we like it, the solution to the housing crisis is probably sitting in front of us. That means we have to support the actors involved and iron out the problems.

I can take the affordable purchase scheme as an example. It is a new area for many local authorities and I accept they have not been in that space for the best part of a decade. How is that working? There are nearly 19 sites in the Ballymun area that are all ideal for affordable purchase. We want to see them started and moving. The policy tool and the funding is there. The land is all in public ownership so can we get delivery? Why would there be a delay, if that is the right word? What will be the speed in delivery for those?

Cost rental and affordable rental is another policy tool that has the required funding and mechanism from a legislative basis. Is that an area in which the AHBs can have ambition? If they do not have that ambition, it may be the case that we are looking for ethical investors providing the housing. After that we would be looking at non-ethical investors. These are two policy tools but there is a range of such tools now available. Is the Department embedding that knowledge in the sector? Do officials in the bodies represented before us know what is happening or are they experiencing difficulties with the likes of housing regulations, for example? We know housing regulations should be available soon and some local authorities have moved ahead, meaning there could be a difference from the published housing regulations. These questions are looking to tease out problems of delivery.

Ms Sharon Cosgrove

AHBs are involved with cost rental and three of the bodies here today are involved with cost rental. There have been two calls so far and we expect shortly an annual scheme where we could, I guess, develop a pipeline. I hope we can bring down the cost through direct construction.

On the question of regulations, we have been very involved with the voluntary regulatory code. We welcome that and the statutory code as well, which will give confidence in the sector to investors. It is something about which we are very positive. It is clearly something that drives our performance across a bunch of areas, whether they are rent collection, maintenance, tenant engagement and everything else. It is something that makes us work very broadly across our activities in a professional way.

Mr. Eddie Taaffe

For the information of the Chairman, the meeting we were supposed to attend has been deferred so we are free to stay on.

Chairman

You could have gotten away with that.

Senator John Cummins

Mr. Taaffe might regret telling us that.

Mr. Eddie Taaffe

Ms Geraghty and I in the housing delivery co-ordination office act as the link between all local authorities and the Department. We deal with the very matters outlined by the Deputy. I have no issue with the way we interact with the Department, the supports and the way it consults with us, particularly on the legislation relating to affordable housing.

We can take the two areas in which we are involved relating to social housing. By and large, local authorities know what they have to do and they just need to keep it going and do more of it. There is a tried and trusted methodology and there was a recent review of the four-stage process that will help. The Department has also recognised that we should not just do a review and stop but rather we should keep monitoring that. There will be a practitioner form set up to ensure the changes and the way this operates is continuously reviewed, modified and improved as we go through the programme.

On affordable housing and cost rental, we can look at the level of interest and supply that AHBs will have through the cost-rental equity loan. There has been significant interest in that and it is a success story. The housing bodies have really embraced it and are going to deliver on it.

On the question of the regulations relating to affordable housing, this is new to local authorities and it is a number of years since we have done it. We have had extensive engagement with the Department on the ins and outs of how the scheme will work. With any of the schemes, it is a balance between making it deliverable, simple and understandable while still having proper safeguards and governance around the expenditure of public money. We think the correct balance has been struck, although these are early days. Local authorities are actively pursuing schemes and getting an understanding. There is two-way communication between the Department and the officials. There was reference earlier to some projects in Waterford. Some of what we might call teething issues have been solved or are on their way to being solved in Waterford. It is through pilot projects like those that we learn and continuously improve.

To answer the Deputy's question, we are happy with the engagement, co-operation and flexibility afforded by the Department.

Deputy Paul McAuliffe

It is a frustration on our side. The legislative and funding work has been done so now we expect to have the houses in six months; I appreciate that this is not possible. The Kildonan Road site is in Finglas and everybody is saying the social housing component will absolutely go ahead and there is no problem but there are still some questions on the affordable housing site. Again, there are other sites, such as the Whitehall car park site. We have been talking about a development there for a long time. It is the same with the port tunnel sites. There is just a fear that the ambition is not there.

The final point I will make is that additional staff were allocated to every local authority but additional staff have not yet been allocated to Dublin.

I think the main reason was they were setting their housing targets but that is where we need to be giving additional staff. We need to be pushing additional staff on the local authorities, whether they like it or not, to increase the overall capacity. There was an opportunity to answer the staffing question.

Mr. Frank Curran

I might ask Ms Geraghty to come in on that. The extra staffing has been allocated around the country and on social housing, there are 200 engineers, architects, quantity surveyors and so on. That is being finalised now for the four Dublin regions so that recruitment process will start very shortly.

Deputy Paul McAuliffe

Is there an indicative figure for Dublin?

Mr. Frank Curran

It is about 50 between the four regions. There are a significant number of staff in place already, as the Deputy knows, but this is to complement that in the areas where we need them, which, as I said, is project managers, quantity surveyors and so on. That is ongoing. There is a similar exercise for affordable purchase, so staff are being identified in each local authority who will be needed over and above the existing staff numbers to implement the affordable purchase scheme.

As these schemes - the affordable purchase scheme and the cost-rental scheme - are being developed, there is significant consultation between the Department and our group, which is the housing, building and land use committee, so people are aware at a very early stage what is coming down the track. There would be various seminars for chief executives, directors of services and practitioners so people know what is coming down the track in terms of, say, affordable purchase. There is a lot coming through there now in terms of advance purchase, there are mixed tenure units coming through and there is direct build in terms of affordable units and working with the AHBs, the CREL system, the LDA and so on. People are prepared. They know what is coming down the track and they do not wait until the approved purchase scheme is in place. There is a lot of work already done.

Ms Margaret Geraghty

Overall, it is that point that came up earlier about building out an affordable pipeline where there might be targets for the next couple of years. We are talking about an affordable pipeline under development into the future, not just for the next five years, so we have to invest that time now in developing out projects across the country, be it mono-tenure or mixed tenure. That is the work that I am concentrating on in the housing delivery co-ordination office with Mr. Taaffe, in terms of trying to scope out that affordable pipeline.

If we look at where we are at the moment, we have 340 affordable homes on-site, some of which will be delivered in 2022, and it is key that we get that early delivery. Behind that, we are trying to bring forward another 400 homes across the country that have approval in principle for affordable housing funding, be it in Waterford or in whichever local authority area they are. It is to translate those into agreements with developers for the turnkey aspect so we can give that clarity and get schemes identified and purchasers identified, and get people lined up to buy. That is where our thoughts are in regard to advance purchase turnkey.

We are working with local authorities in terms of their bigger sites like Churchfields in Mulhuddart with Fingal County Council or at Ballymastone in Fingal, or some of the bigger sites with Dublin City Council, which will be mixed tenure. We have to get our viability models right so we know that what we build can be sold, which is an important piece, or what percentage will be rented.

The Deputy’s point is well made in regard to the bigger urban areas in particular, where we are looking at a package of sites and there may be a number of locations over an area that can support affordable delivery and, indeed, affordable delivery would be the right thing to do. It is looking at those sites as a package with the local authority and the elected members for that area so we have that clarity on what is coming down the tracks and what the different tenure types are, and that we are actually meeting the targets across the different tenure types. That is an approach that we are trying to work on and expand.

Chairman

Excuse me, we are well over time on that slot. I can bring Ms Geraghty back in again later. I call Deputy Ó Broin.

Deputy Eoin Ó Broin

I do not want to ask people to repeat answers to the questions asked earlier if they have already got to them, but there are those issues I had raised in the first round, particularly for the Housing Alliance in terms of CALF as an equity share rather than a grant, and whether it has thoughts around that, and also on the payment and availability scheme review.

