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 Header Item Social and Affordable Housing Provision (Continued)
 Header Item Building Energy Rating Administration

Wednesday, 11 December 2019

Dáil Éireann Debate
Vol. 991 No. 2

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  11 o’clock

(Speaker Continuing)

[Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy] In relation to Clonburris, which will provide 8,000 homes, the local infrastructure housing activation fund, LIHAF, and the serviced sites fund, SSF, will make more than 1,000 of these homes available in the shorter term, including 100 social homes and 133 homes for purchase, at significantly below open market values. South Dublin County Council estimates a price range of €253,000 to €263,000 for these homes. At these rates, using the Rebuilding Ireland home loan, a couple with a joint income of €44,000 would be in a position to buy any of the 133 homes for purchase. As an example, this would be affordable for a couple comprising a new entrant school teacher and nurse. A development partnership between the site owners and the council to will see a detailed design for the full site finalised next year.

Poolbeg West SDZ will deliver up to 3,500 homes in close proximity to the city centre. To improve access to this strategically important site, more than €15 million of LIHAF funding has already been allocated by my Department. The SDZ planning scheme requires the delivery of 15% of the homes for social and affordable housing purposes, which is in addition to the statutory 10% under Part V arrangements. NAMA is currently procuring a development partner for the site.

With the St. Michael's Estate cost rental development, land is being provided by Dublin City Council to minimise the eventual rents of the planned 375 homes, and I understand that an application will be made for serviced sites funding and that it is also planned to utilise low-cost, long-term finance through the European Investment Bank. Dublin City Council is currently procuring an architect-led integrated design team to bring the development to the planning stage, with tenders for this due before the end of the year.

With regard to rents in cost rental projects, in the case of the Enniskerry Road project, which is already on site, the 50 two-bedroom cost rental units will be made available for €1,200 per month, which is a reduction of approximately 50% on the rents being charged for equivalent homes in the area. In the case of the Dublin City Council area, I understand that initial projections by advisers engaged by the council have estimated that rents of more than 40% below open market rates are achievable in certain cases.

Acting Chairman (Deputy Eugene Murphy): Information on Eugene Murphy Zoom on Eugene Murphy The Minister is right on time.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin I welcome that we are beginning to move in the direction of genuine affordability, in rental and purchase. I will, however, make some observations. I believe it is a mistake to think about the pricing of these units as a reduction or a discount from market rent because they are not being delivered by market operators. They are being led by the local authorities. Clonburris, for example, will be a local authority-led project on public land. Given that only yesterday I received replies to parliamentary questions back from the Minister, Deputy Eoghan Murphy, to say that the average cost of construction of new units, including apartments and houses, by local authorities last year was €200,000, one would have hoped that the purchase price for the homes in Clonburris could be below that. I say this because the average loan offering from South Dublin County Council under the Rebuilding Ireland home loan this year was €200,000. To purchase either of the price range houses the Minister has just outlined, the households would need a deposit of some €50,000 to €60,000, which is not reasonable.

Likewise with rents, many of us are concerned that with the St. Michael's estate the European Investment Bank, EIB, finance is only for 25 or 30 years. To get those rents down below €900 - which is where they should be - some form of soft loan refinancing is probably required by the Department to stretch the maturity of the loans, perhaps for another ten years. Will the Minister explore those two options so that even with the Rebuilding Ireland home loan - or for the lower-income working families - we can get the price points down to genuine affordability, especially for those people who are just above the income thresholds for social housing and who currently cannot afford to rent or buy?

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy I welcome that the Deputy has recognised that the delivery of affordable housing is coming and is welcome under Rebuilding Ireland. It is happening now and we are on sites. Obviously we want it to happen more quickly but with cost rental in particular we must make sure the finances add up. We would not want a person securing a rent for ten or 15 years or for longer, only to then find that five or ten years down the line, the rents must increase because somebody had made a mistake in the early stages of the process.

Many of the fundamentals of private house building are the same for public house building, which are the construction costs and so on. When we talk about what a discount might be or a discount on market rates it is just a way of putting it into a perspective that most people understand. The reason we can talk about that is because these homes will not be at a market rate and will not have other aspects built in, such as profit or risk. They will, however, have built in the maintenance and upkeep of the building over time with regard to the asset degrading over time. This is why we refer to a below-market rate in that sense.

I was not quite clear about the Deputy's point on deposits. If a house is to be sold at approximately €225,000 for example, a deposit of 10% would be around €25,000. The help-to-buy incentive could help with a large chunk of that. On the EIB issue, we are looking for long-term finance from the European Investment Bank. We already have them as a hired consultant to help us ensure we get the work right now. This will help us to achieve lower rents that might otherwise not have been available if we had not gone through the EIB mechanism.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin It is important to acknowledge, however, that affordable cost rental across Europe looks at 40-year plus loans and not the 25 to 30-year loans the EIB is providing for St. Michael's. For the Enniskerry Road project, I understand there is an innovative type of financing that allows it to be financed via the Housing Agency up to 40 years. If a similar arrangement was provided for St. Michael's, we could bring the rents down. The Minister is absolutely right that we must get the finances right. The key, however, is the scale of capital intervention by central government at the start and the length of the loan. If we find the right formula the rents could be brought down.

