From Department of Housing, Local Government and Heritage
By: Darragh O'Brien
Published on
Last updated on
Check Against Delivery
Minister O’Brien:
The Government is opposing the motion. In its proposed amendment to the motion, the Government makes clear, and as it has clearly laid out in ‘Our Shared Future’, the Programme for Government, that its actions will be guided by the core principle that everybody should have access to good-quality housing to purchase or rent. This should be available at an affordable price and in sustainable communities that offer a high quality of life.
Tackling homelessness remains a key objective, and I met with the incredible team in the DRHE today to re-enforce that message and to offer any support I can. Accelerating the delivery of social housing, with an increased emphasis on direct build is a key objective, and the Programme for Government, contains an ambitious target of delivering 50,000 social housing homes.
Another key objective will be to deliver affordable homes for people and families to be able to purchase or rent. In particular, I will bring forward measures to give hope back to our young people that they can aspire to own their own home.
I have spent my first ten days in Office meeting key stakeholders and gaining further insights in the challenges that lie ahead. I have outlined the ambitions of this Government in the key areas of housing and homelessness and I have asked them to be as ambitious in their pursuit of delivering the homes that we badly need.
I am meeting key delivery partners on a weekly basis, initially, to target delivery this year, taking account of the challenges presented by the Covid Pandemic. I will also be working closely in partnership with local authorities, approved housing bodies and the Land Development Agency to plot the course ahead and to agree output targets.
In terms of the affordable homes, they will be delivered through a number of channels. To this end, my intention is to:
Expand Part V to encompass affordable purchase as well as social housing;
Provide seed capital to local authorities to provide serviced sites at cost in towns and villages to allow individuals and families build homes;
Expand the Rebuilding Ireland Home Loan;
Strengthen the Mortgage to Rent scheme and ensure that it is helping those who need it, and
Retain and expand the Help to Buy scheme for new properties and self-build properties.
Serviced Sites Fund for Affordable Housing
I’m going to accelerate and expand the Service Sites Fund. Under the Fund, €310 million is already available to provide enabling infrastructure to support the delivery of more affordable homes on local authority lands.
A maximum funding amount of €50,000 is available per home and on this basis and under the existing budget, at least 6,200 affordable homes, to buy or rent, can be delivered. This funding is made available in those areas where local authorities have demonstrated both a requirement for more affordable housing, and that the viability of delivering such housing on their sites exists.
SSF funding of €127 million has already been allocated in support of 35 projects and I am going to ensure that these projects are expedited. This will provide for critical infrastructure works that will support the delivery of almost 3,200 affordable homes across 14 local authority areas, including the Greater Dublin Area (GDA), Cork, Limerick, and Galway.
Importantly, the majority of these homes are being developed across mixed-tenure sustainable sites. The bulk of the projects approved for funding under the SSF are currently in the planning and design stage. The final sales prices of the affordable homes will be fully determined after the necessary planning permission has been obtained, and the procurement process for construction of the development in question has been completed. Local authorities have projected indicative reductions of between 10% and 40% on open market values. I am determined to work with and support local authorities and other delivery partners to ensure that these homes are affordable for the people and families that need them.
For example, in early 2021, a development in Boherboy, Co Cork is scheduled to be the first SSF scheme delivering homes. It will deliver 116 affordable homes and Cork County Council has confirmed these 2 and 3 bedroomed homes are expected to be made available to first time buyers at purchase prices ranging from c.€198,000 to €223,000.
Just yesterday South Dublin County Council issued an invitation to tender for the development of an SSF supported project in Killinarden, Tallaght. The development site has an estimated capacity for 500 units, with an anticipated tenure mix to include 60% affordable housing and 20% social (with 20% private).
Fingal County Council will shortly award a contract and commence construction on a housing project in Dun Emer, Lusk comprising 2 and 3 bed houses and apartments which will be offered by the local authority with an average of 20% reduction on open market values. This development of 51 homes, 39 of which are affordable will see the first delivery in 2021.
We need local authorities to bring forward many more of these types of projects apace, that’s the message I have given. For my part, I will ensure that the necessary budgetary and statutory supports are in place.
I intend to continue to use Serviced Sites funding to support the delivery of more affordable homes on public land. I also intend to extend use of the SSF, and I will be working with local authorities to that end. I am also looking at other potential ways to expand the SSF and to deliver more affordable homes in the shortest possible timeframe.