I will throw in two other questions on top of that. Obviously, we have had a lot of discussion around turnkeys and I know some of that discussion was in my absence. I am not arguing against turnkeys and I think they are going to be essential. My concern is that the ratio of turnkeys to own-developments, both on the local government side and the approved housing bodies side, is too skewed. How confident is the Housing Alliance that we might start to see over the next number of years a rebalancing so that while turnkeys are still going to be part of both CREL and CALF, there will not be that heavy reliance on them, given about 50% of real social housing last year was turnkeys and the same the year before, and less than half of that was direct delivery? If they have thoughts on where turnkeys are going, I would be interested in that as well.

Mr. Sean O'Connor

A lot of what I would call turnkeys are projects we have been involved with, many of them pre-planning and certainly pre-construction. We would class them as new-build development agreements or forward purchase agreements, and the LDA term now is “forward purchase”. We think many of those schemes would not come to the market on the strength of sales, particularly with apartment schemes. As far as we can see, our intelligence on the market is that the only buyers for apartments right now are investors, local authorities or housing associations, and we do not see that particularly changing with the costs where they are.

In terms of the funding system and the Deputy’s question about equity, all we know is that the current funding system of CALF and CREL being loan-based and every scheme being 100% funded really puts us out of step with the rest of Europe, where grants are readily available, as I said when the Deputy was out of the room. We went overnight from a system of 100% grant funding to 100% debt funding. I think that is starting to creak badly now and we can see areas of the country where it is just not viable. The market rents which underpin the system are not sufficient to allow a scheme to become viable. Additional to that, associations are building up levels of debt within the regulatory framework. “Soften” is the wrong word, but it should be okay within the regulatory framework because it is a very strong underpinning of our borrowings and we fix interest rates in line with the term of the agreements, so there is a matching of income and expenditure, particularly loans expenditure.

The concept of equity is interesting. For me, it may be wishful thinking and it sounds interchangeable with “grant”. We would hope “equity” is not just semantics and it is around some protection about the use of social housing in perpetuity, which is what we are about. There is no provision to sell association stock at the moment to tenants; that is the position of the alliance and it is not on the Statute Book. If it was to be proposed, I think we would say we would prefer that it is retained for use as social housing in perpetuity. Possibly, the switch from CALF funding of this soft loan to a grant could be put in place in replacement for a guarantee of that perpetuity of the social aspect, which is not there at the minute because there are funding issues around lenders and they do not want those things in place. The CREL on the scheme in Enniskerry Road in Stepaside is a 70-year designation and the standard designation is now 50 years, which is not bad.

It is an interesting concept. As to our reasoning, as a sector, we would be very happy to consider it. Anything which involves less borrowing would be good. It is just how that equity would work because, normally, equity means control and there is a shareholding. That is not a bad thing for us but it might be a bad thing for the State because we think one of the big drivers of the CALF-P&A system was an off-balance sheet mechanism and that is now water under the bridge because we are on the balance sheet and, of course, we are borrowing off the Housing Finance Agency, which scores against public expenditure, so that is on the balance sheet. In a way, the whole design of the system has possibly moved on. “Equity” is just a word but it is around the control mechanism that the worry might be. If there is hope to get the sector off the balance sheet for obvious reasons, would that be an obstacle and how would it work in practice? In principle, I think people would be happy to look at anything which involves us borrowing less but doing the same or more.

Deputy Eoin Ó Broin

Perhaps I could come back on both of those points. My question about the turnkeys was not to make a case against them. I understand why they are there and as long as they are done in the right way, they make sense. The difficulty is we are not getting any cost rental in Dublin city because the cost of the turnkeys is too expensive. We cannot deliver unless the Government decides to increase the cost rental equity loan, CREL, which it has done with the affordable housing in local authorities. The only way we are going to get cost rental in Dublin city is through a pipeline of own-delivered projects on public land led by the bodies represented here today and local authorities.

My question relates to the total quantum of social and affordable housing. As it increases, albeit at a rate too slow for my liking in terms of volume, how hopeful are the witnesses that an over-reliance on turnkeys might balance out so that there would be more own-developed properties? It is not a case of one or the other but my concern is about the own-developed properties.

On equity, I should be very clear that my thinking is not that any of the approved housing bodies, either in the Housing Alliance or elsewhere, have plans to do anything with their stock other than what they are currently doing. However, given the volume of State expenditure on public housing, none of us can say what will happen when we are all retired, dead and buried and there is a new generation of Ministers and chief executives of housing associations. Therefore, it is reasonable for the State to argue that if it is putting in money, not just through a capital advance leasing facility, CALF, and CREL but also through the availability agreement for social housing, there should be some guarantee that the use cannot be changed without the consent of both holders of the equity. If the conditions of the equity were light and only on future use, my question was whether it would get the housing bodies over the gearing ratio problems with respect to private sector borrowing. My understanding is they do not have those gearing problems with the Housing Finance Agency. If the witnesses have any comments on that, I am interested in hearing them.

If there are 30 seconds left, will the witnesses comment on the P&A for rural areas? What are they hoping for in that regard?

Mr. Sean O'Connor

The gearing is starting to bite now. It is interesting that it is probably the element that lenders worry about least because of the system and because we are fixing interest rates and matching payment terms. It is starting to make boards of associations nervous because it is a lot of debt. I do not know the collective figures for borrowings but I know my association has spent circa €250 million per year in the past four years. It is a lot of money to go through.

The houses are there and will be there in perpetuity. It is a lot of borrowing and the boards are starting to consider where is the limit. We are starting to see a move away from CALF to a grant or equity system as a sensible way forward. What would the limitations be? The Savills report recommended a golden rule that our association is adopting of no more than 85% and we have a hard break at that point. We are currently at 76% gearing and we are the highest geared association. It ticks up very slowly the bigger one gets and the more borrowing there is. It ticks up slower.

Ms Sharon Cosgrove

The gearing threshold was at 60% and there has been a relaxation or, I guess, a proportionate approach to regulation. It still causes some concern at a board level in approved housing bodies. In our own, the board set a risk appetite of just over 70% gearing and we are very close to that. There is a risk that we will slow growth and delivery, as opposed to accelerating it at this time, when it is needed. The grant issue is real for approved housing bodies. Shall I speak to the review question?

Chairman

I am sorry but I must interrupt because we are well over the time for the slot. There will be a third round and Deputy Ó Broin has indicated a wish to speak again. We can return to his questions at that point. What remains now in the round is a second Green Party slot and slots for Fianna Fáil and Fine Gael. We will then get to the third round of questions, and the first slot in that will go to the honorary member of this housing committee, Deputy Boyd Barrett.

I have some questions. We invited the delegations today because the committee is trying to do a series of three meetings, with the first of these dealing with financing social and affordable housing. This meeting is about delivery and the third meeting will have representatives of the Department and its housing delivery unit. This is so the committee can get an idea on financing and delivery obstacles and what we can do, as part of the Government or the Opposition, to try to unblock any blockages there may be in the system. Ms Loftus made some really important points earlier about land management, land banking and ownership of the land to give surety in where housing can be developed and associated costs. We know land is a very significant factor in the production of any housing, whether private or public. I will come back to this if there is time at the end.

I have a question on the 59-week process mentioned by Mr. Curran. He mentioned some of the ways that could be reduced, including site surveys done in advance. Is that something a local authority must self-fund in advance? In other words, it may have to take a chance on it before going into the four-stage process? Maybe Mr. Taaffe will answer that?

Mr. Eddie Taaffe

Heretofore, local authorities could only recoup costs after stage 1 was approved. A stage 1 application would be submitted in some cases without having done a detailed site investigation, and it would be done afterwards. One of the changes requested by local authorities would be that they could be funded in advance of submitting a stage 1 application and the Department has agreed. We now do the site surveys and site investigations before even putting in a feasibility study, as they better inform the feasibility study early on. That is a positive change that we welcome.

