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 Header Item Social and Affordable Housing (Continued)
 Header Item Rental Sector

Wednesday, 20 February 2019

Dáil Éireann Debate
Vol. 979 No. 6

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(Speaker Continuing)

[Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy] In our models, the cost reduction with respect to the market rent grows to about 40% over time because the market rent continues to increase at market rates while the cost-rental rent does not. It may be linked to the consumer price index, CPI, or perhaps another much lower metric. We are trying to provide rent certainty over that period.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien I thank the Minister. I am glad we are discussing this again. I have raised this issue with the Minister on a number of occasions. As the Minister is aware, Fianna Fáil made the delivery of an affordable housing scheme an absolute priority in the budget negotiations and secured €310 million over the next three years to kick-start this scheme. I am pleased that Sinn Féin has belatedly come on board and recognised the need for affordable purchase because that party opposed this very thing in the Dáil last May and opposed the budget as well. That said, we are all in agreement that there is an urgent need for the delivery of affordable homes. House prices are 90% higher than they were in 2012 and home ownership rates have dropped to 67.6%, the lowest level since 1971, while rents are soaring. We need the option of affordable purchase and affordable rent. When will the Minister actually publish the regulations? He reintroduced Part V after last June. When will the regulations will be published and when will we proceed with building affordable homes on State-owned land?

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy I thank the Deputy for the follow-up questions. The affordability schemes were already there but I very much appreciate Fianna Fáil's support for additional funding for the existing affordability scheme and the recognition that it is a good scheme that will work to delivery affordable housing. Fianna Fáil's support for Rebuilding Ireland is very welcome in that regard. As for the provision of affordable housing-----

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Minister is being a bit disingenuous there.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy -----several schemes already were functioning very well. The Rebuilding Ireland home loan is more successful than anyone anticipated.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien It does not bring affordability.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy Just under 10,000 people have been able to purchase their first home through the help-to-buy scheme, which is fantastic. Other things are also happening, as I referenced in my first reply.

On the regulations for priority of access to affordable homes or schemes, it is unfair to suggest the fact that the regulations have not been finalised is delaying anything because we already have awarded €43 million in funding for the first round of sites. We have finalised the second round of sites and we are doing another call now. We have also received the economic assessments. I would like to give the Dáil the current proposed regulations in respect of the order of priority. I seek input from Members as to whether it is the appropriate order of priority for such a regulatory scheme.

I am not sure how the time works when two priority questions are grouped together.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien I do not know either.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy Do people have time to contribute again?

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher Both Members may ask a supplementary question.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Minister is being deliberately disingenuous in part of his response there. The Fianna Fáil affordable housing scheme is the one we have actually pushed for.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy The Fianna Fáil affordable housing scheme?

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien That is the scheme the Minister has not yet delivered. We had to drag €310 million out of a kicking and screaming Fine Gael. People are interested in knowing when they can apply and buy affordable homes. While the Rebuilding Ireland affordable home loan is a welcome product, I have said that publicly before, it does not deliver affordability in itself. It is an affordable product but it does not do anything vis-à-vis house prices, as the Minister is aware. It is not an affordability measure as such but helps people make affordable repayments. We are talking about affordable homes and a shared ownership arrangement with an equity stake held by the State, particularly on State-owned land. That is what we have been driving for.

  I understand that nine local authorities have responded to the initial call. How advanced are those specific landbanks? I would welcome the Minister publishing the draft regulations in order that we can debate them here in the Dáil with input from all parties. This is a major part of the housing crisis. People are consigned and condemned to a rip-off rental market with no hope whatsoever of ever owning their own home. That is the situation for a whole generation of people. We will work with anyone to deliver a scheme that works, including schemes that have worked in the past but can be improved upon. I seek a timeframe. As I said, I will work with the Minister to deliver it and to get this scheme launched this year.

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher Is Deputy Ó Broin's question similar?

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin Perhaps. It is on the same subject.

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher The Minister can answer the two questions.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin I have two supplementary questions. First, can the Minister clarify whether the regulations he has been speaking about will cover the cost-rental model, as well as affordable purchase? I have a genuine concern with the way he is structuring the financing of cost-rental projects. Because the model involves paying down the loans over 25 or 30 years, the starting rents are simply too high. Unless people's salaries increase substantially over the first five to ten years of their tenancies, they will not be able to benefit from what the Minister is calling a market price reduction. It would be much more sensible to extend the use of the capital advance leasing facility, CALF, to approved housing bodies as a soft loan from the Government to supplement the European Investment Bank, EIB, loans. That would allow the loans to be paid down over a period of 40 or 50 years, which would allow starting rents that would have no relationship with the market but could be genuinely affordable for families with modest incomes according to the Minister's own criteria. I refer to starting rents somewhere between €700 and €800 per month, instead of what we are going to see; in Dún Laoghaire, 80% of market rates would mean rents of €1,500 or €1,600, which is not affordable. There is a facility there already, namely, CALF. It just needs to be extended to the cost-rental model. I would strongly welcome annual local authority targets for all the schemes. Can the Minister give an indication of when he intends to publish those?