Another important way that we will be encouraging the development of more affordable homes is through the expansion of the Part V planning provisions. I plan to expand Part V to encompass affordable purchase and Cost Rental homes, in addition to its current important role in providing social homes. This commitment will not only add to the number of homes available in these areas, but it will increase tenure options for people, and will assist in providing a good tenure mix within our communities.
The Sinn Féin motion calls for absolute limits on the selling price of affordable homes. It also places set limitations on the gross income of those who will be eligible to buy affordable homes. These ideas may be well intentioned, but in my view they are flawed and not ambitious enough.
In terms of selling prices, the price of homes that will be made available for purchase under the affordable purchase scheme will be influenced by a range of factors which will vary significantly from scheme to scheme. But I will be working to make them affordable and attractive for the people that need them, particularly in major urban areas where people are facing the greatest housing access and affordability challenge. Placing absolute, and uninformed, limits on the prices of as yet to be planned, procured and constructed homes could easily become a barrier to delivery. This could prevent the development of viable housing in areas of most need, or prevent households identified as having a particular housing need from accessing the type of house they need in the location they need it.
This Government will not support a Sinn Féin position that households on a gross income of more than € 75,000 would be deemed unworthy of State support. This would represent somewhere in the region of 40% of dual income households nationally and a significantly greater number of dual income couple in our urban centres.
The approach this Government favours is proportionality. We do not intend to define affordability, as the Sinn Fein motion suggests, by reference to single points of income or price. Take the median price of a first time buyers home in 2019 which in Dun Laoghaire Rathdown was € 465,000 or Dublin City where it was €343,000. Is Sinn Fein really saying that a dual working couple earning average wages and just over their threshold of €75,000 and unable to buy a more affordable home in their own community would be excluded from availing of support to purchase a more affordable home under the scheme?
Affordability is not simply a question of how much is too much to pay on a mortgage but of how much is too much for whom and in what circumstance? That is why this Government would rather seek to try and accommodate each household’s particular family need and financial circumstance. It is why, in the first part, we will assess eligibility on the proportion of the net income a household would need to buy a house on the open market to meet their needs.
However, the Government will ensure a balanced allocation of State supports both in terms of fairness regarding those who are eligible to avail of it, and in relation to the amount of financial support they receive.
In addition to ensuring that local authorities will be central to delivering housing, the Government has also confirmed that the Land Development Agency (LDA) will have a crucially important and increasing role in the delivery of more affordable homes. This will include homes for affordable purchase and cost rental, but it will also include social housing. As stated in the Programme for Government, we will legislate as a matter of urgency to establish the LDA on a statutory basis to ensure state owned lands are properly managed and utilised. The LDA will be tasked to work with government departments, local authorities, state agencies, and other stakeholders to assemble strategic sites in urban areas, and to ensure the sustainable development of social and affordable homes for rent and purchase. We intend that State lands being offered for sale, whether owned by a local authority, government department, commercial or non-commercial semi-state agency, or any other agency, would automatically be offered first to the LDA.
I will also continue to encourage housing delivery supported by the Local Infrastructure Housing Activation Fund (LIHAF). LIHAF was designed to fund the provision of large scale public infrastructure to relieve critical blockages and enable housing developments to be built on key sites at scale. Funding of €200m has already been allocated under LIHAF and the projects will support the delivery of up to 20,000 homes. Construction of infrastructure and housing has started on many projects and over 2,000 homes were completed to end 2019. About 40% of homes delivered under LIHAF will be sold at rates which provide a discount on market prices. Up to 3,000 will be social housing homes and the remainder will be sold at market rates.
I have committed to introducing an Affordable Purchase Scheme as a matter of priority.
It was with some interest that I read this Sinn Fein motion calling for the introduction of an affordable housing scheme. That surprise was based on the fact that in the last Dáil, Sinn Fein opposed and voted against a Fianna Fáil motion to build affordable housing on State and Local Authority lands. They are late converts to the principle of affordable purchase.
I intend to announce the details of the new Scheme in September, when I will confirm the arrangements under which discounted homes will be sold to eligible purchasers by local authorities.
The underlying provisions for Affordable Purchse are set out in Part 5 of the Housing (Miscellaneous Provision) Act 2009. In finalising the details of this scheme, I am first taking a short amount of time to engage with the various sectoral interests to ensure that the Scheme is as I envisage and envisaged by Government. I have instructed my officials to undertake a short and focused review of the 2009 provisions to ensure they meet those requirements and to identify the changes that will be necessary to reflect the priorities of this Government.