Chairman

That is agreed and funded. It is interesting to know. There was mention of a single-stage process and a figure of €6 million. There were concerns about cost overruns. Is it the case that there would be a request to increase the €6 million to a higher level and would that give some comfort on the cost overruns? Is that purely related to the inflationary spell we are currently going through or did it precede that issue?

Mr. Eddie Taaffe

The feedback from local authorities is that it is a bit of both, really, and it has been exacerbated by cost overruns. It should be pointed out that one of the delivery mechanisms increasingly being used by local authorities is competitive dialogue. It is a single-stage process, in effect, where there are a number of iterations and assessments but when it comes to approval, it is a single-stage process. That is yielding significant results and good projects. For example, Cork City Council and Donegal County Council use that extensively. We are proposing to roll that out. For example, Dublin City Council will use that shortly using those delivery methods. That will see greater use of the single stage and the construction sector's ability to offer housing and design, build and supply the housing more quickly, as opposed to going through each step in the four-stage process.

Chairman

Is it the case that the limit was set at €2 million for so long and there may be a gearing up to get to that level and start looking at those projects? Is that part of the process as well?

Mr. Eddie Taaffe

That is exactly it.

Chairman

There is also the question of staffing levels. We often hear that local authority staffing levels are under pressure and we know they are in various areas. There was a figure of 200 for architects, surveyors and planners. Is it something that is taking a little time to gear up as well so as to get those people in house and start with social own-built or directly built projects?

Mr. Eddie Taaffe

That process has been under way for a number of months in the authorities outside the four Dublin authorities. It is well under way and a significant number of the 211 staff have either started or are about to be recruited, with job offers going out, etc.

With construction coming back and the private sector in particular ramping up, it is a bit of a challenge to find suitably experienced staff and get them to join local authorities. Most, if not all, the job offers are for permanent staff as opposed to contract staff. That will make it much more attractive for experienced people to join the local authority sector. That process is under way and, as Mr. Curran has said, the exercise is about to conclude for the four Dublin authorities in terms of both social and affordable housing.

For example, we had a meeting with Dublin City Council a few days ago and it has put in place a staffing structure and different teams to deliver different mechanisms.

For example, one of the mechanisms is they will ramp up a team to deliver and focus on competitive dialogue and on the public-private partnership bundles as well, so that all of these delivery streams can be fully teamed up and fully resourced. Given the scale of the challenge for the larger authorities, we need every single delivery mechanism to deliver 100% to reach the targets. Those plans are in place, we know what they are and they are being activated.

Chairman

I would agree with Mr. Taaffe on that. We are mostly sort of focusing on scheme projects, that is, projects over a certain number. In terms of the local authorities or even the approved housing bodies, AHBs, looking back into our town centres and those smaller infill sites that might deliver, say six to ten units or even fewer, are the local authorities doing that? Are they starting to focus back and look at those opportunities to acquire sites, whether they be derelict or vacant? I would have concerns on that because I remember in a local area plan I worked on years ago there was an objective to provide for 6,000 new units, but only 200 were going to be infill. I know that one cannot control infill in a local area plan, but I wonder if the local authorities focus on looking at dereliction and vacancy. What is available from the Department to encourage that?

Mr. Eddie Taaffe

I suppose some of this will fall under the Town Centre First policy, which has been ramped up. The Chair would have heard earlier from the Housing Agency that it is giving supports to local authorities to compulsory service order, CPO, properties and get them back into productive residential use. That is being ramped up. It is difficult and time consuming work, but it is work that local authorities are up for. As part of the housing delivery action plans, we ask local authorities to specify the number, that is, an internal target, of how many buy and renew properties they would intend to bring on stream in the lifetime of the plan. We have asked them to highlight that as a delivery stream so that we can keep an eye on it and make sure that the correct amount of buy and renew and brownfield restoration projects are incorporated into their plans. That will feed into Town Centre First and also the Croí Cónaiithe scheme, which is under Housing for All. These will hopefully stimulate brownfield or infill development in town centres.

Chairman

I would agree with Mr. Taaffe on that because it is good when a local authority or an approved housing body can start that process where others look at it and say, "I will do the same". There can be that good mix of tenures as well as a good mix of owner-occupier and public housing.

That is my time slot finished now. I will move onto the final Fianna Fáil slot with Deputy McAuliffe, followed by the final Fine Gael slot with Senator Cummins. Then we will go to Deputy Boyd Barrett. They have seven minutes.

Deputy Paul McAuliffe

I want to come back to that issue of staffing because I certainly appreciated that indicative figure of 50. I am not nailing Mr. Taaffe to numbers - broad terms are all right. I welcome how he talked about gearing up the particular teams, particularly within Dublin City Council, which has a majority in my area. I would just like to clarify, whether 50 is the total overall number he believes might be allocated to Dublin City Council or is that broken down by team? Could Mr. Taaffe talk about that?

Mr. Eddie Taaffe

It is not quite finalised at the moment. In the first phase of resourcing local authorities, we asked the non-Dublin authorities to resource their social housing delivery teams. Subsequent to that, we asked the Dublin authorities to give us their social and affordable request list, which is being compiled at the moment. When looking at social and affordable across the four Dublin council areas, that will be greater than 50. The reason we did it that way is because much of Dublin county delivery comes via mixed tenure scheme. It is not a separate delivery stream. The staff has to be considered in conjunction. We are also looking at affordable delivery teams for the non-Dublin authorities, such as the Corks, the Meaths and the Kildares of this world. That process is likely to yield a ballpark figure of somewhere between perhaps 70 and 90 staff for local authorities for affordable delivery. The 50 would be for social housing, and there would be affordable staff on top that again for affordable delivery in the four Dublin authorities.

Deputy Paul McAuliffe

Mr. Taaffe envisages the overall figure being greater than 50.

Mr. Eddie Taaffe

Yes.

Deputy Paul McAuliffe

That is fine. That concept of mixed tenure is very crucial. I represent Ballymun and Finglas and we know building mono-tenure and mono-income, particularly low-income, is not the way forward. However, sometimes the complexity of the mixed tenure and mixed income provides a real challenge for local authorities to get their head around and get implementation. What I believe the AHBs are saying, and I will come back to them in a moment, is that the current funding model is providing some difficulty in terms of delivery. The social housing funding stream seems to be up and running, well done. Is the same there for the cost rental? Are the numbers Ms Geraghty provided - and to be fair, they are the well-known numbers – the extent of our current ambition in the area of cost rental? Given that people exit the waiting list and social housing income bracket so early now, and cost rental is identified as a solution for people who above those income limits, I do not believe that we have the full extent of the ambition in the cost rental space.

My question is the same for the AHBs. Everyone is talking about cost rental. We have talked about cost rental for a long time. It is actually now on the books; it is here. Is anybody actually taking it up with any gusto? I do not yet see those numbers. If the answer is no, then the answer is no, and we need to know that. I do not see the scale in the cost rental space.

I saw Ms Loftus grimace a little bit in my first round of questions when I talked about cost rental. Perhaps I might give her an opportunity to come in first and then Mr. Taaffe or Ms Geraghty.

Ms Camille Loftus

We have had two limited calls under cost rental equity loan, CREL, which placed a very high premium on fast delivery. There is always a trade-off in these things: fast delivery or lower cost. You rarely get both of them in the same place, so there is a trade-off in terms of that. We would like to develop a long-run pipeline around cost rental. I know the Department is working on a rolling call, rather than the sort of much more limited mechanism we have had so far. We think that is absolutely crucial to releasing that supply.

Deputy Paul McAuliffe

Is that a space AHBs want to be in?

Ms Camille Loftus

Absolutely. Much of the cost advocacy rental came from-----

Deputy Paul McAuliffe

Absolutely.