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy I thank both Deputies for their follow-up questions. Again, I thank Deputy Darragh O'Brien for his support for Rebuilding Ireland and the Rebuilding Ireland home loan. It is really welcome to hear that.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Rebuilding Ireland home loan is a decent product.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy I also thank him for supporting the serviced sites fund for affordable housing, which was in existence before the budget. The idea of using local authority land was not Fianna Fáil's idea, because it was not Fianna Fáil's practice in the past.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Government has not done it.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy It was our way of ensuring security for the provision of affordable housing. That is a fact on the record. I was in the meetings too.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Government has not delivered a single affordable home.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy Deputy Ó Broin's questions concerned the cost-rental model and financial modelling. A lot of work has been done with the EIB and the National Development Finance Agency, NDFA. Some of it is site specific and some of it is more general. This is absolutely not going to work if the rents are not affordable. We understand that. At the moment we are doing a lot of financial modelling around the Enniskerry Road site to see what starting rent we can lock in before it grows to a 40% cost reduction over time. The Deputy is aware of how important the cost-rental model is to me. It is something I want to see in this country so I am keeping a very close eye on the different schemes we have.

I have the order of priority for access to the scheme. In the first instance, this relates to affordable purchase. Once people apply, the first question will be whether the housing is suitable for their needs. If the applicant is a single person but the houses becoming available are three-bedroom homes, it will not be. The next criterion will be whether the person has been resident in the housing authority area for the 12 months immediately preceding application. The next question will be whether a household member is attending an educational facility within a certain distance of the homes concerned, then whether a household member is working within a certain distance of the home concerned. The next criterion is the date on which the application was made.

That is the current order of priority in the regulations. I ask people to consider those criteria and to come back very shortly on whether it is the right priority order. I believe it is, but I want to make sure people are happy with it.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Minister for Finance, Deputy Donohoe, said in his budget speech that he would review the income limit of €75,000 for a couple. Has that review happened? Is it happening as part of this?

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy The limit is €75,000 for a couple and €50,000 for an individual. That has not changed.

Deputy Darragh O'Brien: Information on Darragh O'Brien Zoom on Darragh O'Brien The Minister for Finance said he would review it.

Rental Sector

 23. Deputy Mick Barry Information on Mick Barry Zoom on Mick Barry asked the Minister for Housing, Planning and Local Government Information on Eoghan Murphy Zoom on Eoghan Murphy the steps he will take to counter price setting by institutional landlords (details supplied); and if he will make a statement on the matter. [8671/19]

Deputy Mick Barry: Information on Mick Barry Zoom on Mick Barry An interesting and in some ways extraordinary report from the economics division of the Department of Finance was published in The Irish Times last week. Its authors perceived a threat that corporate landlords would be in a position to set high rents in concentrated urban areas if they become a stronger force within society and the market. Will the Minister comment on that report?

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy The February 2019 report on institutional investment in the housing market prepared by the economics division of the Department of Finance examines the role of institutional investors and large-scale landlords in the Irish residential property market. The report finds that the combined purchasing activity of property funds, real estate firms and real estate investment trusts accounted for a net 1% of transacted units in 2017. Ownership of rental properties by large-scale landlords, that is, those who own more than 100 rental units, is also low, accounting for 4.6% of the wider market.

The report acknowledges that the purchasing and ownership activity of such firms can be more pronounced at a local level, particularly in the context of the apartment market. In the main, the report acknowledges the activity of such firms as a positive development and points to emerging evidence that they are a driving force behind a significant increase in the supply of new apartments in Dublin. As Minister, I welcome their much-needed delivery of high-quality, high-density and well-located rental units.

The report highlights that there may be a risk that such firms could scale up over time to develop monopolistic or oligopolistic pricing power. However, the report also notes that there is currently a diverse range of landlords and property types in the rental market.  In 2017, approximately 310,000 private rented tenancies were registered with the Residential Tenancies Board, RTB, and 86% of landlords owned just one or two rental properties.


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