Key eligibility criteria for an affordable dwelling purchase arrangement under Part 5 include:
the applicant be a first time buyer (there are certain exceptions), and
that the net household income is such that the repayments on a (90%) mortgage for the purchase of a suitable unit at market value would exceed 35% of that net income. Net income here means income net of income tax and PRSI.
In addition, a charge will be placed on the property equal to the % discount from market value, giving the housing authority an equity stake in the property. This is important to ensure that more homes can be delivered over time, helping more people to access affordable homes.
While I consider that 35% is a reasonable threshold, as I have indicated earlier I do intend to scrutinize the eligibility criteria as it relates to income level to ensure it reflects this Governments priorities and delivers the outcomes we need. Broadly, I consider that determining eligibility by reference to net income is fairer than doing so by reference to gross income. Take, for instance, two couples with the same net income, the first couple with one income, and the second couple with two incomes. The couple with one income in this case will have a higher gross income. I do not believe two households with the same net income, which after all influences the ability to repay a mortgage, should necessarily be treated differently because their gross incomes may be different. However, as I have said, I intend to take a close look at this area before finalising the scheme.
Improving the standards, security and affordability for renters is also a priority for the Government. In the Programme for Government we have committed to developing a Cost Rental model for the delivery of housing that creates affordability for tenants and a sustainable model for the construction and management of homes.
We will roll out a Cost Rental model for the delivery of housing that creates affordability for tenants and a sustainable model for the construction and management of homes. In doing this, we will be informed by international experience of the delivery of Cost Rental, such as the ‘Vienna Model’.
Cost Rental is a concept that has received broad acceptance across the political spectrum in Ireland in recent years. The general definition of Cost Rental is where the rents charged to live in a property are set at a level so as they cover only the cost of financing, delivering, managing, and maintaining the home.
Work is well underway within my Department to add greater definition to the concept of Cost Rental and to narrow the field of implementation options. This work aims to identify the best way of delivering Cost Rental so that it can meet the needs of those who require it; to ensure that it works efficiently for the State, and that it is sustainable into the longer term.
An inter-departmental Cost Rental Working Group has been examining a range of issues around this area in order to assess methods for the consistent and sustainable delivery Cost Rental at scale. This Group is chaired by my Department and comprises representatives from a range of Government Departments, Agencies and the local authority sector. Reports setting out the initial position of this group are due to be submitted to me shortly.
To augment the work of this group, an additional external research project into the development of Cost Rental in Ireland has recently been commenced through the European Investment Bank. The EIB have extensive experience in supporting the delivery of affordable housing across Europe, and have demonstrated particular interest in the introduction of Cost Rental in Ireland. This report will examine a number of key issues relating to the proposed Cost Rental sector in Ireland including the potential demand and most scalable and sustainable financing and investment structure and their final report is scheduled for completion in December.
The development of Cost Rental units has already commenced through a number of pilot projects that are currently at various stages of delivery. These are not only providing valuable lessons to assist in the development of this policy, but they will also be able to take advantage of the conclusions of this ongoing work prior to their final completion.
At Enniskerry Road, in Dún Laoghaire–Rathdown, the Housing Agency and my Department have worked with the local authority and two Approved Housing Bodies, Tuath and Respond, on a mixed-tenure development of 50 Cost Rental units alongside 105 social housing units. Construction on this development commenced in July 2019 and delivery was provisionally scheduled for Q3 2021 (prior to the onset of COVID 19). Enniskerry Road project will deliver 2 bedroomed homes for rent at €1,200 per month, in an area where market rates are at least €2,000 for similar accommodation. We intend to see this model widely replicated.
Cost Rental has numerous advantages for individuals in that is it gives more affordable rents to people with long-term security of tenure. From the point of view of the State, Cost Rental is self-financed by the rent paid by tenants, meaning that it is revenue neutral. In the longer term, as the homes remain in public ownership, they can benefit generations of renters over time.
When combined with the detailed policy development work that is underway, I am confident that the most prudent and effective approach is being taken in order to get this vitally important new housing sector off to the best possible start, which will in turn help it to act as an important link between the social housing and private rental sectors over the longer term.
To conclude, my tenure as Minister will see affordability out to the heart of the housing system. My immediate priority in this area will be concentrated on introducing an Affordable Purchase Scheme that will help struggling households access more affordable homes.
I am very much aware of the breadth of the task that is facing us in this area, and I am determined to take on this challenge. I am confident that the extensive range of commitments that our three parties have made in the Programme for Government will prove to be an excellent starting point for our collective ambition to make housing more affordable for people across Ireland, and as such I reiterate our proposed revisions to the motion before us.