Ms Camille Loftus

-----these and even before the Housing Alliance existed. These were the organisations that were saying that cost rental would be a game changer. However, it will only be a game changer if we get to do it at scale. Some 6,000 probably will not make a significant difference to any rental market over the next number of years.

That is part of the reason we are arguing that the debt is a problem. When one looks at developed not-for-profit sectors elsewhere in Europe, all of them rely very heavily on borrowing and nobody has any problem with relying on it. However, they are well into their maturation cycles now. They hold large sections of the market. Therefore, they have the capacity and flexibility to do that there. We are not at that point. The sector just has not had the time and opportunity to get itself up to that scale yet.

Cost rental is very important to us from that point of view. We want to see the rolling programme in place as soon as possible. We know for the Department that a lot of the complexities we are dealing with at the moment are the kinds of things that are slowing it down in that regard. Over the next number of years, I know from members’ current plans that there are about 2,500 cost rentals in the pipeline at the moment. However, we are very eager to go much more ambitious than that. To be honest, my first reaction when I saw Housing for All in terms of the target for cost rental was that it was not high enough.

Deputy Paul McAuliffe

That was my reaction too. I ask the same to Mr. Taaffe, Ms Geraghty or Mr. Curran.

Mr. Frank Curran

It is a priority for us as well. In my area, Dún Laoghaire-Rathdown, there are 300 cost rental coming through in Shanganagh now through the Land Development Agency, LDA. There are 50 units coming through at the Enniskerry Road, which was mentioned earlier. About 120 others are coming through between Tuath and Respond, in terms of CREL. CREL has been very successful in the initial launch. There is huge interest from the approved housing bodies. The LDA has a very ambitious programme. Again, even in my own area, the Central Mental Hospital application will be launched very shortly, probably this week. There will be a significant number of cost rental there as well.

The CCMA has a target of 800. It is a small target, but it is something that we can achieve. One can borrow for cost rental over a very long period of time. Therefore, in areas where affordable is not realistic, for instance, we can look at cost rental and increasing that 800 target. It is something that we are very committed to and we have made a pretty good start on it.

Senator John Cummins

I will take up where Deputy McAuliffe left off in regard to AHBs. Other European countries were cited in the context of cost-rental accommodation. Is it true to say that in those European countries, cost rental would not be solely in the remit of AHBs and that low-cost ethical funds are providing cost-rental accommodation as well?

Ms Camille Loftus

The dominant provider of cost-rental-----

Senator John Cummins

It would not be the sole provider.

Ms Camille Loftus

It would not be the sole provider. The Austrian housing associations, for example, are limited-profit associations to allow them to accumulate the funds. I am just making that distinction between them.

Senator John Cummins

Of course. Last week, at our meeting with the Housing Agency and Housing Finance Agency, we had a discussion on cost-rental accommodation. Ms Loftus may disagree with them but I shared their opinion that the AHB sector does not have the capacity to be the sole provider of cost rental on the scale required. If we are to get to the ambitious numbers to which Ms Loftus referred, beyond the targets set in Housing for All, we must, of course, look to the AHB sector but we must also look at other models and mechanisms within that which are provided for in the legislation. Does Ms Loftus agree with that?

Ms Camille Loftus

I do not think the AHB sector has ever asked to be the sole provider of cost rental but we definitely want to do more than what is there at the moment. We are eager to be in this space. It can be significant. This is the sector that brought the concept forward, has been the cheerleader in that regard and delivered with exceptional speed when the first call went out. My first reaction to that call was that cost rental could never be delivered in that period of time but the AHBs did it.

Senator John Cummins

Absolutely.

Ms Camille Loftus

I watched the session last week and I was a little frustrated. People were saying we need to go beyond the AHB sector. Can they just let the AHB sector do what it is we can do and then we will stretch beyond that? We are eager to develop more.

Senator John Cummins

Of course. The more players involved in this space, the better. It is only with scale that we will see the real benefit in competing with the private market, in terms of reducing rents over the time. The advantage that other European countries have over Ireland is that they developed their stock 40 and 50 years ago, post the Second World War and we are only starting at this point. We will see that over time but the people struggling right now with rental accommodation want delivery today. That is where there has to be trade-off in terms of increase in scale and the players involved in it.

I compliment Mr. O'Connor on his comments in regard to turnkeys because they are often misconstrued and presented in a different light in media and political commentary. The period for forward purchase agreements to which he and the LDA referred is much more appropriate. I have many examples of social homes in Waterford in which families and individuals live today that would be green fields if it were not for turnkey agreements with approved housing bodies and local authorities.

As a follow-on from that, does Mr. Taaffe believe the State can obtain good value for money through turnkeys vis-à-vis the all-in costs of development in the local authority sector? This is often a thorny issue as we do not actually have a direct correlation in terms of the comparisons between the all-in costs for local authorities versus the turnkey cost? Local authorities have staff on their books and certain costs are not attributed. Does Mr. Taaffe believe turnkeys are good value for money?

Mr. Eddie Taaffe

Yes, we do believe that. Ultimately every project has to stand on its own merits and receives an assessment. Projects do not go forward unless that can be demonstrated. We believe that when you look at the all-in costs turnkeys or uncommenced developments are good value for money. The important point to realise is that quite a number of offers that local authorities receive for turnkeys do not make it past that. We see that the money being asked for does not represent value for money. Not every turnkey is accepted because of those criteria that we set to ensure value for money.

Senator John Cummins

That is a very important point to have on the record.

To go back to the approved housing bodies, the Housing Alliance, in its submission and in a number of answers to questions, referred to access to low-cost land. This will probably be perceived as a criticism but I have to cite an example. I will not reference the location in the country nor the people involved but it is a general point on inflating land costs. In one example, which is not in my county, a developer was bidding on a particular site and the cost was working out at roughly €27,000 per unit for the site. An AHB came along and bid €35,000 per unit for the site. The developer would say he could not make the site viable at anything above €27,000 per unit. His point is that AHBs have bigger pockets to draw on. What the AHB sector has done in that location is set a new floor below which no piece of land in that area will be sold. Will Mr. Taaffe comment on that?

Mr. Sean O'Connor

It is rare that we get involved in land purchase. We receive land from local authorities and that is the main form of delivery. We are engaging in forward-purchase development agreements with private developers. You get this carry-on where people chase the highest price. We are fully in step with the local authority sector. We get valuations, gross development values and end valuations. These are run past the relevant local authority and we will not move without its approval. That might not have been the case in the Senator's example but generally I do not think any alliance member would move to sign an agreement without a full lock-in from the local authority.

Interestingly, to come back to the cost-rental issue-----

Senator John Cummins

Sorry, but that seems to be a "pass the book over there" response. Could such a thing have happened? Does Mr. O’Connor appreciate that it sets a new floor for land prices in the area in question?

Chairman

Was it for the same number of units for both developers?

Senator John Cummins

Yes, exactly. There was a direct correlation and comparison in terms of land prices.

Mr. Sean O'Connor

Of course it could have happened and these things do happen. There are many players involved. The local authorities, AHBs, the LDA, the private sector and institutional investors are all sourcing. There are many people out there. I hope that most of our land will come through the State route. In 2022, alliance members are going to deliver 634 homes under cost rental, almost exclusively through forward-purchase agreements, except for Enniskerry Road in Deputy Boyd Barrett's constituency. In both Deputy Ó Broin's and Deputy McAuliffe's constituencies there are sites on which we want to work with the local authority. One is a joint venture between us and Oaklee in south Dublin which will provide about 150 homes. There is one in Ballymun for 300 homes with Ó Cualann, which is the only association that does sales. There is a joint venture in the offing on that. I would like to see a shift towards a greater focus on that. However, one thing-----

Senator John Cummins

Just on the-----

Chairman

I will let Mr. O'Connor finish as we are over time. Deputy Cummins can come in again in the third round.

