Dáil Éireann Debate, Tuesday - 27 June 2017
596. Deputy Richard Boyd Barrett asked the Minister for Housing, Planning, Community and Local Government the requirements for affordable homes in developments in receipt of LIHAF funding; his plans to enforce the €300,000 maximum price in Dublin; if not, the reason for same; and if he will make a statement on the matter. [29540/17]
Amharc ar fhreagraThe aim of the Local Infrastructure Housing Activation Fund (LIHAF) is to relieve critical infrastructural blockages in order to enable the accelerated delivery of housing on key development sites in urban areas with high demand for housing. These public infrastructure projects will be key to the early delivery of 23,000 housing units over the next four years. There is further potential for approximately 46,000 additional homes on these 34 sites in the longer term, bringing the projected yield up to 69,000 homes once sites are fully built out. LIHAF will facilitate additional social housing of 2,300 housing units in the short term through the 10% Part V social housing dividend, with a further potential of 4,600 housing units in the longer term. Furthermore, a number of the projects, such as those which include lands in local authority ownership, will deliver more than the mandatory levels of social housing under Part V.
In relation to the issue of the affordability requirements for developments in receipt of LIHAF funding, it is important to note that the funding under LIHAF goes to the local authorities rather than to individual developers, to enable them to deliver infrastructure, through a normal public procurement process, on sites that were not being developed due to lack of key public infrastructure. The early delivery of the infrastructure will in turn enhance the ability of the developer to build on the site as the infrastructural blockage has been removed and the developer's viability is improved, particularly where multiple land owners are involved.
In return, the State receives a dividend in the form of accelerated housing supply, land for the infrastructure, and much needed social housing under Part V. In addition, developers are required to provide increased affordability on site for purchasers of private housing. On the seven sites where State lands are involved, the local authorities are going to provide additional dividends in the form of either additional social housing, affordable rental housing or housing for the disabled or elderly, depending on the requirements in that particular local authority area.
In seeking to secure improved affordability for the purchaser of private housing, it was initially proposed that a capped price point would be set on a percentage of the housing. However setting a cap in 2016 for housing that would be developed up to 2021 is problematic and it could adversely impact the viability of the development of some sites, potentially stalling development, with consequential negative impacts on supply, including the Part V social housing element.
Therefore, a more proportionate way to recognise the contribution of LIHAF that will encourage housing supply and also deliver an affordability dividend has been put in place. Essentially, two options are available to local authorities in seeking to reach agreements with developers, one which sets a minimum number of houses to be offered at 10% below market cost, including under €300,000 in Dublin, and a second option where a reduction in cost related to the relative contribution of LIHAF to the project could be spread over the housing development as a whole. The second option means a smaller reduction in price over a greater number of houses, giving more purchasers a potential saving but not affecting the viability of the development and more accurately reflecting the contribution of LIHAF.
My Department has included the requirement for the local authorities to have secured the requisite affordability agreements in a grant agreement and the local authorities which were successful in receiving approval in principle for LIHAF funding in March 2017 are now putting local agreements in place with developers so they can sign up to that grant agreement. No drawdown of funding can occur until those grant agreements have been signed and it is expected that all the agreements involved will be finalised by the end of July 2017.