The difficulty with the Clonburris prices is that we must find affordable homes priced between €170,000 and €250,000 to meet the needs of people who are currently applying and being accepted for Rebuilding Ireland home loans but for whom the offer is below €200,000. While the Minister is right that we could combine the 10% deposit with support from the help to buy incentive, if a person's loan offering from the local authority is only €170,000 or €180,000, it does not do it. Even though there has been a shift, as with the O'Devaney Gardens site and other projects, the talk was still of €310,000. We are moving in the right direction but we need units priced between €170,000 and €250,000 for first-time buyers and rents below €900 per month. These can be delivered. We have seen it with Ó Cualann in Ballymun and from the reply to a parliamentary question from the Minister yesterday. I am confident that with the right financing these types of units and prices can be delivered. I would ask that the Minister considers this.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy I thank the Deputy for his follow-up and clarification. The Enniskerry Road project is a very interesting example of how complicated the delivery of cost rental can be. It does not have to be. This is why we are working on a national policy framework, and we have a working group set up to do that. This is also why the EIB is involved and it means we can something that is a bit more off-the-shelf. The Deputy will be aware that the Enniskerry Road project involves the Housing Finance Agency and two approved housing bodies. While the finance arrangements around this are in place now, it took some time for them to be constructed. We have a number of people working on the different types of finance available and how it might be structured into longer-term loans. These are the National Development Finance Agency, the European Investment Bank and some private consultants for some of the individual sites. I have no doubt that as we continue to develop this, we can continue to find longer-term sources of finance that can drive down some of the costs of delivery and therefore, drive down cost rental.

In what we are seeing the delivery of affordable housing for purchase, obviously I cannot overrule the Housing Agency when it comes to decisions made by it or by local credit committees under the Rebuilding Ireland home loans-----

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin Nor would I ask the Minister to do that.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy -----but I take the Deputy's point that people can get less than what they applied for and there is a bigger gap to fill when making up the difference. Even the 10% requirement can be structured so that only 3% of it has to come from the person's savings. There are further mechanisms to assist there. Ultimately, when we consider the approval of a Rebuilding Ireland home loan it is linked to the person's ability to pay; it is not linked to their income. It must remain linked to that.

Building Energy Rating Administration

 40. Deputy Jan O'Sullivan Information on Jan O'Sullivan Zoom on Jan O'Sullivan asked the Minister for Housing, Planning and Local Government Information on Eoghan Murphy Zoom on Eoghan Murphy the extra funding allocated to improve the energy ratings of local authority homes in addition to that already provided under schemes that have been ongoing in recent years; the monitoring that takes place to ensure local authority tenants are protected from fuel poverty due to the condition of their homes; and if he will make a statement on the matter. [52086/19]

Deputy Jan O'Sullivan: Information on Jan O'Sullivan Zoom on Jan O'Sullivan My question relates to the energy rating of local authority homes, many of which have very low energy ratings. This is in the context of climate change and fuel poverty, from which many tenants of local authority homes are at risk. I want to find out what moneys are made available to improve the quality of the homes and what monitoring is there to ensure that when works are carried out, they improve the rating.

Minister of State at the Department of Housing, Planning and Local Government (Deputy Damien English): Information on Damien English Zoom on Damien English As part of the just transition proposals for the midlands region, budget 2020 has made provision for an additional €20 million to fund energy efficiency upgrades to local authority houses in the affected midland counties. There is €5 million in the initial tranche. This funding is in addition to the €25 million, which my Department is making available in 2020 for energy efficiency upgrades to the existing local authority housing stock nationwide.

With the additional €20 million, my Department is currently working with the Department of Communications, Climate Action and Environment on the development of a targeted programme for the midlands region. My Department has also recently met the relevant local authorities in relation to this initiative, which it is envisaged will be rolled out in early 2020.

The Department's energy efficiency programme has been running since 2013. By the end of 2019, approximately 71,000 homes - or just over half of the local authority social housing stock - will have benefited from retrofit works under this programme, supported by a total spend of some €144 million. To date, the programme has largely been focused on phase 1 works, primarily attic and wall insulation. While the energy efficiency improvements arising from these works will have had an obvious positive impact in terms of fuel poverty, we expect these benefits to increase as we move on into phase 2 of the programme. Phase 2 commenced in all local authorities this year and is focusing on upgrades to the fabric of dwellings, including external wall insulation and upgrades to windows, doors and heating. That should also make a significant difference.

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