Mr. Sean O'Connor

I want to make a very quick comment. I do not think it should be an accepted truth that building directly, using the public procurement and public works contracts, is cheaper than forward-purchase agreements or new-build development agreements. The risk is parked with the private sector which has to deliver.

Deputies raised the point that this is where we have to go, which I accept; but, for us to really step up, I would have to increase tenfold the number of architects, engineers and surveyors that I have in-house. There are quite a few but managing a programme like the one in question entirely in-house would involve a big step up. Staff are not available at the minute; they have done. They are in the US and Australia-----

Senator John Cummins

I could not agree more.

Deputy Richard Boyd Barrett

I thank all our contributors. The main thing I am looking for is hope. I accept that the targets, figures and finances are important and that one has to go through all this detail to deliver social and affordable housing. I have been around a while now and note that nothing has changed about the human reality or the misery of people coming through my door week in, week out, owing to housing crises. In the past few months, it has been getting worse. The cohort I am encountering includes people who are working and who in some cases have been on a social housing list for ten or 15 years and are now getting taken off it. All their time is gone and their earnings are only marginally over the thresholds. The ten or 15 years in which they believed they would eventually get housed are gone but their earnings are such that they have not got a prayer of ever buying in my area, where the average house price is €560,000.

I would like the guests' comments on affordable housing. I do not see how it will deliver anything in my area given the house prices. Even with a shared equity arrangement, with the local authority having 30%, I just do not see how people on the incomes in question will be able to afford it. I encountered a council worker who had been knocked off the list after ten years. When I heard about Enniskerry Road, I rang him up very excitedly and told him to get on to those concerned because there were new cost-rental units there. He rang me back half an hour later and said I must have been joking because the rent was €1,200 per month, which he could not afford on his wage. Another council worker, who was on to me this week, lives in his car. Yet another, who has a family and is working in a Dublin hospital on the front line, is just about to be evicted. He believes he will be living in his car with his family. He has an ill wife and kids. They are told to go to Dublin Place Finder Service. This service cannot find anywhere either within the HAP limits. There is just hopelessness and despair. I am looking for a bit of hope from the delegates present.

In one way, I cannot judge these things. I would like to see the figures on them. We can have projections on the number of units to be delivered in a given year but they do not tell how many people are getting knocked off the list nationally every year. I submitted a question to the Minister recently and was told the Department does not have the answer because it cannot find the information. Could the CCMA delegates provide that answer because the Minister cannot or will not? The figure would be helpful. I would like to know, given the projections for delivery, how many are going to be added to the lists. Do we have a rough estimate of how many people will be added to the lists over the period of the plan? Again, figures do not mean a lot if we cannot judge them against how many more people will be added to the lists.

I would like to ask about income thresholds if anybody, such as a representative of the approved housing bodies, is willing to answer. There is much talk to the effect that we have to move away from segregation and stigma associated with social housing, but to me we are going in the exact opposite direction. Do the delegates agree? While income thresholds have remained at the levels they have been at for the past ten years, the incomes of those who become eligible for social housing are becoming increasingly lower. People who traditionally could get social housing, such as workers in councils or those in construction, banking, postal services and healthcare, are increasingly becoming ineligible. Actually, we are narrowing down the cohort of people who are eligible for social housing and telling them that there will somehow be something else, such as cost rental housing or affordable housing; however, I cannot envisage the scale matching the demand. Maybe the delegates can give me hope on this but I just cannot see it. Maybe they could respond and refer to the cohort for whom, increasingly, there are no avenues. I just do not see where the avenues are.

Mr. Sean O'Connor

It is a very difficult situation. Enniskerry Road, within a seven-day window after opening, was ten times oversubscribed. The application window for apartments in Citywest closed after five days. There were 44 apartments and 508 applications. They will go into a computerised lottery. The same will happen in a month in Kilcarbery. Clearly, there is massive demand.

Cost rental is the missing link of policy. It is for people who are falling through the middle, and the gap is growing all the time. The difference in Austria, including Vienna, is that social housing is available to everybody. That is the more radical solution. There is no compartmentalised cost-rental scheme and a social housing scheme. Possibly we would get better mixed tenure through a solution like that but I am not in government, nor are my colleagues. We are implementing policy. We think it is a positive step forward but it is a question of how to get enough housing into the marketplace at the one time. Once the arrangement starts to have an impact, it should in theory have a bigger policy drive to reduce rents in the open market. Why would you rent a private apartment in the circumstances? I accept what the Deputy said about Enniskerry Road but €1,200 is about 50% below the current open-market rent. It is €2,300 or €2,400 per month for a new two-bedroom flat. There is a significant discount but it is not enough for some people. If the State were to rework the scheme and make the CREL proportion 40% or 50% or make use of a grant, that would resolve the problem, but it means someone putting in more subsidy.

Ms Camille Loftus

I do not think I will be able to provide Deputy Boyd Barrett with much hope but maybe I can provide him with a little information. As I understand it, the Department has completed its review of income eligibility guidelines for social housing. I do not know whether any changes are proposed, but, as I understand it, the work is done in that regard. To my knowledge, no one does projections as to what is anticipated; however, we may have some information from the housing needs and demand assessment tool that was used to set the targets for the local authority action plan. We may have some information that would give the Deputy an indication of what is coming forward, but that is not yet in the public domain.

The Department, when its representatives are in here next week, will point out to the Deputy that the number on the housing list has been falling, albeit not very significantly. One dimension of that, which is very much under-discussed, is the mix. Often when we talk about housing in Ireland, we talk about the three-bedroom semi-detached house. From memory, I think 52% of people on the housing list would be in single-person households. It is higher in Dublin. Some 20% to 25% are lone parents with one or two children. Therefore, our demand for smaller units of accommodation is really high. I worry that if we built 33,000 three-bedroom semi-detached houses per year for the next while, we would still have a problem at the end of it. Therefore, the mix is really important. The impetus is such that, because the houses are more expensive, funding up is required.

Chairman

I thank Ms Loftus.

Deputy Richard Boyd Barrett

The CCMA delegates might have wanted to respond.

Chairman

We are almost up to the ten-minute mark. The Deputy had quite an introduction.

Deputy Richard Boyd Barrett

Sorry, I did, and many questions.

Chairman

I ask Mr. Curran to be brief with his answers and then we will move on to other members.

Mr. Frank Curran

Unquestionably, housing lists are decreasing, and their future decrease will come from supply. There is a target of 47,600 new-build social dwellings to be delivered by 2026. Earlier, I outlined the number of sites where work is under way, with 11,000 units under construction, 3,500 units where construction is about to start and 8,500 units at the planning and design stage. Additionally, there is a target of 18,000 units for affordable purchase and 10,480 units for cost rental. That is what is going to make the difference. Of the 33,000 units that will be built in Ireland in each of the next several years, one third of those will be social units. This is what will make the difference to housing lists.

Chairman

I thank Mr. Curran. I call Deputy Ó Broin, who indicated first for the third round.

Deputy Eoin Ó Broin

I have three quick points and some follow-up questions. I respectfully disagree with Mr. Curran on one issue. Gross social housing need is not decreasing. We have 60,000 households on the council lists, 60,000 households on HAP, and just 20,000 shy of that on RAS. Those local authorities that still retain the good practice of presenting their members with gross and net housing lists, much to the discontent of the Department, give a much more accurate figure, and that is before we talk about transfers, sofa surfers and whatever else.

Moving on to turnkey properties, because the points made by Senator Cummins are important and it is appropriate that we have a good discussion about these matters, those units are more expensive in urban areas due to higher land prices. This point is particularly relevant for cost-rental units, and explains why no cost-rental projects for Dublin city are included in the call for proposals for the CREL scheme. The prices for the turnkey units are just too expensive. I do not mind if we call these properties turnkeys or forward purchases; they are what they are. We must accept that if we want to ensure the kind of expanded volume of cost-rental properties called for by everybody here, and if we need a great deal of these units in our urban cores, especially in the expensive ones, then that is not going to come from forward-purchase agreements, based on the figures in front of us. Therefore, in addition to more turnkey units, we will have to ensure that we have a pipeline of new-build projects.

Mr. O'Connor nailed an aspect of the issue. Either the CREL fund increases, and-or, as we discussed with the Housing Finance Agency last week, we find other ways of stretching out the loan terms to bring down the cost of entry level rents. I say that because Deputy Boyd Barrett's point is correct. Rents of €1,200 or €1,300 per month are of no use to some crucial cohorts of people who cannot get into social housing and for whom those sorts of rents are not affordable.

I have probably asked my questions three or four times. On the payment and availability, P&A, agreement review, what would it take from the Department to get that review to work? I am interested in that information. My next question might have been answered earlier by Mr. Curran, but of the 200 new staff positions for local authorities, how many have been appointed and are in place? It would be useful if those figures were available. Again, on the affordable housing regulations, my understanding is that the final ones have not been published yet but that the consultation process with the local government sector is finished. Is there any sense of when it is anticipated those final regulations will be ready? They are holding up the release of some properties for sale, for example, in Cork. To agree with Deputy McAuliffe, I would also like to see more ambition in cost-rental endeavours. The central problem is that the Government is only spending €70 million this year for 700 homes and, therefore, if we want more ambition in this area, whether for the local government sector or the AHBs, that pot of money must be increased because of the 700 units for this year, 300 or so are the overspill from those not delivered last year. Central government funding is still too low in this regard and this is what must change if we want the councils and AHBs to do more.

Chairman

I thank the Deputy. Who would he like to address his queries first?

Deputy Eoin Ó Broin

Perhaps Ms Cosgrove could comment on the P&A agreement, so this does not get lost again.

Ms Sharon Cosgrove

On the P&A agreement and CALF review, we were consulted and provided a submission to the Department last year. We have had further conversations in this regard, and we understand there are going to be some changes to the P&A and CALF schemes in rural areas. For the schemes to work where there are high costs in urban areas, we will need more funds to be available through the P&A and CALF initiatives. If the costs are higher and we must pay market value, that is what we will need. In the rural areas, where the market value of properties and market rents are lower, we must have a higher level of CALF or of P&A to make this approach work. We await the decision of the Department.

Deputy Eoin Ó Broin

To ask a straight question, is now not the time to just decouple the calculation of the P&A from market rents and base it on full-cost recovery? If it is going to be the approach, is this not what we need to do now?

Ms Sharon Cosgrove

Absolutely, and that is what we are suggesting. Either the P&A or the CREL must be increased to match the costs involved, because that is what will make it work.

Mr. Eddie Taaffe

On the question of how many staff are in place, I do not have the exact figures. Most of the recruitment, however, is complete, in the sense that either the people concerned are in place or have got job offers. If the process is not complete, it is not far away from it. On the affordable rent-----

Deputy Eoin Ó Broin

Would that be approximately 150 of the total of 200 staff, if 50 positions are reserved for Dublin?

Mr. Eddie Taaffe

No, 211 posts are outside Dublin and the Dublin figures are additional.

Deputy Eoin Ó Broin

Brilliant.

Mr. Eddie Taaffe

On the affordability regulations, there has been extensive engagement. My understanding is that the regulations will be finalised and available some time in April, perhaps early in the month. Turning to cost rental, from our discussions with local authorities, whether we are concerned with cost-rental or affordable purchase, the key issue is the cost of land. As the Deputy said, it can be done in cases where the local authority has an old piece of land with no debt attached and does not require any income from that land, but this scenario will only get us so far. We are engaged in a significant exercise with all local authorities to assess their land banks and to examine their pipelines of land. We are undertaking that consideration not only out to 2026, but beyond that as well, because we must start buying land as early as possible.

This process is yielding some interesting information. As with the AHB sector, though, access to land, and how that is funded, is critical. The reality of this situation, however, is that when we take any village, town or city and explore how much suitable land is available on the market for affordable or social housing, we find it is very limited. This is going to become an even more critical issue as time goes on. The good news, though, is that we now have early sight of the requirements in this regard through the housing delivery action plans, not only for 2025 and 2026, but beyond those years and we can put that mechanism in place.

Deputy Eoin Ó Broin

A supplementary question on this aspect, regarding the targets for social and affordable housing in the Government's housing plan, for now to 2026, for example, is if this means there is uncertainty concerning whether sufficient land will be available for the direct delivery of those targets? Are we just unsure? I ask this because projects in Dublin city will be constrained by the amount of the land available after next year or the following year, whereas my local authority is in a much better position. Do we have visibility in respect of matching land to the housing plan targets for local authorities and AHBs?

Mr. Eddie Taaffe

Not for the AHBs, because the methodology is slightly different, but we do for the local authorities. We ask them to identify how many additional units they can deliver from their remaining land banks and what land they will require to meet their targets. Therefore, we have those-----

Deputy Eoin Ó Broin

Could that information be shared with the committee? We would be interested in it.

Mr. Eddie Taaffe

It will be in the housing delivery action plans for each local authority when they are published in April.

Deputy Eoin Ó Broin

Okay. I thank Mr. Taaffe.

Senator John Cummins

Not to labour the point on turnkey properties, but Deputy Ó Broin last week referred to Waterford as a town.

Deputy Eoin Ó Broin

Shocking.

Senator John Cummins

I assure him, however, that it is a city and the oldest one in Ireland.

Deputy Eoin Ó Broin

And a beautiful city at that.

Senator John Cummins

In the context of his comments on turnkey properties, I also assure him that Waterford is a significant urban settlement. There is significant value for money to be had from the delivery of turnkey units in my city, which is an urban area. Nothing should be misconstrued from this. Representatives of the AHB and local authority sectors have been clear in saying to the committee that there is value for money for the State in respect of turnkey developments. The representatives of the AHB sector also said that it is, essentially, cost-prohibitive to scale up teams of architects and engineers to allow them to deliver those units themselves. This is an important point. I did not interrupt Deputy Ó Broin.

Deputy Eoin Ó Broin

I am just saying I agree with Senator Cummins.

Senator John Cummins

Okay. I am sorry.

Deputy Eoin Ó Broin

For a change, I am agreeing with the Senator.

Senator John Cummins

Exactly, for a change. To come back to some points made earlier in the context of the presentation from the representatives of the local authority sector, in a response to the Chair regarding targets for the buy and renew scheme, BRS, no mention was made of the repair and leasing scheme, RLS, which has been very successful in my county.

If every local authority in the country had delivered the number of units of repair and lease that Waterford has, we would have significantly exceeded our targets under the previous Rebuilding Ireland plan, but that did not happen. I would like to see local authorities place targets on the repair and lease scheme. I have asked this question several times of the Department and it seems unwilling to force local authorities or place targets on them to deliver under repair and lease. Will the CCMA look at that?

Mr. Eddie Taaffe

It is important to understand the differences between the two schemes. There would be no issue with the Department choosing to set targets on the buy and renew scheme. Buy and renew is different because the local authority can actively go out and buy or compulsorily purchase, CPO, and renew. It is the master of its own destiny, if you like. With repair and lease, the local authority can only deliver what is offered to it by the owner. It cannot force somebody. A local authority can promote and incentivise the scheme, but it cannot proactively force somebody to repair and lease to it.

Senator John Cummins

I appreciate that, but the evidence I get from councillors on the ground is an unwillingness within executives and local authorities to do what Waterford did, which was to engage with the auctioneers, use the carrot-and-stick approach of CPO in terms of going after the owners of the properties, promote the scheme in the local media and engage with local builders. It has been successful. Waterford would have no problem in setting a target for itself for next year under repair and lease, even though it is not within its control. I appreciate and understand the differences because I have been involved in many of those projects but there is an unwillingness in the local authorities to place those targets for it on themselves, notwithstanding the difference between both schemes.

Mr. Eddie Taaffe

With regard to the way Waterford promoted and did the scheme and worked with State agencies to find some of these properties, we have arranged for local authorities to hear about that in a best practice session with the staff from Waterford. Local authorities are aware of the benefits of it and are out copying that model throughout the country. We are starting to see some results on that in some other local authorities.

Senator John Cummins

That is welcome but please do place the targets. Unless the local authority has an ambition and target to reach, it is easier to sit back.

The off-balance sheet, on-balance sheet argument has been referenced a couple of times. It goes back to what I was asking about regarding a rationalisation of the sector and a view on the optimal number of AHBs. I will not ask the witnesses to comment on that any further. However, what is the view on what would be required to get off balance sheet? That is where the benefit is. Is any work under way with a view to achieving that?

Mr. Sean O'Connor

It is on our minds. A few years ago, the Central Statistics Office, CSO, and EUROSTAT rubber-stamped and put us on the balance sheet. Clearly, there are big advantages for the State. We seem to be an outlier in Ireland in that the sector is on the balance sheet. There is a reference to it in Housing for All, which is good. I would like to see a more proactive approach to it. It is quite complicated to get us off the balance sheet again and is largely to do with control.

The State has to accept the type of agents we are. There is often confusion about whether we are public, private or voluntary. All of those can be bunged at us as insults. We are one or the other. We know what we are. We are entrepreneurial, voluntary sector, not-for-profit organisations that only deal in houses and providing homes for people. That is our long-term policy objective and what we are in the business for. It is a good thing.

If we can help the State with our borrowings, which are not insubstantial - the balance sheet value of the sector is not insubstantial - and if it can be moved off the State's balance sheet, that is more money for local authority housing, hospitals, roads or whatever it is. Where it happened elsewhere in Northern Ireland, it was tackled very quickly.

Senator John Cummins

Could the Housing Alliance liaise or is it liaising with a view to achieving that?

Mr. Sean O'Connor

We have liaised, but not very successfully. We would like to get a better hearing of what is required.

Senator John Cummins

Perhaps we could take that discussion offline because it is important for the State, the Housing Alliance and all the additional public services that could benefit by getting off balance sheet.

Chairman

We will compile a report after these three meetings. If something has occurred to someone during or after the meeting and he or she wants to submit a written observation or answer to a question that was not answered, we will gladly include that in the report. That could be one of those questions.

Senator John Cummins

Sure.

Chairman

Has the contribution the Land Development Agency, on which we passed legislation last year, is making been noticeable yet? That is probably a question for the CCMA. I always reference the National Economic and Social Council, NESC, report on the establishment of the LDA and how important the function for which the LDA was set up is, to assist local authorities in the land management, and the complexity of putting some land deals together. Is it noticed yet or does the CCMA expect it to become more noticeable over time?

Mr. Frank Curran

I think it is. In terms of Shanganagh in Dún Laoghaire-Rathdown, the tenders are being assessed for 600 units, 200 social and 400 cost rental, and 100 affordable purchase. The Central Mental Hospital planning scheme will be launched this week. All the units are social and affordable. A land bank is being assembled around Colbert Street station in Limerick. Examples of social and affordable units are also coming through in Skerries and Kildare. There are some early wins there.

The Land Development Agency is also involved in advance purchase and it has a call out for that in terms of providing affordable units, similar to the approved housing bodies, although on a larger scale of 150 units or more. There has been an impact; there is no question about that. There is considerable co-operation between the LDA and local authorities. The directors of services in housing departments really need to know what the AHBs and LDA in their county are doing and try to co-ordinate that in terms of the demand for social, affordable and cost rental housing.

Chairman

A comment was made earlier about apartments in that the only people interested in apartments were housing authorities or investors. Is that because of the design of apartments? Is it because of their location? What do we need to do to make apartments more attractive to owner-occupiers? Why are only investors and local authorities interested in apartments?

Mr. Sean O'Connor

I do not know. There is a fallout from the Celtic tiger years when many pretty suspect buildings went up. Currently, though, the real issue is that private buyers have dropped out of the market and institutional investors are sucking up the apartment market. It is driving up prices as well. There is a lot commentary around the cost of building apartments, some of which from my own member organisation, the Society of Chartered Surveyors Ireland. I do not necessarily see that. It is not the prices we are paying when we do these forward-purchase deals or if we build ourselves. The costs are clearly rising. Most apartment schemes are just not being marketed for sale to individual buyers any longer. I do not know of any recently.

Chairman

It could well be to do with the reduction in standards and sizes over the years brought in by previous Governments.

As well as that, there was a lack of signalling to apartment owners that apartment living is not just a transition to owning a house. Owning an apartment could be a very viable way of living as well. We failed to protect apartments when we protected houses and duplexes from the investment scheme.

Cost rental could be a game changer. We met the Green Party in Vienna, which is the leader in cost rental, but Vienna has about a 70-year head start on us. Do the Government and agencies need to do more to explain to people what cost rental is and what its benefits are? People look at me blankly when I talk about cost rental. It is seen as somewhere people go until they can buy and own a house. The set-up in Vienna is amazing. Why would people want to buy when they have this fantastic town-centre, managed, affordable rental system? What do we need to do in Ireland to make cost rental more popular or attractive, apart from building a hell of a lot more of it, which everybody wants to do?

Ms Camille Loftus

The Chairman took the words out of my mouth. That is the point. When people are in and they see the benefits of this in comparison to other tenures, when social policy works, word of mouth always does all of the promotion that is needed. What we need is more of it. The Housing Alliance brought forward the first tenancies and we are thinking about engaging with those tenants and getting them to tell the story of what it is like to be a cost rental tenant.

Chairman

I am out of time. I would welcome a written submission from the Housing Alliance and the CCMA as well on what we need to do, step by step, to get cost rental at scale.

Deputy Paul McAuliffe

I thank the witnesses for helping me do what I wanted to do today, which was to iron out some of the interaction issues. The responses I have received on cost rental, the CREL scheme and all of those other issues are really useful. Ms Cosgrove mentioned a submission to the Department. If it could be provided to us, if that is not a breach, I would very much welcome it.

I am sorry to bring up new issues so late in the day. Mr. O'Connor mentioned that Ó Cualann is the only AHB that does sales. That is a big issue for the affordable purchase area. Is it the case that AHBs will not be providing affordable sale and it will only be for the local authorities? That would be very disappointing. What do we have to do to make sure that is not the case? Everyone talks about Ó Cualann. I am a big fan of it. However, it cannot build every affordable house in the country that a council does not build.

The second issue I have is in regard to senior citizens' accommodation. Ms Loftus referred to word of mouth. As Ms Geraghty knows, one of the first schemes we did when I was on the council was Ballygall. Fold Housing took it over. There was a financial contribution scheme. I could have filled the place ten times over with the number of phone calls we got. Dublin City Council did the financial contribution scheme very well. People gave a percentage of the value of their house and basically bought their way on to the list but not a preference. Not only is that unlikely to be expanded but the prohibition on acquisition might actually prevent it. Why are we not doing more around senior citizens' accommodation? It is incredibly popular. They are smaller units with higher densities, all of things that we accept, yet I do not see a flood of them. I do not know why private developers are not doing it. They should be. There is a market for it. I do not know why the AHBs are not doing more in that space. Why is Ó Cualann the only AHB doing affordable purchase?

I am grateful for the comments on cost rental. While each of my two colleagues here were trying to get the witnesses to say that they were right, my view is that we need both turnkey and long-term development. That is absolutely the answer. I do not think Deputy Ó Broin was saying he was right.

Deputy Eoin Ó Broin

I think we all agreed on that in the end. Senator Cummins was just confused.

Mr. Sean O'Connor

A number of members work with Ó Cualann. The guarantee we are giving to Ó Cualann is a forward-purchase contract. That particular site in Ballymun would involve a forward-purchase contract for cost rentals.

Deputy Paul McAuliffe

It is the only provider and we need much greater scale in this.

Mr. Sean O'Connor

Exactly. I think associations would be willing to provide mixed-tenure solutions including ownership, particularly affordable sales. No different from the local authorities, our worry would be that if there is a sudden adverse move in the property market, we are left holding the baby. I certainly would not want us to go down the UK route. I used to work for a massive association with 150,000 homes in the UK. Some 75% of its activity is now private home sales. That is not what the sector is about in Ireland. It is about social housing. While this would be cost rental or affordable sales, I think associations would be willing to do it but our lenders would also be looking at what safety nets are in place. If there was a sudden crash, what happens with those homes? Could they convert to cost rental rather than sales? Could they convert to social?

A fair few of us do sheltered housing. It is a minor part of my association. I think Oaklee Housing does more. Maybe Ms Cosgrove would come in on that.

Ms Sharon Cosgrove

We have a number of sheltered housing schemes in operation which work well. They have a support person part-time on-site. We have delivered a number of schemes over the last while. One was in Dublin city, on Poplar Row where we had a transfer of an infill site from Dublin City Council. We have one in Monaghan and one in Tullamore on-site at the moment. It is definitely a good chunk of our delivery. When we are buying sites, we buy them with planning. Sometimes the use is predetermined. They might be family homes. Some of the forward-purchase contracts might be for sites with planning that are not designed for older people. That may restrict the amount of that provision in our pipeline. It is something we are keen on.

Deputy Paul McAuliffe

I do not think it is prioritised by the Department either. That is one of the challenges.

Deputy Eoin Ó Broin

If only the Deputy knew somebody dealing with infill in the Department.

Deputy Paul McAuliffe

Or in government. If I might make one concluding statement, I agree with what both witnesses have said about the overall pipeline and using up land coming available shortly. However, I can only buy into that when on the acres and acres of land in my constituency we have a plan for each site. We do not have that at the moment. If any of our guests wants to come and build a house in Dublin 9 or Dublin 11, there are acres of land coming available. The council wants to work with AHBs. We need plans for every single site. It is happening but not quickly enough. Long-term plans are fine but only when we start developing every site in public ownership.

Chairman

The witnesses can address this in a written submission as well.

Deputy Richard Boyd Barrett

There was one question I did not get an answer to earlier. Maybe people do not have the answer; the Government cannot give me an answer. Does the CCMA have any idea where can we get the figures for how many people are being taken off the list each year because they are reaching the income thresholds? I would just like to know those facts.

If I understand correctly, Mr. Curran referred to 47,600 new social housing units by 2026 and about half of them from the local authorities. That would work out at about 5,400 units per year by the local authorities up to 2026. Last year, direct build by local authorities amounted to 1,343 units. The local authorities will have to more than treble their output. Is that likely to happen? What has been the problem with local authority output?

I know this is before Mr. Curran's time in Dún Laoghaire but I was stunned to find out that last year in Dún Laoghaire-Rathdown there was no directly provided council houses, zero. Most of them were provided by AHBs. From what I can see, most were arrangements the CCMA had made with builders or Part V builds. That is what we seem to be getting. I am not pointing fingers as Mr. Curran is new in Dún Laoghaire. Has he any idea what the problem was there? What is the difference?

On affordable housing, in Dún Laoghaire because of house prices I just do not see how any of the affordable housing is going to work. I do not see how it is going to be affordable. I would be interested in what all the witnesses have to say but especially if Mr. Curran has any take on it. As far as I know, we still do not know what "affordable" means in Cherrywood.

What are we getting for the LIHAF funding? How many affordable units will there be? What will be the price? There is new information available in respect of Shanganagh. Do we know how much the affordable purchase units will cost? As they are essentially a discount on the market price and the market is so off the scale in south Dublin, how will they be affordable? Will they be genuinely affordable for working people who are not eligible for social housing but whose income simply does not go anywhere close to being able to purchase, even at a rate that is discounted on the market, in areas such as Dún Laoghaire and south Dublin?

Mr. Frank Curran

As regards delivery in Dún Laoghaire-Rathdown, last year the figure was 319 in total, broken down as 221 build and 98 in lease. It was 92 in 2020, with 85 build and seven in lease.

Deputy Richard Boyd Barrett

That was mostly AHBs, was it not?

Mr. Frank Curran

It was a combination of AHB, advanced purchase, etc. When I refer to "build", that is a combination of the delivery from the local authority and AHBs. It has been significant through the years. In 2019 it was 246, while in 2018 it was 238. It is consistent. In 2017, it was 257. Many of those were direct build. When we started getting back into social housing in 2015 or 2016, before my time, Dún Laoghaire-Rathdown had many schemes in place and plans drawn up and was able to use the contractor framework. In many cases, it was first out of the blocks in terms of direct build. That will continue. We have set out a target of 2,000 in total in the next five yeas. Members will see that in the housing delivery action plan. That is approximately 400 per year. We have set out exactly where in the county those units will be delivered and how they will be delivered by AHBs and ourselves and the LDA.

When we look at our programme for social and affordable for the next five years, we have sight of the social housing that we have set out in the target and agreed with the Department. We are working very hard on the affordable. I referred to what is happening with the LDA in terms of Shanganagh and the Central Mental Hospital site. We have our own schemes coming on in Ballyogan, Stillorgan and Sandyford. Those schemes are coming through in terms of affordable units. The Deputy also mentioned Cherrywood. I agree that the market is very buoyant, particularly in Dún Laoghaire-Rathdown. There is no question about that. There will be affordable units that will come through advance purchase. People will have to pay a significant amount of money but there is still a €100,000 subsidy from the affordable housing fund that will bring people into the affordable category. What brings more people in is where one develops on greenfield sites such as the schemes I mentioned in Stillorgan, Ballyogan, Kilternan and Shanganagh that we can develop ourselves. Where the schemes are built specifically for affordable and mixed tenure, it makes that a lot easier.

We will also have Part V schemes coming through. There is the social 10% Part V. Part V will be coming through now for affordable. In areas where the price is high - it is currently high and there is no getting away from that - one can always use cost rental as well. For cost rental, local authorities can borrow over 50 years, for example,and spread the costs over that period. It may be more effective in assisting people by having those units as cost rental rather than affordable. There is a strong pipeline. It will be set out in the delivery action plan. We will be ensuring that we have the staff and resources in place to deliver on it.

Chairman

That concludes our time. I thank Ms Cosgrove, Mr. O'Connor and Ms Loftus, as well as Ms Geraghty, Mr. Taaffe and Mr. Curran. I add my congratulations to those expressed by other members on Mr. Curran's appointment to Dún Laoghaire-Rathdown County Council. Obviously, it is a loss to us in Wicklow. I refer to the cross-boundary projects we are working on. I thank our guests again. If anything occurs to them after the meeting that they wish to submit in writing, the committee will welcome that and add it to our report. Our next meeting will be with the housing delivery unit of the Department. That may take place next week. We have not got confirmation of it yet.

The joint committee adjourned at 6.05 p.m. until 3 p.m. on Tuesday, 5 April 2022.